Mythic Investments: Part Two - The Three Year Plan

Tweet by SaffronOlive // Aug 21, 2015

mythic investments finance

Last week I started a series about investing in mythic rares at rotation and came to the tentative conclusion that simply buying every mythic at its rotation low and waiting two or three years until selling might be a profitable MTG finance strategy. The issues was that the first article only looked at Zendikar block and making any definite statements based on such a small sample size would be foolish.

Today we are going to expand this research, focusing mostly on Scars of Mirrodin block, but touching briefly on Shards of Alara and Innistrad blocks as well. Then I'll introduce what I'm calling the three year plan for investing in rotating mythics, which I hope will be a profitable and low-commitment way for players not interested in checking price charts daily or speculating frequently to fund their hobby and play more of the game we all love.

Scars of Mirrodin

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

The important thing to realize about Scars block is that these cards rotated in September 2012, meaning they have had one less year to grow (and, on the other hand, one less year to be reprinted) than Zendikar block. If we round up, we can say it has been three years since this group rotated from Standard. This makes the 146.87 percent increase by the mythics of Scars of Mirrodin even more impressive. Although this gain is slightly less than Zendikar in absolute terms, if we look at it by average percent increase per year, SOM comes out on top growing just a hair under 50 percent each year. This is despite the fact that more SOM mythics have been reprinted in some way or another (6) than Zendikar mythics (5) and its weighted reprint score is slightly higher.

One thing that came up in the comments of the last article was a few people saying "sure, the cards increase in price, but can I really sell them for a profit considering fees, spreads, and all the other transaction costs?" In regards to this question, there are a couple of important things to consider. First, it is true that the prices listed above are "retail" (i.e. TCG-mid) which I've said many times is a poor way to figure out exactly how much cash you can get for your cards. However, it's also true that most of us don't pay TCG-mid prices either, and the before rotation price uses the same metric. So, sure, maybe you will only get X percent of TCG-mid when you sell these cards, but since you also only paid X percent when you bought the cards, it evens out in the long run.

Second, apart from looking up each card on actual buylists, probably the easiest way to figure out sell-values is to approximate the spread; usually somewhere between 30 and 40 percent ends up being a good estimation. Even if we err on the high end and say 40 percent, the average mythics from Scars of Mirrodin is still up nearly 50 percent — remember, this is a low-ball estimate because we are no longer comparing apples (TCG-mid) to apples (TCG-mid), but instead comparing apples (TCG-mid) to oranges (approximation of buylist). As such, even using this worst-case methodology, SOM mythics still represent a solid rotation buy.

Mirrodin Besieged

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

Mirrodin Besieged is an odd set. While a relatively small percentage of its mythics have been reprinted (40 percent), every single reprint has been in an unlimited supply set so the impact on the prices of these cards has been significant. Regardless, every card but the bulk Hero of Oxid Ridge has increased in price, and the mythics as a whole have increased at an average rate of 41 percent per year for the past three years.

The price increases of Wurmcoil Engine and Hero of Bladehold — despite the fact they were high-supply prerelease promos — makes me wonder just how much these cards would cost if they hadn't been promos (or if SOM block used the new multiple-promo system). Is it possible that this old system was just better for players? If your goal is to win the lotto and open a $100 promo Ugin, the Spirit Dragon, the new way of doing things is obviously better. But think of the goodwill generated by giving everyone a $10 promo Ugin, the Spirit Dragon as a thank you for attending the prerelease. It diminishes the value (and equity) of a premium card, but it might be worth it just because it is such an easy way to make players happy. Plus, if the "give a man a goyf and he's going to want three more" theory is correct, it could actually increase sales of boxes and singles at local gaming stores as players try to complete their playset of Wurmcoil Engine or Hero of Bladehold they need for Standard.

New Phyrexia

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

New Phyrexia is just absurd. It's hard to argue that it is not the most powerful set printed in the "new world order" era of Magic: the Gathering. Not only does it have strong (some may say broken) cards across all rarities (Gitaxian Probe, Dismember, Mental Misstep, Birthing Pod, Spellskite), but 90 percent of the mythics printed in the set are either eternal staples or casual all-stars — an off-the-charts crazy rate.

Financially, New Phyrexia doesn't disappoint either. Despite having three of its most expensive, most powerful cards reprinted in Modern Masters 2015, mythics from the set have increased at a startling 51.23 percent rate over the past three years. Check out this quote that pops to the top of Google when you type in "good rate of return:" If you expect to earn 15% or 20% compounded on your blue chip stock investments over decades, you are delusional. It isn’t going to happen. Apparently the author has never hear of the mythic rarity, Magic: the Gathering, or New Phyrexia.

The Three Year Investment Plan

As I mentioned before, in the first installment of this series I was really hesitant to make and hard-and-fast statements since the sample size was so small. Now that we've worked our way through two blocks, I feel a bit more comfortable laying out a plan, but it should still be considered preliminary and subject-to-change as we looks at more sets. This said, here's the average annual percent increase of mythic rares from Zendikar and Scars blocks.

While the rate of return is solid on all of these sets, the return on Zendikar block would have been even better if we had sold a year ago before Modern Masters 2015 at the two-and-a-half or three years post-rotation mark (where Scars block is today). Based on these two blocks, this seems to be the sweet spot for mythics — long enough for casual cards and eternal playables to appreciate in value, but short enough to minimize the risk of a reprinting.

One of the problems with investing in MTG cards is that your profits do not compound. It's not like the 40 percent increase you see on year one automatically rolls into your initial investment and posts its own gains during years two and three. As far as I can tell, there really isn't any solution to this issue, but thankfully the returns are good enough that it shouldn't really matter. Anyway, here's the plan:

1. Buy a Playset of Mythics

Between three months before and three months after rotation, acquire a playset (or, on a more limited budget, a copy) of each mythic in the rotating block. The window here is wide because the floor of individual cards varies depending on how much play they see in Standard. Using Theros block as an example, you should be buying most of the god cycle now since casual cards typically hit their floor pre-rotation, and buying mythics that see Standard play later in December or January.

Buying a playset of every mythic in a block will set you back somewhere between $660 (for Scars block) and $850 (Zendikar block) at TCG-mid pricing. This last part is important because it means you should be able to save quite a bit of money by shopping around. You can probably do even better if you are an active trader, as Standard players will be dumping a lot of these cards on the cheap, especially if they can trade them for hot cards for the new Standard season.

2. Wait About 2.5 or 3 Years

This part of the plan is both the easiest and the hardest. The easy part is you have to do literally nothing. The hard part is you might see some cards increase in price (or be spoiled in some random supplemental product) and be tempted to sell; but don't, just keep holding! Put your investment in a safe place and forget about it. If you are in a position where you think it is likely you'll need this money in a month or in a year, this might not be the best investment plan for you. This is a relatively long-term plan. Since all of the cards don't increase in price at the same rate/time (even though the average rate of return might be 50 percent annually, most of these gains happen between 1.5 years and 3 years post rotation), you can't really plan on cashing out early.

3. After 2.5 or 3 Years, Sell No Matter What

I don't have a super scientific date to sell your investment on (and things like PTQ season can definitely have an impact), but my gut says just before the spoiling of the spring supplemental product (the slot that contains Modern Masters and Conspiracy, among other products) is a good rule of thumb. This way you get to maximize your value by waiting as long as possible, but also minimize your risk of getting caught at the last second by reprints (like what happened with the Eldrazi in Modern Masters 2015). Since the idea is to invest by the playset, selling out shouldn't be that difficult since you should be able to move many of the cards together and minimize your transaction costs. You'll get the most by using some combination of eBay or TCGplayer, but even using buylists with this plan appears to be profitable.

4. Use the Money From Selling to Invest in the Next Block at Rotation

Let's use a present day example. Using our three-year plan, we would have sold our SOM block mythics a few months ago pocketing a handsome profit, potentially doubling our initial investment depending on how effectively we outed the cards. We would get this money just in time to invest in the mythics from the soon-to-be-rotating Theros block. And now we have two options: we can either buy a playset of Theros block mythics and spend the rest of the money to have a nice dinner, make a car payment, or pay down our student loans, or we can roll the money right back over into cards and buy additional playsets of Theros block mythics.

This is the beauty of the three-year plan: after the initial investment of between $1500 and $3000 (to cover the first three years of sets), it should be completely self-sustaining. You sell out of one block and use that money to buy into the next while pocketing profits or increasing your investment every year along the way.

Why Not Be More Selective?

It is true that you could make more money if you put more work into buying and selling cards. Sell card X a bit early when it spikes a tournament, hold card Y a bit longer to maximize its growth since a reprint seems unlikely, and so on. The thing is, based on the blocks we have studied so far, you can still make a huge return while putting in very little work. Think of real life markets: Some people are stock traders for a living and enjoy the grind of maximizing every dollar. Other people just want to park their money and make a reasonable return each year with as little effort as possible. The three year plan is for the latter type of Magic player or financier (or as a way for the stock-trader type MTG financier to diversify their portfolio). While the way to make the most money from MTG finance (or the stock market) is to devote your life to buying and selling cards (or stocks), this plan seems to offer a way to make a strong return for people that aren't interested in in checking price charts and tournament results on a daily basis.

Before You Think I'm Crazy...

Let's look briefly at a few more sets to see if this plan holds true in an even larger sample. Since we are only dealing with mythic rares, it's really only worth at looking at two more blocks. The first is Shards block (the first set to contain mythic rares) and the second is Innistrad block. In looking at these sets, it's important to note two things: First, Shards block has been decimated by reprints over the years, with some sets from the block having a staggering 75 percent reprint rate for cards worth $5 or more. As a result, the numbers for Shards block assume that we were already on the three year plan and that we sold these cards back in Spring 2013. Shards block was also printed back in the day before constructed playable cards were printed at the mythic rarity (apart from planeswalkers); since this group is often the biggest post-rotation gainers, their numbers may be depressed compared to more recent sets. Second, Innistrad hasn't fully matured yet (our targeted sell date would be sometime next year), so we will be calculating the percentages based on two years of post-rotation growth rather than three. This has potential to undervalue Innistrad block since the time frame between 1.5 and 3 years post rotation is usually when the most significant growth takes place.

Maybe these findings are not so preliminary after all. While the growth from Shards block isn't great overall (except for Alara Reborn, which is off the charts) it still averages out to a nearly 35 percent increase per year across the entire block. Innistrad block is also doing quite well for itself considering it is just hitting its stride as far as post-rotation growth potential. The three year plan would have been quite profitable for every block between the invention of the mythic rarity and Innistrad, with sets from RTR forward being too recent to analyze properly.

Conclusion

That's all for today. What do you think? It this three year plan a foolproof way to make money with MTG finance? Will the new, accelerated rotation schedule help or hurt this plan? Am I missing something that makes this whole idea too good to be true? Let me know in the comments, or you can reach me on Twitter (or MTGO) @SaffronOlive.