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Battle of Tix has been a bit slow for me in the past few weeks. Partly because I was travelling abroad and partly because of the nature of the EMA set release. In general, set releases tank prices across the board. Thus, it’s pretty hard to make gains. With standard set releases, you have upheaval in the metagame which causes things to spike, giving you an opportunity. However, with EMA, it’s all reprints, so there isn’t much affect on the metagame AND they are reprints, which depresses prices.

I’m also trying to pick up EMA cards at their low point, but I’m not sure when that’ll be exactly. The EV of the set is low, so there may not actually be much supply on MTGO; it’s difficult to tell and it’s possible I’ve already missed the low for many cards. With that being said, it seems like an appropriate time to talk a bit (a lot?) about supply, reprints and MTGO, after my spec updates.



Closed Positions (link updated weekly):

Current Portfolio:

Update

For the past two weeks, I’ve been slowly closing positions as they turned profitable (shocking, I know). I took a hiatus from opening positions during my trip, but I’ve slowly started opening new positions as I find opportunities. Nothing too exciting, though. The spoiling of New’makrul sent some of the Delirium cards, including Traverse the Ulvenwald into a spike. I had started picking up Traverse the Ulvenwald a bit below 0.5 tix at the end of April, as it just seemed quite strong to me. Unfortunately, it just kept going down, but my faith that it would eventually find a home in standard was sustained, so I continued to buy in when it was ~0.25 tix/card, til I had almost 50 copies. I admit my confidence certainly wavered and I was essentially betting on EMN having something sexy (and green?) to give Traverse the Ulvenwald a good home. So, when I saw the Emrakul-induced spike, I happily outed all my copies for a 10 tix total profit, as I’m very unsure that I could do any better when EMN hit. It’s also nice to take the guaranteed profit now rather than the riskier profit later, especially when it’s very risky, as I feel waiting for EMN to ‘break’ Traverse the Ulvenwal would be.

Speaking of spoilers, I like the new Thalia. I don’t know how playable she’ll be. Her ability to define the standard environment just depends on whatever else is around (amazing insight, I know). To me, she seems like a ‘safety valve’ that WotC put in to try and keep Eldrazi under control (like Witchstalker, Thragtusk, etc). This assumes that Eldrazi were doing well in the FFL, while white wasn’t overly oppressive…not exactly how it turned out in the real world, though. Thalia may make white decks even better, if that is even possible. We’ll have to see what else EMN has in store. However, as far as spec’ing goes, it doesn’t actually matter if Thalia pans out in EMN standard - what matters is people’s perception. Thalia looks like she’ll make Mono-W humans even more insane (at first glance, at least). Thus, people are going to assume that will happen and the market will move accordingly. As such, I snap bought 29 copies of Thalia's Lieutenant at an average price of 1.09 a few minutes after I saw the Thalia spoiler. As expected, the lieutenant jumped almost 1 tix in retail price overnight, and I sold out immediately for almost 0.5 tix per card profit, as I felt this unsubstantiated spike couldn’t hold.



As for the other stuff, mostly things I bought before the Modern Weekend a month ago, they didn’t look to be moving much, so I outed Academy Ruins, Knight of the Reliquary, and Sword of the Meek for small profits each. I picked up Zur the Enchanter during the CSP flashback drafts and he did terribly for a while, so I was happy to sell him for a small profit when he eventually popped back up. Of course, the very next day he apparently showed up on camera at an SCG event…oh wells. Speaking of flashback drafts, this segues nicely into our next topic…

Supply, Liquidity, and Flashback Drafts on MTGO

In my first ‘real’ Battle of Tix article, I talked about many ways that the MTGO market is different than the paper MTG market. One big thing is the extremely high liquidity of MTGO cards compared to their paper counterparts. Now, when I say that a MTGO card is liquid, I’m referring to the fact that they can be rapidly exchanged into tix, ignoring some of the other aspects traditional finance uses to define a “liquid asset”. For example, your MTGO collection is always sorted, so you can easily and rapidly find if you own a card. There are a huge number of buyers for cards, with all the bots on MTGO. And, trades on MTGO are virtually instantaneous, with no fees or costs (like shipping or Paypal/eBay/TCGPlayer) aside from the buy/sell spread. One result of this high liquidity is that prices are quite low on MTGO. In paper MTG, it isn’t ‘worth it’ to sell cards at only $0.25 (huge generalization here), but on MTGO, 0.05 could be good price, since no fees eat into your profits and the time involved is small.

However, just because any given MTGO can be considered liquid as it could be sold rapidly, that doesn’t mean it is actually participating in the secondary market. You see, MTG cards act much like a ‘fixed asset’, they are bought to be used, potentially for an indefinite amount of time. Thus, many cards are taken out of the market. So, while the ‘total supply’ of MTG cards would be every copy printed (and not redeemed, with respect to MTGO), the actual market for these cards is much smaller. The pool of cards that actually changes hands I’ll refer to as the ‘liquid supply’. Thus, while there may be 100,000 copies of a particular card in existence, there might only be a liquid supply of 100. As such, the addition of 10 copies would have drastic effects, as you’ve increased the liquid supply by 10%, even though the total supply has only gone up by 0.01%.

To give a concrete example, we can look at the granddaddy of the current flashback drafts: IPA events. Cards from Invasion block have traditionally had extremely low supply on MTGO. When MTGO ‘went live’ Odyssey block had already been released and was the current draft format. Invasion block cards were also on MTGO and IPA drafts were offered, but, much like today, the ‘current’ draft format was much preferred. This led to a very low total supply of IPA cards. So much so that we had values like this: Pernicious Deed 100 tix, FOIL Pernicious Deed 300 tix, Spiritmonger 50 tix, Reya Dawnbringer 25-50+ tix, IPA booster draft set 60+ tix (unfortunately, we don’t have much actual price data from back around 2004-2007, so these are my potentially imperfect recollections). Around the beginning of 2006, WotC began running IPA events. These were not like the current flashback drafts that just anyone could hop into. WotC didn’t want to flood the market with IPA cards (and wanted to maximize profits, of course), so they made sealed IPA events that were invitation only. Yes, you had to place well in qualifier tournaments to get your spot in these events. They were also very limited in quantity and, as I remember, Worth Wollpert assuaged people’s fears over these events flooding the market with a promise that only a fraction of the total supply of IPA cards would enter MTGO. Something like: only a 1% increase in total IPA supply (I remember this number being lower, 0.1%?, but overlord of the (now deleted) official WotC MTGO forums, bubba, remembers 1%...he probably remembers better than I).

A 1% increase in supply, that shouldn’t affect the market too much, right?

Wrong.

Most people playing in the IPA events didn’t want the cards, they just wanted the value those cards represented, so they would immediately sell them. This resulted in the 1% increase in total supply being predominantly and rapidly funneled into the liquid supply. While a 1% increase doesn’t change the total supply of cards by much, adding 1% of the total supply to the liquid supply had major effects. IPA card prices tanked. For players, that is, of course, a good thing. There isn’t really a reason Spiritmonger needed to be 50 tix, as that price was due solely from scarcity. But, it does provide an interesting lesson in MTG supply and demand. (Here are some articles from that time, if you’re interested: http://www.starcitygames.com/article/11186_The-Week- On-MTGO--2.html and http://puremtgo.com/node/509)

Why does this matter? Because we see similar trends currently with the flashback drafts. Drafters will rapidly sell of any cards of significant value. This influx of supply will then tank a card’s price. Here is where speculators step in. The depreciated value represents a good opportunity to pick up certain cards at low points.

Unfortunately, it’s not that simple, though. These trends and the repercussions of the flashback drafts are, to be honest, relatively simple and obvious. At the very least, people that watch prices will notice the significant drop in value of some of these cards on the first day or two of the flashback drafts. Because flashback drafts represent a ‘good’ and ‘easy’ prospect, many people (from what I can tell) are taking advantage of this opportunity. This really complicates the price trajectory of these cards. Then, you can have other effects, such as set releases, that throw yet another wrench into things. So, let’s break down some scenarios/patterns to try and explain how things go down.

Caveat: this is how I perceive things via logical deduction and various observations. Unfortunately, I don’t have hard numbers (such as the amount of supply flashbacks introduce into the system) to make concrete conclusions. So, basically take this as my (educated?) opinion.



In demand cards

These are your good cards or format staples. Scapeshift, Counterbalance, Wasteland, The Rack, Bitterblossom, Ancestral Vision, etc. While scarcity may make the price of these cards higher, it is not the main driver. Instead, their price is driven play playability and thus genuine demand.

With these cards, flashback supply occurs and the price dips in the first 1-3 days of drafting. Speculators and savvy players then swoop in and buy up copies of these cards. This introduces an increased demand to balance the supply increase from flashback drafts. The prices then rise from their temporary low and begin to stabilize. This results in a small window to pick up cards ‘on the cheap.’

Nettle Sentinel right now shows this pattern – a stark drop in price followed by rapid recovery.

Vendilion Clique is a bit more reasonable, with a dip (early June ’16) followed by slower recovery that levels off.

Scarcity-driven cards

These are cards whose value is propped up by sheer scarcity. While they may be good, especially in a casual setting, there is not actually much demand on MTGO, but that is balanced by the low supply.

With this class of cards, including things such as Zur the Enchanter, flashback drafts produce a quick price dip in the first day or two, followed by a slow downward spiral in price. Because of no interest by speculators and/or players, there is not enough demand to counteract the increase supply.

Zur the Enchanter (CSP flashbacks were in early April: flashbacks were in early April.

Prismatic Omen.

Pump and Dump

There are other patterns you may notice with flashback drafts. I call this on the pump and dump as I think it is caused by overzealous speculation. A card dips in price with the initial supply glut from flashbacks. Then, people come in and generate demand buy trying to snatch up all the cheap copies. Maybe others continue to buy once they see the price going up, worrying they’ve missed the absolute bottom but not wanting to miss out on the, at least, slightly lower prices. This further inflates the price. Now, the people who managed to buy in at the lowest point are satisfied with their quick 1 tix (or whatever) gain and decide to start selling out. Others follow suit so as to not miss out on their profits. This ends up causing the price to plunge, but eventually reach equilibrium.

You can see this clearly with Scapeshift (http://www.mtggoldfish.com/price/Morningtide/Scapeshift#online) and The Rack (http://www.mtggoldfish.com/price/Timeshifted/The+Rack#online). Initial supply drops the prices to 25 and 6 tix, respectively. Then, demand ensues and the prices jumps to 30.5 and 10.1, respectively. Feeling satisfied or not wanting to press their luck, those buyers being to sell out and prices fall and stabilize at 8 and 28, respectively. I’m sure there are some even more extreme examples, but I won’t take the time to search them out.

Interactions with set release

People love to play with new cards, especially new limited formats. In flashback drafts, players sell the valuable cards they pull to fund their next draft. Similarly, when a new set rolls around, people scour their collection for valuables to fund drafts/sealeds/new cards for constructed. The selling off of various valuables puts a downward pressure on card prices across all of MTGO.

The combined effect of flashbacks and set releases can really really tank some cards prices. Case in point – when I spec’d in Counterbalance at the beginning of Battle of Tix (Early April). CSP flashbacks were ongoing and I felt Counterbalance would show a nice, quick profitable pattern. Counterbalance displayed the rapid dip and recovery of in demand cards and I, unfortunately, missed out on the low point (6.8 tix). I did get in at 9.5 tix, as I felt Counterbalance could go places (heck it was 23 tix just a month prior to me buying in). Unfortunately, a week later SOI was released on MTGO, as you can see from the price history, this led to slow decline. I interpreted this as I described above. Speculators that got in at the low (~6 tix) sold out when it hit ~10 tix, depressing the price. Then, other speculators sold out, as they lost confidence in the spec. Finally, average Joes wanted to play SOI, looked for valuables in their collection, and sold of Counterbalance they had from flashbacks (or randomly from before). Thankfully (for me), EMA interested allowed Counterbalance to recover and I was able to make a few tix.

Conclusions

As you can see, things get a bit tricky. It’s difficult to predict how the other humans in the system will behave. To take advantage of flashbacks with certain cards, you need to buy in within the first day or two, before demand spikes the card. However, if no one else wants to spec or buy that card…you bought in too soon and the price will continue to decline for the duration of the flashback drafts.

This is one big reason I’ve not been dabbling in flashback cards or buying much of anything recently. We have EMA released and very soon we will also have EMN on MTGO as well. These rapid set releases are putting a great deal of downward pressure on prices. While that means it can be a great opportunity to get some things at low points, while where in the midst of these set releases, it’s hard to tell what the absolute low will be. Sure, a card may lose 20% of its value because of EMA release events…but will it lose another 20% when EMN comes out or will it stabilize and recover? Perhaps I’m overthinking things, but flashbacks seem deceptively tricky to me. While there are trends in some of the card values, there’s still a good deal of uncertainty. I don’t deny that the flashback drafts are a great opportunity to pick up things at lows, but the future price trajectory, at least in the short term, is difficult to predict.