Skip to main content
Update
Non-financial boards have been closed.

Non-financial boards have been closed but will continue to be accessible in read-only form. If you're disappointed, we understand. Thank you for being an active participant in this community. We have more community features in development that we look forward to sharing soon.

Fool.com | The Motley Fool Community
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 17
Allow me to reveal my inner nerd, and then share what I find to be utterly amazing aspects of the collectables market, and maybe come back to making some points about stocks (haha, doubtful... this is random).

In 1993, a collectable card game called Magic The Gathering (MTG) was created. Details of the game are here --> http://en.wikipedia.org/wiki/Magic:_The_Gathering

Basically, think wizards, goblins, and various D&D type stuff, but in a card game where you could refine your deck, strategy, and trade cards with other players. (Actually, I found the game quite interesting as with many games it involved strategy, resource allocation, understanding of luck vs. skill, and most importantly for trading cards, the inherent value of something without having a price associated with it - I'll touch on this a bit more later).

This was something I played in for a few years (maybe 1994 - 1996) during Junior High and HS. Just picture 6-7 weird, smelly, single (definitely single) white guys playing cards in lunch room... did I mention, single? That's the image.

I enjoyed the game, and I played a lot, and while I never had the most money to buy all the best cards (there was a sort of rarity / value curve for cards which was as you would expect... more rare = more likely to help you win in the game, very loosely), I was quite adept at a) trading with people for what they wanted vs. what I thought was more valuable, and b) winning with inferior cards by thinking more about probability and some juvenile game theory of how others would strategize. Over time this allowed me to put together a decent collection, and I would even enter into tournaments (picture the same lunch room... but now it's a conference room at the mall, with 100 guys...) and win some prizes (cash, cards).

This phase (faze?) of my life was short lived, but I kept my Magic cards, along with my sports cards, in boxes and protected sleeves and mostly forgot about them.

Last year a friend mentioned that he saw some magic cards on eBay at what seemed like incredible prices. Specifically a type of card referred to as "dual-land" was selling for astronomical prices. I didn't really get serious into looking into this until recently.

--- Market related digression... to put these kinds of Magic cards (dual-land) in market context, they are like a free-option. Every deck of Magic cards needed land to do "stuff"... basically it's like money, but there are different "currencies" (five in Magic). Dual lands could be used as one or another currency, and that could change back and forth each round. In every other way, dual-lands were the same as single lands. Because lands were the basis of the game, dual-lands were valuable because they were unambiguously better... for no more cost of resources (# of cards or play speed). When I started playing magic, I didn't have any dual-lands as they were very rare... but every one I saw I would trade for it... if the point of the game is to make the best single deck, dual-lands would obviously be needed... so I would trade many common cards for these to optimize my deck. I ended collecting 4 of each 10 dual-land card (4 is / was the maximum of a single card you could use in any deck). If dual-lands were a market instrument, they would be like a Euro Govy bond, but with the ability to switch the coupon to USD instead of EUR at the owners option if EUR went below 1:1 USD. If this bond existed, no one would ever own a EUR bond (at the same currency coupon / rate) that wouldn't have this feature...

So anywho, I trolled eBay a bit for magic cards, and found some shocking things:

1) Certain rare cards from the first 4-5 editions of Magic were selling at incredible prices (the earliest two versions Alpha & Beta had short manufacturing runs, and were rare even in 1994 when I was playing... even though they were released in 1993. The rarest cards in Alpha and Beta were only made in 1100 / 3300 quantities (respectively) as a note).

2) An entire market ecosystem has developed around "trading" these cards. There are price guides online, very searchable and intuitive websites. There are bid/ask/midpoint quotes with quote aggregation services (aggregating ebay, amazon, private websites #1-15, etc).

3) There is an arbitrage tool to check bids against asks across the universe of marketplaces and adjust for transaction costs and arb the lows and highs (I'm not sh1tting you guys, there is an online arbitrage tool for nerdy card game made >20 years ago).

4) Apparently counterfeiters in China have even been taking a stab at the market as well and trying to get suckers on eBay to buy knock off cards.

5) I even found a site online that chronicled big purchases, and attempted to track the entity doing the buying / selling.

6) But what is most amazing is that Magic card prices have exploded... and luckily, you can see price charts. --> http://www.mtgprice.com/sets/Revised/Underground_Sea ;-) Based on what I've read, it appears that rare Magic card pricing is up 10x in 10 years roughly.

--
Basically, a game for nerds, apparently grew up into a market for nerds that has appreciated into a collectable market... which I guess isn't too surprising given that nerds are good and making websites, and trading tools, and like organizing things; oh, and they also have good income potential... but the prices, I still can't get over.

My good cards, primarily dual-lands from the 4th edition of the game are worth $100-300 each. Sets of 40 (which I have) have sold on eBay for >$5,000 in the past year. I have one somewhat rare card from the "Beta" set of cards... it's midpoint price online is $700. A set of the 9 rarest cards in the first 3 editions (discontinued before I started playing - I own none of these, they were $50-300 in 1994 as I recall) sell for tens of thousands of dollars.

A transaction of the most rare card in the Alpha set, in essentially mint (9.5) condition was auctioned for $27k two years ago. (The "Black Lotus" is the card)

When I was 14, I always figured my Emmitt Smith Score Supplemental Rookie Card was going to be my meal ticket... but apparently I was fighting the last war of sports cards (my generation grew up hearing stories about so-and-so's dad who had a Mickey Mantle rookie card... but his mom threw it out / dog ate it / he lost it... etc). Now I'll be telling kids about how if I would have just traded up for that Black Lotus, I'd have their college tuition. My Smith rookie card is like $100 or something. WTF?

As a microcosm into this world, see this article where a guy opens an original deck of Alpha magic cards as part of an event... and finds a Black Lotus --> http://www.geek.com/games/27000-black-lotus-found-during-liv...

Everything about this link is amazing... the fact the article exists, the fact he opens a pack of cards with rubber gloves, and how he loses his sh1t when he gets to the final card. An event, to have an unveiling for a 22 yr old deck of cards... for a chance (remote) to get a piece of paper "worth" >$30k that <1% of the world even knows exists.

So my takeaway is:
1) Rarity really does matter. If there are only 1100 of something, you only need to find 1101 idiots to make the price go crazy. ;-)
2) I'm selling... like yesterday. The only question is how sloppily I hit the bid!
3) This market feels like silicon valley funded money. It's like the nerd version of buying a Picasso. :)

Anyway, if you read this far I'm sorry. There was really no point. Just mostly stunned that this thing I thought had died has grown into a strange beast. However, I wasn't lying that Magic helped me think about resource allocation, trading, and efficiency, and has a lot of applicability to investing and many levels... but I also think that of many games of mixed skill and chance.

Thanks for reading!

Ben
Print the post Back To Top
No. of Recommendations: 1

Anyway, if you read this far I'm sorry. There was really no point. Just mostly stunned that this thing I thought had died has grown into a strange beast.


Doesn't matter - great story !
Print the post Back To Top
No. of Recommendations: 0
I am hitting my basement immediately after I post this. I played MTG 1995-1998 or so, no Alpha or Betas but a crapton of cards from the 4 or 5 series after the original 2. I had no idea!

What a great story. Thanks for posting.

-ER
Print the post Back To Top
No. of Recommendations: 3
Thanks Ben.

Pokemon, Yu-Gi-Oh and Magic have given me the opportunity to discuss marketing, psychology, business, investing, arms escalation, trading, bartering, collecting, budgeting, using the internet and computers as a productivity tools to play, research, buy and sell, etc..., to differentiate wants vs needs, prioritization, how to cope with disappointment and how to win and lose as gracefully as possible. Plus all the nuances, strategy and structure in the game itself. They started around age eight and Magic has won sway. The oldest (12) is now building decks for free (hooray) with software and playing his friends online with evenly matched decks so the lessons are continuing to evolve.

They were not free lessons (MTG runs a smart business) by any measure but having your kids find something they're passionate about that can teach them real world lessons and life skills is priceless. It's really amazing how many facets of life it bumps into. It can be a problem at school. Chess club turns into Magic tourneys. Kids are being disciplined for trading, selling/buying, taking advantage of or being taken advantage of each other. Etc, etc... I think it is great and filled with natural consequences and learning opportunities but not everyone sees things like I do.

I try to play Magic with my 12 year old now and again and it absolutely amazes me how much strategy, logic and memory he possesses. He and his friends are a blur. They play at the local toy store and their speed and agility is awe inspiring. Magic has been one of the more fulfilling and joyful parts of parenting for my family and gives us the opportunity to touch on so many topics.

Some of the dads (younger than me) still have their Magic collections from the 90s and my kids marvel at how much they're worth. I thank the dads for introducing the game to their kids, and mine. You might want to hold on to a few of those decks if you have kids in your future. There might be an easy and tangible life lesson there for your offspring. Nothing you can't overcome with other measures (buying new decks at better price points or other games, sports, lessons) but it might lend some weight. Steering kids is harder than I thought it would be and best laid plans often end in frustration so I'd probably cash in too. But ya never know what's going to work or not.

I hope my kids turn out to be a little like you. Thanks for sharing and letting me reflect and sharpen my saw a bit.
Print the post Back To Top
No. of Recommendations: 0
Thanks for the walk down memory lane. I have hundreds of these cards buried somewhere in my mom's house. There was a phase in my life where I spent all of my money (tens - hundreds of $$) in a very brief span, buying up MTG cards. Never did get a Black Lotus.
Print the post Back To Top
No. of Recommendations: 0
interesting what makes a market.
collected these when i was a resident. Didn't play just liked the pictures.
Print the post Back To Top
No. of Recommendations: 0
Never collected Magic Cards or even heard of them.

My only card collections were Tops Baseball cards around 1960-2 which somehow did survive. When I went rediscovered them and did an inventory I did find a few gems:

1961 Mickey Mantle
1961 Willie Mays

Three Carl Yastrzemski Rookie Cards (biggest surprise).

A couple of years ago I asked my wife to get me one 1961 card that I never had but wanted - Eddie Mathews (Milwaukee Braves) who was my fav as a child.

sw
Print the post Back To Top
No. of Recommendations: 2
So my takeaway is:
1) Rarity really does matter. If there are only 1100 of something, you only need to find 1101 idiots to make the price go crazy. ;-)
2) I'm selling... like yesterday. The only question is how sloppily I hit the bid!
3) This market feels like silicon valley funded money. It's like the nerd version of buying a Picasso. :)

Anyway, if you read this far I'm sorry. There was really no point. Just mostly stunned that this thing I thought had died has grown into a strange beast. However, I wasn't lying that Magic helped me think about resource allocation, trading, and efficiency, and has a lot of applicability to investing and many levels... but I also think that of many games of mixed skill and chance.

Thanks for reading!

Ben


I barely played MtG, only because I have friends that are super into gaming and one who is a professional game designer, but I remember hearing about the Black Lotus cracking $500 and then $1000. Insane. I probably have ~200 cards from 1994 lying around somewhere. Some of my friends have way, wayyyy more.

For the Underground Sea link, I see it gives a 'value' of $290 when you can buy a couple copies for under $200 on eBay. So I'd say those online pricing services have a little way to go. ;)

You would not believe what short-printed Michael Jordan cards from popular subsets go for:

http://www.ebay.com/itm/1997-E-X2001-Essential-Credentials-N...

Here's a beautiful 9.5/10 MJ rookie from the iconic 1986 Fleer release:
http://www.ebay.com/itm/1986-87-MICHAEL-JORDAN-FLEER-ROOKIE-...


I have that Emmitt Smith also.
Print the post Back To Top
No. of Recommendations: 0
Oh yeah, great story Ben!

Sadly I started with The Dark, probably the least-loved set from the 'old' days with no valuable cards.

My bff has a couple dual-lands though, so he thanks you!
Print the post Back To Top
No. of Recommendations: 0
Sadly I started with The Dark, probably the least-loved set from the 'old' days with no valuable cards.

OCD: Fallen Empires.

The Dark at least had goblins, which were fun (though futile).

-spookynerd, recently had a similar experience, finding about 20 or so revised dual lands in a box in the closet....
Print the post Back To Top
No. of Recommendations: 1
Thanks for reading and the responses guys.

Banksfate, I agree with much of what you said. One of the least noticed things about Magic I think is the enhancement to a young person's vocabulary... it exposes kids to so many good things that you also highlight. I'm quite skeptical of the new prices for things, but the inherent merits of the game are very solid as you mention.

Oh, and thank you for the kind complement. :)

Naj, in my research I have found that condition of the cards is rather more important than I expected... it's pretty wild. Most of my cards are middle of the road, that has hurt my ability to monetize them. But agree that the "market" for Magic is pretty much like the OTC market in 1979 or something. ;-) Or maybe Germany's stockmarket in 1923...

Glad we are both long E-Smith's rookie card... I still think it is trading cheap!

Glad to see so many other's at least knew the game and played at one time!

Ben
Print the post Back To Top
No. of Recommendations: 4
Just a quick follow up.

Sold my cards (for players, I sold a set of 40 dual lands from Revised edition, and a handful of 10 other rare cards) for $3,200 cash to a local guy.

Basically I got bids from a card shop a few guys who's job was / is to basically flip cards. The guys I dealt with were pretty open that they bid at ~75% of card retail for large rare sets... they keep what they want, and split up and sell the rest. Card shop bid me at 60% of retail (They said that is their policy for rare collections).

Wild.

Also, latest Planet Money episode (#609) is about the history of Magic and talks about how it avoided the 'fad' demise so predicted for it.

Ben
Print the post Back To Top
No. of Recommendations: 0
Wow!

My buddy sold his dual lands for several hundred, my bff has like 9 of them, and somebody offered to sell my whole collection for one of the ~$40 cards in it.

I won't take home anything close to your haul, but even a few hundred bucks is 'free money' and will go 0.5% to defraying the cost of my sports card collection...
Print the post Back To Top
No. of Recommendations: 0
Congratulations.
Print the post Back To Top