Go big or go home. Two wrongs don’t make a right, but three rights do make a left. I am never going to see a merman, ever!
The Dow is up due to speculators. Oil is down due to speculators. These are common phrases in today’s investment world. One would think that speculators are responsible for everything since the dinosaurs died off. But with the exception of the rare “London whale,” the markets are moving based on 10,000 different factors and most speculators are just trying to scry the patterns.
A few, like the Brew Crew, put themselves out there as someone who should be followed. Today we are starting with Corbin ” It’s a Merfolk” Hosler versus Ryan “Baby Face” Bushard. Click the “Hosts” link at the top of this page if you don’t know them. We are only looking at results today.
Before we dig into the results, some context. The Major League Baseball Hall of Fame is filled to the brim with players who failed at bat seven out of every 10 times. The highest-paid hedge funds in 2013 underperformed the markets by almost 20%. Donald Trump has filed for bankruptcy four times. The bar for success in life is often very low. The expectations, on the other hand, are often very high. Speculating on MTG cards is the act of guessing the drive and finances of 13 million people at the same time.
On To The Battle
This first round we will compare Corbin versus Ryan from the period starting Nov 1, 2012 going through,April 30th, 2013. During this time, each individual made a different number of calls. So we are going to pretend like you went out and spent $100 on each and every card they said buy, and by coincidence you sold exactly $100 worth of every card they said to sell (If your are spazzing about the math here, please read Investing 201). Then we divided the profits by the number of trades. We are going to start with the short-term results:
Ryan’s 30-day returns: 7% per trade
Corbin’s 30-day returns: 26% per trade
Okay, if we stopped here, everybody would be joining the cult of merfolk. Corbin’s average return per trade in the first 30 days was on average more then three times higher then Ryan’s. Let’s take a look at some of Corbin’s average buy calls:
[card]Tree of Redemption[/card]: $0.50 –> $2.00 (300% profit)
[card]Cryptic Command[/card]: $18.00 –> $12.00 (-33% loss)
[card]Huntmaster of the Fells[/card]: $25 –> $30 (21% profit)
[card]Deathrite Shaman[/card]: $10 –> $14 (40% profit)
Corbin seems to be swinging for the fences, while Ryan is targeting cards with incremental value. Next, let’s look at some sell calls.
[card]Thundermaw Hellkite[/card]: $30 –> $38 (-26% lost profit)
[card]Hellrider[/card]: $15 –> $6 (+60% added value)
Shock lands: $10.00 –> $9.00 (+10% added value)
[card]Mind Grind[/card]: $3.50 -> $2.50( +28% added value)
Again, Ryan is going for incremental and Corbin is pointing to left field (I think that should be last baseball reference). Here’s the 30-day final call rates:
Corbin correctly called the direction of a card’s price 35% of the time.
Ryan correctly predicted the direction of a card’s price 37% of the time!
Remember that each card had to move 20% or more before we counted it as a win for each of these guys.
Now, using the assumption that you will hold cards more then 30 days, let’s look at the rest of our time line. Ryan is more likely to give a target price and to change his opinion when the price changed dramatically. Corbin is more likely to double down. For example, Corbin said to sell [card]Thundermaw Hellkite[/card] at $30 in episode 33 and then picked it again as a sell at $40 in episode 35.
Let’s look at the card values at rotation. Corbin’s returns on picks through rotation were 41% per trade. He made the correct buy/sell calls 56% of the time. Ryan’s returns on picks through rotation were 21% per trade. He made the correct buy/sell calls 62% of the time
Again, Corbin’s returns are stronger, except they are little misleading. If you remove Corbin’s [card]Aven Mindcensor[/card] call ( 300%!), his returns drop to 32% per trade on average. And 75% of his picks move more then 50% up or down after he picked them, while the Magic universe at large moved less the 20% in any one direction. In the investment world, we call this a high Beta.
Corbin’s picks during this round were more high-risk, high-reward, while Ryan’s pick were incremental and value-driven. A gambler (Gordon profile) will more then likely find Ryan’s pick unsatisfying. While an investor (Alex profile) who fears risk more then he desires gains will jettison Corbin’s picks too quickly to realize gains.
Join as next time we pit more Brew Crew members against each other!
5 comments on Brian Dale – Investing 202: Corbin v.s Ryan, Round 1
30% is pretty bad. Clearly these guys don’t know what they are doing.
Compared to what? The stock market? No. Another financier’s advice? Prove it. Some vague notion that you do better? Let’s see numbers.
Why did you pick 20% for the card’s value change to count? As opposed to 1% or 5%?
No one makes or loses any money if a card moves 1%. It is statistically insignificant and less than the variation between different card sites. 20% indicates actual movement.
“, according to data from JPMorgan Chase, while 63 percent are missing their benchmark, A mere 7 percent are topping benchmarks by more than 2.5 percentage points.”