Arbitrage. Noun. The simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.
In “Finance 101” terms, this basically means that we’re going to buy something at one price from some entity, then immediately turn around and sell that exact same thing to somebody else for a higher price. As such, this tactic would be most commonly found in the stock market, where an individual can make make dozens of transactions in a single minute.
While the stock market has razor-thin margins where fractions of a penny are made in each transaction, Magic corrects itself far more slowly. While it’s true that [card]Mesmeric Orb[/card] can climb from a bulk rare to $4 in less than a day, that’s still much slower than the “real world economy.” Every single store and dealer doesn’t update its prices by the hour, so there are definitely opportunities to be taken advantage of.
Maybe a vendor on TCGplayer has a $40 card listed for $25 (whether to rapidly increase his store level, or due to a mispricing, or any other reason). At the same time, a buylist might be offering to buy the same card for $30 cash. If we account for packaging and shipping, we’re still likely ahead for a couple dollars if we act fast enough. Now, is that honestly worth the initial money and effort? That’s up to you. There’s also the possibility that the buylist updates while you’re waiting for your purchase to come in the mail, and now you don’t have an immediate out for $30. Whoops.
Many other websites and authors have called this method “free money” in the past, and I’ve never been a fan of that analogy. It’s not free if you have an initial investment cost, and you’re still taking multiple risks along the way. For all we know, our buyer could just refuse our sale.
Where to Look?
I’m assuming you’ve realized this by now, but arbitrage is not exactly the secret golden goose of Magic finance. This isn’t like buying a collection where you can easily make a 200-percent profit when you’re finished. As a matter of fact, solid arbitrage opportunities are probably more rare than collections. You don’t want to spend all day scouring TCGplayer for every single card and checking it up against every single buylist. Thankfully, our friends at MTGprice.com have released a tool (still in beta) that can help with your search for “free money,” as some people call it: the arbitrage tool.
If you’re already in the habit of checking the MTG interests every day, adding one more webpage to the routine can’t hurt. Even if there aren’t any amazing buy-in opportunities, this page shows how absurd some buylist prices actually are. StrikeZoneOnline, for example, is buying foil [card]Breeding Pool[/card] right now for higher than retail! I know where I’m dumping my copies at Jersey this coming weekend.
If you have a Quiet Speculation Insider subscription, you can sort lists of entire sets on MTG.gg by the spread (the spread is the difference between the lowest sell price, and the highest buy price). If a card has a negative spread, then there should be red lights going off in your head that there’s an arbitrage opportunity. Just click on “lists,” pick your set in the dropbox, hit “View Edition,” and then click the “s%” column. Any negative spreads will jump to the top of the list, which can also be a great help while sorting through bulk.
Unfortunately, there’s still a lag in the time it takes for the card to arrive. Like we went over in our initial example, the price could have changed in the few days it took to be shipped. Thankfully, this is much less of an issue when on site at a Grand Prix. I think I’ve previously told the story in this column of when I bought eight copies of [card]Chromanticore[/card] from one vendor for $1 each, then walked across the hall and got $12 for all of them from a different dealer. Zero lag time, and minimal effort required. If you see one vendor advertising an absurd cash offer on a card and you don’t have any, it might pay (literally) to take a walk around the cases and see if someone else is selling the card for lower than the first store’s buy price.
Often, the cards with the highest buylist prices will be the ones that haven’t been touched in ages, and nobody has bothered to update. Sometimes a store already has a buyer lined up for a very particular EDH foil, and they’re willing to offer retail or higher to get the card in stock, because they know their loyal customer will pay even more than that to get their hands on it.
If you look at the MTG Price arbitrage page, you’ll see (at least if you’re reading this on the week of the article’s release) that a large majority of the cards with an absurdly high buylist price are EDH foils that StrikeZoneOnline is willing to pay ridiculous amounts of money for. (Quick aside on StrikezoneOnline: Do not mail your cards to their buylist, even if you have a nice arbitrage opportunity. They will grade cards extremely harshly if you’re not there in front of them, and they will flat-out refuse any card that is not “NM” in their eyes, sending it back and charging you for the shipping. On the other hand, they’re a great store to sell to in person at events.) Often times, these are the cards that you can make an offer to if you find the correct store. If the dealer you’re talking to enjoys having new EDH foils that he’s currently out of stock of, don’t be afraid to create an arbitrage opportunity out of nothing.
Bulk rares can have an oddly low spread as well. If you can be the guy in your local area who buys them at $.10 apiece, you can find the strangest bulk rares with a buylist price of $.17-$.20. ABUgames and AdventuresOn seem to practice this the most, and I’m not sure why. If you were planning on shipping a buylist to a store anyway, there’s no harm in getting a few extra dimes for a few seconds of work. I’m ok with getting $.27 for each of my [card]Myr Battlesphere[/card]s, and so should you be.
Hopefully I was able to teach you a little about the concept of arbitrage, and how you can use it to your advantage. You won’t make a fortune by being the quick middleman between two parties, but it’s easy money (not free money!) if you know where to look, and what tools to use. If you were left hanging with any questions, comments or concerns, feel free to let me know! I’m also looking for topics to write about for next week, because the week after that will be my return from New Jersey. Thanks for reading!
Last-Minute Interesting Things
[card]Chord of Calling[/card] has dropped down to about $5, even though it’s from M15. I don’t see how it can go lower, and I like this as a long-term pickup going forward. Nobody’s opening up any M15, and it’s poised to spike if it sees increased play in Standard.
[card]Mishra’s Bauble[/card] is a $3 uncommon. Did you know that? I didn’t know that. Buylist them if you have them, because you can put that money towards things that aren’t this card.
These are your last couple of days to buylist some of the commons and uncommons that are reprinted in the Commander 2014 decks for maximum value before the decks start being cracked. The green deck is absolutely full of casual elves like [card]Imperious Perfect[/card] and the black deck has [card]Dread Return[/card]. Get rid of them while you can.
One comment on “Conjured Currency #38: Finance 101, Arbitrage”
This is something a lot of people miss out on. Sometimes it’s obvious, sometimes it’s not. I’ll share two stories from the same GP.
GP Vancouver – 2014
Story 1) I bought all the Cavern of Souls and Inkmoth Nexuses from all but 1 vendor because the last one was buying Cavern at 12 and Inkmoth at 7$. I bought the caverns at 10$ each and the inkmoths at 6 or 6.50$ each (different from different vendors)
Story 2) Rageblood Shaman was going crazy at the time with minotaur speculation. One store was buying for .50$ BUT the relevant part here was they were offering 1$ in trade for the card.
The second one I missed out on and traded them approx 12-15 ragebloods before realizing there was arbitrage to be had by trading in the ragebloods for trade, using that to buy deathrites (10$) and then selling those deathrites to another store for 7$.
So 10 ragebloods would have gotten me 7$ cash if I did that vs 5$.
I honestly think this is one reason that stores don’t like to provide buylists. All I did was walk in early on friday, get a buylist from every store that would give me one, go over them and then see what I could find.