The first item on my fearless personal inventory (discussed in my last article) is bad money management. If you are into the financial end of Magic in any way, shape, or form, bad money management should be at the top of your list as well. For most people, myself included, it is something that you learn the hard way. Unfortunately, money management mistakes will always cost you, but unlike play mistakes, these ones hits your wallet. After losing almost my entire collection to bad buying and selling, I think I’m pretty qualified to offer warnings in this department. I hope that some of you can learn from my mistakes. Let’s get right down to it.
I won’t be able to cover every issue and would be more than happy to answer any individual issues that you may have. Today, we are just going to start with five. There are many more that could be covered, but these are my biggest five that have hindered my personal growth in MTG finance. If there is something you would like covered you can always comment with it or tweet it to me @CalebGothberg
It is very easy to buy too much, too fast. Starting out, I sold most of my collection and used that money to start buying. I bought every card that someone would sell me. The first time that someone tried to sell me a collection it almost ruined me. My friend, let’s call him Richard, messaged me to let me know that he was looking to liquidate everything that he owned except his decks. Richard had other priorities in his life that he felt (and justifiably so) were more important than having a Magic collection. I was in deep enough that I had to visit a local dealer to turn cardboard to cash. Most of the things that had to be sold were on the way up. Because I needed the money so fast I had absolutely zero walk-away power. I made about $300 on the collection but probably lost that much in selling what I had. If I wasn’t buying every card someone would sell me, I wouldn’t have had a problem buying that collection.
It is also very possible to underspend. The only way you can make money in Magic is by keeping everything on both ends moving. Finding buying opportunities can be hit and miss. I hit one of those patches very recently. I had a month where I only bought about $200 worth of cards. Guess how much profit I made in that month? Absolutely none. Finally, I had enough and started scouring Craigslist for collections being sold. Just about every single one of those collections were listed for way too much to make enough any profit. I finally found some old posts that hadn’t been removed yet. After meeting with a few of them and trying to make it fair for both sides, a good opportunity finally popped up. He had been trying to sell his collection for quite some time and understood that he wasn’t going to get full price on his cards. The negotiations didn’t go quite as well as I would normally like, but we came to a reasonable point where we could both get what we needed. I had to grind more than I usually like to with a collection, but turned a decent enough profit to justify buying. In the end it was better than not making anything for the month.
There are many ways to go about buying Magic cards. My personal favorite is just working with people I have met through personal networking. They know what I do and understand that we can find something that will accomplish what we are both looking for. When I am in a bind, I will look to places like Craigslist or local trade groups. eBay is another good option that some people use as their primary source of card flow.
One of the worst things to a speculator can do is buy a card that has already spiked. Whether it is by misinformation or emotional attachment, it can happen to anyone. For me, this card was [card]Wolfir Silverheart[/card]. I went too far into this card too late. I started buying in at around five dollars. I was into the hype enough at the time that I didn’t realize that it was on a permanent downturn. I held onto all 55 of my copies until rotation hit. I was sure it would see more play despite what the community thought of it. I ended up buylisting them for around fifty eight cents a piece for a net loss of $243.10. Had I not gotten emotionally wrapped up with the card I could have saved myself a couple hundred dollars.
The easiest way to avoid this type of situation is to be involved in the MTG finance community and pay attention to the appropriate forums. Other people with lots of experience are online all the time and are happy to help you out. When doing this, you need to keep in mind who the information is coming from. If the advice is from someone unknown that replied to your Reddit post and it contradicts what @JasonEAlt is saying on his Twitter account, it’s best to side with Jason’s experience. Twitter is a huge resource that I believe is incredibly underutilized. I am not always as active on posting as I should be, but I look at #mtgfinance all the time, as well as Trusted tweets from experienced financiers. If nothing else, you can always just listen to a certain financial podcast that will help you out when it comes to speculating. No matter how you slice it, research is almost always the key.
Have you ever been sitting on a card so long that it almost demands selling? It hasn’t moved from where you bought it so you aren’t losing anything anyway and you would like to have the money for other things. I find myself in this boat way more often than I would like to. Part of this is due to the fact that I have more buying opportunities than I have cash. The other part is I have severe ADD and have a hard time sitting on cards for any period of time. Recently it was [card]Blood Baron of Vizkopa[/card]. I bought into this card in late July and decided to dump them in September. It didn’t appear to have much upward movement being generated and I was starting to get a little skittish about it. I got back what I put into them but then a month later, it finally spiked as I had anticipated. I needed something a little more exciting and lost the chance of doubling my money on this card. It was a solid bet that everyone in the community seemed to be behind. But how do you know when something like this is going to happen?
You can never have 100% certainty in life, but you can get close. Research is usually your key in these situations as well. There will be some cards that will always be a safe bet and all you need is to pay attention to what trusted people are saying. Usually the Brainstorm Brewery podcast provides some pretty sound knowledge on the subject. If you pay attention to the podcast you can already have a leg up on figuring out what’s low and what’s high. There are also sites out there, both free and subscription-based, that have a wealth of information to share with you. In the age of the internet, there are plenty of places to look for this information.
Mixing Personal and Magic Finances
One of the biggest struggles that I have is how much money to put into Magic and how much to take out. For myself, I feel like the less that these two mix, the better. My next article will be on this subject. For now, if you can keep your personal finances separate, you will find yourself much happier. You never want to put yourself in a situation where your hobby starts to affect your day to day living. That is all that I will say on the subject for now.
Stay tuned to Brainstorm Brewery for other articles that can help you avoid pitfalls that I haven’t covered yet. As always, welcome to the grind.
How do you keep Magic and personal finances straight and what advice would you give to a novice brewist?