“William has already made us $15k. Cool, you want me to break something else?”
“Do you think it will work? It would take a miracle.”
“When will then be now? Soon!”
Timing is everything in investing. The difference between making 100% and losing 50% can be as little as 24 hours. Being in the right place at the right time can mean selling an Elspeth for $40 because the tournament is starting in 20 minutes.
Marcel is involved in MTG finance mainly on MTGO. This gives him some extra benefits because he can buy and sell quickly. However, he is also limited because he can’t click over to TCGplayer and buy 30 copies of a near-mint mythic. Jason is able to flip his wares quickly, too, but because he buys and sell at events. Jason also runs his MTG business so that he can be in tune with what his potential clients will want. This is necessary in order to not be sitting on a stack of worthless cardboard at rotation. Profit per trade means more trades (or volume) is key.
This first round, we will compare Marcel and Jason from the period starting November 1, 2012, going through April 30th, 2012. During this time, each individual made a different number of calls. As before, 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 you are spazzing about the math here please read Investing 201). Then we’ll divide the profits by the number of trades.
Let’s start with the short-term results:
Marcel’s average return 30 days after his calls:
8.4% profit per trade
Jason’s average return 30 days after his calls:
27.6% profit per trade
Based on these short-term results, you might think that Marcel should stick to smooth jazz radio stations. But don’t turn on the Kenny G just yet. Marcel’s picks are meant for longer terms and are low-risk specs. This way, he doesn’t have to micromanage his portfolio. Jason, on the other hand, pays the bills on turning cards quickly. Making 27.6% on one’s investments per month will pay a lot of bills.
Despite a large variance in returns, they actually have similar prediction ratios:
Marcel correctly called the direction of a cards price 37.5% of the time.
Jason correctly predicted the direction of a card price 40% of the time.
Here are some examples of buy recommendations to show why the returns are so different (all price changes are the prices 30 days after the call):
[card]Birthing Pod[/card] (MTGO): $2 –> $4. (100% profit)
[card]Underworld Connections[/card] (MTGO): $0.40 –> $0.40 (0% profit)
[card]Lilliana of the Veil[/card] (MTGO): $35 –> $40. (14% profit)
[card]Invisible Stalker[/card]: price $1.50 –> $3.50 (133% profit)
[card]Spellskite[/card]: $3.50 –> $10.00 (185.71% profits)
[card]Obzedat, Ghost Council[/card]: $25.00 –> $15.00 (-40% losses)
So far, Jason’s short-term business approach for his calls is beating Marcel’s slow-and-steady approach. Lets take at look at the percentages at rotation. Remember that we are looking at a period starting in November 2012 to April 2013, so all picks were at least six months old upon the release of Theros.
Marcel’s returns on picks through rotation:
79% profit per trade.
Correct buy/sell calls: 56.25% of the time
Jason’s returns on picks through rotation:
1.6% profit per trade
Correct buy/sell calls: 36% of the time
Wait, what? What happened?
A very high 78% of Jason’s picks peaked shortly after he called them, but they all dropped by rotation. Marcel’s picks, on the other hand, rose steadily. He did hit 500% profit on his [card]Counterflux[/card] call (starting price of $0.05), but even if we remove that one, he still earned an average of 48.7% per trade.
Here are some examples of cards Marcel and Jason called, their prices 30 days later, and their prices at rotation.
[card]Craterhoof Behemoth[/card] (sell recommendation): price, $18 –> 30 days later, $12 (33% value preserved) –> price at rotation, $5 (72% value saved).
[card]Liliana of the Veil[/card] (buy recommendation): price, $35 –> price at rotation, $55 (57% profit).
[card]Mutilate [/card] (buy recommendation): price, $2 –> 30 days later, $3 –> price at rotation, $4 (100% profit).
[card]Invisible Stalker[/card] (buy recommendation): price, $1.50 –> 30 days later, $3.50 (133% profit) –> at rotation, $1 (-33% loss).
[card]Rhox Faithmender[/card] (buy recommendation): price, $1 –> 30 days later, $3.50 (250% profit) –> at rotation, $0.50 (50% loss).
[card]Chalice of the Void[/card] (buy recommendation): price, $9 –> 30 days later, $10 (11% profits) –> at rotation, $4 (-55% loss).
Marcel is a classic Alex-profile investor. His picks seem to favor low-risk, long-term growth. Though he makes fewer sell calls, he’s a buy-and-hold investor, not a buy-and-forget guy. Jason, on he other hand, is almost single-handedly building the Gordon psychographic from scratch. If you want to flip short-term specs, Jason seems to have it down. His picks turn fast, so “leave the last 10% for the next guy.” While an Alex type will advise you with less risk and more upside, a Gordon will get bored waiting for results.
Join me next time when we watch two more Brew Crew members face off!
2 comments on Investing 203: Marcel vs. Jason, Round 1
Spellskite used to be $3.50? Good lord. I called it correctly and still feel like I did it wrong. I wish I could go back and buy all of them…
lol @ that bio…
Good article though!