The Big Things - Arabian Nights Speculation

Keeping track of subtle trends can be difficult, especially when viewed against a backdrop of a noisy market. But for those of us willing to refresh our Interest pages a little more than just every now-and-again, it can reveal some interesting opportunities.

I mention this because, beyond the ever-increasing excitement accompanying Magic’s newer releases, it seems something else has been quietly growing in the background: a new wave of speculation in Arabian Nights.

Speculation vs Investment

First off, let’s get a distinction between speculation and investment out of the way, because this will prove to be a very important difference to understand as we move forward. The primary, if a bit rough, difference between these two comes down to how each handles the question of risk. While investment opportunities are certainly concerned with asset growth – it’s how they make profit, after all – this is really a secondary goal, with the primary goal being wealth conservation. Investments ask the question “How much money can I lose?” before asking “How much money can I make?”

Speculation, on the other hand, focuses more on the growth side of the equation than the conservation aspect. Risk tolerances are heavier, as is the involvement of price volatility. This is frequently afforded by a lower buy-in; a house is an investment, but a sane person wouldn’t bet the barn speculating. Crucially, this means that instances of market volatility due to speculation are often episodic, rather than long-term shifts, as the demand (and supporting capital) necessary to create an increasing price floor for speculative assets diminishes rapidly with time.

Condition Dependency

Alright, with the speculation vs investment breakdown out of the way, now it’s time to talk about another core aspect of Arabian Nights: the role of card condition in pricing old cards.

Card condition is a tricky matter, especially because it barely matters for most cards but is absurdly important for others. Now, a good chunk of this section is going to be a bit of elaboration and repetition from my very first article for MTGStocks, so if you want to do some extra reading, here is an excellent opportunity to refresh on how vintage Magic is priced.

In short, card condition for older cards (primarily anything from before the year 2000) is reflective of rarity. Nowadays, we have foil, nonfoil, borderless, extended art, etc., but for older Magic cards the only applicable modifier (up until Urza's Legacy introduced foils in 1999) is condition. Couple that with the natural attrition rate of trading cards, and suddenly the most common version of highly desirable cards from the early days of Magic are those with visible wear and tear, cards which saw plenty of unsleeved kitchen table play, and the like. The result? A high price disparity between the rare, unplayed cards and the comparatively common played cards.

This discrepancy varies from set to set, of course, due to it often being highly exaggerated by the age of the set and the scarcity of the print run, both of which play a heavy role in the current price disparities across Arabian Nights cards. Looking at nearly any listing on TCGPlayer will present you with the nearly identical phenomenon: a near doubling of a card’s value between near mind and moderately played listings, as well as a significant crowding of the marketplace with worn and damaged cards. What this means is that the actual value of an Arabian Nights card isn’t that of its near mint copies, but rather is better reflected in the sold listings of cards with a little bit of wear on them. Not damaged, to be sure, but the double or triple multiplier seen on most cards is more akin to that of foil multiplier than it is representative of the base allure of the card itself.

The Arabian Nights Case

We talked about asset management strategies and wear designations, but what does this all have to do with the Interests page over the course of the past two months? Well, in between the volatile swings of Magic’s newest cards a small pattern has emerged; nearly every week, it seems, a handful of the cheaper Arabian Nights cards have been appearing in both the weekly and daily gainers sections, while the heavier hitters (Bazaar of Baghdad, Library of Alexandria, etc.) have continued their decline alongside that of the rest of the vintage market.

This split between which cards pop up where is indicative of a speculative run, as opposed to a natural growth. As I mentioned earlier, speculative moments tend to be exactly that – moments. Rather than seeing a sustained interest in any particular card, the Interests page each week seems to be more so reflective of sudden “pops” across the cheaper cards, with one after another attracting brief interest only for the spotlight to suddenly shift to another card. Meanwhile, anything with sustained behavior is trending downwards, as is expected given the broader weakness in Magic singles.

Importantly, however, this doesn’t have the characteristics of a buyout. We aren’t seeing cards like Bird Maiden (Light) suddenly spike to 100+ dollars a card, but rather we are seeing incremental growth spurts in the 10%-15% range. Episodic and speculative, yes, but not a full-scale run. Looking at the price data on TCGPlayer, we can see that part of the cause for this is pressure from the bottom-up such that less of the typically worn copies of cards are available, allowing for the less damaged (and more expensive) copies of cards to exert a heavier sway on the overall price of cards.

Wrap Up

So what do we take away from this? Well, the market certainly hasn’t turned green yet for vintage Magic cards, that much is for sure. But that doesn’t mean no one is looking at the old stuff. Rather, there seems to be – at least, for the time being – a growing interest in picking up some of the cheapest old cards while people can. It’s a buyer’s market, and you don’t have to be an investor to pick out a good deal.

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