The year? 2011.

The set? Innistrad. 

The person? Famous Hearthstone streamer and all-around handsome man Brian Kibler. 

The card? Daybreak Ranger

We were still two years away from Hearthstone's debut, and at the time, Brian Kibler was a professional Magic player and regular on what was then known as The SCG Open Series. He had a regular column on StarCityGames, where he wrote about the latest tech in competitive formats like Standard and Modern. This was in the pre-Arena era, remember, when the latest tech didn't just explode onto the scene like it does today. Back then, the best way to figure out where the metagame was going was by reading what the pros had to say. And no pro seemed quite so in love with a card as Brian Kibler was with Daybreak Ranger.

It began with a tweet (now lost to time, but recapped in a contemporary article of mine) where Brian cryptically revealed that he had purchased several hundred copies of an Innistrad bulk rare during the pre-order period. Then, on September 30th, the hammer dropped. Twin articles by Brian Kibler and Brad Nelson revealing their love for Daybreak Ranger on what was arguably the most popular Magic strategy site anywhere.

At the time, it was nearly unheard of for two top pros to write simultaneous articles extolling the competitive virtues of a bulk rare. Nearly every other time it happened, the card in question ended up being every bit as good as the pros said it was. Naturally, quite a few people (including me) read this article and then rushed out to pick up as many Daybreak Rangers as they could. They price wasn't quite bulk anymore, but it was still kicking around the $2 range. If the card hit $7 to $8, which seemed well within reach, it would be an easy flip. The price chart at the time looked like this:

See those middle columns? That was probably Brian, Brad, and their friends picking up copies. That second spike, on September 30th? Those are the folks who read their articles and decided to buy in. Incidentally, that column includes copies of Daybreak Ranger that I still own. Hi, Past Cassie! You're a girl!

Anyway, the price spiked pretty hard the next day, and I figured I was sitting pretty. I'd sell out as soon as it hit $8, perhaps keeping a set or two for myself just in case. I patted myself on the back, recommended the card to my readers, and waited for the money to flow in. 

And then this happened to Daybreak Ranger over the next few months:

Oh. Well, no matter. Let's see how Daybreak Ranger has done in the years since! After all, the card hasn't been reprinted in a decade, and maybe —

Ah. 

A spec dropping from $2 to $0.50 doesn't seem like the worst outcome in the world — play with penny stocks, and you'll get burned some amount of the time — but these sorts of spec buys are always about volume. Buying four copies of Daybreak Ranger won't do much, even if the card quadruples in price from $2 to $8, because you're really just talking about turning $8 into $32. That's just $24 in profit before you factor in platform fees, shipping, etc. Not a bad profit, but it won't buy you more than a lunch and a half at Chipotle. 

On the other hand, if you buy a hundred copies of Daybreak Ranger for $2 each with the goal of selling out at $8, you're talking about turning $200 into $800 — a $600 profit, minus platform fees and shipping. That's a solid week's pay for a lot of us, and it's why people are so drawn to speculating on Magic cards. When you're faced with a can't-miss spec like this one sure seemed to be, it's very tempting to bet the farm and try to make a meaningful amount of money. Goodness knows I did. 

Of course, even can't-miss specs will miss sometimes. I still have a few dozen Daybreak Rangers in a box in my closet somewhere, and Brian Kibler seems to have quite a few of his stash still kicking around — at least, he did as recently as June 26th of this year. It's far from the only card I've missed on, too. I've got loads of foil copies of Kozilek's Return from when that card was starting to make waves in Modern. I've got a stack of Naru Meha, Master Wizard. I've never met a Nivmagus Elemental I haven't spent too much money on. I've got piles of Archmage's Charm, and…okay, that one paid off. Point is: if you take risks  —and you need to, if you want to engage with the Magic card market at all — you are going to lose, and sometimes you'll lose big.

So. What do you do when a spec starts to go sideways? Is it better to sell out on the way down, or should you hold on and hope for a rebound? What are the telltale signs of a risky spec? Stick around, because we'll get to all of these questions and more in today's article.

Profiles in Risk

Before we can talk about how to handle our bad buys, we have to spend a few minutes chatting about why some speculative buys end up being so much riskier than others. My advice on what to do when a spec goes bad changes a lot depending on the risk profile of the card in question, so let's get a good grip on that before we talk strategy.

Whenever I talk about risk, I lean on terminology borrowed from the wide world of sports. See, whenever a sports team evaluates a draft prospect, they need to figure out how to communicate about that player's possible risk, as well as their superstar potential. The terms that caught on in that world are "floor" and "ceiling." A player with a high floor has a reasonably good shot to be a solid member of the team, while a player with a low floor is unlikely to make it to the big leagues at all. A player with a high ceiling has a shot at becoming an all-star player, while someone with a low ceiling is unlikely to ever develop into a superstar.

Why do we need both terms? Because some players have high floors and low ceilings, while others have low floors and high ceilings. A player with a high floor and a low ceiling has a strong shot at becoming an everyday contributor, but very little shot at ever being great. A high ceiling low floor player is unlikely to make it to the big leagues, but if they get there? Man, oh man, are they going to do some damage.

This terminology translates over to Magic pretty easily. A card with a high floor but a low ceiling is always going to be in demand, but it has very little chance of ever spiking too high. Think non-mythic Standard staples like Bonecrusher Giant, or eternal staples that have been reprinted dozens of times, like Lightning Bolt or Path to Exile. On the other hand, a low floor high ceiling card might have a shot at becoming a staple in both Commander and Modern, but they also might not ever see any play at all. Mox Amber is a pretty good example of a card like this that ended up paying off. Sanctum Weaver is a card like this that hasn't paid off — yet.

Another concept from sports evaluation that I've brought over to Magic finance is the idea that once you demonstrate a tool, you own it. In sports, this means that once a player does something impressive (hit 40 home runs in a season, say), then it's appropriate to evaluate them as though they are capable of repeating that feat — even if they haven't done it for a few years in a row. That doesn't mean they actually will, of course, but someone who has hit 40 home runs before is more likely to hit 40 home runs again than someone who has never done so even once. 

In Magic finance, this means that you should have more trust in cards that have dominated a format and/or spiked in price before than cards that have never done either — no matter how much potential they seem to have. I am far more bullish on reprints to eventually recover their value than I am on new cards to reach those lofty heights, for example. That doesn't mean it'll always happen — many cards are reprinted in quantities that make it all but impossible — but I have a lot more faith in cards that have already shown me what they've got than I do in cards that just got here.

We also have to talk about money. Cards with a higher upfront cost take on some amount of increased risk simply because you're putting more on the line. Losing $1,000 is worse than losing $100, and there's no amount of fancy math that can get around that. 

On the other hand, expensive cards tend to have higher floors than cheaper cards. This isn't always true, but it's a pretty solid rule of thumb in the absence of other evidence. Cards that are already expensive have shown some degree of demand already, while cheaper cards have not. Since past demand is a reasonable indicator of potential future demand, your expensive specs are less likely to end up hitting $0 than your cheap ones. 

It's also worth remembering that it's far easier to sell cards that are worth at least $3 or $4 than cards that are worth $2 or less. Expensive cards tend to have more demand, you'll lose less of your profit to shipping and fees, and there's less chance you'll have to dump your entire stock to a buylist. If your spec ends up being worth less than $2, chances are you'll be stuck outing them to some store's buylist for $0.20 each or something. This is part of what makes penny stock cards so risky: when you buy a card that's worth $2, it will cost you $2. When you sell a card that's worth $2, demand is usually so low that you'll end up having to buylist them for a fraction of that price. That makes speculating on cards in this price range a little bit riskier than it looks.

Lastly, it's important to consider that high velocity cards are a lot less risky than low velocity cards. What is velocity? It's my term for how quickly — or slowly — you can sell a card at the going market rate. High velocity cards have a lot of demand, and you can generally sell them very quickly, regardless of the price. Think Commander staples, Modern staples, chase mythics, etc. Low velocity cards can be worth a lot of money, but it might take a while to sell them. Older foils, niche Commander cards, obscure Reserved List cards, etc. 

Why does this matter? Because you can dump high velocity cards quickly if the market starts to dip. Low velocity cards can take forever to sell, so you might end up chasing the price down and down for weeks at a time without a sale. That doesn't mean you should never speculate on low velocity cards, but be aware that you might not be able to get out fast if everything goes sideways.

The Sunk Cost Fallacy

The Sunk Cost Fallacy is one of my favorite conversational topics. Even though it usually comes up in financial contexts like this one, it actually applies to everything in life. I can't tell you how many conversations I've had with folks who are figuring out their gender, sexuality, or even just the next step in their lives that have come down to Sunk Cost Fallacy thinking. Heck, I've been stuck in that trap myself many, many times.

What is The Sunk Cost Fallacy? It's a cognitive bias that basically boils down to: "people think too much about what they paid for something when they're trying to figure out what to do next." For example, imagine a Magic card that is currently worth $100 but is clearly trending down in price. People who paid $10 for this card are more likely to just sell it for $100, while people who paid $150 are more likely to hold onto the card in the hopes that it'll eventually rise in price again. 

In truth, what you paid for the card is completely irrelevant to whether you should sell the card now or not. You can make a reasonable case for selling or holding, but that case should only be based on where the price is likely to go from here — not what you paid or how much money you might lose. Buy costs are already "sunk" —  they're in the past, and you can't take them back. All that matters now is what's best going forward.

Of course, "investment" is a relative term. You can "invest" in a relationship, a job, a friendship, or even a gender presentation. Spend long enough doing something miserable, and it becomes paradoxically harder to give it up. After all, that would be admitting you made a mistake in the first place — better to keep your head down and hope things get better, right? In truth, we should always be thinking about the right decisions for our future, not simply to craft a narrative of our past that allows us to save face. Seriously: take it from a gal who knows.

Sell or Hold?

When you're stuck with a bad buy, you basically have three choices: sell everything now, hold everything until the price rebounds, or split the difference. 

The advantages to selling everything now? It protects you from future losses, and it allows you to re-invest your money in something else. Not only will you avoid riding your bust down to the bottom of the barrel, but you can take your losses and use them in a card that's on the rise.

When you think about it this way, it's easy to see that selling everything is usually a better move when a card still has a long way to fall. The more you have to lose, the more this advantage matters. For instance, if you're invested in an $80 card that appears to be dropping toward $20 due to a widely-available reprint, selling at $40 on the way down might net you an extra $20 per copy. On the other hand, if your spec has already reached rock bottom, that advantage disappears. Once that card has reached $20, for example, selling out is unlikely to protect you from any future losses. Instead, you're just choosing to cash out so that you can use your money on something else.

Speaking of re-investments, the second reason to sell your losses ASAP is going to vary a lot from person to person. Some people have thousands of excess dollars to invest, and those folks never really have to worry about finding available cash when a good spec comes up. The rest of you probably have a small fund that you use for speculative buys like this, and money being tied up in existing cards is preventing you from looking for the next big thing. 

It's important to have a realistic sense of your finances when you make these decisions. If putting a few hundred dollars' worth of cards in your closet for a year or two in order to wait for the price to rebound is unlikely to affect your ability to invest in the next big thing, holding onto cards becomes a lot more attractive. If you need that money to keep speculating, you should probably sell at a loss more often.

On the other hand, the big advantage of holding everything until the price rebounds is that most cards do eventually find their way back up. It can take years, but it usually does happen. As long as you're willing to be patient, you can turn most of your losses into gains. The advantage of doing this goes up the more disposable cash you have, but it also goes up if you're investing in Commander or Modern playables. Modern and Commander cards are far more likely to rebound than Standard staples, many of which will become irrelevant long before they have a chance to rebound. This was the problem with Daybreak Ranger — it wasn't good enough for Modern or Commander, and it only had a couple of years to find a home in Standard. Since it never quite got there, the card never ended up being worth more than bulk.

On the other hand, you have a card like Engineered Explosives:

Engineered Explosives was selling for close to $100 before its reprint in Ultimate Masters, and it dropped as low as $2.50 after being reprinted yet again in Double Masters. Selling out right after the Ultimate Masters reprint was announced would have been the best option — it had a long way to fall — but anyone who has managed to hold on since 2018 has finally been rewarded for their patience. Yes, you would have done a lot better selling at $20 and buying back in at $3, but the card is over $20 again and rising pretty fast. Cards this good often rebound eventually, even when it seems impossible. It probably won't hit $100 again, but it should hit its highest price since that initial reprint.

That brings us to our third and final option: splitting the difference. This seems like a cop out, but it's actually a pretty solid way to hedge your bets. By selling off some of your stock ASAP, you can recover a meaningful amount of your investment. By holding onto the rest of it, you can take advantage of the future market if your spec rebounds. It's not the sexiest answer, admittedly, but it's one I use a decent amount of the time — and now always by choice.

See, what often happens when you're trying to sell a card on a downward spiral is that you have to keep chasing the market lower and lower. You set your price, sell a few copies, and then the sales stop. If you want to keep the sales flowing, you have to keep racing to the bottom. What I often do is pick a price that I won't drop below, and I keep everything that doesn't sell higher than that figure. It's a compromise, but it works.

Wrapping Up

Now that we have a good base of knowledge to rest on, let's put it to use. I wanted to find some really interesting current case studies, but there aren't any cards in freefall right now. We're too far removed from the most recent set release, and since we're all waiting for Standard to rotate, the market is fairly stable right now. Plenty of cards are in periods of very slow decline, but that's not very useful for our purposes. Instead, let's use one current example and a couple of historical test cases. 

Let's start with Misty Rainforest's current status. Not the classic spec, I know, but with the fetchlands having just been reprinted and seemingly resistant to the immediate rebound that many of us were expecting, what should we do? 

Okay. So we know that Misty Rainforest has a high floor and a high ceiling — it won't drop below a certain amount because it sees a ton of play, and it has been worth $100+ before. It's high velocity, and it's a staple in both Modern and Commander. It also seems to be approaching something of a price floor; based on this chart, it doesn't look like it's still trending down.

The only reasons to sell now? If you think we're in danger of another immediate reprint, or if you need the cash to re-invest. Otherwise, I see nothing in this card's profile that tells me it won't rebound at some point over the next few years.

Since most of the other current examples I've found are fairly similar, let's move to a couple of historical test cases. Let's start with this card:

This chart belongs to a Standard mythic planeswalker. It started hot due to its color combination, dropped pretty hard at release, and then started seeing just enough play to cause the price to rebound. It didn't end up becoming part of the metagame, though, and it's not particularly great in Commander. It has an outside shot of Modern playability, but that potential is disappearing by the second. What do you do?

Based on what we know here, this card still has a high ceiling (Modern-playable planeswalker!) but it also has a very low floor — Standard-legal cards that don't see any play in Standard and aren't beloved in Commander are tough, tough sells. It appears to be a pretty low velocity card right now, though Standard-legal mythics always sell quicker than, say, random Reserved List specs. The card also looks like it still has further to fall, or at least doesn't appear to be done dropping. It's a planeswalker, so it probably won't ever drop below that scary $2 threshold, but the difference between a $7 planeswalker and a $3 planeswalker is pretty large. 

I can't say what I'd do about this card with any objectivity, of course, because I know its future trajectory and it is absolutely affecting my analysis here. My gut reaction is that I would likely split the difference here, keeping a handful of copies to take advantage of any potential future spikes while selling the rest of my copies as a hedge. As it turns out, however, selling out of this card entirely would have been the right call. This is what The Royal Scions' entire price chart looks like right now:

Yeah. Turns out, this card was not immune from dropping below $2 after all. You just had to be patient.

One more example? One more example. Take a look at this chart:

This card is very similar to the last one. It's a Standard-legal mythic, and it got hyped up big right before the set release, but it ended up not anchoring a tier one deck after all. In this case, however, the card did end up seeing enough play to stabilize the price at or near the $10 range. If it's dropping in price now, it's doing so quite slowly.

This card does see a little play in Modern, and it has more of a following in Commander, so it has a higher floor than The Royal Scions. It's also not currently in freefall, which is a pretty big change from that last chart. The ceiling is still "cornerstone mythic in the best deck in Standard," too, since it showed that "skill" to us on release week. In this case, then, you can make a stronger case for holding. Unless you need the money right now, it doesn't seem like there's much disadvantage in playing the waiting game.

Did it pay off? I'd say so! Here's the full chart for Thassa, Deep-Dwelling:

Thassa did end up dropping off another $1 or so from where I cut this chart off, but it rebounded later on once it saw more play. It's still selling for more than the $10 you could have gotten for it if you'd bailed back when it looked like a bust. Persistence doesn't always pay off, but sometimes it does.

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