“MTG Finance” is a popular niche investment community. Basically, participants invest in individual Magic: the Gathering cards, particularly cards on the reserve list. These cards have proven to be reliable forms of investment over the years, some even qualifying an exceptionally good investments. Yet I’ll never invest in Magic cards. Here’s why.
- Magic cards can be lost or destroyed easily. This means that an investor must spend additional time, money, and energy into the safe storage and transportation of their collection. Fires, theft, water damage, etc. Theft is particularly significant because many deals occur at conventions, where there is no shortage of potential thieves roaming around. Expect to be enslaved to your collection the entire time.
- Magic cards can be counterfeited. This means additional time, money, and energy must go towards grading and inspecting cards before a big sale.
- Magic cards have no inherent value. At the end of the day, they are pieces of paper. While Wizards of the Coast does maintain a reserved list, and cards on these list tend to only increase in value over time, WOTC cannot reserve the value of the Magic hobby as a whole. Yes, Magic has done fantastic up to this point, but I am not optimistic about Magic’s future in twenty years, and I would prefer an investment vehicle that has long-term potential.
As you can tell, my biggest problem with Magic investing is the hassle involved. What would encourage me to invest in Magic cards is if a mutual fund or investment trust tracked the entire reserve list, but based on my limited knowledge of mutual funds, it appears that this would involve too much regulation and the fees would be exorbitant.
If you enjoy MTG finance, more power to you. I think its a fine hobby, but a poor choice of investment. As for serious investing, I’m a believer in passive investing, not an active investing, since its ultimately just another job. And why work another job? Indeed, if you look at big names in MTG finance like Rudy of Alpha Investments, its clear that he has dedicated his entire career to MTG finance. He is the most active investor imaginably. Most of his waking hours are dedicated to MTG finance.
As for me, I’m a believer in index funds. If you want to see my investment strategy, visit here.