For me, investing is Capitalism at its finest.  Capitalism to some has a negative meaning, but in my life it has served as a positive foundation to my business and how I invest daily.  In order to understand why capitalism is important you should ask yourself, is the money you make at your job make you more money?  What if the money you invested could allow you to enjoy other passions in your life?

For most people, living pay check to pay check is a normal part of life.  Savings usually gets spent on entertainment, travel or life necessities.  In the area of entertainment, Magic is a pure luxury.  It is not needed to live, and if it came down to it, we would sell everything we had to survive.

Assuming your personal finances are stable (I will not examine the importance of establishing your personal financial plan versus investing in Magic in this article), Let’s dig deeper to why Magic is one of the most powerful investment vehicles to hedge against inflation and diversify your investment portfolio, versus the traditional 401k, IRA or ROTH IRA.

Daniel Chang: Top 5 Reasons why investing in {Vintage} Magic will outperform traditional Investments

#5 = The Game

If you are going to be an investor, you need to believe the company or game (in this case) has a stable balance sheet and positive growth in the future.  Another factor to consider is if the game or company continues to innovate and reinvent its products even when there are competitors in the same market.

If you look at the player growth alone, the statistics are staggering.  With double digit annual growth and a player base of 10 million to 20 million worldwide (depending on the source), Magic has trumped Pokémon, World of Warcraft, Yu Gi Oh, and pretty much any other game we all grew up with.

Reports from major financial companies have shown that Hasbro (HAS), Wizards of the Coast (WOTC) parent company growth has primarily been attributed to Magic alone.  Scary right?  Magic being the main growth engine for a multi-billion dollar company?

#4 = Diversified MTG Investments

What is Diversified Intra-Investments?  It is a fancy way of saying multiple vehicles to make money.  Think of it this way – when you travel, what can you do to enhance your experience?  The possibilities are endless – from fancy dinners, room service, upgraded rooms, butler service, mini bars, massage & spa services, it goes on and on.

Magic is the same way when it comes to investing.  The traditional investing model for Magic is buying a booster box or pack and acquiring singles to put in your binder and deck.  Did you know you could get your cards signed?  How about altered?  How about graded?  What about investing in original artwork & sketches?

If you think of different investments in Magic, you will discover new patterns and profit centers for your portfolio.  This is also the foundation for #2 = Robust Secondary & Tertiary Marketplace.  In the traditional investing world, it is taking more risks than a traditional blue-chip Dow 30 company such as General Electric (GE).  By exploring other areas to invest, your portfolio has the opportunity to realize gains beyond safer bets.

#3 = International Growth

Magic can be found in over 70 different countries in nearly every language, you can be in anywhere in the world and duel against someone.  In business, a company that has managed to extend and begin to saturate markets internationally minimizes risk.  Why?  When the company has income sources from various parts of the world, even if one economy is challenged, other countries could be growing.

International growth for Magic will only expand.  With more and more tournaments and local shops being added monthly comes more accessibility and exposure to Magic. As a result, more products will be purchased which equates to more revenue and profits.

#2 = Robust Secondary Marketplace & Tertiary Marketplace

With any investment you have to have buyers and sellers for the investment.  The stock exchange is a perfect example of buyers and sellers as at any time you wish to sell your 500 shares of Facebook (FB), you can do so using any type of stock trading platform.  Companies such as Scottrade, E-Trade, TD-Ameritrade, Fidelity and many others provide tools for you to sell, buy or research companies at a click of a button.

The marketplace for Magic is huge.  In fact, what makes it even more special than the major secondary platforms such as eBay or Amazon is that tertiary marketplaces have developed. An example of this development is the Facebook groups like the MTG Art Exchange.

Where you will find daily MTG art that is for sale or on auction?  There are auctions on Facebook?  Yes, social media auctions are widely successful, check out Terese Nielsen’s Judge FOIL PROMO Full-Art Lands Original Artwork Auction. This beautiful piece of art was sold through the Vintage Magic Facebook Auction Group for a record $13,100 – the highest Terese Nielsen artwork piece sold publicly.

{https://www.facebook.com/groups/VintageMagicAuctions/}

With so many avenues to sell or buy Magic: The Gathering art, cards and rarities, this is my #2 pick for the reason of liquidity as an investor.  At any point, if I need to sell my collection, I can do so via multiple avenues.

#1 = The “X” Factor

The #1 reason why Magic will outperform most traditional investment index is the “X” Factor.  What is the “X” Factor?  The “X” Factor can be broken down as 3 sub-categories – Nostalgia, Collectability and Pop Culture.

Nostalgia – For newer players, it could be meeting an artist and purchasing some prints or artist proofs.  For Vintage Players, it is creating an Old School Magic Deck from the Vintage eras of Magic (1993 – 1996).  It doesn’t matter if you’re a collector, investor, or player lying in the end of the bookends (Vintage to Modern) or anywhere in the middle, nostalgia is a driving force to why the growth of Magic will continue to accelerate to new heights.  Consider this – if the player base in the early days of Magic is only 1/100 of the current player base, imagine the amount of collectors/players who will invest in Magic as they grow in their careers and rise in financial status?  Assuming this scenario, let’s look at some simple math – 100,000 players in the early days of Magic, and today there are 10,000,000, and the lifetime spending of a player is $1,000 (which is a very conservative figure), the math is quite staggering.

Collectability – Out of the all the “X” Factors, this one is probably the most relative one.  When you talk about collectibles, Magic: The Gathering is just that.  It was the first Collectible Card Game (CCG) that became an actual hit.  Magic rarities have gone to new heights, reaching sales surpassing comic books, and sports cards.  What are some of the highest sales?  BGS 10 Beta Black Lotus sold in 2013 for $50,000, another BGS/JSA 9.5/10 Alpha Black Lotus sold in 2014 for $50,000 and a market evaluation of the Only BGS 10 Alpha Black Lotus of $100,000++

Collectors have spoken when it comes to paying top dollar for Magic: The Gathering Art, here are some pieces sold by the Vintage Magic Gallery – Black Lotus (2013) = $200,000, Wrath of God (2014) = $80,000, and Plateau (2014) = $92,500.

While these prices seem astronomical to the average investor, to the Magic’s Elite collectors, these prices represent the strength of the market’s most historic pieces.  Like any industry, the true “One of a Kind” pieces command premiums above traditional cards or collectibles.  Magic has come a long way from $7.95 Starter decks to $50k Black Lotus’.

Regardless, what level of collector you are, there is always another collector in another country with the same passion you have.  Combined with the statistics highlighted in the Nostalgia section above, the collectible future of Magic will continue to grow exponentially.

Pop Culture – Magic has come a long way in the world of Pop culture.  In the past Magic was known as the game for “geeks” or “nerds” in school.  Today, the geeks and nerds are the coolest people in school.  Gaming in our generation is more than just entertainment, it is a lifestyle.  It doesn’t matter if you’re playing Candy Crush or Words with Friends, gaming is cool.  Magic represents the highest echelon of gaming.  It is a hybrid of chess & poker.  Combined with the ability to play online or “live” at a local tournament or larger Grand Prix, Magic has risen and continues to rise to new heights.

Most recently, Grand Prix Las Vegas 2015 commanded over 10,000 attendees and fans from all over the world.  This event easily trumped the previous record, and it is guaranteed that future events will be bigger than ever.  Vintage Magic vended at this event and I have to say it felt like a Comic Con.  With over 30+ artists, and an incredible line up of side events, it was the most amazing event I have ever attended.

What does Batman, Iron Man, X-Men, Fantastic Four, and Transformers all have in common?  That’s right, they all have movies.  And as you may have known already, Magic: The Gathering has started production for a movie that you can bet will have a good chance of surpassing previous fantasy movie sales and attendance records.

          Magic Pop Culture has emerged as part of our daily life on all social media channels.  Check out this incredible Alpha Black Lotus from an Alpha Starter Deck Opening sponsored VintageMagic.com:

When is the last time you saw a Magic video with 4 million+ views?

How about live streaming of Magic tournaments and events?  Twitch is the easiest way to watch events and get the latest commentary from Magic professional players.

So why is pop culture important for investing?  Well, at first glance it doesn’t do anything but generate a lot of noise.  But it is the community of Magic and the reach of the brand that an investor should look at.  Is the game growing to potentially new gamers?  Will those gamers have easy access to learn to play, socialize, and most importantly share with their friends?

The “Factor as outlined in the three sub categories gets my #1 reason why Magic will beat traditional investing strategies.  But it really is all the factors listed here (and many other reasons that are too long to discuss in this article) that makes Magic more than just an incredible game – it is an investment. With the right information and execution, you can make some extra money, pay off your college tuition or like myself, create a business.

Thank you for taking the time read more about my introduction about Magic investing.  I will be posting a new article each month in regards to various topics of MTG collecting & investing.  Feel free to leave comments or thoughts of the article.  I will answer everyone.  Also, we are looking for your input on what some of the future topics should be – please feel free to comment or email me directly at daniel@vintagemagic.com

Happy collecting & investing,

Daniel Chang