Modern Times - Common Value, Private Value, and the Nine
Hello everyone! My last article covered what I believed to be the most playable Modern cards from
However, something very interesting has arisen in the market that I think is worthy of discussion. Or should I say, there are nine of the same things that are moving in the market, worthy of discussion?
Is
Common Value Versus Private Value
This idea of common versus private value is important to today’s discussion, so it’s only appropriate to start off with some handy definitions:
Common Value: the value assigned to an object that is the same across all bidders or market participants
Private Value: the value assigned by an individual participant in the bidding process that is not necessarily the same across all bidders or market participants
Here’s an illustrative example of the difference between common and private value. Pretend that you just went to an auction for an original art print of Christopher Rush’s famed
The question becomes, is the appropriate market value of a Black Lotus art print $1,100 or is it simply reflective of how much you value the print? How do we disentangle the common value of a Black Lotus print from its private value? Simple. If you recall our scenario, your $1,100 winning bid got you both a Black Lotus art print and a $100 bill. You can always take that $100 bill and put it in your pocket, and then go back to the marketplace and attempt to resell the art print at a later date. The $100 you pocketed is the common value of the asset in question while the $1,100 you paid is the private value of the asset.
Back to Reality
In reality, artwork and Magic cards don’t have dollar bills stapled to them, but we can measure common value in a fairly convenient way. For homogenous goods, the difference between its most expensive variation and its least expensive variation is reflective of the common value. To bring things full circle, the cheapest of the nine Nazgul is
Obviously, a Nazgul is a Nazgul regardless of what artwork it has. But if that’s the case, why are there non-trivial differences in the prices of each variation, and how can we speculate on Magic cards in a similar boat (think
Now, the differences between that minimum and the actual prices reflect the private (or market) value of the Nazgul because of variations in the artwork. The willingness to pay for a Nazgul 332 is $7 above the common value, but $11 for 338. The catch is that not everyone is willing to pay $11 or $15 for Nazgul, even if that’s what sellers are listing them at.
Private value is really difficult to speculate on (as any Magic finance article will tell you), as the market is difficult to predict and has many moving parts that determine the value of a given card ranging from playability to collectibility and everything in-between. However, cards that have heterogeneity in form, but homogeneity in function make calculating common value possible, and aid in financial speculation, as a means of hedging your bets.
Returning to the Nazgul
So the million dollar question is, should one invest in Nazgul? And if so, does it matter which artwork one invests in? Going by our calculations earlier, a Nazgul, regardless of its printing, has a common value of $4. The market will always buy a Nazgul at that price. In a sense, that is your hedge.
So, let’s say you buy 100 of Nazgul 332 for $1,100 ($11 x 100 = $1,100). Your hope is that over time, its market value or private value in the eyes of collectors increases such that you can make a profitable return on your investment. Of course, if your speculation goes haywire, and you find yourself in need of liquidating your position, you can always recoup $400 ($4 x 100 = $400) in common value, making your real losses $700 (-$1,100 + $400 = -$700).
But consider this. If the common value of Nazgul increases to $6, in our scenario, your $1,100 investment can be hedged by $600 ($6 x 100 = $600) in common value, reducing your potential losses to only $500 (-$1,100 + $600 = -$500).
A convenient feature of speculating along the lines of private versus common value is that you don’t need to care about which artwork you buy, rather you need only care about the difference between the most expensive variation and the cheapest variation. As you can see from the simple math above, there are only a few things that affect your return in this environment: your buy-in point, your selling point, and the common value wedge.
Realistically, as buyers and sellers, we often have to take the prices of our cards as given, leaving loss calculations hard to predict over long periods of time. However, we can always calculate our hedge or the “common” value of our investments, so long as there are multiple variants of the card in circulation. This goes for showcase versus non-showcase frames, extended versus normal art, and even foil versus non-foil cards.
Concluding Thoughts
The Nazgul are not unlike
The in-set variation of their artwork is a feature that none of the aforementioned cards above have going for them. While some Secret Lair bonus cards exist for Shadowborn Apostle and Persistent Petitioners, their print run is so small, and there are so few in the market, that they are more like novelties than a high-volume speculatory item.
The presence of the Nazgul is already being felt brew-after-brew for Commander in decks playing the
| Nazgul (0335) | ||
| Nazgul (0100) | ||
| Nazgul (0332) | ||
| Nazgul (0333) | ||
| Nazgul (0334) | ||
| Nazgul (0336) | ||
| Nazgul (0337) | ||
| Nazgul (0338) | ||
| Nazgul (0339) |
Check out these other articles:
How I Read a Top Commander Page (And So Can You!) by Jason Alt
Where Are They Now? - June 2023 by Ryan Cole
History, Restapled - Walkers This Way by Steve Heisler
Corey Williams is an Assistant Professor of Economics at Shippensburg University in Shippensburg, Pennsylvania. He considers himself a macroeconometrician with his research body reflecting work in applied macroeconomics and econometrics. Corey is an L1 Judge who started playing Magic around Eighth Edition. He enjoys Modern, Commander, cEDH, and cube drafting. Outside of Magic, he loves running, teaching, and the occasional cult movie.
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