Alpha Investments

https://www.patreon.com/AlphaInvestments/posts
https://www.youtube.com/ - Alpha Investments

............seriously?

Seriously...

I found this content creator about 4 months after he started posting?  I love his posts.  He talks about Magic the Gathering as an investment topic, and backs up his posts with real financial knowledge. This type of content was missing in a big way.

Now, I know you will tell me about MTGStock.com and MTGGoldfish.com but in my mind they were just tracking.  Their messages were mainly about MTG finance within the bubble of Magic the Gathering.  Rudy takes it a step further.  He talks about collecting as though it were any other financial medium, and this was missing.

How else can I explain this...

Let's say you wanted to investing for your future.  You save up some money and open an online brokerage account.  Then you start buying Mutual funds.  You keep putting more money into those funds over many years, and by the time you retire you have this nice lump sum of cash to retire. Then you read an article on how Mutual funds screw you for about 1/3 of all your retirement funds when you retire based on the fees they charge.  (Frontline: Retirement Gamble)

Rudy is the article.

Honestly that is the best way I can explain it.  I have tired to write and re-write this blog for about 30 min now.  But really, that is the advice he gives you.  I have been learning about investing for retirement, and 'investing in money that can make you money' for over 20 years.  I am not in the financial field for work, it is just a hobby that I have and it interests me, but the way he explains and shares his opinion about Magic the Gathering is very close to everything that I have read about saving and investing for retirement.

Why is this so important being a collector of Magic the Gathering cards?  In my eyes, it is just being smart in what you need to do with your interests in this world.  Now I know he is doing it for his financial gain, and he runs his Magic the Gathering as a business.  I on the other had, run my Magic the Gathering more like a collector.  I don't mind paying list prices for some items, because for me the only thing I worry about is having to sell my collection because of financial hardship and I need to keep my house.  Hopefully that will never happen, and my wife will be able to sell the collection with the highest cost basis when she sells it for a loss after I die.  Then she will not need to pay any taxes for all this cardboard.

I look for good deals so I can trade for missing items in my collection to fill out my collection, but I am not looking for a paycheck at the end of the day.  What I take in with purchases are either going to go in my collection, or on Deckbox to trade for things that I need to get in my collection.

What Rudy does, is he uses his leverage to buy in bulk to drop his cost basis as low as possible on any new set that comes out.  Then he will hold sealed product for at least 5 years in hopes that the price for that product will increase, and then he will release some onto the market to make a profit. He will also open some of the product, keeping all the foil cards, and sell the singles to make a profit over the long term.  He will then take those profits and buy Reserve List product to hold for the long term to make even more of a profit.  So really, the lower he can get the cards, the better for him because he does not look to turn the product around right away for the Standard Market, he will buy and hold for the longer term.

I mean one of his videos goes through how he will take a credit card, buy a bunch of product on this credit card to get the 1%-2% cashback on purchase.  Then he will buy something with some 15% deal with the same card.  So in reality what he just bought for $100 really only cost him $83 because of the 15% + 2% discounts.  If you could buy a Force of Will for $17 less, and still get that same card would you do it?  Logic...

He does all this, and he shares his information.  Now I don't think he shares everything about everything, but you get a good picture on how he does what he does.

OH, and another thing, if you support him on Patreon you can get in on buying some of the sealed product at wholesale prices that he gets from distributors.  That's right.  He gets boxes for less than $90 and passes those prices off to you.  Great example, Commander 2016 he was selling for $99.99 each and depending on your Patreon support you could get up to 2 sets of decks.  Pre-sale prices for this set was getting close to $160 for the set of 5.  I was able to get sets from my LGS for $30 per deck and a set of 5 for $150.

There is some hate for the guy, some people are looking to see how he is screwing people who follow him, or donate to his Patreon, but really all he is doing is investing the way he is investing and allowing people in on some of his ideas.  Even if his selling booster boxes of Kaladesh for $78.99 somehow hurts the Magic community, than a LGS's selling booster boxes for $100 - List price is hurting the community even more.

Let's take a look at it:

So based on his numbers of Patreons, he pulls in $11,240 a month.  Then he sells product to each of those Patreons if they wish to buy from him on a month.  Now, that $11,240 number seems like a lot, but that is gross.  That means on his taxes he needs to claim that as income, so best case let's say he pays 28% in taxes.  That means he really only brings in $8,092.80 in Patreon income after taxes.

Now based on his Patreons, and each Patreon bought their max that would be 5,424 booster boxes of his Dec 2016 deal.  That means he needs to spend $423,072 just to fulfil those orders if everyone buys something, and that is at $78 per box.  Even if, let's say he bought them for $75 a box and then sold them to his Patreons.  That is a buy of $406,800 where he will turn around and sell them for $423,072 with a $16,272 profit.  This is an intake, inventory, package, ship of 5,424 booster boxes to possibly 771 different addresses.  And remember he does not charge shipping to anyone on his Patreon list.  Not a single mention of shipping no matter the order.

Oh yeah, total scam...

So he will bring in $11,240 a month, be expected to spend $406,800 to get 5,424 booster boxes from many distributors, box up 771 different orders, and ship all those out all in a month just to make 771 people happy.  And this is all assuming he is getting the boxes for $75 a booster.  For that type of service I am hoping he is getting those boosters for cheaper and making more than $16,272 a month. Because if you think of it in those terms, with $16,272 + $11,240 = $27,512 a month Gross.  Fucking Gross!?  With those types of numbers, he is more than likely paying at least 35% tax.  So he is ending up Net $17,882.80 a month if everyone maxes out all their orders with him.

Just think of it, for someone to run a business spending pretty close to half a million dollars most likely on credit to get 5,424 booster boxes of Magic the Gathering, have the space to store that many orders when they come in.  Inventory all the product.  Take in all the orders, print the shipping labels, box up all the orders, pay for shipping, and get all those 771 orders out the door within a week of the first of the month when the deals start out.

All this happens for a lot longer than 1 month.  This is a multiple month project, where he needs to contact distributors to see if he can get enough product in to fulfil the "expected" orders that might come though.  Multiple distributors, sending multiple shipments to a location, then storing all that product for a matter of time to where he can even give the monthly deal.

This is all if everyone buys up everything.  What if he is thoughtful and does buy up enough for everyone to get everything they want, but not everyone buys their limit?  Then he is stuck with the product sitting there.  Math shows that $11,240 is only about 150 booster boxes at $75 a piece.  That is his wiggle room if you base it on him using the Patreon money for the float.  He can be off by 150 boxes to not have to hold any cash in inventory that he might not get rid of.

This blog went on for a very long time, and I rambled a bit, but I really wanted to point out the work, effort, and cost of trying to be nice to people that support him for the content he creates.  And for him to put out a deal like this even for a $3 profit per box while providing a price no one outside of an LGS could get without connections into distributors is just amazing.  Even if he did make $17,882.80 Net a month through a deal like this, it is totally worth it for us, his Patreons, and I am glad Rudy does this service for people who believe in his content.

Oh yeah, and he still makes pretty awesome content for his YouTube channel.

/hugs