Pumping vs. Sharing Information: What’s the Difference?

After a slow January, February is turning into a pretty busy FAB month. This week saw the sudden reigniting of the CRU market with sharp spikes from the previous $470-500 price up to $700+ with cases going as high as $4500. All of this movement followed a patron-only email from Rudy of Alpha Investments that has now been extensively leaked, so I’m going to treat it as public knowledge at this point. In his email, Rudy said that he was buying CRU boxes on the open market and he thought they were underpriced; queue people flocking out to buy up the boxes which immediately caused the market to reevaluate the price of sealed CRU. It’ll probably be another week or two before we see where they shake out after this bump, but I think the $500 CRU box is now safely a thing of the past. The market movement on these is newsworthy in its own right, but what I want to talk about is the discussion surrounding the catalyzing event for this movement: the Rudy email. I’ve seen people on various FAB groups claim this is just Rudy pumping the game, while others are calling it hype. Personally. I’d say he’s just passing on a tip after making his move. I think these distinctions matter, and I’m going to try to differentiate them from one another and talk about why you should be precise in how you assess these things.

Defining Our Terms

Broadly speaking, Rudy causes the FAB market to react. Period. This is not inherently good or bad, but it is factual, and if you’re going to deal in cardboard, you need to pay attention to what he’s saying even if you disagree with him. So, when Rudy said CRU was underpriced and he was buying boxes on the open market, I think it was a safe assumption that he knew the market would respond by buying up boxes at their current price, thus increasing the market price. I’m not 100% sure he knew exactly how much it would move the market, but I think it’s safe to assume he knew some motion would happen; and, knowing that, I think it’s safe to assume that he already had the minimum number of boxes he wanted to own. The important question here is “what were his goals in making this statement,” and I think this is where people get tripped up.

People asserting that he is pumping the market are implying that the increase in value is artificial and Rudy is doing this for some (probably nefarious or self-interested) purpose. Those claiming this is hype are suggesting something similar, though perhaps without as much of a negative undertone. My position is that he is simply passing along information to his patrons even if he knows that sharing that information will necessarily have consequences. Why does any of this matter? Well, depending on which of these is true, future market movements will likely be different. Pumping is usually coupled with dumping; that is, you boost the price of a commodity you own, then sell out when it’s spiking before it comes crashing back down. Hyping is a bit more nebulous but I would say that people generally use this to mean that someone is bullish on something and they’re trying to spread that impression, though not necessarily with an intention to cash out or an expectation that the item will drop in value in the near future. Finally, my position is Rudy is just passing along information; he made an observation and shared it with his patrons because that’s his model.

Why do I believe this? Well, for one thing I literally said the same thing about CRU prices the day before Rudy’s email went out (“I remain firm in my belief that CRU is currently underpriced at $470-500, and it should be a lot closer to $700-800 right now”), and I’ve been saying similar things for a few months now. “Sealed CRU is the best buy in FAB” has been my refrain for pretty much all of 2021. So, to me, it seems entirely plausible that Rudy looked at the same data I saw (he also has access to more and better data than I do) and made the same call. The big difference is that I have a couple hundred readers and Rudy has thousands of patrons and tens of thousands of viewers on his videos, so when he shared his thoughts things moved fast. However, here’s the thing, Rudy has built a multi-year track record of being generally right about Magic prices. If anything, he often underestimated how high certain things would spike. He puts out videos explaining his thoughts on these and detailing the position he has in these cards. He also isn’t really known for dumping product – the type of product he sells is pretty consistent, and he’s clear about what things he’s building a long term position in.

That last bit is key in my mind. If you’re not trying to obfuscate the fact that you are invested in the item you’re discussing, people are making informed decisions using the data you’re giving them with full knowledge of your own relevant interests. Again, I have some limited firsthand experience with this at a smaller scale. I’ve talked multiple times both in public discussions and via articles on this site about things that I think are undervalued in FAB, and there have certainly been times when some market activity has followed –I’m absolutely not a huge media presence, but FAB is a tiny community so it doesn’t take much. My article on non-foil Ms being undervalued was one of my most read pieces; in it I made it clear that I had made my position in these cards prior to writing the article. I then laid out why I thought they were undervalued and put that information out into the world. Since then, the prices of most WTR and ARC first edition NF Ms have doubled. Did I cause that to happen? I don’t think so, but I do think that I likely accelerated the fact that it happened by making my stance public.

I think that this is what happened with Rudy and CRU. I believe that Rudy has already made his main position on CRU when he posted that and he was regarding additional pickups here and there as a sort of “might as well” with the belief that that was the market giving him easy money. While I think Rudy’s enthusiasm about FAB is genuine, his position in actual FAB product is a very tiny portion of his wealth-generating instruments. It seems likely that if he were going to try to pump and dump, he would do it in Magic where his position is vastly larger. So, I think that he believes what he was saying about CRU (like I said, I’ve been publicly sharing that same belief for months now; I believe the same thing).

Cool Story Why Do I Care?

Well, that was unnecessarily aggressive. But, you should care because if this is Rudy simply sharing his belief about the market, informed by not only by many years of cardboard finance experience but by a direct relationship with LSS, then you have to make a judgement call: Is this an artificial spike or is this the market correcting? If it is correcting, can you get in on that? Do you want to? What are the implications for other items? All of these are important things to ask and you need to respond quickly to changing circumstances. When something like this happens, you need to figure out if you agree with Rudy’s claim. If so, you have a very small window to act on the initial item in question.

Let’s assume you decided that this was a correct take (if you disagree, then all of this is irrelevant and you can either ignore it or sell into what you’re deciding is a bubble). If you weren’t a Rudy patron, you were unlikely to see that email until other people had already scooped up the $470 boxes. Well, that or you were on the FAB Discord where someone will invariably leak a patrons’ only email minutes after it goes out. While Rudy can send ripples through the Magic market in days the FAB market is incredibly tuned into him and you’re looking at minutes to hours usually. So, when you see a dozen people trying to buy boxes on Facebook at the old price, you know you’re already in the “too late” phase. At that stage, your option was to buy up ones that could be purchased without negotiation (TCGPlayer, ebay, channelfireball, other retailers, etc.).

If you missed that narrow window, it’s important to ask what other items on the market might be affected. Before we go into that, I want to note that CRU is currently functionally frozen at $750 a box because that’s where ChannelFireball has decided to set the ceiling. They’re doing what they’ve done with FAB all along and put out boxes a bit below the rising market price and frozen upward momentum. They release in small batches, see how quickly they sell, and then either put up another small batch at the same price or tinker with it. As always, I don’t think they’re going to sell through their supply. This is a calculated sale of a portion of their inventory. So when they “sell out” don’t be surprised if prices go up to $850-1000 and suddenly there are $900 boxes from CFB on offer.

ANYWAY, CRU has arrived within the range I thought it should be at, so I’m now reassessing my “best value in FAB” award. With CRU at a more reasonable price, I think that people may finally catch up on ARC first edition, which is another box I’ve been arguing is underpriced for months. With CRU sales over 1k per box prior to the CFB ceiling coming down, people should be assessing the market as a whole. To me the two things most likely to move are ARC boxes and CRU singles. I like ARC as an investment over CRU singles because I think CRU singles were already quite high. They shot up, in part, due to the belief that UNL CRU wasn’t coming or could be years off. Now that it’s known to be in the pipeline, I don’t think people will feel that they need to be as bullish (effectively singles prices had overshot where they should be for a $470-500 box). So, while they could certainly still move up more in the short term, they were unusually close in EV to a sealed box prices compared to other sets, and I don’t anticipate they’ll be moving up anywhere nearly as precipitously as the boxes themselves. Meanwhile ARC, which has the same print run as WTR is selling at under 50% of WTR sealed cost and sometimes as low as 33%. To me, that screams underpriced. As the gap between ARC and CRU closes, ARC should increasingly look like the more promising box.

*Header Image – Rhinar by Wisnu Tan

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