I am by no means an expert in picking stocks and what follows is therefore not intended as financial advice. I was simply curious about how we could apply the fundamentals of stock picking to card picking.
Meta changes are the BLACK SWANS of the game
Black Swan:
“An unpredictable or unforeseen event, typically one with extreme consequences.”
After playing the game for a while, a decent player will be able to come up with educated guesses, speculations, and theories about the future changes coming to the game.
But, the truth is “nobody” (at least, besides the developers) knows the specifics about future changes. It is in that sense very similar to the stock market where nobody truly knows what the future will bring.
When somebody claims to be able to predict the foreseeable future of the stock market, this person is either lying or guilty of insider trading. The same rings true for the future meta of this game.
A new summoner, a new ability, a new ruleset… there are just so many things that could buff or nerf a card. Consequently, even in the card picking world, you get to assess a card either in terms of intrinsic value or potential growth, or even better, both.
Back-to-basics: the INTRINSIC value
Intrinsic Value:
”The real value of an asset.”
In Splinterlands, the intrinsic value of a card is its burn value. In the hypothetical scenario in which you wouldn’t be able to sell your card on the market, the burn value is the amount of DEC you would get by virtually burning the card.
When I buy cards, the burn value is the first thing I look at. No matter how the meta change, this burn value will never change. Of course, DEC could go to 0, but so the dollar to a certain extent.
As long as the game survives, DEC should survive. This token is simply at the heart of Splinterlands’ economy. This mechanism alone largely explains why cards from older editions are often more valuable.
CP/DEC, the P/E ratio of card picking
P/E ratio:
“The price-earnings ratio, also known as the P/E ratio, is the ratio of a company's share price to the company's earnings per share.”
The CP/DEC is a ratio players use to assess the “fair” price of a card regarding its utility. While a high P/E ratio means more risk involved, the contrary is true for the CP/DEC ratio in this game.
A high CP/DEC ratio means that the price of a card is low compared to its intrinsic value. the lower the CP/DEC ratio is, the more expensive the card is.
Again, comparable to the stock market, players are willing to pay more for a card that currently provides value when playing the game. They are also willing to pay a premium when they anticipate an increase in utility from a specific card.
The ART of Card Picking
In the end, there is no right or wrong purchase as we don’t really know what the future meta will bring to the battlefield. An expensive card might be a carry card for years to come while a card that nobody wants today can become a game-changer in the future.
In my current situation, my best bet seems to invest in cards with high CP/DEC but also with potential growth (educated guesses only). In the worst case, they will add cheap Collection Power to my deck, which I need. In the best case, a few of them might be home runs.
Yes, this is purely speculative. Nonetheless, it is I believe a strategy that makes sense for players with a limited budget. Putting everything on one or two overpowered cards that could potentially lose in utility seems to be overly risky.
Thomas
Ongoing (unanswered) question
Does anyone know how this bot was able to sell cards with only a 1% fee?
Thank you for your help!
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https://splinterlands.com?ref=tt88
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