Liquidity & Investing vs collecting
 

I don't post often, but I feel compelled to share some thoughts. Most of you will likely disagree, and that's ok too. I hope eventually you get it.

If I asked any of you the value of a barrel of oil, most of you would log on to Bloomberg or CNBC and check the ticker. Why? because it shows live transactions where buyers and sellers agree on a price. There is security in knowing where assets such as oil, wheat, sugar or now sports cards trade repeatedly. As more trades happen, more people get more comfortable with price and liquidity and feel it is safe to make a 'bet'.

In the basketball world, Jordan rookie cards are the ultimate commodity. Baseball you have mantle rookies, football... Try on a Namath rookie for size. What do you feel safer putting your money in??? A Jordan rookie at 30k or a PSA 9 1934 Gehrig that never trades that will cost you 10x the price because that's what a private broker says it's worth?

Tell me why a Jordan PSA 10 shouldn't be worth 30k? There are roughly 250 of them... That's five per state in the union. Are you honestly going to try to make an argument that there aren't more than 250 people that are able and willing to own a Jordan rookie at 30k to say they have one? They should probably be worth 100k+ each!

Give me the liquidity, give me the commodities, give me the transparency. If you want to collect, fine... Go buy a PSA 6 gold border common. If you want to invest, give me a PSA 8 Koufax all day long and twice on Sunday. Complain about prices changing all you want, but when you are done, you will miss the move... Or perhaps you already have.

Peace

I have never needed a card to trade constantly in order to ascertain it's value and I have been dealing and collecting successfully for 25 years. I also do not define liquidity in this market as something which is based on the frequency that item trades. Liquidity and market efficiency has never really been a problem in the hobby for me as a buyer or a seller.

As for your example of the 86 F Jordan vs the 34 G Gehrig I would feel much safer placing my money in the Gehrig but I do think your comparison is like comparing apples to oranges. Historical pricing, before 2015 on both of those cards would support my reasoning. If my memory is correct the Jordan 10 USED to be a 100K card. Regardless this post sounded more like a commercial for the 86 Fleer Jordan...

A BGS 10 Jordan has sold for 100k. I believe this sale took place when a PSA 10 Jordan was in the 10-15k range. They're much more rare.

Whether or not the PSA 10 Jordan is still a good investment at it's current all time high valuation remains to be seen and is an interesting topic for a discussion. I think it is.

its all about risk/reward. Gehrig would be a slower more stable investment for long term. Jordan will have huge price jumps in both directions depending on the current market when the card is sold. Both players are special and very Iconic to their sport they dominated while playing. The Population from Gehrig is ten times more rarer than the Jordan, but we all know scarcity doesn't always mean value. One last thought, is Gehrig's story is over and his Legend continues, and Jordan is still writing his. If the unthinkable happend to Jordan where he got caugh in a scandle or committed a violent crime... Then that would really affect the value on his card too. I love both Jordan and Gehrig and I actually have both their rookie cards.

It's not a commercial for Jordan cards... None of which I even own.

It's an example that although there are a large number of a certain card available doesn't mean that is bad. It also doesn't mean it's not still under priced.

How many people are going to pay 300k right now for a PSA 9 1934 Lou Gehrig (10x the Jordan card) ?? Maybe 5-10 people max. That doesn't mean I wouldn't rather have the Gehrig card... All I am saying is that if I have 300k to 'invest', 10 Jordan cards might be the better investment. Why u might ask?

Ok say another awesome cardboard wonder comes along that you can't do without? Are you going to call you card broker to go sell that Gehrig? Or are you going to send Brent at Pwcc a couple Jordan PSA 10s to pay for that Ernie banks PSA 8 and George Brett PSA 10? Cards like Jordan rookies are almost as good as cash... They are liquid. Rare high end cards are too, but they are way tougher to move in a pinch.

These cards are becoming commodities with real value ... Real liquid value with someone like Pwcc taking them as payment for winnings :).

There are obviously a lot of hedge fund guys pouring cash into the hobby right now who feel the same way as you do. I'll stick to collecting scarce-rare seldom-traded baseball cards that I like, and investing in mutual funds.

If you believe what you say, you should be buying Jordan 10s. Just be careful, seriously, not to get a fake one, there are some pretty convincing ones from the Mexican guy out there.

My problem with 10s always has been that to me they are just Mint cards with a different flip for the most part -- that you couldn't tell apart but for the flip -- but in an era when flips seem to be independent commodities that seems not to matter.

Thank you for posting. I almost never use the investment perspective of collecting as the main factor when making a purchase - so maybe I don't have a sound grasp on some of the examples you've mentioned. I mainly do this for fun - but you raise some good points.

In your example cards aren't truly that type of commodity yet. If I buy a contract for a specific type of crude oil with a specific sulphur content and API gravity I expect to get exactly that. Grading companies have brought us closer to a common standard - but there is too much variability in the perception of the value of a certain grade - due to factors such as the PSA Registry. This can be seen when you compare the Fair Market Value of cards corresponding to the same grade across the various grading companies.

In addition, due to counterfeits, uncertainty of execution and the various quirks in how things are bought/sold, means many buyers are willing to pay a premium for the certainty of execution. You don't have that factor in commodities where you can go to any place that buys/sells and get the same result. That is certainly a reason some eBay dealers achieve higher prices for their cards than other sellers.

The depth of the market also varies greatly over time, making the market volatile for certain areas of collecting. Certainly there is volatility in the market for other commodities - but not to the extent of those that invest in cards. See the example in another N54 thread about the guy that bought $80K in the rookie card of a specific player...which later tanked. I believe it is also one of the reasons you can't compare the value of investing in, say penny stocks to those traded on the NYSE. The market isn't deep enough to support long term investment decisions without involving a significant amount of speculation.

Just my thoughts, and I admit I could be way off base.

Z

I think it's a good and relevant debate. I recently converting cash sitting in the back earning literally 2 bucks a month in interest into a '52 Mantle at a decent price. I personally think the '52 Mick is a commodity, and a good one at that. It will (imo) do a whole lot better than 2 bucks a month when he finds a new home. SMU doesn't take '52 Micks in their payment plan so he WILL find a home in the next 3 yrs. :). I like looking at him a lot better than numbers in a bank account too!!

My problem with investing big money into any slabbed card, pre-war or not, is a grading company's reputation (i.e. GAI) can be damaged beyond belief and severely devalue their cards overnight. As purely a hypothetical example, what if news broke that any of the big two/three companies was caught giving many faulty grades for personal gain, etc.? Or purposefully slabbing trimmed/altered/fake cards?

If I ever poured $30,000 into a card, I'd feel much more secure putting it into a rare card in general than I would putting it into a nominal card marked up 100x simply because of a grader's opinion. That's always seemed incredibly risky to me. I have no problem with graded cards and especially enjoy the protection they can provide to cards that could be damaged without a slab. But I just wouldn't have the desire to pay that kind of a premium for something based on opinion.

This is why I bought into what I think is the safest bet in the hobby. I wasn't going for a 20k HOF'er OJ which Richard, Keith and Jay already own. :)

The idea of something like Jordan cards being a riskier investment because he's still alive and his story isn't finalized yet is something I never really thought about. Sure at some point OJ Simpson and Bonds were fetching big bucks too. The guy who paid big bucks for a Sammy Sosa homerun ball has likely jumped off a bridge long ago. Jordan's reputation hasn't exactly taken off since he retired and who knows what he's gambling on these days.

By the way, I have zero interest in Jordan cards and never plan to buy one. I'd drop big bucks on Ruth any day over Jordan.

Why even own the physical card? The flips could be traded on an exchange and your online account will show your holdings. The cards themselves would be as obsolete as stock certificates.

If PSA can figure this out, it will happen. Others can chime in but I think they would need the ok from the SEC and get all the necessary securities licenses to act as a broker and then it could happen. Pretty unlikely though...

As for the Jordan, I have mine (a psa 8 oc). It's probably the best investment card I've ever bought. I wish it was a straight 8 but it presents really well and was reasonable about 1 1/2 years ago. I also agree with liquidity as a key factor to investing.

I'm astounded by the record prices of the Mantle/Clemente RC's, but especially the Jordan RC, with thousands and thousands slabbed. I do have a Clemente because I'm a Pirates fan, but I collect and invest in prewar for their scarcity and investment potential. I'll buy a Ruth RC with approx 75-80(a bunch have been crossed), who was the best baseball player of all time, having a 100 year old card, than chase a holder and grade of the cards today. Modern cards for that reason to me are significantly riskier. Prewar prices have been consistently solid and increasing, postwar with the PSA registry driving prices have done great as well, but modern cards to me are a risky proposition. Too volatile, too many of them, and too unpredictable in the future for me. Great point on that the players story may not be done yet even though they're done playing. No one is going to rewrite Ruth, Jackson, Cobb or Wagner's stories.

A real investor would not bother with already vastly appreciated cards but would be looking for the next wave cards so as to maximize returns.

All cards are liquid; the issue is a red herring. The discussion should be liquid at what price. Right now certain cards are flying off the shelf because we are in a mania. Anyone who has collected for a long time has seen it before. Remember E cards? T206 errors? Chasing the tail of a mania is a bad idea. Better question is what cards are still undervalued.

The PSA 10 Jordan discussion is incomplete. The relevant pop is not PSA 10 but is 8-10. Many collectors will simply downgrade rather than chase a ten. There may be a better ROI on a lesser grade card unless you expect the Jordan to go from $30k to $60k. Maybe it will. But maybe the better play is several 8s that have the potential to triple in the same time. If you are an investor. If all you can afford is one Jordan 10 you aren't an investor you are a person trying to sell yourself on a splurge.

Buy what you like and assume you will own it for a while. If you want liquidity and transparency go buy a security and leave the cards to the collectors. Trust me you won't be missed.

I think 10 flips are almost always a better "play" than 8 or 9 flips due to relative scarcity and perceived value among people who can afford them. Obviously more people can afford 8s than 9s, and more people can afford 9s than 10s, but that isn't material to this discussion because the supply of 8s and 9s is also correspondingly much higher.

It is material if you are analyzing investments as a combo of returns and liquidity. The issue to me is whether a card that has already doubled several times over is really a better investment than a corresponding value of cards that haven't. I'd prefer to gamble on the latter.

I think you are positing a false circumstance, where 10s have doubled it is overwhelmingly likely that 8s and 9s have already had significant appreciation too. Jordans are way the hell up in all the upper grades, for example, from what I can see.

I agree with peter

have you ever wondered...

there might be a reason some have doubled and some haven't? I agree there are deals to be had, but i think the thing to remember is that some cards are just getting left in the dust and might never catch up

+1

I bought a 1951 Bowman Mantle SGC 60 for $3,200 a few years ago primarily as an investment because, to me, it was obvious they were undervalued. Sold it for twice that this year. What's next is ... ? ;)

Personally I think that relative to the recent mania Paige cards -- and there are only three of them, with one next to impossible -- may be undervalued much as I hate that word.

We have a perfect example going on right now related to this argument.

Here we have a 1915 Cracker Jack - Joe Jackson on Ebay being consigned through PWCC:
http://www.ebay.com/itm/1915-Cracker...0AAOSwNsdXSg9R

The current bid on the card is $63,800 with over 13 hours still to go (as of this posting)

This exact same example was purchased in a 2009 Heritage auction for $41,825 (incl BP).
http://sports.ha.com/itm/baseball-ca.../a/714-81128.s

It was purchsed again in a 2011 Paragon auction for $55,612 (incl BP).
http://paragonauctionsite.com/LotDet...nventoryid=375

Since the current PWCC listing reached a bid of $55,555 (which for this argument I will say is close enough to equal to the previous Paragon sale including BP) there have been 9 unique bidders on the PWCC eBay listing. To your point about how many people might be interested in such a card "Maybe 5-10 people max" this listing is currently right inside your estimate but with 13 hours still to go the number of unique bidders above that mark could increase.

We can revisit this specific example tonight once the PWCC listing ends, but the fact we have a relevant example to study and apply in this discussion is interesting.

Anyone who is willing to put $300K into cards as an investment in their future is nuts. The only people spending $300K on cards are high rollers who don't even need to see a return. I would say the same is probably true for everyone who's purchased that Joe Jax card too. I would be very surprised to hear about anyone laying out their life savings on a card who was just a normal person who managed to save 60K.

Was referring to a time before you were in the hobby, not since VCP has reported sales--2015. I was wrong however, the Jordan did not used to sell for 100K but when it was a much lower population card it was selling for over 40K. There was a dentist who used to post ads in SCD buying certain cards from the set for obscene numbers. This was probably 15 years ago.

There was a dealer back in the day who used to bring his Jordan 9s (among other things, he had huge volumes of cards) to the Parsippany NJ show and he told me they would always bump a certain percentage of them into 10s. The show bump phenomenon made me pretty cynical about grading at least at the upper levels.

Why nuts? I would guess if you took a basket of elite graded cards and compared the rate of return on them to the stock market or most other investments over the last 20 or 10 or 5 years, the cards would have a better rate of return.

My personal experience agrees with you wholeheartedly.

Ok well do you guys have 401K's or some other retirement plan? If so, why didn't you just pour that money into a few cards?

I have a rollover 401k. As those rules are, it is tax deferred until I take it out and earns interest that way, compounded. Most of that is in Fidelity Index 500 fund shares. I prefer to leave that alone as to diversify a bit (and not pay the 10% penalty to take it out for cards). Everyone has their own methods. I always think of this imaginary, but oft used, financial "pie" in my head and know there are many pieces for a reason. If I only had 1 piece of pie that piece wouldn't be cards. It would probably be the Fidelity Index 500.....

Having very much money in a savings or other cash type account is actually like losing money in today's economy. All in my humble opinion...
*AND Please seek professional tax and estate planning advice and don't rely on anything I say :). I had to sell my whole collection to fund a college degree.....LOL


.

What I'm really trying to say though is that I don't think a normal person looking to build their future is going to invest 60K or 300K or any significant amount of their life savings in cards. I think the only people who are plunking down 60K or 300K on a select card or cards is a person who isn't counting on the return changing their life. They are more or less gambling and not investing.

Just...wow. Speechless.

Normal
 

I wonder how many normal people we have on the board. What is normal ?

I would guess a lot since you don't often see a Joe Jax like that show up in a pick up thread.

If you're an ordinary guy looking to invest his savings, you're not only looking at expected ROI, you're also looking at the probability that you're going to lose everything. Maybe the expected ROI on Mantles is really really high, but there's also a chance that this is a huge bubble and you'll be left holding the bag. If that happens, you're ruined. And avoiding being ruined is extraordinarily important.

Whereas the stock market didn't drop more than 50 percent the last time it crashed.

I am confused? let me get this straight... since the dollar amounts are beyond what you are comfortable spending, trading high end cards should be considered gambling?

Most of the time, I certainly don't begrudge anyone for having more or less money than me, nor do I question their motives or reasons for doing what they do. However, when you say things that are this narrow minded, it makes me understand perhaps why you have less than me and probably always will.

What is so confusing? If you're spending 300K on cards, you've probably got the 300K to burn if it's going to cards, right? So then that is entirely different than your 401K or your Roth IRA where you're depending on making money back, because it's your life savings. How does that type of thinking make me a pauper? All I'm saying is buying high end cards at those prices isn't how most people are going to retire. It's how comfortable people might make some more money.

it doesnt, but its all relative.

just because 300k is beyond your comfort zone, it does not mean its beyond mine. And if you say that anyone that invests or spends 300k on something he can afford to invest or spend it on does not make it 'gambling' because its more than you would invest or spend.

All I am pointing out is just because I decide that 300k is an appropriate amount I am willing to put into cards, it does not just make it 'gambling' and it wont matter if i make or lose money.

That sort of thinking is wrong. I think we all make decisions that we are comfortable making, or at least we should. Perhaps your threshold is lower than mine, but that doesnt make you a 'pauper', but it does seem a bit ignorant.

justin c

Willing to put into cards and sacrificing your life savings are two different things. You're talking about leisure whereas I'm talking about survival.

I think you could make your point without ad hominem remarks directed to people's relative net worth, no?

There's nothing narrow-minded about his comments. The high end baseball card market is extremely volatile. The prices are going through the roof right now. That trend isn't going to continue forever. What goes up, invariably, will go down. When you consider, too, the amount of market manipulation that is present in our hobby, I just can't see how anybody would be so cavalier. Realizing that, the inherent risk is palpable. If you choose to bet big, more power to you. You may make a lot of money. But don't for a second think your gains are the result of sound financial rationale.

Comparing high end baseball cards to commodities is wildly inappropriate.

Everyone's situation is different. If you don't have a financial set up you are presently happy with, I certainly wouldn't be pouring a sizeable chunk of what you have into cards, artwork, race horse partnerships, or anything else like that. But if you are comfortable financially, whatever that means to you, I don't see why buying a 75,000 Mantle card is a whole lot different from buying a condo in Florida you might rent out. It may go up, it may go down . . . I doubt it will be worthless when you go to sell it. Diversifying is the name of the game. If some relatively modest % of your wealth is in baseball cards, I don't see an issue with that. In fact I think its pretty smart.

I don't see an issue with that either. At the risk of being called poor again I'll just reiterate that I'm talking about leisure investing vs. future dependent investing.

Speaking of what goes up must come down, I wouldn't be too happy if I had "invested" in Go Pro.
Check out the one year chart.
https://www.google.com/?gws_rd=ssl#q=gpro

+1,000,000

exactly

Wow, that 52 week spread is painful. Down 19% in May, alone.

His second post was phrased nicer, but he is right either way. $300k (since we're using that number) is a lot of money to a lot of people on this board, but that doesn't mean that it can't represent a small and reasonable percentage of someone's net worth to be invested. High end sports cards have been a good investment in recent history. Calling it gambling just because the number is big doesn't make any sense.

Yea that's pretty crazy. That dentist could have been buying up PSA 8 52 Mantles for 40k instead of the Jordans at that time. It looks like a few years later in 2006 they were going for 5k.