Quote:
Originally Posted by kickitup
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
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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