Posted By:
ChadYou could go 100% long, but that's a lot of risk. Also, I think having to wait for a major auction to sell is pretty illiquid. The premiums auction houses charge are really large compared to the commissions on stocks, as well. Even if you could negotiate down the seller's premium, the buyer's premium isn't going anywhere. There's also the problem of coming up with an inventory. There are other obstacles as well.
I do think it is possible for a fund to get involved in cards, but for the amount of work, risk and return, I'm not sure why one would get involved. Again, if a private investor wants to use cards as part of a diversified porfolio, I think that makes sense. In fact, I can think of others way to make cards an investment. If you knew somebody sharp, who knew the hobby backwards and forwards, I could see giving that guy/gal some startup capital to start a dealership/auction house. I wish it made sense for a hedge fund to get involved in cards--it would make my work much more fun, believe me--but I can't see it. Of course, now somebody will start one and make a gazillion dollars while having a great time and I'll curse the day I was ever born.
--Chad
edited to add: Jason L, I agree with what you're saying. I think bringing the term "hedge fund" into this discussion may be confusing things, too.