I'm just thinking out loud here, so don't construe any of this as investment advice. But it's worth asking why the prices of high-end cards have gone through the roof (and, as noted up thread, that of lower end cards haven't). One possible explanation is that it's driven by increasing wealth inequality. Sure, correlation isn't causation, but the two have been increasing in tandem. Concentrating money in fewer hands means that those with the money can afford to drop larger sums on baseball cards. If that's what's doing it, then, at least in the long run, high-end baseball card prices are in trouble.
That's because, for prices to continue to rise would require further consolidation of wealth (so that there's somebody out there who can afford to spend even more on cards), but, at some point, this process will backfire. At some point, this will require shrinking the pool of wealthy people (so that the remaining wealthy people have enough money to afford the very expensive cards), but as you do that you increase the risk that the remaining wealthy people (who are interested in baseball cards, it's not like all the wealthy people are buying cards) already have the cards that they want. Kendrick probably isn't the market for another t206 Wagner, for example. And at that point the price of high-end cards collapses.
In short the problem is that increasing prices requires two things: a population of people who have ever increasing amounts of money, and a population of people who are willing to compete against each other to buy the cards. But if the first part of this equation is growing because of increasing wealth inequality, it means that the second part is shrinking. And if the number of people who can spend huge amounts of money on cards shrinks far enough, it doesn't matter how much money they have, there won't be the competition for cards that supports card prices.
Now I don't know that this is what's driving the value of the high-end cards. But it might be. If their price is increasing faster than the growth of the economy as a whole, or faster than the real growth rate of the top end of the economy, then something has got to explain it. And I don't have any better guesses as to what it might be.
|