Bursting Bubble
 

Say you are of the mindset that we are in a bubble that is about to burst relatively soon - say this summer. How long do you think it takes for values to balance out? Are we talking a massive decrease almost over night? Over the course of several months? A few years? What do you all think?

This question about the bubble bursting and if I should sell or hold, etc, has been asked numerous times but truth be told, no one knows.

Like I said before there might be some in a year or 2 saying, damn, why did I sell so soon, and then there might be some saying, damn, why didn't I sell back then.

No one has a crystal ball, only opinions, so make your decision your decision if you think you can live with it?

I ask myself the same question when I own a stock that's had a nice run up.

Truth is, you cannot time the market. My recollection of the last run up a few years ago was you started seeing auction results fall on 8's and 9's of 1955 Koufax and Clemente, for example. I think if and when it does happen, you notice it more on higher valued items where auction results can be easily tracked.

Every few days there's another bubble post. If you really afraid it's going to pop. Just sell everything and don't look back

Sell those late 80's cards now folks while you can...the price drop when the bubble bursts will be sharp and long lasting.

Brian (Here's a mostly ignored fact. Topps stopped including bubble gum in their packs starting with their 1991 issue).

This is just th start....hold on

People have been clamoring on this board since March that we were in a bubble. No one can predict!!

What a lot of bologna. no one knows what's going to happen. personally I see more room for improvement, especially in pre war. With all the new stuff going nuts, it will raise pre war to a new level. Why is everyone constantly in panic. Only the picnickers can cause a crash.

Sooner than later on some?
 

Jan 30/31 Goldin auctions (2) PSA 10 1986 Fleer Jordan Cards sold for $720,000.
Feb 11 Goldin auction PSA 10 1986 Fleer Jordan Sold for $600,000
Feb 21 REA Auction PSA 10 1986 Fleer Jordan sold for $612,000
In 1 month the card has dropped about 15%. I understand it has gone up almost 1200% in 1 year but that is a definite correction. Jeff W

A LOT more collectors, investors, and publicity in the hobby this past year. Also, a ton of liquidity in the marketplace as well chasing assets. I personally do not think it's a bubble, especially not in Prewar. There are one-off sales that may be an anomaly, like the Trout 1/1 for 4mm last year. But, there have been a consistent amount of modern cards selling for over 1mm. How can a Ruth RC sell for so little compared to all of these modern cards? I think Prewar is about to catch up real soon.

The baseball strike in 1994-95 was a major cause of a price crash. Another work stoppage in baseball seems to be looming. It's tough to be a modern baseball card collector when everyone is pissed off at the "greedy" players and owners. If I collected modern cards I'd be worried about another work stoppage in baseball - just based off of history.

My opinion/prediction is we see a leveling off and small decline in the spring and summer when the weather gets better and people get out more and covid starts to fade from front and center of everything.

I also disagree about prewar going up or "catching up". Many, many collectors just see it out of their realm and won't venture in. Also there is no memories or nostalgia associated with it like there is 50's- modern day.

I know I tried to get into pre war about 10 years ago and after 6 months realized on my budget I would likely never have a solid Ruth or Cobb etc. and so I sold all that I had and concentrated on the stuff that you could get most of what you wanted (i.e. 50-70's)

People have been clamoring since the day I joined the board that we are in a dangerous bubble.

The highest sale before these was 211k. When a card jumps from 211k to 738k, sales of 600 and 612 is not a drop. In fact the day after the 2 738k sales Goldin reported 2 direct sales at 600. A drop would be sales over an extended period above 700 then sales around 600.

We'll see Chris. There has to be a leveling off on the modern for sure. Going back a year ago, modern went nuts first, then Postwar, then Prewar. Now, it's happening again. Investors will find better value and true rarity in Prewar. I think it's a natural hobby progression to start with modern, and eventually getting to the vintage. In a lot of respects nowadays, vintage is cheaper than modern.

I wonder how the Mariners President spouting off about how they have been abusing the rules to screw players out of money is going to affect the on going labor negotiations?

I read another “bubble” chain here recently and appreciated the perspective offered by one thoughtful poster...

While I am like many (most) members here - collector, first and foremost - I don’t begrudge anyone who decides to spend their hard earned money any way they want. If they consider this an investment, no real harm to me.

If that inflates prices, that’s free market - also ok by me.

There are always new ways to expand my collecting interests - one new hobby friend recently opened my eyes to great old magazines which are very affordable and are super cool to read, display etc.

I am not going to root for a huge drop in card value that would put lots of hobby businesses out of work just so that I can afford to buy that Ty Cobb card that is just about out of reach now.... there’s always another way to add Ty to my collection

Yup. Same goes with 54 Aaron surge with his death now starting to normalize and 86 tiffany bonds. Went from 8k-10k suddenly with a 16k sale. I remember Jordan went down some after the documentary then made another jump.

Not sure of course but barring anything unforeseen I have to think that the dramatic rise in interest has helped the hobby overall.
I am not one of those interested in the commodity mentality of buying/selling modern cards but believe that even those non-hobbyist investor types my ignite a true interest in carboard.
I'm probably over hoping.

I don't understand how using "rules" that were collectively bargained is "abuse". In the negotiations both parties had things they wanted and things they were willing to give up. If the players "traded" the rules on arbitration, (which give clubs the option of bringing top players up quickly thereby getting the players production and starting arbitration early or delaying both) in order to obtain concessions (that the players placed greater value on) from the owners, why shouldn't teams use them however they see fit.

It seems completely rational for the players to restrict the compensation somewhat of the best (soon to be highest paid) players in exchange for benefits such as salary minimums, pension rules, etc. that benefit all players, including ones who will never approach the compensation levels achieved by the elite players.

Looking at the effect on elite prospects in isolation may make it appear that they are being "screwed" (paid less than they could have commanded without the arbitration eligibility "rules"), but if those rules were traded during negotiations for things that benefit all players, it may be a completely sensible trade-off that the negotiators of the CBA wanted and agreed to.

You really don't think not using any prospects for a whole season because it was a shortened season isnt an abuse? Sure it is within the rules, but certainly not in the spirit of what was bargained. He admitted that they were deliberately holding back players so they wouldn't get fair market value. The players suspected this was going on and now have confirmation. It's not really any different than collusion in the 80s. I think the prospects of a strike just went way up. The only ones really losing are the fans.

I don't know what "not in the spirit of what was bargained" means. The CBA establishes a framework that prevents teams from keeping players in the minors indefinitely. It establishes how much leeway teams have to manage when each player's clock toward arbitration and ultimately free agency begins. If it allows a team to do something at its sole discretion, why is it abuse when a team goes ahead and uses that discretion however it sees fit. It might be unwise, unfair to fans, etc. But not "abuse" of the players.

Again, the players primarily affected by this phenomena are the elite prospects who figure to make life-time security before their career is over. If it delays (for a year) a 9-figure contract for a handful of elite players in exchange for more generous minimums/benefits for players who may never see an 8-figure contract, it could easily be justified as beneficial to the union membership as a whole.

Your point about a strike might be valid. Union leadership might regret the trade-off they made last time in light of how the rules are used and might want a different deal; owner's might balk. His comments were unwise because they were unnecessary and may be used to inflame opinion going into negotiations, but "abuse" I don't get.

That’s usually an indicator. Same with news articles being posted about the card industry booming (which we’re starting to see more of). Obviously, like already stated, there’s no way to predict. Keep in mind, the more people that enter a market, the quicker it crashes when the time comes. However, there still could be tons of room to go as others have also stated. Which is why you see lots of back and forth.

If the bubble questions are starting to be asked.. it typically means that those asking are considering selling.. remember J.P. Morgan was famous for saying he made a fortune getting out too soon.

LOL - in case anyone thought it was good to take advice from random dudes on baseball card chatboards.

I love it, there’s no accountability. Just honest thoughts!

Personally, I say use this time to position your collection like you would position your portfolio. Don’t sell your marquee cards - we can’t time the market and may run and never come back, but the other stuff that rounds out your collection, unless ultra rare, will still be around. Use this liquidity to focus, build a war chest, and be opportunistic once supply returns...

There's nothing wrong from your standpoint. I'm a union negotiator and sometimes hard decisions bite back in the wrong way. Next go round they become a priority. But as a fan, the Mariners are "suck d*** for crack" bad and refuse to bring up their name recognized prospects to bring fans into the stadium. It just means that these players will feel no guilt or remorse to stay in Seattle because their boss is a jerk who doesn't care and is willing to publicly run their name through the dirt.

Sent from my SAMSUNG-SM-G930A using Tapatalk

What caused the bubble to burst in the late 1980's, primarily, was that the card companies realized they could print huge amounts of money, so they kept the presses rolling and absolutely flooded the market. That's always going top be the danger with modern - there is nothing to stop card companies from continuing to crank out stuff. Unless they state something is a 1/1 they can make as much stuff as they want, even years after the original release. I remember buying 1987 Topps "cut" cases well into the middle of 1988 and being told by someone that those sheets were still being printed.

Even with the 1/1 concept, they can come up with different gimmicks to create dozens of 1/1s by making them different in some way - different photos, different border colors, whatever.

Bottom line, with this kind of crazy money being spent on modern, expect the card companies to start capitalizing on it.

Vintage, aside from the ever present counterfeit and doctoring threats, has a finite supply, save for the occasional "new to the hobby" find.

If I had any modern stuff that had gone crazy price-wise, I'd be dumping it. If I had any big ticket vintage that was moving up, I'd hang onto it awhile longer, maybe forever.

I hear this all the time and it has always confused me. They didn't "flood the market" they met demand. Blaming them for the demand is bassackwards.

Card companies are basically printing companies. Even now they don't give a rip about the secondary market except in the most indirect way. They care about selling boxes, packs, and sets. If a 1/1 purple neon snowleopard autographed laser refractor sells a bunch of boxes today they don't care what it's worth tomorrow.

Hell, you can't even get Topps to protect their own intellectual property on Ebay and demand the counterfeits be removed. Coach, Tiffany, Micahel Kors all protect their property even though they don't make any money on the secondary market. The point being, all the card companies care about is selling cards TODAY. If they need 100,000 cases they're not printing 1,000,000 and "flooding the market."

I quit watching or caring about MLB after the 94-95 season. I never looked back and don't regret it one bit. Everyone else can have it.

I also think pre war stays strong but I do think there has been too much of a run up in new cards. Some of those will fall way back down, imo. Only time will tell. And as Warren Buffet says, you can never time the market.

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I was taught to treat others like you want to be treated. If you don't see what is wrong with this, then I don't know what else to say. A player works hard for an organization and when he is ready for the majors, he doesn't get the promotion to the majors that he deserves. Kris Bryant was a perfect example of this. When you treat people like that, you lose your integrity.

I GOTTA agree with Scott!

I bought AND sold during that time and EVERYTHING was GREAT until the Collector/Investor/Get-Rich-Quick guys on one side of the Dealer's Table stopped buying from the Dealer/Investor/Get-Rich Quick guys on the other side of the table.

Before that, I could sell Junk Wax as fast as I could get it! Canseco Rookies, Benito Santiago, Mike Greenwell, Gregg Jefferies, Ripken FF cards, on and on and on... Baseball, Football, even Hockey & Hoops - it all sold as fast as I could replace it.

1987 Topps was EASY to get, but still sold GREAT! 1987 Fleer was HARD to get, but still sold GREAT!

Prices went up every week, every day...

But then, new product seemingly started coming out every week with all of the new companies joining in. It seemed to render Last Week's stuff nearly unsaleable.

I couldn't get rid of Last Week's product fast enough... Manufacturer's met demand so fast. Everyone got theirs and moved on to what was next... Inventory sat on the shelves, but I still bought NEW product.

Impossible to ascertain magnitude and timing of any selloff but I think HOF baseball players from 1950s to 1970s roughly graded PSA 6 to 8 offer a healthy risk/reward regardless of market conditions. Sort of equivalent to large-cap value with a 2.5% to 3% dividend yield. You won’t get make a lot fast but downside seems limited.

Of course the Nationals brought up Harper and Rendon a little early and as soon as they could they left; even though they were offered nice contracts to stay inDC. Unfortunately it’s all a business now and everyone is in it for themselves.

They are absolutely different. The former, regardless prewar or postwar high grade vintage are non income producing alternative assets. They are also illiquid assets, unique in each example similar to real property.

The latter are income producing assets that carry a risk premium (cards cant default or cut your divy) and are based on discounted cashflows of that stock (whether to use the dividend discount model or discounted free cashflow yield remains to be seen). Liquidity is much better as transaction costs are minimal and there is a open marketplace that provides daily liquidity. Also, those stocks are dictated by passive ETF investing and are subject to flow.

I think what you mean is that those investment grade cards are better investments, which I agree, due to the fact that there will always be higher liquidity and demand for that type... but not the same as large cap stocks.

It's abuse because the teams aren't making decisions that are best for the product they're putting on the field. They are intentionally not bringing up major-league-ready players to save money. Tanking is, and always will be, unethical. Yes, it makes fiscal sense for the team. Yes, it's "allowed". But it's definitely abusive to not bring up a player simply because you don't want to pay him.

The bubble or no bubble argument can be had all day and trying to time a market is tough.
#1 rule if you are worried about anything being in bubble territory
-- You can't go broke taking profit!! ---

That's true from the perspective of the card manufacturers. If they sold everything they printed, then they didn't "over-produce." They met demand, as you say, and there was insatiable demand.

I sold 100 card lots of single players back then, and several customers bought rookie cards by the 800 count box. One fellow in New York bought 4,500 each of about 40 different 1987 Topps cards from me, which was basically a 300 vending case custom sort. I always wondered what the end game was supposed to be, when a guy had 4,500 Wally Joyner or Mike Greenwell rookies. Some day find another buyer who wanted thousands of those guys' cards I guess.

So I'm not placing blame on card companies for printing and printing and printing cards in the late 1980s. What I'm saying is that tons and tons of the stuff was printed, making its long-term value impossible to sustain.

Today's collector isn't buying the way the wild eyed 90's collector was. Not grabbing everything in sight in pure blind hope... it's targeted and based on a punters eye for talent.
If they buy packs/boxes/cases or in to breaks, it's in the hope of landing a prized rookie from that year - one whose name they already know and are praying for, or high end material/parallels of established superstars.
The flotsam players they gather in the wash mostly go in the bin.
No one's building entire sets from an issue, holding all the cards hoping a gem player floats up from the dust. They build subsets of one players' cards, or a few from their team, that have specific meaning whether fan based or monetarily.

People aren't buying the huge amount of product that's being made because they believe somewhere within it all they'll get lucky opening it up in 5 years after it's sat gathering dust in the closet.
They make their estimation much like Mel Kiper or any other so called draft expert and hope to predict the next young big thing whose cards will be worth big big dollars.

The new collector isn't going to have 50,000 junk cards he's got $50K in to, and needing to dump because they didn't play out. He's going to have a selected collection that may or may not pan out, but will probably take 5-10 years to truly make that evaluation. So he holds, waits, and watches sports.

There are still plenty of high end collectors holding significant Aaron Rogers collections and Russell Wilson collections who believe there still a chance, with say a run of 3 super bowls somehow materializing, their fancied horse having a chance to be considered as all time greats.

They've had that money in those players for 10+ years.
There's no dump, no bubble. Price corrections sure, but in quality players a baseline of value for rarer material holds strong.
Just some wins, some losses, and next years possibles.
There are more non KC Chiefs supporting collectors on the Pat Mahomes thread in Blowout than the idiologues. They buy his cards because of the slight promise of what he may one day achieve.

In my opinion, the hobby is at the OPENING of a chance to go truly mainstream. No bubble, no overproduction, just a free floating market like the stock exchange with an enormous number of people participating and prices for players will flow up and down accordingly. Only way more enjoyable because sportcards are awesome - yes even modern - and can have meaning even outside of their financial performance.
Vintage should likely be the stable steady earner.

The idea that more people in means more likely bubble is silly.
In fact it's the opposite.
More in, more believers, better understanding that it's a market to play and just like stocks the long hold in blue chip is safe, and the flutter on speculatives can be exhilarating and rewarding or flat loss making.
Aaand, they will feel far more knowledgeable about what they own than the faceless stocks with fake profit loss sheets they're currently indentured to.

Or none of it might happen, and sportscards recede back into the niche it's always held.
We'll know pretty shortly. Next 12-24 months should tell everything.

Historically, trying to time any market usually fails more often than succeeds. It's easy to pontificate but a lot harder to be right.

This is absolutely incorrect. You are giving humans way too much credit. It’s a very basic economic principle... The more people you throw into this, the more people are involved that have no idea what they’re doing. They get sucked in because they see their friend, brother, sister, mother, etc.. crushing it. They see how easy people make it look to turn huge profits. It’s one of the main contributors to a bubble! It’s those same people that loose their shirt, or throw the towel in early, or cut losses and dump cards. Once the initial fear hits, that happens on a MASSIVE scale. I applaud you for having that kind of faith in man kind, but statistically it’s incorrect. And every single economic crash will show you that.

I agree. The increasing heard number only increases the heard mentally and its adverse effect when the selling starts.

Once people get their ass's back to work and stop pretend zooming all day while looking at E-Bay and other outlets spending money instead spend the day sitting in traffic jams thinking about the next vacation to spend their cash on will the bubble burst. Only my opinion..

It’s one many agree with. That description fits me very well.

Interesting, but not having any idea of what they're doing never stopped this nation making the stock market it's default retirement plan.
I think there's room for people to own cards, and I think you waaaaaay overestimate the brain matter and knowledge it takes to pick some cards to buy.
Sports may be the one area this nation actually invests significant cognitive energy towards, and that's all it really takes. Know the players you think are good, ride the guestimates of the 'experts' as they announce the next big thing, and spend time on ebay.

It's hardly rocket science.

No, they're not going to spend time learning every esoteric vintage issue.
So what?
They need to know the names of 15-20 players and look online at what cards are available, where the money seems to be flowing suggesting desirability, and perhaps cruise to one of the many sites showing historical sales data.

I'm not giving enormous credit here. This place isn't home to the Mensa society, but simply a cross section of society who share a common interest.
It's cardboard, not carbon nanotubes.

Herd aka crowd effect, is a signal that most of the entrants have jumped in the pool and are drinking the coolaid. But crowdedness doesn’t cause the bubble to pop. Bull markets don’t die of old age, they get murdered. The 2000 bubble popped because people were using relative price/sale valuations on companies with no earnings and poor fundamentals (like today’s SPACs). The 2008 financial crisis was caused by systemic risk in the financial system brought by greed and lipstick pigs, aka private-label, securitized liar loans.

This current bubble has shades of it all. The dot com valuations of 2000, the inflated home prices of 2008, and the possibility of a 70’s Nixon style inflation that killed the nifty fifty back in ‘73. Interesting that the nifty fifty, or the country’s fastest growing large caps is analogous to FANG/tech. Which is plausible as we move away from zero bound discount rates, impacting growth company valuations the most (as their terminal out year values are shrunk by a rising discount rate). If you were wondering why growth underperformed value (dividend/materials/energy/financials), this is why. This may not happen, we may continue to get a Goldilocks economy for a little longer because the economic disparity is creating a very unbalanced economy not conducive to sustained inflation. But the risk is still there.

Long winded way of saying herd mentality is a signal on how much juice is left to squeeze, but not necessarily for a top or end of the bull run. FOMO and herd mentality can last for a while - exemplified in this 12+ year bull run in the market.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” - John Templeton

And yet I find it interesting outside of the MDs, none of the analysts have been around the last time there was a bear market...

Agree 100%. I view the heard mentality as an indicator that the “euphoria” is abundant. Doesn’t mean it’s the top and, like you said, could last for years. Nobody ever knows. But bulls / bears make money, pigs get slaughtered.

Think we ultimately agree. I am extremely well versed with investing and recognize the difference between non-income producing assets and income producing assets. I didn't mean for my words to be taken literally. I was making a quick comparison in three sentences and said "sort of equivalent" to underscore that the parallel was meant in spirit.

I read your previous long take in this thread. You clearly know your stuff. What do you have most conviction in be it that player x's cards, or such and such sport's cards from a year or decade etc. are undervalued/overvalued.

I am starting to think that the increased grading, volume and visibility of cards will make a somewhat (but less so over time) inefficient market place, regarding price, become ever more "liquid" and dynamic and reduce the variance between prices. A stock market comparison is apt. I think the internet changes a lot for the hobby for the better. It makes it global and grading facilitates buying/selling/trading and adds trust.

I have zero interesting in cards from the '90s to present and would not cry myself a river if the sky high prices in modern basketball tanked. Some hard lessons wouldn't be bad for novices chasing outsized gains.

I gotcha. “Brevity is the soul of wit” - quote from another board member... ;)

I have no conviction, I have no clue, but collect who I like . That said, I am using this time to move some of my less liquid sets and less popular players. As Kennedy said, “The time to repair the roof is when the sun is shining.” By next month 2/3 of my small collection would be Ruths and Cobbs, with an example or two of Gehrig, Williams, mantle and Aaron. If I had to choose a popular sport, basketball... but my heart is in baseball.

I agree on your comment regarding the grading. I made a comment a few months ago that the standardization of grading cards, plus accessible online venues like eBay, have led to commoditization of our hobby. This is a good thing; increased fungibility and liquidity, increasing inherent card values.

Completely agree with this. I move Expats around the world and although it has nothing to do with the travel industry, occasionally information crosses over. The info I have is there is an enormous pent up demand for people to get out, travel, go to movies, sporting events, practically anything social, and once people are able to do this, they will spend more of their money and time away from the computer.

March 2019