[BobC]

I don't post often and usually say nothing about grading. I prefer raw cards, when I can find them, and would rather look at and value them myself. I don't really collect for resale or investment purposes, just for the enjoyment. Usually when one of these types of threads come up there are the usual suspects who either support or bash the grading companies. I'm not doing either. The grading companies have certainly been helpful in providing a more "level" and "reliable" source of grading, which has allowed the internet to take over the sales and distribution of cards, and contributed mightily to the demise of card shops and shows, much to the detriment of many. The introduction of registries and population reports then helped to fuel the desire to obtain certain cards, which in turn helped to expand and grow the marketplace and assist in the rise in pricing we've seen over the years. Meanwhile, it is common knowledge that it is humans doing the reviewing, grading and encapsulation of these cards, and we all know that humans are just that, human! And with it comes all the foibles of being human; inconsistency, emotions, up-days, down-days, greed, the whole gamut of feelings and weaknesses that we as the human animal posses. Grading will never be truly perfect but, it doesn't need to be. The mantra that many on here religiously preach and follow, "Buy the card and not the holder!" will always be true and maybe never more true than it is today.

For the current grading companies, or any future newcomers to the ranks, to continue to grow and provide valuable services to the collector community, the greatest challenge I see in them all going forward has to do with TRUST. And by that I mean not only that a card is being accurately graded but, that it is also authentic and that it has not been tampered with in any way, shape or form once it has gone through the grading process. Can we trust the grading companies to be independent in their actions and dealings? Can we trust them, to the extent possible, to always adhere to common and accepted standards and practices and act consistently? Can we trust them to be honest and forthright with us? And maybe most importantly, can we trust them to be financially responsible for their shortcomings?

In this current market with what I can only describe as ridiculous prices for highly-graded cards, the 8s, 9s and gem mint 10s that are out there, I think it is fairly obvious that these pricing trends are NOT being driven by the true collectors out there. They are being driven by people looking at these cards from almost a pure investment standpoint, and nothing else. But with the old saying, "All boats rise with the tide.", a lot of collectors and dealers are jumping on the bandwagon and either selling their cards for historically insanely high prices, or looking to acquire them today to take advantage of a hopeful continual rise in prices so they can cash in tomorrow. You can't blame someone for cashing in when people are sticking handfuls of money in their faces for little pieces of cardboard. On the other hand, jumping onto the bandwagon and buying such high-graded cards in the current market, hoping to turn around a nice profit as they supposedly keep appreciating, smacks of the problem that was occurring back in the 80s when people were buying up rookie cards left and right and dreaming about how in 10 or 20 years they'd sell them and retire as multi-millionaires when all these rookies retired and ended up going into the HOF. (How'd that work out for all those people?)

If this current market is going to be driven and fueled a lot by the investment community, the grading companies are currently, in my opinion, sorely deficient and lacking in the service they provide. Just look at the recent spate of issues with fake or replaced cards in holders that are out there. Leon has said he has spoken with one person himself, out of Mexico, who makes no qualms about creating and dealing in faked cards and holders. I've seen and actually held some of these "fakes" in graded holders myself, and I have to tell you, they are absolutely scary in how perfect they are. Right down to the flips and everything. And as these ridiculous prices seem to continue to rise, it is evident that the bad element of humankind will seek to derive a way to take advantage of these crazy price trends and cash in for themselves and dishonestly separate good people from their money.

It has gotten to the point where the grading companies and their services are actually creating value where it otherwise formerly wasn't. A raw Mantle card is worth one amount to most people but, put that same Mantle card into a "10" graded holder and you've just increased the value astronomically, whether it is deserved or not. The way these grading companies and their holders are being treated it is scarily akin to printing money. Yet, what measures do the grading companies take to really insure that no one can copy or break into their holders, or to influence their employees to give out undeserved grades or show favoritism to certain big dealers/submitters, or to even assign consistent, accurate grades to begin with? As far as I can tell, not much. They are also fairly tight-lipped and somewhat secretive about their internal practices. Why? You would think that in serving the collecting community and providing that "Trust" that it needs, they would be much more transparent than they have ever been.

I've been a CPA for almost 40 years, and the one sole purpose of a CPA is to attest to the financial statements of their clients, which are used by banks, lenders, investors, stock markets, and a myriad of others to use as a measure of value, worth and financial health of those client companies. Not really too dissimilar from a grade that a third-party grading company puts on a card. In both cases, be it card grades or the attestations results of a CPA's audit, the result rendered is an OPINION on the grade/health/condition of both the cards and the companies in question, not a statement of complete fact. CPAs don't try to kid anyone and tell you that things are written in stone. We admit we may not catch everything and that things can change over time. CPAs also have to submit to a standardized set of rules and regulations in regards to audits and attest examinations that we perform and belong to a nationally organized group, and follow the rules and regulations that national group promulgates. There are literally thousands of accounting firms and CPAs across this country yet, we all must follow the same set of rules in order to continue practicing. Included in that set of rules is a very strict requirement of INDEPENDENCE in regards to our clients. Even though we are paid by our clients, we must still act on behalf of the public at large and must be independent from our clients for whom we provide such attestation services in both fact AND appearance. Likewise, we must be transparent in what we do and have to submit to periodic peer reviews from fellow CPAs/accounting firms who go through a sample of our practices, reports, training and everything we do in regards to out attestation work to insure as much as possible that we are following the same reporting rules and using the exact same standards for all client examinations, regardless of which CPA or CPA firm is doing it. How do you think any one of the grading companies would feel about every couple years or so having to open up their doors to let a rival grading company or some other organization in to see what they're doing, and how they're doing it, so as to insure that they are following the rules, standards and practices being put forth by an independent group that is setting the standards for grading all cards, and not just following standards of their own design? And then following all that, have a report put out about them that the public can see to tell how good of a job they've been doing? If the grading companies are truly looking out for the best interests of the collecting community as a whole, they should look into self-regulation and standardization of practices and grading criteria across the board. If not, then who's interests do you think they are really looking out for?

I also mentioned Independence as an integral part of what a CPA must be in relation to their clients. I remember not too long ago the report came out about supposedly which people were possibly involved in the shill bidding on Mastro auctions in the past. If my memory is correct, didn't that list include some employees, officers or even owners of third party grading companies? And yet despite a bit of righteous indignation put forth in that thread, there really wasn't much else said or done about it, nor any real follow-up or other repercussions that seemed to result from it. That just amazes me as that is truly a horrendous display of the lack of Independence then displayed by these grading companies. You can say what you want but, in my opinion, if these third party grading companies, as well as their employees, officers and owners, are in any way involved in the ownership and sales of their own graded cards, that should not be allowed, and they should be subject to investigation and possible fines, censure and the possibility of being denied the right to continue to grade cards. If that type of information was to come out about a CPA and how they acted, they could be subject to fines, censure and possible loss of their licensing and ability to continue doing what they were doing. In other words, if I put out an audit opinion for a company in which I was not independent, I could be be fined, reprimanded, ordered to undergo additional training and even be subject to losing my license.

Sorry for the long rant but, I see these threads coming up time and again with the same debates and rhetoric they always get. Without some form of standardization and regulation to at least try to guarantee some accuracy and consistency in grading, we could end up with all kinds of fake cards and improperly graded cards floating around out there that undermine the hobby and create mistrust amongst collectors and investors alike. As there is more mistrust, ultimately the value of items and the hobby itself takes a hit. Go back to the times of Enron or Bernie Madoff and see how they impacted the financial community and markets. In those instances, CPAs, Congress, the SEC and others in both government and private industry rose up to enact new and more stringent rules and regulations to deter and hopefully eliminate any such recurrences like those, going forward. I'm not foolish enough to believe our card collecting hobby and community are anywhere near the level of the stock markets and the SEC but, the principles are basically the same. If the Trust in the markets and the people that attest to the worth and value of companies they look at gets diminished in any way, the economic hit can be devastating to the market as a whole, just like if the Trust in third party graders and in the cards they grade becomes less and less trustworthy, the same negative impact is inevitable for the card collecting community also.

It doesn't look like the current crop of third party grading companies has any interest in banding together to create a centralized, unified set of rules and grading standards because it doesn't do anything for them economically. And the card collecting hobby itself isn't so big that the government would see fit to jump in and force some standardization and oversight like it has done with the financial and stock markets. The only way I could ever see this happening anytime in the near future is if the collectors themselves finally all got together and more or less demanded it of the third party grading companies. How would they do it, simple. Get together and quit buying their services unless they do what we really need them to do.

Unfortunately, the reality of that actually happening is most likely nil. To do so, you'd have to get the majority of collectors to agree to operate in this manner going forward. You'd have to get them to determine a standard, consistent set of grading criteria that they all could agree upon. You'd have to get them to basically regrade everything that has already been graded to conform to the new codified standards. And you'd have to get someone to agree to oversee the third party grading companies. Where would all the money for this come from? How would you get the average, casual collector to buy-in to such a program? Who would attempt to oversee it? These are virtually impossible questions to answer given the current state of the hobby. Currently, the powers that be in the hobby are in control of the money and how things go. I don't see them relinquishing that control anytime soon, without one helluva fight at least. Seems that dealers and auction houses wouldn't want to rock the boat as they see these insane prices ultimately bringing more cards out of collections for them to sell and putting more money into their pockets. And probably the biggest reason you won't see any such changes anytime soon is because at the end of the day, it is a HOBBY. Something that the majority of us do for fun, not to get involved with all the work, effort and politics that would go into trying to make major changes to clean up and standardize the grading and to try and deter the people putting out fake cards and fake holders. Even if you got all the Net54 members to go after the grading companies and demand they make changes, we, in my opinion, probably only represent a very small percentage of the entire hobby community and likely don't have a loud enough voice to really enact change by ourselves.

For all these reasons and more, we can continue debating the grading companies all you like but, until there is enough money involved to make it worth someone's while to make changes, nothing is going to change for the average or casual collector anytime soon. So I doubt if I'll ever get a 1952 Topps Mantle card now. The ridiculous prices are insane, and I'll leave those cards to investors who think a half million dollars or more for a NM7 example is accurate and focus on the ones I can afford and appreciate more. I could continue on but, this is more than enough.

B@b C4$mer