$15,000 to spend on 1-5 cards...WWYD?

BobC · #1 10-22-2022, 04:46 PM

Quote:

Originally Posted by anchorednw

Though not something I would even begin to invest a large amount in (cardboard-wise), a very interesting project and maybe something fun to do on a smaller scale.

Reason for my suggesting it goes back to last year, and a thread about prices some M101-2 Sporting News Supplements were suddenly bringing in the Memory Lane auction in August of 2021. Turns out that unbeknownst to pretty much everyone reading the thread, PSA apparently had suddenly started grading these supplements only a year or two before then. Most serious M101-2 collectors really weren't into grading them at all, especially since up till then only Beckett graded the M101-2 supplements. SGC never has, and I didn't see any on CSG's pop reports, so I don't know if CSG also doesn't grade them, or if it is just no one has tried submitting one to them yet. Meanwhile, PSA's pop reports show that as of today they have still only graded 137 M101-2 Sporting News Supplements in total. The M101-2 set has 100 different supplements in it, so PSA hasn't even gotten close to grading every different supplement in the set yet.

It would seem that with the influx of new collectors/money into the hobby these past few years, and the attraction and desire they appear to have for low pop/high grade PSA cards and items, getting in on the ground floor of a set/issue PSA suddenly starts grading items of may not be a bad idea. Though PSA and their Registry are not my personal cup of tea, it certainly seems to be for a very large number of people in the hobby. And the money that follows shows it.

I've wondered in the past what would happen to the prices and values of items in other such sets/issues were PSA to suddenly start grading them. Like the S74 silks, BF2 Ferguson Bakery pennants, and B18 felt blankets, for example. There are Cobbs, Wagners, Joe Jacksons, and other HOFers and star players in such sets/issues that I've often thought they are way undervalued due to a (for lack of a better term) perceived stigma that may follow them because of a perception then of their not being deemed worthy of grading by PSA.

Peter_Spaeth · #2 10-22-2022, 04:58 PM

Great chart, but does the typical way one talks about annual return take into account some notion of compounding, in which case the annual returns would be somewhat lower?

raulus · #3 10-22-2022, 05:06 PM

Quote:

Originally Posted by Peter_Spaeth

Great chart, but does the typical way one talks about annual return take into account some notion of compounding, in which case the annual returns would be somewhat lower?

I�m sure you get tired of me pointing it out, but does the chart also assume zero selling costs?

Peter_Spaeth · #4 10-22-2022, 05:08 PM

Quote:

Originally Posted by raulus

I�m sure you get tired of me pointing it out, but does the chart also assume zero selling costs?

Am I right or wrong on the first point, you're a numbers guy and I'm just a lawyer?

raulus · #5 10-22-2022, 05:16 PM

Quote:

Originally Posted by Peter_Spaeth

Am I right or wrong on the first point, you're a numbers guy and I'm just a lawyer?

Just based on a quick look, the math appears to be an annual return.

For example, for the first item, going from ~$1,500 to ~$15,000 from start to finish would be about a 1,000% return in the aggregate. So since we�re dealing with about 16 years, it�s going to be a lot less on an annual basis with annual compounding. I would have expected less than the 137% quoted here, but certainly a return approaching 80-100% per year.

Maybe when I�ve got my laptop handy, I can double check the math instead of just trying to do it in my head. Or one of the other math savants loitering around here will beat me to it.

BobC · #6 10-22-2022, 05:22 PM

Quote:

Originally Posted by raulus

I�m sure you get tired of me pointing it out, but does the chart also assume zero selling costs?

And don't forget the taxes!

cgjackson222 · #7 10-22-2022, 05:07 PM

Quote:

Originally Posted by Peter_Spaeth

Great chart, but does the typical way one talks about annual return take into account some notion of compounding, in which case the annual returns would be somewhat lower?

There is no discount rate, interest rate, inflation rate, nor any other assumptions

Peter_Spaeth · #8 10-22-2022, 05:20 PM

Quote:

Originally Posted by cgjackson222

There is no discount rate, interest rate, inflation rate, nor any other assumptions

Fair enough, and not my area, but I thought when people speak of annual rate of return for investments they're considering compounding so just dividing by the number of years in the period would overstate.

https://www.investopedia.com/terms/g/geometricmean.asp

raulus · #9 10-22-2022, 05:33 PM

Quote:

Originally Posted by Peter_Spaeth

Fair enough, and not my area, but I thought when people speak of annual rate of return for investments they're considering compounding so just dividing by the number of years in the period would overstate.

https://www.investopedia.com/terms/g/geometricmean.asp

So, some bad news here. Looks like my quick and dirty math in my head overstated the annual returns, and not by a little.

The annual return on that first one, factoring in compounding, is 15.4%.

Like me, you are probably thinking, WTF!!!

Just seems really low when your item goes up about 1,000%.

But I ran the math a few times and reverse engineered it. Investing that sum for that 15.4% rate over about 16 years gets you the final value.

Just another example of how your returns on cardboard might actually be less than you expect. Admittedly, not every investment in the stock market is going to generate 15.4% per year for 16 years.

And the return on cardboard is calculated before even factoring in selling costs and taxes. Although admittedly often investment returns are quoted on a pre-tax basis.

Peter_Spaeth · #10 10-22-2022, 05:45 PM

Quote:

Originally Posted by raulus

So, some bad news here. Looks like my quick and dirty math in my head overstated the annual returns, and not by a little.

The annual return on that first one, factoring in compounding, is 15.4%.

Like me, you are probably thinking, WTF!!!

Just seems really low when your item goes up about 1,000%.

But I ran the math a few times and reverse engineered it. Investing that sum for that 15.4% rate over about 16 years gets you the final value.

Just another example of how your returns on cardboard might actually be less than you expect. Admittedly, not every investment in the stock market is going to generate 15.4% per year for 16 years.

And the return on cardboard is calculated before even factoring in selling costs and taxes. Although admittedly often investment returns are quoted on a pre-tax basis.

Right. It's geometric, not arithmetic. Those are still nice returns but we need to keep it in perspective and apples to apples. I doubt there is any investment that generates a 70 percent annual return over time.

https://www.investor.gov/financial-t...est-calculator
The beauty of compounding, illustrated.

raulus · #11 10-22-2022, 05:57 PM

Quote:

Originally Posted by Peter_Spaeth

Right. It's geometric, not arithmetic. Those are still nice returns but we need to keep it in perspective and apples to apples. I doubt there is any investment that generates a 70 percent annual return over time.

https://www.investor.gov/financial-t...est-calculator
The beauty of compounding, illustrated.

And most of that return came during the pandemic. Prior to that point, your return was low to mid single digits on an annual basis.

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