Taking money out of retirement funds to purchase cards

[Luke]

Anyone who did this between 2000 and 2019 outperformed the market massively if they bought blue chip cards. I wouldn't do it now, but it has worked in the past.

I know the OP is talking about people pulling money out of retirement accounts, but in a way we are all doing this with our collections. Every dollar you spend on baseball cards is a dollar you could have plowed into a Vanguard fund. I'm sure there are people who just invest every extra dollar, and to them the way we spend on cards probably looks crazy.

[Exhibitman]

As card prices surged, my wife asked me why I hadn't bought some of the highest-flying cards when they were relatively affordable (Ruth RC, etc.). I said because I was being responsible and putting every spare dime into IRAs and other savings vehicles: if I'd come home and said "hey, honey, I just took the IRA money and bought a great Babe Ruth card", she'd have thrown me and the Ruth card out of the house.

As for the OP, I think many of us are starting to look at our collections as retirement vehicles. I know that I plan to make picking and dealing into my main occupation when I can retire from my law practice. It can generate some reasonable income and it is just plain fun.

Taxes are intensely personal; there is no one-size-fits-all formula. For example, right now cards held for more than a year are taxed as capital gains at 28%. However, if you create a business and sell that way, your profits are taxed as ordinary income. Then there is the question of entity use, which can result in a pass-through of some income tax-free under the Section 199A deduction. You have to calculate hard and soft costs of using an entity (state franchise taxes, formation costs, costs to file tax returns) against the costs of either going with capital gains or doing a Schedule C and eating some self-employment taxes.

There's also the question of what else you could do with your money and what you have done with your money. Cards are a storehouse of (untaxed) value, same as any other hard asset that doesn't produce income, but the cost to get out is that tax hit on your profits. On the other end of the spectrum, the first $500,000 of gains from the sale of a married couple's principal residence is tax-free. So, you could say that it makes sense to buy a home first and accrue up to $500,000 in potential gains at a tax-free rate over time rather than buy a card first and face a tax on the gains when you sell. $500,000 tax-free is the same as roughly $700,000 with taxes.

In other words, there is no simple advice other than if you are really interested, have a professional figure it out for you.

ETA: one further thought on pulling funds from retirement accounts. We will all face the dreaded "RMD" (required minimum distribution) if we live long enough (I think it is/was 70.5 and I thought I read it was going to be 72), and if we inherit an IRA the distributions can start even earlier than that (Inherited IRAs have to be liquidated within ten years). Money is going to come out of these accounts and be taxed, so spending it on cards may be a good play at that point, as a reinvestment. Until an RMD, it is really, really dicey to pull money out; the ROI better be stellar to justify the tax rate and the penalty for early withdrawal. Plus, the accounts offer a level of asset protection that cards...don't.

And while we are at it, one final thought on velocity. One mistake that the shiny crapsters make is not getting out with a profit when the getting is good. I was at a card show recently and one of the dealers was screaming into his cell phone at someone to "dump my Tatis!" Apparently, he'd been offered into six figures for a Tatis card, declined, and had, shall we say, regrets. If you want to have the card until you die, that's one thing, but if you don't, get out when the profit is good and move into the next deal.

[G1911]

Cards might go down, cards might go up.

Stocks might go down, stocks might go up.

Generally, over the long haul, if the major stock market indexes doesn’t go up over the long haul (a retirement account is a long haul investment), the dollar will be collapsing and collectibles will be worth little to nothing. One may make more on 52 Mantle’s or the right vintage, but the indexes are a lot more secure. If they collapse, everything collapses. I’m all for taking some smart gambles, but retirement accounts should not be withdrawn (with those heavy penalty hits) to gamble on baseball cards. Safe and solid is a wiser approach for retirement, but that’s just my opinion. If one wants to go risky, risking it in a way that doesn’t incur huge withdrawal fees seems the wiser risk. Take some income and put it into cards if one wants, or yolo it on crypto, some risks can pay off a lot better than the stock market. But don’t take out of retirement accounts to do it.

[Johnny630]

I would only plow into an investment asset class during some kind of treacherous time in the market when it becomes ridiculously under valued relative to it's past performance. High End Vintage to me right now is not the time.

[Peter_Spaeth]

Originally Posted by Johnny630

I would only plow into an investment asset class during some kind of treacherous time in the market when it becomes ridiculously under valued relative to it's past performance. High End Vintage to me right now is not the time.

If only we could know when things were ridiculously undervalued, we'd all be fabulously wealthy.

[Johnny630]

Originally Posted by Peter_Spaeth

If only we could know when things were ridiculously undervalued, we'd all be fabulously wealthy.

Warren Buffett did it quite well over the years!!

[Casey2296]

Originally Posted by Peter_Spaeth

If only we could know when things were ridiculously undervalued, we'd all be fabulously wealthy.

Like this?

In mid-April 2020 the price of a barrel of West Texas crude went below $0 as sellers had to pay get rid of it.

2.5 years later a barrel of WTI currently sits at $87.78

[Mark17]

Originally Posted by Peter_Spaeth

If only we could know when things were ridiculously undervalued, we'd all be fabulously wealthy.

Game used flannels. They are at least 50 years old, so truly vintage. They are scarce, large, colorful, display well, and are tied directly to the player, the stadium, the clubhouse, the batters box and basepaths. With road jerseys, they also travelled with the teams on trains or planes. A pre- 1958 road jersey from any NL team likely saw Ebbets Field, the Polo Grounds, Sportsmans' Park, and so on.

There might even be actual trace DNA in the fibers of the shirt.

If you're looking for the next thing where suddenly, everybody is going to say, "Doh! Of course! This is the coolest, most under-valued thing ever," it's flannel gamers.

[raulus]

Originally Posted by Mark17

Game used flannels. They are at least 50 years old, so truly vintage. They are scarce, large, colorful, display well, and are tied directly to the player, the stadium, the clubhouse, the batters box and basepaths. With road jerseys, they also travelled with the teams on trains or planes. A pre- 1958 road jersey from any NL team likely saw Ebbets Field, the Polo Grounds, Sportsmans' Park, and so on.

There might even be actual trace DNA in the fibers of the shirt.

If you're looking for the next thing where suddenly, everybody is going to say, "Doh! Of course! This is the coolest, most under-valued thing ever," it's flannel gamers.

No cotton?

https://www.youtube.com/watch?v=sTQvIq0ritI

[todeen]

Originally Posted by parkplace33

On another forum, I read a post where two member spoke about buying cards and withdrawing funds to purchase vintage cards that they wanted. One had being doing it for a while and said that “buying and holding vintage cards made more sense that investing in stocks”.



In a recent conversation with a dealer, he said that this was commonplace, especially in the last few years. Some buyers have had to delay card purchases due to having wait for the payout from funds.



Is this commonplace? I, personally, cannot fathom withdrawing funds from my retirement for card purchases, but maybe I am in the minority.

I would be shocked if it was investing in modern sports cards. That's a risky game especially Bowman 1st. I wouldn't encourage that.

My dad did not invest in stocks, he invested in index fund portfolios. it created diversity and shrank risk. it also prevented high yields from stocks like Apple and Amazon. If an investor is strictly talking selling stock to invest in major foundational sports cards, I'd probably not be too concerned because IMO the risk is the same, and he's trying to create diversity. But if an investor wanted to move from an index fund to cards, maybe I would be hesitant because diversity is built into the funds.

I would think the investor could do no more worse with major foundational cards than with bonds. I might even encourage cards over bonds if they are just trying to hedge against inflation rather than seeing it as a volatile market.

Sent from my SM-G9900 using Tapatalk

[carlsonjok]

Originally Posted by Casey2296

Like this?

In mid-April 2020 the price of a barrel of West Texas crude went below $0 as sellers had to pay get rid of it.

2.5 years later a barrel of WTI currently sits at $87.78

Not the slam dunk you think it is. The reason WTI went negative was because such futures contracts had to settle physically at Cushing and, at the time, Cushing was almost completely full. So, sure, you could have had someone pay you to take that contract off their hands, but you would have also had to take delivery of actual crude oil and find somewhere to store it for 2 1/2 years so that you could sell it today for $87.78

As to the opening question, I would never borrow against my retirement even with the lure of higher returns. I have made financial choices in my life that ended up costing me in the long run (I am looking at you, QCOM), but when I sit with my financial planner and he tells me that his Monte Carlo simulation says I have a 98% probability of maintaining my current lifestyle in retirement, I have no regrets. FOMO holds no truck with me. My collection is my hobby only and represents around 2% of my net worth.

[Casey2296]

Originally Posted by carlsonjok

Not the slam dunk you think it is. The reason WTI went negative was because such futures contracts had to settle physically at Cushing and, at the time, Cushing was almost completely full. So, sure, you could have had someone pay you to take that contract off their hands, but you would have also had to take delivery of actual crude oil and find somewhere to store it for 2 1/2 years so that you could sell it today for $87.78

As to the opening question, I would never borrow against my retirement even with the lure of higher returns. I have made financial choices in my life that ended up costing me in the long run (I am looking at you, QCOM), but when I sit with my financial planner and he tells me that his Monte Carlo simulation says I have a 98% probability of maintaining my current lifestyle in retirement, I have no regrets. FOMO holds no truck with me. My collection is my hobby only and represents around 2% of my net worth.

Nothing as complicated as futures for me Jeff, just a recalibration. When you read a headline like "oil below zero" it's a shout from the mountaintop to sell the runners that got crazy because at the time people thought they'd spend the rest of their lives inside pedaling Pelatons, shopping with Shopify, and clicking through on their Roku TV's. Sell Zoom buy ConocoPhillips was the clear play, of course one would have to separate emotion from the trade, I just wish I could have separated more and gone all in.

[Gorditadogg]

Cards are not an investment. If you are buying cards to make money on them you are speculating, not investing. There is no intrinsic value to cards, all they are worth is what the old farts on this site are willing to pay for them, as long as we are around.

If you made a lot of money on cards, good for you. Maybe you were smart, maybe you were lucky, or most likely you were just obsessed.

Bur think about it. Right now you have a piece of cardboard with a picture on it that cost two cents to make 50 or 100 years ago, and you are hoping somebody will be willing to buy it from you for $1000 or $100,000 ten or twenty years from now. Because why?



Sent from my SM-S906U using Tapatalk

[Sean]

I borrowed a few times from my 401K to fund card purchases. I always paid it back. And I have a couple cards that matter more to me than the earnings that I missed out on in the market while paying off the loans. I don't know if it made financial sense to borrow, but the cards mean more to me, so it makes sense in that regard anyway.

[Exhibitman]

Originally Posted by Gorditadogg

Cards are not an investment. If you are buying cards to make money on them you are speculating, not investing. There is no intrinsic value to cards, all they are worth is what the old farts on this site are willing to pay for them, as long as we are around.

If you made a lot of money on cards, good for you. Maybe you were smart, maybe you were lucky, or most likely you were just obsessed.

Bur think about it. Right now you have a piece of cardboard with a picture on it that cost two cents to make 50 or 100 years ago, and you are hoping somebody will be willing to buy it from you for $1000 or $100,000 ten or twenty years from now. Because why?



Sent from my SM-S906U using Tapatalk

The intrinsic value argument is not a good argument because it is exactly what can be said about stocks, art, gold, diamonds, and nearly every other thing (tangible and intangible) that we use to store value. There is no intrinsic value to any of it other than what some old farts willing to pay for it agree it is worth. As for speculation, so-called 'investments' all are speculation. if that was not the case, why would SEC Rule 156 (17 CFR 230.156) prohibit mutual funds from telling investors to base their expectations of future results on past performance? Simple: because it is all speculative. Any differentiation between one form of construct and another is merely a perception of value and risk relative to one another.

There is little in this world with 'intrinsic' value. Just land, food, fuel, weapons and drugs. But securities, art, cards, even a dollar? Just a construct, worth what people collectively agree it is worth. Or to quote Gordon Gekko: "The illusion has become real, and the more real it becomes, the more desperately they want it. Capitalism at it's finest."

[rats60]

Originally Posted by Sean

I borrowed a few times from my 401K to fund card purchases. I always paid it back. And I have a couple cards that matter more to me than the earnings that I missed out on in the market while paying off the loans. I don't know if it made financial sense to borrow, but the cards mean more to me, so it makes sense in that regard anyway.

I have borrowed to buy a card too. I have borrowed from my retirement, not for a card, but I wouldn't hesitate in the right situation.

I am always amazed at these threads and the negativity towards cards as investments. I have been doing it for 38 years and making easy money. I have constantly heard these negative comments from those not in the hobby, they just don't know. From people that should is just shocking. Sports cards have outperformed the market for 38 years and by a lot. I am not ready to get out yet.

If you are happy with mediocre returns in the markets, then make that choice. I have investments I'm the market too. Why so negative towards those doing better with cards? For those in the market, you have made zero the last 3 years. Why would you be surprised at someone moving investments from something not currently making them money to something that is?

[glynparson]

It’s not as crazy and some seem to be acting. In fact do what you are comfortable doing. Many people have made a lot of money on cards and other collectibles. If you go with blue chip items it’s not near as risky as some of the scared people pretend it is.

[ALBB]

depending on ones situation..
suppose your now nearing 75 + ,retired ...made loads of smart investments/ have the annuity / have a huge pension/ social sec./ house long paid for/ minimal monthly expenses...If its something you enjoy..why not ?

[ClementeFanOh]

Hi all- interesting topic for sure. To Rats60, bad news! We seem to think
alike at lot of the time In all candor, I have yet to take money out of a
retirement fund to buy a card (or comic book, etc) but I cannot fault those
who have. Finances are an intensely personal thing, too complex for most
individuals to lay out in a net54 post. Most folks who claim to "know"
financial markets should immediately be disregarded out of hand, they
"know" zero. Depending on the specific person's means, a withdrawal he/she
approves for the purpose of buying an extravagant collectible, cannot be
dismissed out of hand as a "bad" decision. I'd be willing to wager that many
of you have family members/friends/coworkers who have made
spectacularly unwise decisions for buying spur of the moment items with
retirement funds (insert item "X" here). How can a card with real investment
potential be a worse buy, than classic forehead slappers we all possess
knowledge about? In fact, that could be a compelling "Off Topic" thread
itself- what's the dumbest thing you can name, that someone frittered
away retirement funds to buy? What could possibly go wrong with that
topic? Trent King

[Snapolit1]

Originally Posted by Exhibitman

I am really sorry to hear that. The family financial pillage that occurs in this health care system model is appalling. I hope you both are well and have long, prosperous lives to rebuild.

Incredible how a completely broken medical system destroys the retirements of good people who worked hard their entire lives and saved, yet every time a politician says we have to reform the way medicine is dispensed in this country he or she is shouted down, mocked, belittled . . . . It's just mind blowing.

[Johnny630]

If you bought and have continued to buy over the past 5 years higher-end/grade-centered non-oddball Ruth, Cobb, Jackie, Mantle, and Mays you have never lost. You have won, with a high percentage of winning big. Limited supply with large demand. People always want them and the people that have them don’t want to let them go unless you pay to the moon.

I invest in those names and grades I collect what I love. Collection of Cards and an Investment Section of Cards.

[raulus]

I guess the beauty of living in a free country is that you get to choose how to spend your time and financial resources. And nobody can force you otherwise. Your mother and wife might try, but even their influence has limits. And the beauty is that all of our actions have consequences. If I make brilliant choices, then I reap the rewards. If they are foolish, then I suffer accordingly. Sometimes it takes years or decades for the natural results to manifest, but the law of the harvest is just as true today as it has ever been.

If you decide to pull your cash out of retirement and put it into cards, then God bless you. I really hope it works out well for you financially. And if not, then hopefully you can derive some pleasure in just having the cards.

And for those of us that under-allocate to cards and over-allocate to other assets, hopefully our choices work out for us as well, and we don't look back and wish that we had just let it all ride on cardboard.

Happy collecting, and hopefully we can all enjoy a well-deserved retirement when the time comes, hopefully sooner than later, free of financial worry, and replete with hoarding cardboard and arguing with strangers online about piffle.

[raulus]

Originally Posted by Exhibitman

The intrinsic value argument is not a good argument because it is exactly what can be said about stocks, art, gold, diamonds, and nearly every other thing (tangible and intangible) that we use to store value. There is no intrinsic value to any of it other than what some old farts willing to pay for it agree it is worth. As for speculation, so-called 'investments' all are speculation. if that was not the case, why would SEC Rule 156 (17 CFR 230.156) prohibit mutual funds from telling investors to base their expectations of future results on past performance? Simple: because it is all speculative. Any differentiation between one form of construct and another is merely a perception of value and risk relative to one another.

There is little in this world with 'intrinsic' value. Just land, food, fuel, weapons and drugs. But securities, art, cards, even a dollar? Just a construct, worth what people collectively agree it is worth. Or to quote Gordon Gekko: "The illusion has become real, and the more real it becomes, the more desperately they want it. Capitalism at it's finest."

I think this discussion about speculative assets misses the point, because the real issue is productive assets v. nonproductive assets.

I've always found this discussion by Mr. Buffet to be enlightening from the 2011 shareholder letter, so I'm pasting it here, as it highlights some key differences between asset classes, which appear to be germane to this discussion about investing in cardboard v. other asset classes. It's a bit lengthy, but I've always found it to be insightful:

Investment possibilities are both many and varied. There are three major categories, however, and it’s important to understand the characteristics of each. So let’s survey the field.

Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as “safe.”

In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as the holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control. Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time. Consequently, a tax-free institution would have needed 4.3% interest annually from bond investments over that period to simply maintain its purchasing power. Its managers would have been kidding themselves if they thought of any portion of that interest as “income.”

For tax-paying investors like you and me, the picture has been far worse. During the same 47-year period, continuous rolling of U.S. Treasury bills produced 5.7% annually. That sounds satisfactory. But if an individual investor paid personal income taxes at a rate averaging 25%, this 5.7% return would have yielded nothing in the way of real income. This investor’s visible income tax would have stripped him of 1.4 points of the stated yield, and the invisible inflation tax would have devoured the remaining 4.3 points. It’s noteworthy that the implicit inflation “tax” was more than triple the explicit income tax that our investor probably thought of as his main burden. “In God We Trust” may be imprinted on our currency, but the hand that activates our government’s printing press has been all too human. High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label. Under today’s conditions, therefore, I do not like currency-based investments.

Even so, Berkshire holds significant amounts of them, primarily of the short-term variety. At Berkshire the need for ample liquidity occupies center stage and will never be slighted, however inadequate rates may be. Accommodating this need, we primarily hold U.S. Treasury bills, the only investment that can be counted on for liquidity under the most chaotic of economic conditions. Our working level for liquidity is $20 billion; $10 billion is our absolute minimum. Beyond the requirements that liquidity and regulators impose on us, we will purchase currency-related securities only if they offer the possibility of unusual gain – either because a particular credit is mispriced, as can occur in periodic junk-bond debacles, or because rates rise to a level that offers the possibility of realizing substantial capital gains on high-grade bonds when rates fall. Though we’ve exploited both opportunities in the past – and may do so again – we are now 180 degrees removed from such prospects. Today, a wry comment that Wall Streeter Shelby Cullom Davis made long ago seems apt: “Bonds promoted as offering risk-free returns are now priced to deliver return-free risk.”

The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century. This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future. The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end. What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while. Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A. Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion.

Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices. A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.

Our first two categories enjoy maximum popularity at peaks of fear: Terror over economic collapse drives individuals to currency-based assets, most particularly U.S. obligations, and fear of currency collapse fosters movement to sterile assets such as gold. We heard “cash is king” in late 2008, just when cash should have been deployed rather than held. Similarly, we heard “cash is trash” in the early 1980s just when fixed-dollar investments were at their most attractive level in memory. On those occasions, investors who required a supportive crowd paid dearly for that comfort.

My own preference – and you knew this was coming – is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM and our own See’s Candy meet that double-barreled test. Certain other companies – think of our regulated utilities, for example – fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets.

Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle. In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce. Our country’s businesses will continue to efficiently deliver goods and services wanted by our citizens. Metaphorically, these commercial “cows” will live for centuries and give ever greater quantities of “milk” to boot. Their value will be determined not by the medium of exchange but rather by their capacity to deliver milk. Proceeds from the sale of the milk will compound for the owners of the cows, just as they did during the 20th century when the Dow increased from 66 to 11,497 (and paid loads of dividends as well). Berkshire’s goal will be to increase its ownership of first-class businesses. Our first choice will be to own them in their entirety – but we will also be owners by way of holding sizable amounts of marketable stocks. I believe that over any extended period of time this category of investing will prove to be the runaway winner among the three we’ve examined. More important, it will be by far the safest.

[Peter_Spaeth]

Nicolo, yes, and a fabulous analysis thank you, but everyone isn't 30 years old with a 40 year investing horizon.

[Johnny630]

Originally Posted by raulus

I think this discussion about speculative assets misses the point, because the real issue is productive assets v. nonproductive assets.

I've always found this discussion by Mr. Buffet to be enlightening from the 2011 shareholder letter, so I'm pasting it here, as it highlights some key differences between asset classes, which appear to be germane to this discussion about investing in cardboard v. other asset classes. It's a bit lengthy, but I've always found it to be insightful:

Investment possibilities are both many and varied. There are three major categories, however, and it’s important to understand the characteristics of each. So let’s survey the field.

Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as “safe.”

In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as the holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control. Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time. Consequently, a tax-free institution would have needed 4.3% interest annually from bond investments over that period to simply maintain its purchasing power. Its managers would have been kidding themselves if they thought of any portion of that interest as “income.”

For tax-paying investors like you and me, the picture has been far worse. During the same 47-year period, continuous rolling of U.S. Treasury bills produced 5.7% annually. That sounds satisfactory. But if an individual investor paid personal income taxes at a rate averaging 25%, this 5.7% return would have yielded nothing in the way of real income. This investor’s visible income tax would have stripped him of 1.4 points of the stated yield, and the invisible inflation tax would have devoured the remaining 4.3 points. It’s noteworthy that the implicit inflation “tax” was more than triple the explicit income tax that our investor probably thought of as his main burden. “In God We Trust” may be imprinted on our currency, but the hand that activates our government’s printing press has been all too human. High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label. Under today’s conditions, therefore, I do not like currency-based investments.

Even so, Berkshire holds significant amounts of them, primarily of the short-term variety. At Berkshire the need for ample liquidity occupies center stage and will never be slighted, however inadequate rates may be. Accommodating this need, we primarily hold U.S. Treasury bills, the only investment that can be counted on for liquidity under the most chaotic of economic conditions. Our working level for liquidity is $20 billion; $10 billion is our absolute minimum. Beyond the requirements that liquidity and regulators impose on us, we will purchase currency-related securities only if they offer the possibility of unusual gain – either because a particular credit is mispriced, as can occur in periodic junk-bond debacles, or because rates rise to a level that offers the possibility of realizing substantial capital gains on high-grade bonds when rates fall. Though we’ve exploited both opportunities in the past – and may do so again – we are now 180 degrees removed from such prospects. Today, a wry comment that Wall Streeter Shelby Cullom Davis made long ago seems apt: “Bonds promoted as offering risk-free returns are now priced to deliver return-free risk.”

The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century. This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future. The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end. What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while. Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A. Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion.

Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices. A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.

Our first two categories enjoy maximum popularity at peaks of fear: Terror over economic collapse drives individuals to currency-based assets, most particularly U.S. obligations, and fear of currency collapse fosters movement to sterile assets such as gold. We heard “cash is king” in late 2008, just when cash should have been deployed rather than held. Similarly, we heard “cash is trash” in the early 1980s just when fixed-dollar investments were at their most attractive level in memory. On those occasions, investors who required a supportive crowd paid dearly for that comfort.

My own preference – and you knew this was coming – is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM and our own See’s Candy meet that double-barreled test. Certain other companies – think of our regulated utilities, for example – fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets.

Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle. In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce. Our country’s businesses will continue to efficiently deliver goods and services wanted by our citizens. Metaphorically, these commercial “cows” will live for centuries and give ever greater quantities of “milk” to boot. Their value will be determined not by the medium of exchange but rather by their capacity to deliver milk. Proceeds from the sale of the milk will compound for the owners of the cows, just as they did during the 20th century when the Dow increased from 66 to 11,497 (and paid loads of dividends as well). Berkshire’s goal will be to increase its ownership of first-class businesses. Our first choice will be to own them in their entirety – but we will also be owners by way of holding sizable amounts of marketable stocks. I believe that over any extended period of time this category of investing will prove to be the runaway winner among the three we’ve examined. More important, it will be by far the safest.

This is so brilliant

[Exhibitman]

Here's the thing: we all see what we want to see.

Dollar-based assets are terrible, unless they aren't. My wife's grandfather, who was a machinist, got lucky and bought a mess of Treasuries when interest rates were over 10%. When inflation came down, he ended up with a big winner.

Hard assets, also terrible until they are not. Case in point: gold. The inflation-adjusted price of gold was equivalent to over $9,000 an ounce in 1979-1980, at its all-time peak. My father bought a tube of Krugerrands in the mid-1970s and sold it a few years later for a giant profit. Timing was everything.

Income-producing assets, really dependent on what the asset is and the degree to which it is subject to outside forces. Take rental real estate. Big asset with a track record of performance. Until it hits a wall of political resistance. Like rent control or the shelter in place eviction freezes of the pandemic. Even a dirtbag tenant who uses the non-emergency law can remain in place for months before he can be dug out of the property (my clients have had more than a few of those). No income and you still pay the carrying costs throughout. If you have a thousand units, you can handle it readily. if you have a single building, a few nasty deadbeats and vacancies can kill you. I know of more than one real estate entity facing capital calls due to cash flow issues stemming from losses of tenants and inability to evict deadbeats.

None of it is assured, it just depends on timing and specific risks to the asset. That's why you have to diversify and take profits. At the recent Burbank show a guy came to my table wanting to trade. He opened his custom Zion card case (which they all have now) and pulled out a stack of limited-edition autographed cards...of Walker Buehler. Oops! Probably should have traded some of those when the profits were there and picked up other players, like Tatis. OK, bad example.

You know what is concrete, though? Paying off your debts. Borrowing to invest is a fool's errand for average people. Debt for baseball cards? Puh-leese: that box break is not going to beat the credit cost. Again, back to my wife's grandfather, not a sophisticated guy but knew from the Depression that debt was the key. Own your stuff and owe no one. That's how you weather downturns. He paid off his house and saved to pay for new things. Not very fashionable, but he paid for both his granddaughters' college after their deadbeat dad walked out, and left enough money to secure his grocery clerk daughter's retirement, too. That's what I aim for: to own my stuff and not to owe jack-squat to anyone, maybe leave a legacy for my kid. Of course, it will probably be Ruth cards...

[Directly]

Yep--Spend it all before the Nursing Homes can get it--for six years of care it cost my late mother-law around $460,000, her nursing care insurance policy did help!

[Fuddjcal]

Originally Posted by raulus

First, congrats on reaching 61, Leon.

Second, while the tax penalties are important, don't miss the forest for the trees here. The major point that this discussion is missing is that once you withdraw funds from a retirement account, you can never put them back in. There are very low annual limits that limit the amount that you can contribute to your tax-advantaged retirement accounts. If you start pulling cash out, then your ability to put it back into those accounts is very limited. And for those of us with a short runway between now and retirement, your ability to replace those funds is even more limited.

The ability to bank tax-deferred (or tax-free in the case of a Roth) growth in a retirement account for multiple decades is one of the easiest and low-risk financial layups in our country.

For most Americans, we already are woefully short (financially speaking) when it comes to preparing for retirement. For Americans in their 50s, the median account balance is ~$60k. If you've got $60k in your retirement account and you're in your 50s, I can guarantee you that pulling those funds to buy cards is going to leave you waaaaaaaaay short for retirement.

Let's say you pull $50k out of your Roth today, instead of leaving it in the account for the next 30 years before you need it. If it grows on average at 7% per year (which is not an unreasonable assumption), at the end of 30 years, you've got $380k, all of which is tax free. If it grows at 8%, then you're talking $500k.

Even for someone like Leon who just turned 61, the odds are good that you will live to be 80 or 90, so you may very well be keeping some portion of your retirement account invested for the next 20+ years.

Don't just focus on the tax penalties, because that's a total and complete red herring in this discussion. Remember that there's a lot more involved than just what happens today, because making this decision today could dramatically affect your financial health once you to reach retirement.

And I don't want to end up eating cat food and cardboard when and if I make it to 80. Thanks for the sage advice.

[rats60]

Originally Posted by Fuddjcal

And I don't want to end up eating cat food and cardboard when and if I make it to 80. Thanks for the sage advice.

If you had invested 50k in a 1952 Topps Mantle 31 years ago, you could have 12 million dollars today. If your are happy with 10x in 30 years instead of 200x or more, that is your choice. I think retirement with ~10 million would be a lot more enjoyable than one with 500k.

[Snapolit1]

Easy to pick the one card or one stock that has gone up ridiculously to make an argument for an entire class of assets. I am sure many people have bought individual cards for $50,000 and they cratered. Same with stocks. For every 52 Mantle and Amazon there are many many under performers or simply ordinary performers.

[Brian Van Horn]

"Taking money out of retirement funds to purchase cards"

Please don't.

[Johnny630]

People will do whatever they have to do to own a 52 Mantle. The luster of this has never been stronger. It has a cult-like following that has Zero ends in sight. I’ve had several collectors I’ve known who own this card tell me that they would rather live under a bridge than part with this card. Now that's God’s Honest Truth tell me how I’m wrong on this.

[raulus]

Originally Posted by rats60

If you had invested 50k in a 1952 Topps Mantle 31 years ago, you could have 12 million dollars today. If your are happy with 10x in 30 years instead of 200x or more, that is your choice. I think retirement with ~10 million would be a lot more enjoyable than one with 500k.

Here’s the thing- after taxes and auction fees, that seller only netted about $6M.

Basically half of the $12M+ that it sold for.

The taxes and auction fees will eat so much of your financial returns that if this is your approach to retirement, your returns will have to be astronomical to overcome those financial drags.

[ullmandds]

Originally Posted by raulus

Here’s the thing- after taxes and auction fees, that seller only netted about $6M.

Basically half of the $12M+ that it sold for.

The taxes and auction fees will eat so much of your financial returns that if this is your approach to retirement, your returns will have to be astronomical to overcome those financial drags.

No way in hell the consigner paid auction fees on this

[raulus]

Originally Posted by ullmandds

No way in hell the consigner paid auction fees on this

What about the juice? Do you think the consignor kept the bidder’s 20% premium?

[ullmandds]

Originally Posted by raulus

What about the juice? Do you think the consignor kept the bidder’s 20% premium?

I would imagine the consignor got part of that

[raulus]

Originally Posted by ullmandds

I would imagine the consignor got part of that

What percentage would you estimate that they got? 25%? 50%?

[ullmandds]

Originally Posted by raulus

What percentage would you estimate that they got? 25%? 50%?

If he did not get half of the buyers premium I say he did himself a disservice

[raulus]

Originally Posted by ullmandds

If he did not get half of the buyers premium I say he did himself a disservice

OK. Let's assume the seller got 75% of the buyer's premium, and zero listing fees. You and I aren't going to get this deal when we sell our items. Last time I consigned with this AH, they kept the juice, and I paid 7.5% listing fees. But let's just roll with this generous assumption for now.

So the sale was for $10.5M, with a bidder's premium of $2.1M, total of $12.6M. If we assume that the seller keeps 75% of the bidder's premium, then the seller nets $12.075M.

Now to the fun part - paying taxes. The seller's basis was $50k, which is well known. The gain is therefore $12.025M.

The feds get 28% for capital gains on collectibles. Plus 3.8% for the Obamacare tax on capital gains. So 31.8% to the feds.

But wait, there's more!!

The seller, as I understand it, lives in New York. The top marginal rate for the great state of New York is 10.9%. I thought I also read that this seller also lives in New York City, which adds another 3.8%. So state + city gets you another 14.7%. And under the new tax law, it's not deductible on your federal return either. Brilliant!

So all-in, taxes are 46.5% on a gain of $12.025M, which gets you to taxes of $5.6M. Seller nets right about $6.425M after taxes. Even with very generous assumptions about who gets the juice, and no listing fees.

If the seller was in a zero tax state (and city), then that would help. The seller would net $8.2M in that scenario. Hopefully this seller moved to Florida last year, although I'm guessing that Governor Hochul will still work like the dickens to get NY's cut in that scenario.

But whether we're talking about $8.2M or $6.425M, it's still a lot less than $12.6M.

[Johnny630]

Originally Posted by raulus

OK. Let's assume the seller got 75% of the buyer's premium, and zero listing fees. You and I aren't going to get this deal when we sell our items. Last time I consigned with this AH, they kept the juice, and I paid 7.5% listing fees. But let's just roll with this generous assumption for now.

So the sale was for $10.5M, with a bidder's premium of $2.1M, total of $12.6M. If we assume that the seller keeps 75% of the bidder's premium, then the seller nets $12.075M.

Now to the fun part - paying taxes. The seller's basis was $50k, which is well known. The gain is therefore $12.025M.

The feds get 28% for capital gains on collectibles. Plus 3.8% for the Obamacare tax on capital gains. So 31.8% to the feds.

But wait, there's more!!

The seller, as I understand it, lives in New York. The top marginal rate for the great state of New York is 10.9%. I thought I also read that this seller also lives in New York City, which adds another 3.8%. So state + city gets you another 14.7%. And under the new tax law, it's not deductible on your federal return either. Brilliant!

So all-in, taxes are 46.5% on a gain of $12.025M, which gets you to taxes of $5.6M. Seller nets right about $6.425M after taxes. Even with very generous assumptions about who gets the juice, and no listing fees.

If the seller was in a zero tax state (and city), then that would help. The seller would net $8.2M in that scenario. Hopefully this seller moved to Florida last year, although I'm guessing that Governor Hochul will still work like the dickens to get NY's cut in that scenario.

But whether we're talking about $8.2M or $6.425M, it's still a lot less than $12.6M.

I've always said this, cards may in theory seem easy and profitable when the time comes to liquidate, until you see that tax bill, ugh. That being said a net of $6.425 million ain’t too shabby for a 30-year investment of $50,000. I'd take that return everyday of the week and twice on Sunday's !

[raulus]

Originally Posted by Johnny630

I've always said this, cards may in theory seem easy and profitable when the time comes to liquidate, until you see that tax bill, ugh. That being said a net of $6.425 million ain’t too shabby for a 30-year investment of $50,000. I'd take that return everyday of the week and twice on Sunday's !

If we could get that return on all of our cards, then there’s no doubt that we would all retire comfortably.

[Johnny630]

Originally Posted by raulus

If we could get that return on all of our cards, then there’s no doubt that we would all retire comfortably.

It seems the only way to make a gain like this is to spend big on an item or asset class that you have major conviction in for its long-term growth. It Could be anything, your business, real estate, stocks, crypto, or cards. This gentleman had the smarts and guts to pay the $50,0000 at the time. I believe at the time one recently had just sold, 91 or late 90 with Christie’s or Sotheby’s for $50,000 so I believe that’s how Rosen came up with his price to the gentleman for $50k.

[G1911]

This is a biased sampling predisposed to baseball cards, of course, and many have large investments into them that stand to gain from further growth that is promoted, but I’m a little surprised to see so many that think going all in on like this is a smart decision. It is going all in; if one is to the point that they are emptying 401K’s and IRA’s to pay for cards, they are not diversifying their portfolio. That’s an extreme step.

High end cards have skyrocketed since the opening of 2020. It’s fallen from the peak, but prices remain very high. Gambling your retirement that it will continue inexorably forward and continue to make huge percentage leaps is a very risky gamble. Retirement accounts are set up for very favorable taxation and stability, losing those tax benefits and taking the early withdrawal fees to invest in mass produced collectibles that are not set up for favorable taxation (if I sold a Mantle I’d owe close to 50% of my profit in taxes alone) is a titanic gamble. You don’t have to have your cards perform better than the stock market to profit from this, you have to beat it by a LOT.

One can gain a lot from large risk. Draining your retirement accounts to participate in the current collectibles fad is a large one. Whether it’s cards, crypto, beanie babies or GME, it can pay off big time. If I had bought into 52 Mantles and sold them now, or had bought more crypto in 2009, or drained my 401K to join the apes on WallStreetBets when they started the train on GME, I’d have made more than my index invested retirement accounts. There are also many such events where I would have gone broke if I followed the hype. Stocks may go up or down, but the market grows over time. If the market doesn’t grow over time, the US dollar collapses and your collectibles collapse too. Retirement accounts are set up favorably to enable responsibility and security for old age. I have a hard time seeing that risking a secure retirement in favor of going all the way in on baseball cards after a huge rush and pump is intelligent financial advice. Again, emptying retirement accounts to do it is very different from diversifying or putting some of one’s cash or income into it as a supplemental investment.

[raulus]

Originally Posted by Johnny630

It seems the only way to make a gain like this is to spend big on an item or asset class that you have major conviction in for its long-term growth. It Could be anything, your business, real estate, stocks, crypto, or cards. This gentleman had the smarts and guts to pay the $50,0000 at the time. I believe at the time one recently had just sold, 91 or late 90 with Christie’s or Sotheby’s for $50,000 so I believe that’s how Rosen came up with his price to the gentleman for $50k.

Certainly the returns on this one item are pretty spectacular, even after taxes and auction fees. Even if the auction fees were priced at normal prices that you and I will pay on our items.

But do you really need to hit a home run every time to retire comfortably? My experience when you get both cheeks into every swing is that you're not going to connect every time.

Just for fun, let's say that this $50k was instead invested in a Roth back in 1991, with the S&P 500, reinvesting dividends.

For those of you who will observe that $50k is above the annual contribution limits for a Roth, then let's assume that he pulled $50k out of his Roth to buy it, since pulling cash out of your retirement account to buy cards was the original impetus for this string. For those of you who are tax historians and who will retort that Roths didn't exist until 1998, I guess we'll just have to enter the land of make-believe to attempt to compare apples to apples. Since we're all buying cards with after-tax dollars, and since Roths are available to us today, this seems like a reasonable comparison.

According to the returns that I'm showing for such an investment, the seller would have about $925K in that hypothetical Roth today, all of which would come out tax free.

Not the home run that he got from buying the 311 Mantle. But still a very nice return on investing $50k in a relatively boring asset class. And for most of us, I'm guessing that $925K in a Roth would put us well on the way towards retirement.

But by golly, if you've got the next Rosen Mantle, then go nuts and do whatever it takes to buy it.

[Exhibitman]

Originally Posted by Johnny630

People will do whatever they have to do to own a 52 Mantle. The luster of this has never been stronger. It has a cult-like following that has Zero ends in sight. I’ve had several collectors I’ve known who own this card tell me that they would rather live under a bridge than part with this card. Now that's God’s Honest Truth tell me how I’m wrong on this.

I wouldn't go that far but consider this objectively: you can purchase an asset that has a 40+ year track record of price increases well above inflation. Which is more reasonable, to assume that the price of the item will shift downward over the next ten years, or to assume that the price will increase over the next ten years? I'd go with the former. I know that past performance is no indicator of future performance, but a track record is all we have to go with when it comes to hard asset investments.

I bought a lot of cards a long time ago not because I thought they were good investments but because I enjoyed them. The fact that they are turning out to have been a good investment too is a bonus. Confronting today's prices, there are not many cards I would buy, but the 1952 Topps Mantle is one of them, because of all the factors we have been over ad nauseum on this board. Name a single postwar card with comparable recognition and status of the Mantle. Not possible. The interest in the card transcends collectors. Non collectors are impressed with it, same as a T206 Wagner. That tells me all I need to know about the long-term prospects for the card. There are likely to be short term corrections, as with any asset, but the market trend is upwards over the long term.

And cards are really fun to own, damnit!

Thread needs a card image

[Jewish-collector]

This situation was not an average collector saving up all his money, selling some cards, borrowing money, etc,... to buy this Mantle for $50,000. As I understand it, the consigner is very wealthy. So, whatever the payout to him (after the taxes stuff), probably isn't going to change his life at all.

[HistoricNewspapers]

Originally Posted by G1911

This is a biased sampling predisposed to baseball cards, of course, and many have large investments into them that stand to gain from further growth that is promoted, but I’m a little surprised to see so many that think going all in on like this is a smart decision. It is going all in; if one is to the point that they are emptying 401K’s and IRA’s to pay for cards, they are not diversifying their portfolio. That’s an extreme step.

High end cards have skyrocketed since the opening of 2020. It’s fallen from the peak, but prices remain very high. Gambling your retirement that it will continue inexorably forward and continue to make huge percentage leaps is a very risky gamble. Retirement accounts are set up for very favorable taxation and stability, losing those tax benefits and taking the early withdrawal fees to invest in mass produced collectibles that are not set up for favorable taxation (if I sold a Mantle I’d owe close to 50% of my profit in taxes alone) is a titanic gamble. You don’t have to have your cards perform better than the stock market to profit from this, you have to beat it by a LOT.

One can gain a lot from large risk. Draining your retirement accounts to participate in the current collectibles fad is a large one. Whether it’s cards, crypto, beanie babies or GME, it can pay off big time. If I had bought into 52 Mantles and sold them now, or had bought more crypto in 2009, or drained my 401K to join the apes on WallStreetBets when they started the train on GME, I’d have made more than my index invested retirement accounts. There are also many such events where I would have gone broke if I followed the hype. Stocks may go up or down, but the market grows over time. If the market doesn’t grow over time, the US dollar collapses and your collectibles collapse too. Retirement accounts are set up favorably to enable responsibility and security for old age. I have a hard time seeing that risking a secure retirement in favor of going all the way in on baseball cards after a huge rush and pump is intelligent financial advice. Again, emptying retirement accounts to do it is very different from diversifying or putting some of one’s cash or income into it as a supplemental investment.

Good points.

If we took every baseball card and its prices in 1991 and tracked their value compared to now there may be just as many losers as winners.

Then you have to look at condition. People were buying vintage cards at NM to Mint prices back then when in reality 90% of those cards would be graded at 4-7.

For example, in the early 1990's, Eddie Murray RC's were going for $40-$50 and 90% of those were most likely in the 4-7 grade range.

So it really isn't fair to say that a PSA 10 Eddie Murray goes for 15K now and look how much money you would have made.

How many $40 Eddie Murray rookies were bought in 1991 that would now be $15 cards in their raw state, or $35 in PSA 5 condition(then when you minus grading fees, still $15-$20)? I would say the vast majority.

So in totality, the Murray RC, if viewed as a stock by looking at EVERY card, even if you include the handful of $15,000 PSA 10's that sold, that Eddie Murray RC stock may very well still be even or have gone down since then. $40 in 1991....and still a $40 stock in 2022 with no dividends ever paid.

That isn't even counting all the sets like 1990 Leaf that were $150-$300 sets in 1991-ish and are worth about $50 now.

Then you have the trash from the junk wax era that ALL lost big value.

Pre-war has done very well though compared to 1991. I would say it is up across the board in that segment.

[Mike D.]

I consider card collecting a hobby, not an investment per say.

That being said, it's likely a better financial investment than my other hobbies (going out to dinner, drinking beer, live music, travel, etc.), at least in terms of any long term financial payback.

Unless anyone wants to pay me to tell stories about that time I drank beer and saw that band after that really good dinner out...

[Bridwell]

I like the diversifying approach. I have real estate, 401k, IRA, savings, and baseball cards. The cards are not part of any of the other investments. I don't borrow from one category to fund another, even though that's allowed.

Watching the stock market drop lately makes me glad for that diversity. Prewar baseball cards have been steady in holding their value, while some cards have jumped up better than the other investments. It's hard to find another investment where something is worth 10x what I paid.

When it's time to sell, all will be subject to taxes for me. I'll sell gradually to fund retirement I suppose.

[bmattioli]

Ask this to any sane financial advisor..