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Eric BrehmThe purpose of a price guide is to estimate the price at which an item would change hands between a buyer and a seller when both parties have reasonable knowledge of all the necessary facts, and neither is obligated to make the transaction, i.e. the fair market value. This estimate should be based on historical transactions completed for the same or similar items. I don't think it is particularly relevant whether those historical transactions were auctions in which several buyers competed with each other to arrive at the final price (e.g. eBay or auction house), or simple buy-sell transactions in which the buyer simply agreed to pay the asking price (e.g. eBay BIN), or ones in which the buyer negotiated a final price one-on-one with the seller (e.g. at a card show). This would be true of baseball cards as well as other commodities such as houses, securities, etc.
Seems to me that what is important in determining card values is to take into account as many transactions involving that card (and perhaps other similar cards, say from the same set) as possible in arriving at a single estimated value. The goal is to limit the effect of outliers, based on extraordinary circumstances, that could skew the true market value, resulting in estimates that are unrealistically high or low. This is usually done by taking average or median values across the whole range of transactions that have occurred over time, or simply by throwing out data known to be associated with unrealistic transactions.
In a recent internet auction, two 1933 Goudey common cards in PSA 8 went for about $8000 each, due to the fact that two or more individuals were willing to pay way above 'market' value for those cards because they wanted those particular cards for their sets. The bidders were also probably caught up in the emotion of the moment -- i.e. not wanting to get outbid, and willing to go to extremes to avoid that. (I doubt whether these cards would have sold for $8000 each if there had been a fixed BIN price of $8000 placed on them to begin with.) These auctions are examples of outliers that, while not irrelevant to arriving at a value, need to be either discarded, or averaged in with other transactions where such fervent buyer competition was less of a factor. In the absence of such data, looking at sales of other 1933 Goudey common cards with similarly low populations might be helpful in predicting what the cards would likely sell for in the future. This is where a little bit of 'theoretical' extrapolation, based on general knowledge of the baseball card market forces pertinent to those cards, would come into play, as opposed to purely empirical sales data for particular individual cards.
Price guides like SMR are good because they track the sales of cards in each set, individually and collectively, over a long period of time. Changes in the reported prices from one period to the next should reflect general trends in the market, not minor fluctuations that occur from time to time because of temporary changes in the popularity of the set or a particular card, or unusual transactions that occur because of extraordinary circumstances that will likely not be repeated in the future. Toward this end, SMR gives their average estimates for each card in a set, but also lists some of the more extraordinary transactions separately. For example, the latest SMR gives a price of $9500 for 1933 Goudey #230 Hubbell in PSA 9, but also indicates that one sold in 2006 for $24,368. Is that because two people went overboard when bidding for that particular card, or is it because that Hubbell card was particularly strong for a PSA 9 and so commanded more than the average? Did they average the $24K sale into the average, or exclude it? No way to know, but either way, the high sale is probably worth noting separately.
Guides like vintagecardprices are good because they do show the range of recent prices actually realized for a particular card. But my first inclination is always to average those prices, so that I feel I am factoring out, or at least reducing the effect of, the outliers that may have occurred for various reasons. The transactions are indeed based on the 'latest' market conditions, but they must still be put into historical perspective in order for their effect on true market value (again, the price at which the card would likely change hands in the future) to be properly accounted for.
10-17-2007, 09:58 AM
New 2008 SCD Came Out- Are Prices Accurate?
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. At least SCD doesn't copy Beckett. Sounds like from what Rich was saying they don't generally do that, either.
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