Minimizing your Losses

[glchen]

Resurrecting this "oldish" thread because of a couple of things recently. First a thread here on something akin to shilling by an auction house: Link. The second was an email I recently received asking what I paid for a certain card. That card was a Ruth card during his playing days because the emailer had also recently purchased that card type also for Ruth. It ended up that the buyer paid something like 10X the value of the card because he was not knowledgeable about the typical prices of these, and that the seller had trumpeted the card as 1 of 1, which it definitely was not. This was a Ruth card, so you can imagine how much the buyer overpaid. The good news in this situation was that the buyer was able to return the card and receive this money back without any problems.

This brings me back to this topic, which is how to minimize your losses in cards. Most everyone will say that card collecting is a hobby and it is for fun. However, one refrain that I commonly here is "I want to get back the money I put in the the card" (or close to it). People enjoy collecting, but they don't not want to get creamed. Many collectors have families or bills or other things, so if they're getting whupped buying collectibles, they're not the only people suffering. And again, most people are happy as long as things even out. Generally, if they lose some money in these cards here, but these other cards have appreciated in value so that things are generally even, they are happy. That brings me to what you need to do to minimize your losses:

* Don't overpay!

This is like those ads on television that you sometimes see from gambling casinos. You have to know your limits. Here, you have to be disciplined enough to not overpay for cards, and let cards go when they go over their value. I would say when you look to purchase cards, you should assign it to values. First is the true value of the card monetarily. The second is how much enjoyment you would receive from just owning the card. The second is the value that you would not mind losing. If you say this card is worth $50, but I get $5 value just having this card in my collection and enjoying it for a while, then $55 is a fair value to pay. You can think of this as similar to the concept of renting. There have been some discussions where it seems that some high dollar value cards seem to change hands fairly often. The comments are often that the buyer was just "renting" the card for a while, enjoyed having that card in their possession for a little bit, and then was willing to let it go again. Think of the rental fee as that part that you wouldn't mind losing. Of course, if the card appreciates, that's great. However, if you lose a bit, don't sweat it too much.

This doesn't mean that you have to only collect certain popular cards or sets (although certainly, these often have less price fluctuations and are easier to sell). It also doesn't mean that you shouldn't buy rare cards that only come out once in a blue moon. Sometimes, if you don't get a card, it won't be available for another few years. That's something you just need to keep in mind when determining value.

The other part of value is the first part of equation. What's a card worth? For that you need to be knowledgeable and "do your homework." The do your homework part doesn't sound fun, certainly not for a hobby, which by definition is something you do for fun. That's why this board is so great. There's a lot of knowledge here on net54, where just reading the posts, you can get a lot of knowledge about cards, and still enjoy the learning. The other part you still need to learn is the pricing. Often this comes from buy and selling many cards in your collection so you come to have an idea what these are worth. However, you can also look at past auction histories or ebay completed sales or VCP.

This is why shilling is so dangerous. With shilling it always pushes you to the brink of overpaying for cards. You may think that you are still buying the card for a good value, but any kind of hedge that you have is gone. Your collection will go from "I lose some here but I gain some here" to much more of "I am losing everywhere." So definitely be careful when you buy. Collecting is definitely great fun, but even better when you're financiall at peace of mind.

[Exhibitman]

Nicely put, Gary. I agree wholeheartedly. Of course, while what you are suggesting makes perfect sense, it also requires a fair bit of intellectual honesty on the part of a collector in admitting that one really does not have the ability to pee in the tall weeds with the big dogs. Not an easy thing to admit. That realization all but drove me out of vintage baseball card collecting some years ago when I realized that many cards on my want list were simply beyond my reach. A nice side effect of what you propose never having to wait around all night looking for auctions to close. Just put in the limit and STICK WITH IT.