[benjulmag]

Bruce asked an interesting question, one that I asked a prominent dealer who has been in the hobby for over 30 years. That person told me that in his opinion, the current market is the softest he's seen it since the early 80s (though to put that in perspective, even in this soft market cards values are exponentially higher than they were then). He believes the main reason for it is that the whales, who were largely responsible for driving the prices though the roof to complete/upgrade their registry sets, are for the most part out of the market now. And they have not been replaced by the next generation of whales. He does not believe the current FBI investigations are a major factor.

I think that what this dealer says is certainly a credible explanation for the soft market. But I also think another big reason is the sorry state of the economy. I'm in commercial real estate and business is the worst I can remember since the recession of the early 80s. People I know in other fields report similarly dismal activity, some shockingly below previous years.

Like all business cycles, in time we will come out of this one. Though given its depth, I believe it will take a lot longer than any previous downturn since the Great Depression. But as to baseball cards, even when the economy strengthens, it is unclear how robust the rebound will be, even if a new generation of whales enters the hobby. Part of my caution is that I do believe the current FBI investigations could have a major impact, especially if there are indictments and some major players are criminally convicted. I believe a significant reason card prices got as high as they did was because of fraudulent activity - shilling (which includes the act of suggesting to investor clients that they bid on certain lots the auctioneer knows another collector will bid very high on) and the reporting of "sales" that never took place. I believe part of the reason some recent high profile auctions did not do nearly as well as in the past, as measured by price realized per lot (as opposed to overall auction gross), is because of the auction houses' concerns that too many investigative eyes might be watching, and therefore this might be a good time to start running a clean(er) auction.