Recession and effect on cards

[parkplace33]

I subscribe to a ton of financial videos and updates. The past month, more and more commentators and so called experts are taking about a greater likelihood of a recession in the next year or so.

If that happens, do card prices go down? Curious to hear from long term members about card prices during the 2000 and 2008-2009 financial crises.

[ullmandds]

For the most part of course they do!!! Prices will soften across-the-board in my opinion the more desirable and/or the rarer the card the less so.

[Johnny630]

REA has a ton of Really Nice Stuff…including some really nice high end sets the 61 Topps, one of the 59 Sets on of the 64’s it’s gonna go for mega mega amounts all those big eBay sellers guy go and view, they can grade, they will spend. I think consignors are nervous if they wait could be detrimental.

[bbcard1]

I just don't know. I think that the baseball card has disconnected from the sport and is functioning more like the art market now. Of course, I am often wrong.

[JustinD]

Catch 22 on this hypothetical…yes, recession is likely and many people will tell you it has already started. I do not ascribe to that belief and instead see it about a year or more down the road unless we start to aggressively fight inflation with real interest rate adjustments. Don’t look for that to happen till after November as election worries far exceed the destruction of the economy to our political folks. (And if someone wants to complain about that as biased, well it doesn’t really matter the party in charge if the flip is as severe as is likely this year).

My point, it is perspective with aggressive inflation and likely recession combined. Picture your cards continuously gaining value over the next year, you may think this is awesome. The truth more lies in devalued currency just like your groceries. Paying more for less is and will be status quo until we tip the demand balance. Only then will you see a dip.

I’ll compare what I know well as an example and much of the 2008 housing crisis. As we sit interest rates on homes have risen to prepandemic levels and honestly about a few years prior. Home values remain very high…for now.

Consumers most often follow an affordability index that modifies sale values. They take a predetermined amount of monthly income that they can allot to a mortgage much like a car payment. How that payment is broken down is of no consequence to many as long as that amount is followed. Your payment is in simple terms, a combination of the principal amount and the monthly interest on that amount. The lower the interest, the higher of a principal loan amount you can have and still hit your target payment amount. With rates at 30 year lows the past 24 months it has given buyers the ability to far overpay and get in bidding wars for homes. Thus paying higher and higher prices. If I change those rates higher, that monthly payment is now more interest and your principal must go lower to obtain the same payment amount. You can easily see how this affects home values and how the current home values can quickly be affected as soon as the market demands correction as demand lowers as consumers are priced out.

After all that rambling, think of the inflation we have had providing so much discretionary spending and low borrowing rates for buying collectibles. People in many job groups are receiving much higher pay rates which are raising the price of goods exponentially. The same basic economic rules will soon apply. Once the seesaw tips too far and the market is outpacing buyer income it will fold causing prices to settle.

That’s what happened during each of those periods you spoke of and the dynamics of basic economy will dictate it will always happen again to restart the cycle. As a collector I personally love those cycles as I have been holding on major purchases for 2 years and expect my collection value to stabilize much like my home. These cycles do drive the average investor out and drops the dead weight, but you will see the big pieces continue demand as always as those that have been here long know the cyclical nature of these things just like the stock market. It is never the end, only a new beginning.

Again as always, just my personal opinion. Avoid anyone who tells you they can factually predict the future.

[Exhibitman]

Originally Posted by JustinD

Avoid anyone who tells you they can factually predict the future.

Now who can argue with that? We are all just:



Except for those with political agendas:



Past experience is that cards go into a decline some time after the start of what turns out to be a recession. In the Great Recession it took about a year from the start of the cascade of real estate defaults to the card market declining. Pretty simple why:



I agree that some parts of the card market are not tethered to the business cycle. I had an interesting conversation with a reporter who covers art (her son is way into cards and she was referred to me by a family member). She said that the art world no longer talks about cyclical investments in blue-chip art because the proliferation of extremely wealthy people across the world who are essentially insulated from economic cycles has led to a constant market. I suspect we are there with the really expensive cards. People who can drop $100K on a card aren't going to be hurt by inflation or a recession.



"It's good to be the king."

The rest of us...



All I can think is that with such a strong card market it is the time to empty out the doubles and trade boxes and sell off the half-finished projects we all start then abandon, etc. What the 50 year history of the hobby does tell us, though, is that you hold the best cards and use the dip in the market to get more of them.

One other thing we also know from history is that collectors will sit on their collections when values fall, unless they have to sell.



Peace, out

[Johnny630]

Adam to me this statement couldn’t be more true.

Some parts of the card market are not tethered to the business cycle. I had an interesting conversation with a reporter who covers art (her son is way into cards and she was referred to me by a family member). She said that the art world no longer talks about cyclical investments in blue-chip art because the proliferation of extremely wealthy people across the world who are essentially insulated from economic cycles has led to a constant market. I suspect we are there with the really expensive cards. People who can drop $100K on a card aren't going to be hurt by inflation or a recession.


People spending six figures on big cards in the major auction houses
REA, Heritage, Mike High, Goldin, ect inflation doesn’t really bother them.

[Leon]

Originally Posted by bbcard1

I just don't know. I think that the baseball card has disconnected from the sport and is functioning more like the art market now. Of course, I am often wrong.

I agree with this. Cards have a life of their own (at least vintage).
.

[mrreality68]

Originally Posted by Leon

I agree with this. Cards have a life of their own (at least vintage).
.

+1 agree especially vintage.

But the more modern cards especially the last 5 plus years are tied to the success of the young super stars or potential superstars as we see with these special cards created, refractors, minor league cards of the potential superstar etc

[JollyElm]

I think today's the day I'm finally going to run down to the coin store and exchange all of my Gregg Jefferies rookie cards for gold bullion!!!

[Rich Klein]

And yet history tells us cards can sometimes explode during a recession.,

The hobby boom of the late 1970's-81 was during a recession

The mega hobby boom of 1987-93 came with the recession along the way

Now the market did soften significantly during the economic issues of 2007-2011 or so

So I think things depend on other factors. This market has changed so much that we can guess but that's all we can do

Rich

[Casey2296]

Buying Cobb, Ruth, Wagner, is like buying coastal property. They're not making anymore of it so if you can get in at any point get in, you won't be disappointed.

The days of cheap money and frivolous spending are coming to an end and there will be a lot of folks holding their "modern junk" in their hands.

The Fanatics/NFT crowd will go the way of SPAC's, shits going to get real for the general public. Older folks here remember what a monster inflation is and it's affects to a lot of folks. The UMC/MC will pull back from the market in a big way, and lets face it, those are the two most important classes to the collectibles market.

[Exhibitman]

Originally Posted by Casey2296

The days of cheap money and frivolous spending are coming to an end and there will be a lot of folks holding their "modern junk" in their hands.

I see what you did there.



You are a bad man. Very, very bad man.

[oldjudge]

Originally Posted by Casey2296

Buying Cobb, Ruth, Wagner, is like buying coastal property. They're not making anymore of it so if you can get in at any point get in, you won't be disappointed.

The days of cheap money and frivolous spending are coming to an end and there will be a lot of folks holding their "modern junk" in their hands.

The Fanatics/NFT crowd will go the way of SPAC's, shits going to get real for the general public. Older folks here remember what a monster inflation is and it's affects to a lot of folks. The UMC/MC will pull back from the market in a big way, and lets face it, those are the two most important classes to the collectibles market.

LOL, with rising ocean levels they actually are making more.