Are Pre-War Baseball Cards "Solid" Investments?

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Posted By: DJ

This was discussed about a year ago in a thread and I believe a large majority of the posters said the sky is the limit with this hot collectible and I think we should bring back some opinions.

On another thread (the one about a watch), several board members argue against "investing" in baseball cards.

History has shown a nice increase through the years on a yearly basis (going back to old Beckett annuals, about 15-20% per year) and I think a thread should be devoted to whether vintage pre-war baseball cards are a "good investment".

Is there a bubble about to burst?

What will a PSA5 T206 Ty Cobb Red sell for five years from now? How about ten years?

DJ

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Posted By: Rick

Nothing beats compounded interest over the long haul.

Not houses, cards , beanie babies etc.

Cards are not the easiest thing to sell sometimes and have a thin market, they produce no income at all ...the can and have produce gains ...but its hard to buy the right cards at the right time and then sell them also at the right time ...lots of good timing.

The market seems pretty hot right now ...but all markets are cyclical and collectibles can really swing either way.

And maybe most importantly...its a hobby ...to bring greed into it will hurt the actual enjoyment of it.

Its like football fans who take fantasy football too serious.

There are a lot of old timers here who can tell you that pre war cards were a hard sell 15 years ago while cansecos and straberry cards were all the buzz ..hell you could have bought a bunch of HOF's for less that what people were paying for those rookies.

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Posted By: davidcycleback

I would think quality antique sports autographs would be a fair investment: a nice Knute Rockne ALS with return envelope or Ty Cobb signed ball with good provenance. These seem to gain value with time, and it's unlikely an authentic Cobb signed ball or check will fall to zero any year soon.

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Posted By: Gilbert Maines

I sure wouldn't listen to me, because I know how my investment choices have done to date. And I recommend that you stop reading this post right now.

However, I believe that baseball cards have good potential as a long term investment. By long term, I am speaking on the scale of home ownership (a lifetime). Any 10-20 year period may exhibit a downturn.

In my estimation, the way to best address this is to commit a fixed level of investment in the baseball card marketplace every month, and do not vary that.

When your available cash improves, invest it elsewhere. Stick with this plan and you will average out the peaks and valleys, imho. Focus your buying on the segment of the prewar hobby which is least popular, at all times. For example, right now that could be r-cards (those ugly strips appear to be developing a following - I guess some gelt laden weirdos have joined the fray).

By buying the least popular issues you will obtain them at relatively favorable prices, and over a lifetime popularity will cycle. Don't be afraid to sell what is hot for what is not.

Tell me how you've done in 40 years or so. And I will sell you what is hot - probably pink sugared popcorn on a string.

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Posted By: Dan Kravitz

I think there are far better investments than baseball cards (try real estate, it has some incredible benefits). I don't think you can buy cards thinking that you are making a sound investment, unless you are buying them far under the current value and buying extremely rare pieces that very wealthy people will always pay up for. When interest rates start to creep up and gas goes through the roof, most people will slow down in their buying habits or even trying to sell their cards. I believe that the value of hofer players in common sets that are in abundance will fall sharply. The Cobb t206 is super common and I would bet that when the market takes a turn down it will follow accordingly. Now if you had a 1912 Boston Garter you would most likely be able to sell it in any market. BTW If anyone has any interest in discussing the benefits of residential or commercial real estate investing, please email me. You should collect what you like, because if and when the market takes a dive, you still have a collection of cards that make you smile.

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Posted By: John Spencer

While I am first and foremost a collector, and at one time a part-time dealer, I always, like most of us, had an abiding interest in the value of my collection. My collecting interest has always been geared to pre-war cards, as I thought it was the "golden age" of the game. But equally important I thought the cards from this time would hold their value better than a boatload of Dwight Gooden rookies. I have been fortunate enough to buy the majority of my collection when prices were not at their current statrospheric levels. In other words I would not and could not start in this niche area in 2006. As an investment, like almost anything, cards will move in line with economic barometers; the stock market, the price of oil, jobless rate, housing values, disposal income, etc. Hence, timing is a critical component when buying and selling vintage cards. The REA and recent Mastro auctions confirm that we are certainly in a bull market. Perhaps a personal example will help illustrate. Around 1999, I bought on Ebay a PSA 7 E98 Bresnahan for around $500. In May of this year I consigned it to Mastro for the auction which ended last night. It fetched $7,000, bringing a return that far outsripped any investment I ever made in the past. Are prices like this sustainable? Who knows, but I am certain that card prices like stocks, bonds or commodities (not to mention swamp land in Florida or Dutch tulips)are cyclical and can fall at any time conditions warrant it. The beauty of being a collector versus an investor is that I won't ever feel compelled to sell the collection at a certain time to reach a price target. I can just enjoy it.

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Posted By: Jack Richards

The biggest problem with card investments, it seems to me, is the difference between wholesale and retail. Buy a card, any card, then walk to the dealer next door and try to sell it. Asuming he's willing to buy it (always a questionable proposition), you're doing pretty well if you get 80%. More likely, you'll get 60-70% on a good day.

Dealers often cite SMR when they buy a high end "investment" card ("I'll give you 100% of book"), then turn around and ignore the book when they sell the card at 3-5 times SMR. So as a card buyer/seller, you can get stuck between a rock and a hard place: buying at inflated prices, and selling at deflated prices with a high "commission."

Direct Internet selling, with or without the assistance of established auction houses, can allow a seller to reduce the overhead, but no matter how you cut it, it is easier and cheaper to sell stocks and bonds than it is to sell baseball cards. Geesh, it can be easier and cheaper to sell a house.

Of course, not too many people like to take their stock and bond certificates or their deeds out of the safe to look at them on a regular basis.

Thanks, Jack

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Posted By: Frank Wakefield

When you guys get done reflecting upon the constant gains in prices of old baseball cards, please think about what you consider an investment....

An education is a good investment. A college education, for you, a spouse, or a child.

A home can be a good investment. Tax laws really facilitate this, if you live in the house long enough, you can sell it and avoid taxable gains in certain situations.

World War II fighter aircraft have really appreciated in value. Planes that could be bought for a few thousand dollars in a third world country twenty years ago are now worth half a million, or more. But I don't think such aircraft are a good investment.

Moon rocks... a few are out there. As they have changed hands over the years they have done really well.

Paintings?? Chagall works have done well. Degas is sound. DaVinci drawings have soared. As have anything from the hand of Michelangelo Buonarotti.

It seems to me that the biggest "investment" gambles around are petroleum tanker ships, off shore oil platforms, then motion pictures, then race horses. Although you can get into horses in a little way, buying a fractional share.

The tax laws don't deal with the buying and selling of baseball cards as investments. And when you get done talking about how the values have risen, baseball cards are still not investments. Come on now... are you a baseball card collector, or a baseball card investor???

Abrams once said something to the effect that every day on Wall Steet millions of shares of stock are bought and sold. For each buyer of a share, there is a seller. One decided to sell what he had, the other to acquire the very same thing at that same moment. It is likely that one of them has made the wrong decision... His point was that we knuckleheads who work for a living will be in the wrong half of that decisionmaking unless we get some expert advice. So get some advice... go to an estate planner, an investment counsellor. They will tell you about mutual funds, specific stocks, franchises, buying and selling of residences, money market accounts, maybe even fast food franchises and commodity futures. They won't tell you about baseball cards, not even graded cards.

If you are in this for an investment you are screwing up the cost of collecting for the rest of us.

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Posted By: Frank Wakefield

I forgot to talk about rising and falling markets.

Someone who really knows his stuff told me that over the years, more than some on this board have been alive, that when the market goes down people move there money a bit into gold coins, collectables, and the like. When the stock market and economy booms, the collectables and gold coins are liquidated and the money goes into stocks a bit more.

I've not made a great study of that, but it seems correct with a limited examination.

So if we get out of Iraq and any other places we might find ourselves in the next couple of years, if Congress becomes less oil company friendly, if the economy does well... then the increase in baseball card prices should flatten a bit. I'm not saying they'll go down, it is just that the rise in "values" will slacken some.

In looking around the room I'm in I see piles of crap that I "collect". If this junk was "investments" I should be institutionalized. I have some investments... but the cards, coins, autographs, books, and ephemera gathering dust, none of it is really an investment.

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Posted By: Seth B.

Frank, everything you have said is just about dead on.

I think one reason this is even an issue is that cards are at boom prices right now, so people who had their cards even, say, a year ago, are seeing $$$ signs. I know E93 collectors must think they've made some brilliant investments right now. But investing is a long-term thing, and over the long term, other equities are much more reliable than cards. Doesn't mean you can't play the flip game and turn a little money while the goings good, but don't get ahead of yourself and call cards investments.

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Posted By: Judge Dred (Chicken Little)

Around 1999, I bought on Ebay a PSA 7 E98 Bresnahan for around $500. In May of this year I consigned it to Mastro for the auction which ended last night. It fetched $7,000, bringing a return that far outsripped any investment I ever made in the past. Are prices like this sustainable?

Great question - "Are prices like this sustainable?"

Lets think about this - that was an increase of 14x the original cost. I somehow doubt that card is going to increase 14 fold again. I'm guessing that things are peaking or have peaked. Unless. as mentioned in previous posts, the card is very rare or on EVERYONES want list (T206 Wagner) I can't imagine that these little pieces of cardboard are going to keep going up at such a rapid rate. Perhaps the really high grade stuff may maintain a small market but if the "house of cards" collapses the perception will be that these aren't a great investment and the demand will begin to slow down. This, as mentioned earlier, will probably associated with a downturn of the economic cycle. What happens then? Simple economics... less demand, lower prices.

Unless we hit a point of hyper inflation I can't see cards keeping up at the same insane appreciation rate that we've seen in just the last 5 years.
I'm not saying the sky is falling... translation - cluck, cluck, cluck...

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Posted By: leon

I think there are more issues than what has been brought up about the investment side of collecting. We all know how pre war cards have done in the last 1-10 yrs, they've done pretty good, overall. I will respectfully (and for sake of a good argument) disagree and say that cards can be good investments. Before I go any farther I will say that that is not my primary reason for collecting them, but it's certainly something. Any investment can go up or down, just like cards. An investment is something that you buy in hopes of selling later for more than you paid for it. Cards can fit that description. Investments are something that you can hold a long time and be relatively sure they will go up, over the long run. Pre-war cards have done that. I think the biggest reason I see cards as a good, dare I say, investment, is that to determine value we always look at both sides of the supply vs demand equation. The thing that has not been brought up is the demand side of the equation. Think back 10 yrs ago. There was no internet (or certainly not the way it is today). Since the internet, ebay, online auctions, etc.... the prices have gone up rapidly as more folks are coming into the hobby, with easier access, and are wanting the same finite number of cards. Timing is a key part of investing and so is card buying... I don't think it will change. I don't think pre-war cards will continue spiralling up, the way they have, but I do think they will be good long term investments. The market/hobby is too deep for it not to be....just another point of view I wanted to bring up. It's certainly debatable..I know that about 8 yrs ago it dawned on my that many more people would start collecting since they were so easily accessible...I was correct.....regards

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Posted By: Greg Ecklund

Frank,
The only problem is that the economy has been doing well by most any measure while baseball cards have been booming. The markets haven't been down, at least since 2003, and a great deal of appreciation has taken place in baseball cards since then. The Dow was below 8000 in early 2003 and today sits at 11,381 while the Nasdaq went to 800 and now sits at 1576. Both rallied tremendously off the lows for most of 2003 and we have been up about 10% since - not great for the last few years, but not a down market.

Those who were sitting in tech stocks that they bought during the tech bubble probably didn't feel the market increase all that much, but it did happen to those who were in energy, industrials, and financials.

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Posted By: warshawlaw

There are some things an "investment" is not:

It is not an intangible, ephemeral thing like an education. An investment is an asset you can sell off. You do not sell your education, you sell your time or your labor or your expertise. To include your education in the "investment" category is nice rhetoric but it obscures the analysis we are after. It is not purely an income-generating thing (most stocks, residences, gold, etc. do not throw off income streams).

I believe that the core defining characteristics of an investment are (1) it is a tangible, fungible thing or right that the society considers to be of value, (2) society allows it to be traded, and (3) people in that society consider to be worth spending time and resources to trade in. Remove one or more of these factors and watch how it changes your perception as to whether it is an investment: I do no think anyone would consider "investing" in a stable of prostitutes in Los Angeles, but legalize the activity as it is in some parts of Nevada and "investing" in a brothel is certainly within the realm of possibilities. Ditto for drugs. It is an "investment" to buy shares in Coors or Anhaeuser-Busch because booze is legal; prohibit liquor and the "investment" collapses.

One thing that people (including some here) often fixate on, sometimes implicitly, as a characteristic of an investment, is lack of pleasure as a hallmark of an investment: that except for its potential to return, you would not buy it. I often hear people say, in essence, that cards cannot be an investment because it is a hobby or because they like it. Bull. There are lots of things that are "investments" that people enjoy too. Many people consider their homes to be investments. And they have been proven amazingly correct over the last few years as the Fed has softened the stock market collapse by inflating a real estate bubble. My house has more than tripled in value, easily the best "investment" I made, but I also enjoy it too.

A few people pointed out the adverse tax treatment of cards as proof they are not investments. Wrong again. The tax code is a reflection of special interest lobbying and resulting policy decisions, not reality. To give you an example: if I am employed by someone who does not offer health insurance, I purchase it myself with post-tax dollars. if I am self-employed, I offer coverage to myself through my business as a benefit and pay for it with pre-tax dollars. Same coverage, same insurance, different tax treatment. There is no rational basis for that difference in treatment; it is merely a policy decision made by politicians who are bought and paid for by lobbyists. I guarantee you that if the card business had a lobbyist and sufficient cash to spread around Washington, the word "cards" would find its way into the tax regulations. There is no rational basis for treating cards differently than coins or stamps, it is merely a policy decision. What it means is that cards are an inferior investment from a tax treatment standpoint.

In sum, there are no hard and fast classifications or rules for what is an investment; it is all about what people think.

Now, are cards an investment? Well, society considers them to be of value, allows them to be traded, and lots of people spend their time and assets on them. By my interpretation, cards are an investment, certainly. Whether they are a good investment or a bad investment is the question. IMHO, they have been historically a decent investment for people who understand WTF they are doing. Like anything else, you have to be an expert in the field to understand how to invest in cards. Otherwise, you are a monkey throwing darts. Great example: Last night I had dinner with my parents. My father and I were talking about cards (the Mastro auction) and he said that I should buy up cards of those young players with the Dodgers because they may become superstars. I had to enlighten him as to why that is a poor investment strategy.

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Posted By: Gilbert Maines

I hate doing a rain dance at parade time, but tell me that the following does not mirror 1929: Precious metals have doubled in the past year, the stock market is strong, home values are through the roof, and virtually every other indicator is positive.

How is your liquidity? How is your balance (i.e. if home prices drop 25%, or more, can you cover it?). Cards are a fun investment and collectable, until you tie up too much in them. Then they become a risk - which is less fun.

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Posted By: DJ

Well said Adam and I agree.

I have always thought (and rightfully so) that anything that continues to appreciate in value as an investment and just because you are able to handle and enjoy this limited piece of cardboard, makes it a bonus. Are there better investments? Sure, but there are A LOT worse.

As far as vintage autographs go as an investment, this is one area I would clearly stay away from. The truth of the matter is that this type of investment is way riddled in fraud (kind of like that Enron stock, huh) and easily manufactured. There is way too much trust in certain legitimate authenticators and doesn't it seem a tad scary how many amazing pieces are introduced in every new catalog? I think there are some brilliant forgers out there and there should be caution when purchasing anything, no matter who says the item is good.

If you have a cherry Babe Ruth signature (that is authenticated), the prices seem to be all over the place as for some reason, they simply aren't as rare as they were about fifteen years ago. I have seen one ball sell for $16,000 and one in similar condition fetch $8,000 over the past six months.

DJ

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Posted By: Frank Wakefieldf

Greg, I read your post.

2 things come to mind. One, you're a Republican defending your President. Two, tell the Ford employees who're about to see 21% fewer vehicles manufactured how well the economy is doing. It is NOT doing well. Boeing is shutting down its C-17 line. Things aren't gloom and doom, but things aren't rosey either. And I think lots of money that would have gone into stocks has wandered over into baseball cards, and screwed up the prices. Generally, card prices on old cards will go up, merely as a function of a growing population of collectors and inflation.

I used to be a Democrat. Realistically I've become a Libertarian. Government is too big and wastes too much money. I want a smaller government that taxes me less. I asked a Libertarian friend of mine what he thought about the Clinton impeachment when it commenced. He said it was great. I asked if he wanted Clinton impeached, "No, I don't care one way or the other." So why are you glad about the impeachment? "Because as long as Congress is doing that, they aren't passing any laws to screw us up. The less they do, the better. I hope they try Clinton for 7 months." It seems to me that Democrats want money for lots of government programs for the people. Republicans want lots of money to pay private enterprises (usually Republican run, eg Haliburton) to do lots of things. I'd prefer getting a bit more bang for my tax buck, paying much less in taxes, and making due with a smaller bang.

The reality of investing in a card, buying a PSA 7 card for $500 and selling for $7,000 is that you have $6,500 of ordinary income there, that you're supposed to pay income tax on. If you're at 28%, that would be $1820 that you owe the IRS for your investment. And here's what kills me. I'm to give $1820 to someone when they've done nothing to deserve it, and I'm to give it to the one entity around that is an expert at spending foolishly. Grrrrrrrrr....

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Posted By: Bob

As a collector first and foremost who sells only to finance new card buys, I wish all the investor-only types would dive out of the prewar card market, it makes it awfully expensive for the rest of us. That said I do realize that the investors and speculators help fuel the soaring prices of cards we already own. The one area I think still has some wiggle room is the caramel cards which have been on fire the last few years. Collectors are finally coming around to notice how few exist and that they are started out in the hands of children, not adults like with the tobacco cards, and are therefore very scarce in nice or often even decent shape, that is when you can find them. The stepbrothers of the tobacco cards have really been moving lately. Also, I've noticed, to my chagrin, that certain regional issues have started drawing amazing prices because of their scarcity as collectors (and investors) have begun to notice them also. I think prewar cards are an excellent investment.
The Clinton impeachment was a farce and one of the ringleaders who had a personal axe to grind is about to suffer the consequences in his attempt to become governor of our State. I won't go any further or this post will become political...

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Posted By: leon

We actually agree on something else (this). Not sure what the value would be today but in the ACC this was valued at .20 cents, in 1960(I think that was the last update of the ACC). There is, even at 46 yrs, a very good return in the long run, I think. Getting in at the right time is certainly key too. For all of you mathematicians out there what is the rate of return if Mr.Comisky was valued at $25,000.00 today and .20 cents in 1960? I think that could be a conservative estimated value but I am biased so want to be cautious.

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Posted By: davidcycleback

I am leary about items that have seen a big boom in price lately. I'm not saying I wouldn't invest in them, but would think twice. Early baseball card prices have had a big boom-- though, in their defence, collecting cards is hardly a fad and the early cards are relatively rare.

I also look not only to the potential upside versus the potential downside. If your T206 Cobb drops to 70 percent in value, that's not so bad-- especially if you're a collector who loves the cards. If your current rookie superstar investment breaks a leg before arraignment, you're in trouble.

A major reason I picked a Ty Cobb signed baseball as an example for a collector is I don't see it falling dramatically in price. There will be lots of people wanting a Cobb signed baseball in five or seven years. I think collectors are less concerned about whether their collection will double in value, than if it will halve or fraction in value.

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Posted By: Judge Dred (Fred)

Drool... slobber... drool...

Edited to add that this post is in reference to that .20 cent card that Leon posted...

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Posted By: BcD

short term,there should be some hit given the conditions of other markets (oil,gas,anthrax ect),but if you are looking to hold on 15 years I suspect you'll make more than a CD in the bank and unless the IRS finds a way to scan all e-bay and auction house records there still could be no tax implications as well.

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Posted By: Gilbert Maines

Leon: a financial consultant once told me that if your investment doubles in value every seven years, it should be considered a good choice (not a great choice).

The math on your card works out to: if by year 2009, the card is worth $25.60 it should be considered a good choice, if you obtained it in 1960.

Edited to add: so it really has done 1000x better than that - as we all knew.

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Posted By: Scott Gross

IMO vintage cards are an investment (for all the reasons so stated in this thread). And as also stated before, a fun investment. I wish I had all (well most) of the money I messed around in the stock market (win and/or lose) to put in cards and other investments that I enjoyed. I have bought and redeveloped three fixer-upper houses. I loved ripping out walls, working with architects and contractors, and all the DIY projects. Broke even on one, made a few bucks on another, and the value of the one I live in now is almost obscene (relative to me).

I'd much rather look at my cards and know the approximate value, that look up stock symbols and know the exact value.

Oh, and the next time some whiner comes on this site and starts bad mouthing us "losers," have them read this thread and realize the pure intelligence of our members. I wish I could be so eloquent.

And: Privatize everything !!!!

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Posted By: jackgoodman

Leon,

If I punched the correct keys on my HP12C calculator, you received about a 29% return per year for each of those 46 years. Nice job!

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Posted By: Wesley

Gil, Money will double in seven years at 10%. I think most of the caramel cards have at least doubled in the past twelve months.

Wish I still had some.

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Posted By: john/z28jd

I might have alot of money "invested" in cards but i cant wait for the bottom to drop out of the 19th century market so i can buy more of them!

and if it doesnt ever, then ill have a valuable collection when im an old geezer like Leon.So basically it works out either way, but me personally since im a collector,id rather have more cards and not worry that i mightve spent a little more than they will eventually be worth

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Posted By: Gilbert Maines

Wesley: is 10% good or bad?

I bought a cd from the bank at less than 6% last year, and my initial mortgage on my current home was @ 17.5% (1981). So I don't know how you figure. Ive had mutual funds do better than 30% and Ive taken losses. Individual investments are all over the place.

I think that 10% annually is just a fine average target. How about you?

I don't have enuff money in cards for it to really matter.

Edited to add: if most carmel cards have doubled in the past year, then they have almost done as good as silver bullion.

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Posted By: Greg Ecklund

Frank,
Politics really doesn't have anything to do with what I was arguing and I think you read a little too much into my post. I'm certainly not defending "my" President (for full disclosure - voted for Bush in 2000, voted Libertarian in 2004 because neither Bush nor Kerry was worth voting for IMO).

Your Ford example is fine, but really has nothing to do with the numbers - the big three auto manufacturers are probably the companies that have had the worst time of over the past five years, so using them as an example of the overall economy really doesn't hold water and would be like me using late 80's or early 90's cards as an example to argue how the whole card market is terrible. Certain companies and industries are experiencing tough times right now, but that has always been the way the economy works and in historical terms the economy is certainly in above average shape, as are our stock markets - I certainly wouldn't expect a Ford employee to want to hear that but it is the truth regardless.

I would say the surge in card prices has a lot to do with the top end of the income scale doing much better than the lower end in the current economy - many people have more money than they know what to do with, so why not spend $8000 on a PSA 8 Tattoo Orbit common or $25,000 on a PSA 9 1952 Topps Del Crandall?

I agree wholeheartedly with your sentiments on government spending, but I would add that the C-17 shutdown by Boeing is largely a function of decreased government spending on the planes.

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Posted By: Wesley

Gil, Ten percent a year is good. That is about four percent more than a twelve month CD. But not as good as double. Certainly they are more risky, but cards should not be discounted as a long term or short term investment vehicle.

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Posted By: bruce Dorskind

Gentlemen


Those of you who attended the Mastro dinner at the National were
given the book Carboard Gems co published by Mastro and PSA.

At the back of the book there is a portfolio analysis of 100 "collectible"
PSA 8 cards. (see pages 172-175)

Thirty five of the cards in the portfolio are pre-World War II, eleven cards
are from Bowman or Leaf in 1949,. forty-three cards are from the 1950's and
eleven cards are from the 1960's.

The cards are all Hall of Famers with a disproportionate number of Mantle
cards represented from the 1950's and 1960's sections.

Mastro's portfolio analysis compares 1995 prices with 2006 prices. It then compares
the result with the S&P and the Dow Jones averages for the same time period.

The card portfolio grew by 143%, the S&P 500 by 153% and the Dow Jones by 133%.

However, in the Mastro-PSA analysis, the T 206 Wagner is included in PSA 8
The value for 1995 is $430,000 and for 2006 it is $1,265,000 - an appreication in value
of $835,000. The entire portofilio with Wagner only grew by a little more than $1.4 million
Thus the Wagner represented about 60% of the growth in the portfolio.

If you take the Wagner out , the Mastro PSA card porfolio appreciates from $556,875 to
$1,136,940 or 104%.

In other words, when we eliminate a "unique card" (forgetting about whether or not it
really should be graded 8), the stock market outperforms cards by a wide margin.

My view, like Leon's is, that this is a HOBBY. If you are going to be an investor, then you
should become a professional investor, and avail yourself of the proper investment tools.

Super rare cards of well known players in top condition are generally so few in population
(PSA + SGG) that they almost never decrease in value. Whilst there is a great deal of
discussion about grading, there are proably 50+ wealthy collectors (with large disposable
incomes) bidding for less than 500 cards a year. (major auctions +Ebay)
Note: We are referencing only to low population, pre-WWII cards in PSA/SGC 7,8 and 9.

If we look at rare E , R and T cards with populations of less than 5 in conditions 7,8 &9
and their performance over the past ten years, my guess is that their compounded growth
rate (major auctions and E-Bay) is well in excess of 40% per annum.

For those who can afford to invest in the very best cards in the best condition, there is
little chance, that prices will ever fall.

Everything else in the hobby is pot luck...some odd-ball sets are hot some years and not
hot other years. Cards with large populations from the 1950's have, with a few exceptions,
not done well. The 1941 Playballs in PSA 8 have actually dropped in value, and the 1915 Cracker
Jacks in PSA 8 (with the exception of a few stars and low pop cards) are priced less than they
were five years ago.

You can't, in my opinion, go wrong collecting Impressionist Paintings. The rare, beauitful
and professionally (and accurarately graded cards) in top condition will always have more
buyers than sellers.

That said , the market is so thin ( I was the second under bidder on the aforementioned E-98)
that is difficult to make a strong case for rare baseball cards as an important part of
an individual or family's investment portfolio.

Thank you for your consideration. I would welcome your comments.

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Posted By: edacra

I picked up an old Beckett Price Guide from 1988 and was shocked at how much of the vintage pricing was still accurate. Okay not, all - many cards had doubled in book value for a 100% profit, assuming you were buying and selling at that rate to begin with. Where many rare issues jumped in price, others had settled, or are just outright undervalued in comparison. That I can buy any pre-war cards today at 1988 prices or possibly even lower says everything.

It comes down to, what percentage of a profit do you need to make for this to be worthwhile? Even Mr. Mint (oh hush!) explained in his book (no really) how if the card market bursted, he would trade in his "pennies on the dollar" plan (shhh!) for say, pennies on the half dollar. Or quarter. In other words, if you buy a Christy Mathews silk for $50, and sell it a month later for $60, you just made $10. Was it worth the effort to get that $10? If you do enough volume then sure. How many older issue cards can you say are way below what the market demand is? 20's Exhibits are probably the most consistantly mentioned cards which are undervalued and hard to come by - but there's no way to really gage when to buy/sell without just working on intuition. Could it be it's a good time to sell now, while everyone is hot for them thinking they're the next investment? If you're actively buying these cards with a portfolio menality, what's a healthy buy price? Hard to say unless you know where the pricing will eventually land. So the only sure investment are cards selling for about half of their street market value. Great if you can find them.

All I know is there are few steals left on Ebay at the moment. Two months ago, a lot of nice cards were going bidless, or selling at their opening price with one bid. Not so much anymore.

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Posted By: DJ

Leon,

Now you are just showing off.

Here's a quote from "The Complete Book Of Collectible Baseball Cards" about Lone Jacks from 1987:

"...too expensive and the collector can find a nearly identical card in the Old Judge series for a small fraction of the price."

5-Year Projection on the value is below average and the Comiskey should set you back $450, while commons $300.

The authors thought they got it right when they wrote this (basically over valuing every pre-war set and pushing us in the direction of 1980's cards), and these fools probably have a warehouse full of 1988 Topps vending boxes.

Back to David. You can't go wrong with a Ty Cobb baseball, but the problem with collectibles like that is that there will always be a cloud of suspicion whether the item is legitimate or not, unlike trading cards which are difficult to duplicate. Well, unless you can remove hair fibers and such. In an industry where roughly 8 out of every autograph is a forgery, there tends to be a dark cloud when you pay $6K for one and your neighbors pay $400-600 for there's. I have seen some cooling (and doubting) in this business the last year and a half as more single signed baseball with "spectacular" signatures appear more and more frequently into the market place.

Am I worried about this hike with trading cards? Absolutely. Where the hobby accepted a nice return (par price guide) on a given year, it's simply gone crazy of late. Can this continue? Will a Flick T206 in PSA4 form, now selling for $200 be an $800 card this time in 2007? Who knows.

DJ

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Posted By: Gilbert Maines

Cards are up? What ain't?

Don't gimme this ... PSA8, e-cards, etc. = any card is up. Any precious metal is up. Any stock index is up. Any automotive fuel is up.

This can last. Get out your stopwatch and time how long.

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Posted By: Greg

I'm pretty new here, but thought I would jump into the fray.

I would point out that the one thing you have to look at in terms in any collectible being an "investment" for the future would be the potential "demand" that the item would have in the future.

To make my point, let's use the prices that auction houses are bringing in as auction houses have been brought up. Say an item brought in $1000 ten years ago but brings in $15,000 now at auction. Although one would think that the item would have the potential as being a good "investment" for the future, I would be very worried if I was the high bidder if there was only one other potential buyer bidding against me to that high number while the rest of the pack stopped at, say, half the high bid. In other words, if the underbidder that jacked the price up should happen to drop out of the hobby for any reason, the true investment potential the item has is now really half of what I paid for it.

This isn't to say I still wouldn't buy the item, but I would justify buying it because I love it, need it, and it gives me pleasure...not because it's a financial investment for the future.

It all depends on what you're paying for something. If you're paying top dollar, don't expect to get a higher return for something in the future. If it happens, and it probably will, consider it a benefit, but don't count on it. There are many other more solid "investments" out there (as have already been pointed out) if you're looking for a higher return on your money in the future.

In the meantime just enjoy your item for what you should have bought it for in the first place, a nice piece for your collection. If you get something at a good price, consider yourself lucky and enjoy the ride the same way.

Greg

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Posted By: warshawlaw

Frank: “I think lots of money that would have gone into stocks has wandered over into baseball cards, and screwed up the prices.”

I disagree. It isn't the Ford workers who are buying heavy cards. Folks who are stupid enough to tilt their retirement portfolios into cards invariably are the baboons who got nailed in the glut of post war and 1980s rookie cards. In my view prices on prewar cards are being driven by several hundred (perhaps a few thousand) relatively high income collectors. I stress collectors. I have seen quite a few record-setting cards go into private collections that will not see the light of day for decades, perhaps never if the next generation cares for their Pops’s collections. When it comes to cards of that sort, the demand is always there. If you have demand and you have rich people, you will have strong prices.

Edacra: “Two months ago, a lot of nice cards were going bidless, or selling at their opening price with one bid.”

That happens every year before the National. It is the worst time to sell on Ebay and the best time to buy. Lots of buyers are selectively pooling their cash for the show and/or are not watching the listings with their usual attention. Lots of sellers are liquidating inventory below market to generate cash for the show. I picked up a few real steals during the month before the National.

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Posted By: Gilbert Maines

That is an interesting point which you raise, Warshawlaw. I however, am less certain whether it is the high end collector who drives prices with their comparitively few 1K+ purchases, or the Ford worker types who support the market with their <$500 (and often ~$100.) typical individual card purchase. Actually, I am leaning toward the latter as the true driving force.

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Posted By: warshawlaw

Don't mix the two; they are not the same. I think for anyone to have a substantial effect on the vintage card market they have to be able to spend into five figures every year. Those who cannot afford to spend more than a few hundred dollars a year simply do not have the financial muscle to push the prices on vintage cards. They play the "penny stocks": postwar and modern cards. If you want to know who moves those markets, that's the answer. Younger, lower socioeconomic class (think back to who you saw at those tables at the National).

A few thousand collectors spending five figures a year can move the vintage card market substantially. It isn't a huge market in relative terms. Mastro claims $40 million in annual sales and it is the top dog. How much of that is vintage cards? Do you think there are 1000 collectors in the world who collect vintage cards? I am sure that number is way low. Of those vintage card collectors do you think there are 1000 who have the financial leeway to spend $1,000 a month on average? I'd say that million dollar a month figure is low because of the number of really wealthy collectors who can spend five figures or more in one auction. Now factor in the real rarity of so many issues and you have a very limited number of cards sought after by a substantial group of people with strong means to go after them. It is not a case of relatively few $1,000 deals; it is the case that most of these folks can buy whatever they need when it comes to market, which is only a few times a year. Short supply + big demand = high prices. It doesn't matter how "broad" the market is; the supply is so narrow that a relatively small market will readily consume it.

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Posted By: JimCrandell

Ungraded prewar cards and lower graded prewar cards should be a fair to good investment. High grade SGC or PSA prewar cards(8 or better) should be a spectacular investment.

You have guys jumping into the hobby spending over $1mm per year in this area. You don't need too many of these to drive the market. Most who spend this kind of money want their sportscards graded and they want high grade.

The one thing that could make this not happen is if wealthy collectors lose confidence in the grading companies ability to detect altered cards. Despite the belief by some on these boards that a significant number of high-end graded cards have been altered, this view is not shared by those spending the big bucks.

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Posted By: Gilbert Maines

I stand by my contention that for each of your high income collectors spending upward of $1000 per month, there exists more than ten less high income collectors spending upward of $100 per month, and driving the market.


Edited to add: Yes Jim, big ticket investment types will always go for top quality material in any area. And there exists some seriously deep pockets. It occured in the coin market seventeen years ago.

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Posted By: JimCrandell

Gilbert,

I am not talking about $1,000 a month--I am talking about $100,000 per month and that is driving the market.

Jim

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Posted By: Gilbert Maines

Jim: in 1989, in numismatics, it was closer to $100,000 per day when investment firms decided to enter the market.

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Posted By: JimCrandell

Gilbert,

This time its ceos of Fortune 500 companies, oil and gas entrepreneurs, doctors, lawyers and wall street guys fueling the increases--and the ones I know first hand and what I have heard second hand all love the hobby.

Jim

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Posted By: Gilbert Maines

It was not love in our sister hobby. It was the perception that coins would trade sight-unseen and become the new commodity. Grading was young and welcomed. The investors misjudged the power of the collectors.

Sight-unseen trading was eventually rejected. In part because coins which were equally graded could look entirely different. Toning of silver coins can be extremely attractive or hideous, for example. And grading companies did not differentiate based on appearance. Only on wear, alteration, damage and the typical criteria.

And the coins which were bought had no wear, etc.

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Posted By: warshawlaw

It is collectors, not investors, driving this market. Take the folks we all know and (sometimes) love who have the mega bucks for cards. All of them are collectors first. They ENJOY this. That sort of spirit wasn't there with coins. The dynamic is different. The pride, the happiness, the little boy showing off his card collection, all that plays into this hobby like no other. Coins are dull. There are no funny stories from the dugout, no classic films to watch all winter, no gamer bat to hold or hat to try on and pretend for a moment, and no funny old man telling stories who used to be the Man. Your dad and you never tossed coins back and forth in the yard and you never drove a coin over the roof of the school or cut off a coin deep in the gap in left-center.

If card prices rolled back by a decade tomorrow, I know I would be in there eagerly filling holes in my collection that I would otherwise never have the chance to fill. I'd hazard a guess that most of the folks here would do the same. I just do not see the same speculative bubble forming here as in the coin biz. Sorry. Just my view of it.

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Posted By: jeffdrum

Jim,
You make a good point about what is driving this market. I hope for those high income/high-end collectors or investors who are now "jumping" into the market that their confidence in the ability of grading copies to spot altered cards is not misplaced

copies = companies .

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Posted By: JimCrandell

Warshawlaw,

Absolutely.

At the national I spoke to a collector who has thrown several million into graded cards the past 2-3 years. He was one of the most excited of anyone I have ever seen about collecting, Same thing with Merkel, Fogel and Louchios--these guys love the hobby first and the investment is a second consideration.

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Posted By: Gilbert Maines

Although it is true that the coin hobby was invaded by investors in the late 1980s, the hobby had been existing for over 200 years by that time. And while it is true that coins have less interactiveness associated with the "sport" of minting, there is an interesting history associated with the manufacture of those lil devils.

Come on now - what kid didn't enjoy putting a penny on the railroad tracks to see how the passing train would flatten it out? And the joy of being able to put a brass slug into a gumball machine, instead of the penny which you flattened out! What? thats not sport?

Well tell me then how you start a football game if there is no heads nor tails?

Seriously tho: I got a 1798 cent this week that I had been wanting for way longer than (almost) any baseball card - and I haven't put it away yet. When is the last time you kept a baseball card "out" for days? I even dragged the other five that go with it (a type set) to see how they look together.

Baseball cards, as Adam aptly points out, do bring several added dimensions to collecting that really can not be duplicated. That is why I collect them too.

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Posted By: DJ

I think it's "too each his own" as far as what people collect and the enthusiasm they have for the item.

I have never had any interest whatsoever in comic books, coins or stamps, as I have about cards and autographs. I have kept out cards for long periods of time, admiring them like a newborn, only to replace them by the next card I get. The first time I bought an Old Judge card, it was like: "this card is 100 years old!". When I was a kid, I fell asleep beside Stan Musial 1948 Bowman and when I was nine years old, I did my school report on 1952 Topps cards and brought in a Minnie Minoso.

One of my friends showed me something of interest over lunch the other day. It was a graded 8.0 Amazing Spiderman first issue. He said he bought it three years ago for $4,900 and he just saw one sell on eBay for over $8,000. I was more enthusiastic about his "kid like" grin, then a book...you can never open up again, right?

He also told me that he took out 20% out of his stock portfolio to purchase comic books and original comic art.

I was one of those in a past thread that couldn't believe the sudden rise and interest in cards and the amazing prices they were bringing and was waiting for a bubble. I have watched this hobby closely since around 1978 and I must say that I have never seen anything like it. I'm convinced and highly doubt that there will be a bubble, maybe a slow down at one point, but what the hell do I know. I think I still own JDS Uniphase at $80 somewhere in one of my portfolio.

DJ

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Posted By: Frank Wakefield

It matters not that prices for something have gone up... that is not a valid indicator of a good investment. If it was, then invest in human cadaver tissue business, that should be booming, maybe AlloSource of Centennial, Colorado would be a good choice, since their #1 competitor in North Carolina is under investigation. Or buy enriched uranium... it would fetch a fine price in Iran or North Korea.

You want investments... #1 an education. #2 a home. #3 education for your kids. #4 sound mutual funds, midsize, large, growth, and international. Those are investments. Other stuff is just playing with money. I just know without finding out that when Hal got his Wagner, he didn't remortgage a home, close an IRA, or sell off all of his mutual funds or stocks.

Buying two cases of motor oil when it's on sale is not an investment. You don't invest in a shirt and tie, nor tennis shoes. A car isn't an investment. And baseball cards aren't, if sound judgment is used.

If you can think of the difference between investing and saving it might help understand it all. But probably not, if you thought buying baseball cards was investing in the first place.