What I Don't Understand about Baseball Card Economics
 

I admit I am no more than a novice when it comes to understanding the general economy and the stock market, but here is one thing I have learned: The stock market rises and falls by processing information. When an interest rate cut is anticipated, the market goes up. If a tariff is instituted on China, for example, the market tanks. These are just two examples, but I recognize how information determines how markets move.

But in the baseball card hobby, the market appears to be absolutely tone deaf. We know grading is subjective and inconsistent; we know altered cards consistently get upgraded and slabbed; we know the card we buy as an 8 might have been resubmitted half a dozen times as a 7 until we find a grader willing to bump. Yet despite all this information that should be a giant warning sign to anyone thinking of investing in baseball cards, the money comes pouring in like an avalanche, and world records keep getting set.

We see 7's turn into 8's and increase fivefold in value. We see 8's become 9's and increase tenfold. And we all know it's all smoke and mirrors.

Yet buyers don't seem to be processing this information. They can't throw big money at this garbage fast enough. So what am I missing?

That the vast majority of people - even the "smart" ones with degrees etc. are quite often stupid.

Barry you already know the answer.

Not completely Peter. I do understand that the collector who pieces together a VG T205 set one card at a time is passionate about what he is doing, and doesn't care about all this background noise about card doctors.

But we know that recently a whole wave of investors has entered the hobby and is putting big money in high grade cards. Those people are looking for one thing only: making a profit. And given the rickety state of the high end hobby, why aren't they fleeing it? If you bought 100 shares of Apple and then discovered that instead of using computer chips in their smartphones they were filling it with jello, you would bail out in a heartbeat. You would have no emotional attachment with the stock. But these high end players seem to sense that nothing is wrong. No, I don't entirely understand it.

Who says it's rickety? Who says the vast majority of these guys even know about the stuff on message boards yet? BTW I disagree with your premise, lots of high rollers also love the cards and being high on the Registry is also an ego thing for them. It's about much more than just money.

Why aren’t pricing tanking? Some possible reasons:

1. I doubt most “high-end” collectors are aware of this issue.
2. If tainted cards are being removed from the hobby, PSA populations will theoretically drop. Prices might increase because of this fiasco.
3. It’s too soon. PWCC hasn’t had an auction since this issue hit.

The saying isn't..."There's a genius born every minute".

You’re a very smart man ! I feel 100% the same way...I refuse to invest for the longterm anymore money into this hobby and I can say I’m way happier now ! Blessed and thankful that most is gone prior to this recent scandal.
Zero emotional attachment when investing, all emotional when collection on low end trashed out cards :-)

I'd bet there are a whole lot less "investors" that previously thought or shown through auctions, Ebay and the like. Most likely people who jumped on the bandwagon due to fear of missing out, are now holding the bag of high graded cards. Albeit not necessarily altered, but comp sales were skewed. I'd assume collectors wont mind, and it would be silly to sell now.

Also agree when blood is in the waters it’s the time to buy not sell

PWCC has 8,282 listings running right now.

From what I can tell it appears it is 100% business as usual.

There is no doubt there is something to this recent scandal and even those wearing the most rose collared glasses will see that but it is going to take much more I believe to derail the hobby.

I read someone say that many collectors live by the ignorance is bliss moto and that may very well be true.

There are quite a few people out there that have dealt with infidelity in a relationship. Probably said to their friends if that bit++ ever cheats on me she is gone. It happens and just a few months later they are explaining to their friends she made a mistake and we all make mistakes and she is sorry. Humans are very complex that is for sure.

I watched the entire Brent interview. He made it out to be like conservation was common knowledge and everyone knows it. Many of the examples we see popping up fit his description and have simply been improved. I think there is a very real chance that many of these cards will be reviewed by PSA and they will deem them to be good because they are grading the card in front of them not the card that used to exist. Brent also indicated he was going to bring in an expert and offer this as a service and if they alter cards where there is no discernible evidence upon inspection this crisis of confidence could easily subside. I don't think all parties will be happy but the market will move forward.

So if these high rollers who don't know about this message board found out about it, would they bail out? And I think this issue will spread much further than just Net54. I think this is pretty big news for the hobby.

and to Peter- sure some of these people love what they buy. But they don't want to feel that they are being ripped off. You can be passionate about far less expensive cards too.

I expect more significant press coverage soon. A couple of days maybe. We'll see.

David- I think PSA will deem most of these cards good after review for a very obvious reason.

The market is so easily manipulated that there's very little disincentive to a deep pocket investor with, shall we say, moral flexibility.

In light of all the recent happenings in the hobby I still want to further my collection. Maybe at the National this year I will be able to find something.

The large AH's with their BPs, taxes and high shipping costs are drawn out affairs. Too slow for me. Some times 2 to 3 weeks before shipping. I don't understand. Why so long?
The straight Ebay auctions are usually shilled. Why don't sellers start the listings with the minimum they are willing to take? I don't understand. Why shill?
The Ebay BINS are usually 50 to 300 percent overpriced. I rarely find a card I can use at a reasonable price. I don't understand. Why the "Museum" concept?

So Chicago here I come.

I understand what you are getting at.

That said I don't think it will change going forward because they are grading the card in front of them. I do know they are scanning all images of cards sent at the quicker turn around times so perhaps this deters folks but I am not so sure if now this will be an option that Brent offers to clients.

I am more inclined to think the market "matures" and just has to deal with the facts.

I am not really a cynic by nature but does anyone really think that a card that sat inside with cracker jacks or tobacco was ever 100% clean? I don't. I assume they all have had some stain removal of some kind. I might be wrong but this has always been my belief.

Or had razor sharp corners.

Yes David, any one hundred year old baseball card with pure white borders gives me pause. They are generally made with cheap paper, and paper tones over time.

But I want to get back to the idea of processing information. If I am thinking of buying a card in PSA 10, I really have to consider that the card may have been bumped from a 9 holder, or it may have had a slight alteration. I just don't know. As such, while I might deem it to still be worth a premium over a 9, and cannot see any way it could reasonably worth ten times that. Ask the fellow who just purchased the 52B Musial in a PSA 10 how he is feeling right now. Again, I don't think the information that is out there is being calculated into purchases.

I understand the idea that people who pay a lot of money to get a 10 are willing to do so because they want to own the best. But in so many instances they are not getting a 10. And nobody likes to feel he was ripped off. Again, I know some disagree but I find all of this unfathomable. I guess to each his own.

What if you already bought a PSA 10 of a card at $25k that you suspect. The guarantee you bought is based on current market value. If another PSA 10 example of said card is sitting at $15k, do you feel pressure to push the price up, assuming you feel good about the company behind the guarantee?

Sent from my SM-G950U using Tapatalk

I have done it twice. Ego and personal satisfaction are the two primary reasons. Money was a distant third.

One was $2,500 the other was just over $3,000 so not life changing money but it is all relative. Both were 9's bumped to 10's.

I have never looked back with any level of dissatisfaction.

Where's this interview, please. :)

Woohoo!! Thanks! :)

It would take a huge sum of money to get me to watch more than 1 minute of that lol.

Not everyone pays attention to facebook or even card forums. I didn't think much of this till someone said there was an article in wall street journal.
Unless it shows up on national news tv.. I don't know if it causes grading to plummet or not. I've never graded. I'm a junk wax dealer.

If it hits a major newspaper it will spread, I believe.

Peter you might like the comment section. Haha

Not a very well received video that is for sure. 56 up votes and 95 down votes and some blistering opinions expressed.

Either way I think he really feels this way and while I totally understand why many disagree I think much of what he is saying has been happening and will continue to happen.

I have a client that has close to 20 refurbished 50's collector cars. If they can get the cars to look exactly like they did when they were brand new I don't doubt for a minute there are folks out there who can work magic on cards and go undetected.

I would need a heavy dose of blood pressure meds to watch him for any length of time. Were it someone objective, sure. But not someone who has worked hand in glove with a major card doctor or maybe more than one for over a decade. Pass.

Restoration has a different level of acceptance in different hobbies. It is understood that cars will be restored. If you want to drive it and the engine is dead, you replace it. If the chrome is rusted you polish it. Collectors know that.

Coins, stamps, and baseball cards are viewed differently. It is best to leave them in their original condition. You can't compare automobiles and baseball cards with regard to restoration.

You've clearly never been to a National.

Dave wasn't equating them I don't think, just pointing out that it can't be that hard to convincingly alter a card.

You might break your computer screen or smartphone. I would pass. LOL

I watched it because I wanted to see what he had to say.

Brent is a disrupter and he clearly has one vision and how that plays out remains to be seen. It is very easy to argue he has taken on too much too soon with card indexes, stickers, the vault, investment advice etc. but it is clear he isn't taking advice from anyone and is going for it.

We'll see where he ends up in light of all that is hitting the fan about the seemingly countless doctored cards he has sold. Knowingly, I might add. An interesting vision, that.

Darren Rovell has started tweeting about it so it will slowly start spreading mainstream

Not condoning just stating I think it is unrealistic to think it isn't possible.

A few years back I got some rust stains off my front porch that were on non polished travertine. I tried everything I had at home but it wouldn't work. I went to a stone store and sure enough they had a cleaner that could do it. You would never know the stains were there. I believe a similar solution has probably been created that can remove stains from cards without any after effects. Not saying it is right just saying I believe it is possible.

Not sure. I think it may be extremely difficult to detect with normal methods but last time we had this discussion, knowledgeable people thought with the right equipment it could be detected and does change the card.

https://www.npr.org/sections/thetwo-...or-155-million


Steve Wynn Picasso. I am sure many are aware or have read about this.

Quote from the article


"The restoration seems to be factored into the price," Beverly Schreiber Jacoby, valuation specialist and president of New York-based BSJ Fine Art, told Bloomberg. "If you didn't know that it has been damaged, you would not see it. It's superbly restored."


If a painting can be fixed without leaving a trail I believe cards can too.

I would bet the restoration could be detected with the right equipment there. It may not be visible to the eye.

Perhaps.

We then get in to a much larger discussion about whether TPG firms have the wan't or the resources to invest in greater technology. I don't know the answer.

The general point and I believe you will agree is they are pretty good at it and good enough where Brent plans to hire someone to do it for customers.

90 percent of Brent's problem is the people he has chosen to take consignments from, IMO.

I am only 40 and also have never gotten into art so I don't have any real perspective on that market. Was there a time when art restoration was frowned upon?

Art is all unique. My understanding is that it's always been acceptable to conserve art, or restore if it's been damaged, as long as it's disclosed if there is a sale. Now if it's done to deceive rather than to genuinely conserve it for generations to come or restore it to enhance people's appreciation of it, then we're into baseball card land.

Good write up David. 100% business as usual is right. I'll add that I believe the market gets stronger from this point. Investors with their assets are expecting profits on the flip. They won't have fire sales at a loss because they got scared. Cards are relatively cheap compared to most investments.

While I've heard a divergence of opinions, many people agree with this, Martin. I think it will be a little while before we know because I doubt the word has spread very far. But it may not change much if and when it does. I'm not panic selling certainly.

Just as an FYI, I ran one of small Plano card shows this weekend. Out of the 125-150 people who were in the room at some point, maybe 3 even mentioned this subject and maybe one really cared. This "IS" an important issue but remember we're a very small percent of the hobby as an whole.

I think investors invest in how they're invested.

If it is known there are irrational variations in grading, but the prices still go along a line, they are investing in that line.

Investors have been keeping their heads in the sand about certain issues, because everyone else has been keeping their heads in the sand. Most everyone, including registry mebers with a brain must have already realized the irrational variations and margins in error in the number grades on labels, and many people have already been of the belief that many high-grade cards in holders are altered-- I've been of that belief for many years.

Also, what facts don't affect prices today, doesn't mean they won't affect prices tomorrow.

I think longterm investment in "high grade" vintage cards is a bad idea. Nice looking cards will still fetch good prices, but I don't believe in the future someone will pay $100,000 for a one grade increment knowing the card is likely altered to get to that grade. I, and of course many others, already thought it looney considering the normal variations (margins of error) in assigning a grade itself. Considerations the margins of error and variations is grading, paying $500,000 more for a 10 over a 9 is, in many people's opinion, silly enough, but paying $500,000 for a trimmed edge in someone's basement is beyond the pale of expectations.

My assumption, my opinion, is that the majority of high-grade vintage cards have been altered, or 'conserved' if you prefer. And, if and when that sets in with the hobby as a whole, I assume it will affect pricing.

Also, it doesn't take the entire hobby or current 'investors' to give up the ghost on high-grade cards to affect the market. It can just take a substantial minority, in particular, if they are big spenders.

https://www.ebay.com/itm/1984-Donrus....c100033.m2042

Is this normal for a 1984 Donruss Don Mattingly? I remember when these were in the $600 to $700 range.

16 retraction bidder running it up.
https://offer.ebay.com/ws/eBayISAPI....p2471758.m4792

interesting

April 4 Probstein sells one for 1025.
April 14 PWCC sells one for 1601.
Ok.

how many people even work at these places? 2 months wait sounds like bad business anyway

If we reach the point that a baseball card can be restored with such skill that an alteration cannot be detected, then we should all agree that third party grading will become obsolete.

We can then accept that any baseball card that looks Mint is Mint. It won't matter if it was restored, because nobody will know the difference. Maybe this will be the future look of the hobby.

Due to the inherent subjectivity in grading, I've believed for some time that the hobby is due for a 'correction' to redress the tremendous disparity in values at the high end of the grading scale. Of course, to date, this correction has existed only in my imagination.

But, I now wonder whether the current scandal, assuming well publicized, will trigger or help facilitate such a correction.

Restoration to paintings can be and is identifyed. The "you would not see it" is really saying "If you just looked at it when it's hanging on my wall, you wouldn't notice it."

Gotcha.

Repairing a hole and making it look good sounds impressive to me.

Removing a stain and having the cardboard look the same seems to have happened many times successfully and that is all I am getting at. Perhaps they are not similar enough of examples. Just was trying to convey that significant repair has taken place to items such as this.

I think two things are going on with some of the high roller investors:

1. When PSA assigns a card a high grade, that then is what the card "becomes." If you're holding a PSA 9 Mantle, forget what the card looks like; what it is, to the investor, is a PSA 9 Mantle, period. How it got there (overly generous grading, unnoticeable alteration) is basically irrelevant.

2. The PSA population report creates artificial rarity. A seasoned collector will understand why a T206 Doyle in fair condition is quite highly desirable because of its (legitimate) rarity, while an investor will look at a 1967 Card #1 The Champs in PSA 10 and see that only one exists. So, to the investor, that card is unique. If he wants the BEST 1967 set, he must have that specific instance of that card (so his thinking goes.)

I have often thought that PSA, and other TPG, basically have a business model that allows them to create wealth out of thin air. I think collectors who buy cards that are legitimately scarce will, in the long run, have a "portfolio" of "assets" that will grow in value, while those who are paying huge multiples for those 9s and 10s are just inflating a false bubble.

The reason I always point to the ego driven nature of high grade cards is in my view that is what drives the spread. If you can solve for a humans desire to "have the best" or have something someone else can't then it will change. I just think that human behavior is pretty well established and grading differentiates what started out as very similar items.

There is a big difference between a PSA 8 and a PSA 10. There are much smaller differences between a 9 and a 10. Probably the most liquid card that exists is the 86 Fleer Michael Jordan and under no circumstances will you ever see a card that is an 8 that looks as good as a 10. You easily could see one that is a 9 that does and I am sure some of the 10's started out as a 9. That said there are far too many collectors that get a thrill out of saying they have a 10. This isn't going to change.

This is pretty much it. And exactly what the registry capitalizes on.

And I must say that I'm not immune. I initially sent cards out for grading so they'd be easier to sell someday. (Maybe a good decision, maybe not... )
Along the way I ended up with a couple that are either the highest graded, or really close. I was a bit surprised that it mattered to me once I was there.

As long as there are people out there who will pay a multiple for each grade increment, we have the existing economic model. That's why this scandal won't have an impact broadly across the hobby but will have a deep impact : people who collect lesser condition cards, collect on a budget, etc., have no skin in this game.

Maybe but I think there will be a substantial difference in pricing. Unlike natural difference in grade, I don't think in the future someone, even someone with lots of money, will pay an extra $500,000 because one card had a very slightly better alteration than another altered card. It's one thing to pay that difference for what is perceived to be natural if very slight difference, but another to pay that difference knowing that the difference is because someone was just slightly better at using a paper cutter.

I agree. I've often considered the exorbitant prices paid for numbers on a label to be a different hobby. A world outside of my collecting world.

I actually believe the trimming/alterations could be a major factor in the price escalation. Suppose the trimmer is buying a psa 4 card that he is pretty confidant that he can make a psa 6, will he care what VCP says the value of the 4 is? I doubt it. It becomes a matter of his business model that he win that particular card. I will admit I haven’t looked to see how the prices paid for the pre-altered cards compared to the then market price of the card. My gut tells me they purchased for whatever it took within reason.

Mark

Mark, this is a very interesting point, namely that card doctors are pushing prices bc they are buying cards at high prices thinking they can crack, alter, submit and achieve higher grades which will bring even still higher prices.

For example,
Dr. A sees a great looking 33 Goudey Ruth in a PSA 4 flip. According to VCP, the card is worth approximately $Y. Dr. A feels he could take that PSA 4, crack it, remove a few stains and straighten up one border and get a PSA 6-7, which will make the card worth 4 x $Y. So, Dr. A is willing to 1.5 x VCP pricing on the PSA 4, thereby forever changing the value of a PSA 4 Goudey Ruth.

I am sure this happens. Mark, thanks for providing an angle I have not thought of -- nice to read something new.

Ryan

We've discussed this before in explaining some insane prices for cards that look great for the grade with only a trivial flaw. I think clearly you have some card doctor competition for such cards.

If all cards are altered, it also makes one wonder how important the TPA grades will be. If two cards are largely alike and both known to be altered, will it make such a big difference it is graded a 9 or 10. The price valuations may change significantly.

Of course, then, if the cards are altered, they are all "AUTH" the traditional 1-10 grades won't apply.

I'm no lawyer, but it makes me wonder how liable people can be for the general artificial prices across the board in the hobby. I.e. if undiagnosed altered cards, shilling and other illegal trickery inflated prices across the board, how legally responsible those people can be held for contributing to the general fall in prices not just the specific instances the directly participated in. Just a ponderment.

Ok, maybe its not a new thought -- to me, in the moment, it was -- but still a great point. Namely, card doctors do all sorts of damage -- direct and collateral. But, at the same time, if you have a very pretty card with a few minor flaws, throw it in a PWCC auction (or really any AH) and hope that a Dr. will pay up to turn your PSA 4 into a PSA 7.

And then consign it back to you where you can put a nice sticker on it, write some garbage description, and sell for a new world record. And if it's centered OMG.

Museums hire people to paint/ restore artifacts, old things.
Like world war one medals ,weapons , paraphernalia.
It's still the thing it was, and now better.
How does trimming a card now make it fake or of lesser value? Unless it's proven that a trimmed card eventually starts to peel/fold at the edge , while encased.. what's the big deal?
Unless it's a completely reproduced, digital, computer copy. It's THE card.

I totally feel you barry...part of me doesnt get it either?? I don’t think my vintage habits will change much as my collecting focus has been extremely thin lately anyway... and what I am looking for is in such short supply anyway I’m not so sure I really care if it’s altered if its all that is available? For newer high grade stuff I have never understood that market so I really don’t care!

There are potential problems aside from the one you suggested. Cards with creases flattened out don’t always stay that way. Often, the creases will re-appear with time.

And added color (to conceal flaws) can also change with time. Certain Chemicals used for “cleaning” can eventually erode the paper as time goes on. So the card you see in the slab very well might not be the card you see 5 years from now.

Because the pricing of baseball cards is in part based on the condition of the card in it's natural, unaltered state. It isn't just "what it is" that is part of the value, but the natural condition.

Or, to answer it another way, because altering a card reduces the value. Condition-wise, an altered card ranks below the lowest number grade (1). It literally doesn't even get a number, though AUTH is quasi 0.

Barry, I'm not an economist, but I believe that you are comparing macroeconomic effects with microeconomics. For many individual stocks, it the same thing in that it can be all smoke and mirrors for all we know. We don't know if the insiders are buying or selling; the companies put forward different metrics like # of clicks, who their social evangelizers are, when they are losing money hand over foot, that you really don't know what the company is doing. You never have all of the information.


It's the same thing here. You have a bunch of cards that were submitted by Gary Moser. You don't know if they were altered or not. There's a good chance they were altered, but maybe not. Is the entire market going to tank because of this group of cards, probably not. Probably only this group is tainted. Are these cards worth 0? No, they are still authentic, but likely altered. So the floor to the price is the price of authentic/altered. However, the card might not be altered, so it probably won't reach that floor, but will likely just sell at a discount to another card at that grade. Why just a discount rather than the floor? Because where many buyers won't stand to have a card in their collection that may be altered/tainted, there's another buyer who's optimistic/naïve, whatever you want to call it, who thinks this card is completely fine after looking at it themselves, and are happy to get the card for cheaper than they would otherwise.

I'm not saying that I agree with this mentality, but just trying to explain it.

sure, chemicals etc. i agree. trimming, im sort of ok about/with

mindset
 

Don't know about most guys..but Im sure glad I collect lower grade cards..and enjoy the hell out of it !!

If anyone is waiting for the media to 'catch up' and start investigating the topic at hand, don't hold your breath. The news moves too fast and things just quickly disappear. Remember the airplane that vanished in the Pacific? POOF!! Gone. How about those soccer kids trapped in an underwater cave. POOF!! Gone. We commemorated the 75th anniversary of D-Day only four days ago and POOF!! Gone. Not a word about it in the news today. The helicopter that crashed in NYC today? I give it until late tomorrow afternoon and POOF!! The story will be gone.

And one day, Mastro/Legendary was poof... gone as well.

I’m holding out hope for the sake of our hobby.

Then you are in the vast minority. And you can buy altered cards for $100 that most people would pay $1,000 in NM condition. Congrats. Just don't go trying to sell them as unaltered.

Hi Gary,
So here is something that still troubles me. If the hobby has reached the point where the slightly altered cards are almost impossible to distinguish from the unaltered ones, then what use does the hobby have for third party graders? We pay them a lot of money to make determinations that many of us don't feel qualified to make ourselves. But it appears that as graders and authenticators they are no more skilled than we are.

So it's starting to look like (and truth be told it's been going on for a long time), all of these machinations are reduced down to one thing: getting the number we want on the slab. The whole hobby is really about that number.

Sorry folks, but it's a sad state of affairs. And I don't like it one bit.

It could be that graders simply authenticate cards-- something others on Net54 have proposed. That would be a fair service too-- a third party that says the card is authentic.

Of course, the grading companies don't that.