What Would You Do ????
 

Asking for a high end client of mine….this is a good one and I really do not know how to advise …

What Would You Do ???

Say you had $150k cash to invest to hold for the next 25 years having had only two choices which one would you pick ?

1. A Killer Dead Centered 52 Topps Mantle PSA 5-6

2. 150k in the S&P 500 in his brokerage account.

Would also like to take into account the tax benefits of either or….hopefully Bob C can chime in with his wisdom guided by knowledge expertise and experience in the tax law field.


Remember you only have these two choices what would you pick?

Does he have a wife?

Good question. I say the stock market, but only bc it’s so beat up right now and top cards are so expensive. On the whole, I think the 52 mantle beats the stock market, but timing matters, and right now I think stock in top companies presents a better buying opportunity (“deal”) than blue chip cards, which are sitting at all time highs. .

Tax wise - under current tax code, the sale of stocks held for one year is a better tax result than the sale of a collectible held for investment.

No can’t be wife

Very well said. I agree with you.

Thank You

I think you cannot go wrong with the S&P 500. It's reliable, has weathered recessions and has stood the test of time. It out performs hand picked portfolio's by hedge funds. It's impossible to predict what the country and economy is going to look like in 25 years but I think it's definitely the better of the two options. I don't think if you asked anyone here on the board 25 years ago what the hobby would look like today, they'd be able to picture what's going on.

100% agree, I would also add that we don't know much about the client other than they are "high end". I would assume the client has sufficient assets elsewhere but without knowing for sure I wouldn't act on that assumption. IMO it would be irresponsible to suggest the Mantle if the person doesn't already have a well rounded portfolio. From an investment prospective, the Mantle lacks the flexibility to withdraw a portion of the investment if needed. For that reason, without further info, I would take the stocks to protect the person when life happens to them.

+1 agreed in addition the stocks gives you the flexibility down the road to take out of the market to potentially Persue the Mantle down the line and still have some or all of your original investment in the market with the growth covering your future card collection/investment

The gentleman is 50 has 950,000 saved in his 401k, two kids in college one is full funded the other has half funded two years to go in school. He has 160k left on his mortgage, looking to retire in 10 years.

The answer is stocks.

The Mantle is great but stocks are better. With the market down, I see a prime buying opportunity.

Definitely the S&P in that scenario.

The wonderful method of compounding interest leans heavily towards the S&P.

With about a $1M nest egg for retirement and about a decade to go (and assuming he some day wants to retire), I think the more prudent thing to do is either invest in VTI or pay off the mortgage. If he had $4M+ invested, looking to alternative investments for the sake of diversity would make more sense.

Imagine a scenario where five years from now the 401K is worth $400K because of a major recession and he is a few years away from retirement (or worse, gets forced into retirement due to a bad economy). He still has 5 years on a mortgage, $400K in a 401K he can't touch, and he is trying to sell a very expensive piece of cardboard to a market where most of his customers have just lost 50%+ of their net worth. At least VTI would push out some dividends and he could liquidate small amounts in an emergency.

With that said, is he a big sports card collector? If so, the psychological benefit of acquiring and owning a "grail card" could tip the balance closer to even. But, if that card represents 10%+ of his net worth, then you could have additional costs of storage and insurance. So, unless he is as crazy as most of us on these boards, I don't think it is smart from a financial "investment" standpoint.

I also wonder about the timeline posed in your original question. You say he is 50. You also say he is looking for an investment to "hold" for 25 years. That puts him at 75 when he is looking to potentially liquidate the card. 75 is far from guaranteed to anyone. I am not there yet, but it seems like there is less value in a stockpile of money when you are 75 than when you are 60-65. At least in the stock market, you can liquidate smaller portions of your investment over the years for experiences and things that make your life more enjoyable or easier.

A lot of great thoughts there for consideration. However, I don't know if I would put all my eggs in the same basket in case I dopped the basket.

Why not consider spreading the love out over say - 10 - high end cards. Some are still out there that may increase more than Mantle as the people that can afford a Mantle gets smaller each day. Aaron, Banks, Koufax, etc. are still within reach.

That is what happened with a lot of the more desirable star cards - people bought them up for collecting and locked them up, and would only surface again 20-30 years later. In my opinion its great for investing but not for collecting.

Just a thought.

Stock market has more upside and liquidity than the Mantel so assuming no trade restrictions and good advise, go for the market.

To choose #1, the ball card, would be a decision based on the heart. Why not a Michael Jordan basketball rookie card or a Bronko Nagurski National Chicle football card; because his heart is saying Mantle baseball card.

To choose #2, the brokerage account investment, is a decision based on the head. That's the correct decision. It lacks that emotional swing that our hearts put us through; but it's the right choice.

The market is clearly the prudent way to proceed; diversity, spread of risk etc. But you can put the Mantle under your pillow at night and gaze at it during the day. Harder to do with stocks.

The most recent comps of the Mantles make me say go with the Mantle, provided you can obtain dead centering for that price. Stocks having taken a hit recently certainly make that an attractive play, especially if you go with something like Vanguard, but here's where the Mantle comps become very compelling based on the "givens" provided...

If you can get a dead centered 6 Mantle for 150k, then I would say that is the way to go— because an SGC 5 with merely B/B+ centering just sold the other day for 180k. So at 150k for the 6, you would be getting a pretty substantial steal. A truly dead centered 6 would hit 250k and certainly have potential to go north of that at the right auction, if the eye appeal is there and the right two buyers see it and want it. So at 150k for a dead centered 6, you are instantly up so big, it is hard to turn that opportunity down.

Even a dead-centered 5 would certainly eclipse 200k, based on the recent comp of 180k for an SGC 5 with merely "okay" centering, and another comp of 156k for a PSA 5 that was a worse card than the SGC 5. So at 150k you would already instantly be "in the money," so to speak, to the tune of some 50k. As a further comp for dead-centering on the 52t Mantle, I can say I have had two separate offers in 2022 on my dead-centered 4.5 of 175k, and one offer of 200k. So again, at 150k for dead centering in a 5 or 6— if the card can be found at that price— I'd go for it.

Of course the above is just based on sheer money bet; if I were the client and had such a robust 401k, I may lean strongly to something like a piece of artwork or the Mantle, if that was what my heart desired and would bring me some intangible joy beyond the mere investment aspect. Personal living philosophy comes into play for sure in a situation like this.

If you can locate a truly honest killer dead centered PSA 5 for $150.k I would probably bite and go for that. Remember, nobody says you must keep the card for 25 years. You may see a nice profit after only few years, then sell it and move on.

Looking at prices, has to be a 6

Option 2.

I like the "pay off the mortgage" option...it's not sexy, it's only a small rate of return (whatever % their mortgage rate is) but it's guaranteed return and removes future obligations, which is a good hedge and sets up future opportunities.

?
 

Depends, if the Mantle had 50/50 centering.

S&P 500 has the following advantages:

Cash flow, diversification, liquidity.

S&P all the way.

Another vote for the S&P 500

Agree !!

Never mix feelings/emotions with investing.

Bitcoin :)

Agree !!

Never mix feelings/emotions with investing.

It depends what his financial situation is. If the $150,000 represents his entire savings then definitely the stock market. If the $150,000 was just change found under a couch cushion and he likes Mantle then I’d go with the card. BTW, current capital gains tax rules favor stock investment over collectibles with the long term rate on collectible gains being almost double the comparable rate on equities.

If you can find a dead centered PSA 5 or 6 52 Topps Mantle for anywhere near 150k, you'd be an idiot not to buy it as quickly as you possibly could, because it's worth nearly double that amount right now. An off-centered PSA 5 or 6, sure, that's worth about 150k. But a perfectly centered Mantle is easily worth double what an off-centered copy goes for in mid-grade condition. Hell, even a dead centered PSA 4 is worth at least 200k+.

That said, I wouldn't invest in either the Mantle or the S&P 500 right now. I would put the $150k into Bitcoin.

In 25 years I would think the mantle would be worth way more than the sp 500 investment

The Mantle number would have to be greater than $1,820,322 in year 25.

I look at it this way: would you want to invest in a single stock (the '52 Mangle) or a portfolio of stocks (the S&P 500)?

If time is on your side, most investment advisors would say to invest in the market as a whole instead of a single stock. If you gotta hit a homerun in 9 months, then a single stock is your only hope. Given that the client has 25 years, I'd go with the market.

I would pay off the loan. Not advice, just what I would do.

Question
 

Some good points made here. Buying the right card or cards is critical. Many cards appreciate more than 5k per year…buying 6 of the right cards for 25k each might also be a fruitful investment option. I like cards much more than the market. Buy 6 of the right cards and enjoy 30k of appreciation per year!

PS — Cards or photos / memorabilia.

What rate are you compounding at—the long term ROR on the S&P 500?

S&P annualized average return of 10.5% since 1957.

Great question, and one for which there is no perfect, correct answer. There are too many variables and unknowns involved, and it is impossible to even somewhat accurately predict where the stock market and card market will be even one year from now, let alone in 10, or even 25 years.

Johnny has given us some specific, factual details of his friend/client's current financial position and status, along with a few more tidbits regarding his family and situational timeline for certain financial/personal things occurring or being achieved. However, what not a single one of you has specifically brought up is the fact that no one has apparently asked Johnny's friend/client the most important question of all. Why?

Why is he asking for advice in this regard with just these two very specific and straightforward options? He must have some specific goal or plan in mind with this investment choice, but whatever it is, no one has apparently directly asked him. There must be some goal he is looking for in making the decision between these too very different investment options. We know he is looking to retire in 10 years, but is this investment supposed to be used to then help fund that retirement? That point is never made clear. Nor do we know about his spouse's work situation and potential savings/retirement. And what about other family and potential inheritances coming to this person? There are so many other unanswered questions to such a decision, it is impossible to give a truly good, helping response without knowing the "Why?" behind all this.

To simply assume Johnny's friend is looking to make a purely financial decision based on which of the two options will be worth the most in 10 or 25 years, may not be what his true goal is, even though that may be what many of you feel is implied by Johnny's question from his friend/client. As someone else kind of alluded to, maybe this person possibly has a collector/nostalgic interest in getting a Mantle card as well, which may factor into the decision. It is possible his true goal is to own a '52 Topps Mantle at some point and he's trying to figure out if it made more sense to buy one now, or put that money into the S&P 500 and make even more over the next so many years so he can eventually buy his '52 Topps Mantle, and still have even more money leftover in his stock investment. Let's ask him first WHY he is making this decision, and then go from there.

As to the tax side of the question, Ryan and a couple others already hit upon the basics of it, but that is too simplified of an answer. Assuming Johnny's friend would buy either the Mantle card, or S&P stocks, and then hold them for over a year, the eventual sale of either will be considered as a Long-Term Capital Gain. Under the current tax laws in place, the LT Capital Gains from selling stock are capped at a maximum federal tax rate of 20%, whereas because the Mantle card would likely be considered as a collectible item, the maximum federal LT Capital Gain tax rate on collectibles is capped at 28%. But the answer isn't that straightforward and simple because those are the MAXIMUM tax rates that can be charged. Who knows what Johnny's friend/client may be making and showing as taxable income in 10 or 25 years from now? Also, we can't accurately predict how much gain would result from the sale of the stocks or the Mantle card years from now, which would have a direct impact on how much taxable income they would have in the year of their sale. Chances are that if the taxable income of this person isn't too high, there will end up being little, if any, difference in what tax rate the LT Capital Gains from the sale of either the stocks or Mantle card would be. And I can't tell you specific numbers because everything is subject to change in regards to the tax laws and rates.

One possible tax advantage to getting stocks over a Mantle card is that at the time someone does decide to sell, you only have the one Mantle card, so the entire gain from its sale will all hit in one single tax year (unless you agree to work out an installment sale with the buyer, which may not be possible if you sell through an AH or online). However, if you invest in stocks instead, depending on your tax situation when you finally decide to sell, you don't necessarily have to sell all your stock at the same time and can elect to spread the sale over multiple tax years, thereby lowering the LT Cap Gains you would otherwise have to report in one single year, and possibly lower your overall tax liability as a result.

The best thing to do in a situation like this is to first, find out WHY the person wants to make such a decision, and what their OVERALL GOAL is from it. Then you simply spell out for them all the different options and the pros and cons for making a choice either way, remind them that tax laws, rates and personal and financial situations and circumstances not can, but will most definitely change when you're talking 10 to 25 years out, and then let them decide what they are most comfortable and happy with as their choice.

Everyone is different in their thinking and circumstances, as well as their aversion to risk and personal goals. Basically, all everyone else posting answers to Johnny so far are most likely giving their opinions as to what THEY would do. But none of you are Johnny's friend/client, and really have no clue as to how he really thinks and feels. All of the points, comments and suggestions everyone has made are great and completely valid, just not necessarily right for this other person.

Despite a personal bias I have to agree with Ryan. The fact that stocks are down and cards are up probably make stocks the better choice. But if you could get a dead centered PSA 6 for 150k buy it. If you have one for sale I will take it. I don't think you'd even get a dead centered 5 for that today.

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That is not an option.

“Remember you only have these two choices what would you pick?“

The Annualized Annual Return of the S&P 500 since 1957 is 10.67% and includes dividends.

Very simple question, select the equity market. In my opinion, if the equity market goes up the value of the card may go up, if the equity market fails to go up, I doubt very much the value of the card goes up.

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The AAR includes dividends.

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Since 2008, the 1952 Topps Mantle in a PSA 8 has outperformed the S&P 500 and BRKA.


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Thanks Bob, always appreciate your input !!

My friend/client whom I caddy for, his main goal is to enjoy the card and pass it along to his kids whom also enjoy baseball and collecting cards, mostly more modern but baseball, Trout and Soto . He asked me because he knows I have some very nice mantle cards. I don’t think the $150,000 spent on the mantle card would break him, plus so cool that he wants to give it to his kids when he passes. I’m leaning on telling him the S&P500 maybe grave two other mantle cards of lesser value to pass along to his kids.

Yea let's use 1957 because that's when people had 150k to spend. Now they'd be well over 90!

I'd assume the ror over the next 20 years 5-7%

What does anyone think about a web3 play ? I would think this would be something Snowman Might Know About since he already mentioned Bitcoin.