Cards as an inflation hedge ?
 

I know that most of us buy for enjoyment and personal collections.

However, I also believe that in the back of our minds, we are thinking forward in that what we purchase will grow in value. If we need or want to sell, making a profit is a nice thing.

Stocks, metals, crypto, ect all move up and down, sometimes violently and quickly. Downward trends are tough to reverse.

I don't see the same with cards, especially vintage. The newer stuff is "meh" for me. Too much of it, and player careers can flame fast. Zion comes to mind.

So what are your thoughts?

To me this current state of the vintage and modern card market is still overbought. I'm of the opinion that 5 guys purchased at reasonable levels in upper mid to higher grade 6-8's are excellent but not at these levels.
Cobb
Ruth
Jackie
Mickey and Willie.

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

I agree with this…well said!

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

To further Ryan's points, there's a lot of new wealth out there and these guys have a lot of disposable income. What cooler place to put some of it than cards if you're a sports fan and you see cards more and more having features of at least good and perhaps very good investments? And they come with bragging rights too, posting about a great card you bought is a little better than posting about how many bitcoin you bought or shares of AMZN.

What's the most anyone could have received from stimulus checks?

Some of your might be true for some buyers but those who are really responsible for prices being driven up do not have to pick between expenditures on entertainment, dining and traveling or buying cards.

more business owners receiving money that they didn't need.

Ah I see. And they spent it on cards LOL. Only in America.

Speaking as one of them...When the pandemic hit I had no idea what would happen to my clients and by extension to my business. The money made available under the PPP and other programs required that you move like hell to get in before the money ran out. I actually was unable to secure a loan the first go-round but got it the second. So it was all uncertain. Once I had the loan secured and was able to apply for the loan forgiveness it provided a cushion. I did not spend it on cards, I held it for an uncertain future. I finally decided it was Ok to spend it, hence a 952 Topps Mantle.

Having a few higher end cards in your portfolio is fine, but I don’t recommend investing heavily in vintage cards. Put money in a 401k or IRA and you will be fine.

Everything you predict could happen and vintage cards would still be a "hedge against inflation". If inflation strengthens and persists (which seems likely, IMO), the Fed will tighten credit, interest rates will rise, and the economy will go into a recession. You are correct that this will cause downward pressure on card values, but only in the near term. The same is true for home values, stock prices, etc.

Assuming inflation is eventually brought under control, interest rates stabilize, and the economy booms again, card prices (like all assets) would be expected to regain their relative value, but in inflated dollars. This is unlike bond values, for example. If I own a bond that matures 10 years from now, I will be paid its face value at maturity regardless of how much inflation has reduced the purchasing power of those dollars during the intervening ten years.

Vintage cards are inherently "hedges against inflation" because their supply is fixed. That doesn't mean they will be good investments. In order to retain their value as investments they will have to remain popular. If their popularity disappears (boomers age out, baseball gets tuned out, etc.), they will be bad investments no matter what inflation does.

An upper middle class family with 3 kids probably would've received $13,900 between the three stimulus payments. I say probably because upper middle class, depending on location, usually wouldn't be enough income to have been phased out of the payments. Each additional child would have resulted in approx. $2,500 more in total stimulus payments.

Exactly ! It seems many are emotionally attached to their cards, investments and emotions don’t mix!

I personally diversify into all 3 sectors that you mention - Vintage cards, 401K and an IRA.

Theres no right or wrong answer here. To each their own!

+1 or more agree

Vintage cards is another form of diverting on my asset portfolio

Like my stocks and 401k

However, for me it is primarily a hobby that I love that had long term growth potential and something I can pull out and show and share with family and friends and enjoy along the way.

The key like anything else is to not over invest/ spend in any one area with your funds and keep an eye on your investments and adjust strategically as necessary

And in the end enjoy your collection, your flipping, your purchases from your cards, your family.

I see an auction like Goldin and go through 500 lots of "modern " autos/patch cards etc. I fell the demand for people adding these types to their PC is minimal. They are quick flippers, or buying and holding hoping for it to go up. Much like the stock market, the greed steps in when prices fo down, and now your flip is already losing ground and this is when people panic sell. It causes a market crash.

I see lelands auction, and frankly I dont think I've seen anything more ridiculous. It appears these 25 "lots" are all "consignments " from the collectable app, try to find a greater fool. Aside from the t3 set, and its ridiculous estimate, I see very little upside on anything listed. I'd wager another "app" or fractional ownership company will be "winning " these lots with a spectacle being made of "sales" prices.


For vintage, I think there are a good mix of people who enjoy the cards, as well as enough people actively pursuing cards to flip. This keeps the market in balance. However, when people stockpile cards like 52 mantle, etc. I think it does inflate the price somewhat.

I dont ever remember seeing 3 or 4 vg 1952 May's listed in a major auction house until the last few years. It kind of silly, and my bet would be they are all from the same consignor. As a consignor, I'd be a little miffed if I sent a card, and there was already a few example in the same auction. There is only so much the market can bear.


Buy what you like, and ca afford, and you will never go wrong. If you end in the black, you held an amazing asset, and made a few bucks as well. After all, it's just cardboard

Did you see in the Lealands auctions the 51 Bowman Mantle PSA 8 ? That was just in Memory Lane last July Selling for $498,000.
These cards can’t be purchased by collectors usually collectors keep them more than four months it’s like musical chairs with these so called investment pieces. They pushed it too high in the short term and they don’t have the balls to sit on it in the long term because they know they overinflated it.

Thanks Johnny, I didnt see that sale, but it's very telling, and not surprising. It wont surprise me with a "new record" sale. As the reddit crew says "stonks go up" .

Maybe someone can make a better quote "fractional ownership is great, if you are selling to the fractional buyer"

LOL that’s funny.

They know they pushed it too far too quickly certain cards and they can’t stomach the pain to hold onto it that’s not a good sign.

Not to get too political here, but did you really spend taxpayer money designed to cover paychecks to keep workers from being furloughed on a 1952 Topps Mantle card?

I have long believed many auction sales prices are just for show, and since there's no transparency there's really no good way to know other than common sense.

Are you saying you think many of these record auction sale cards were never actually really paid for ?

I wonder if "big spenders " are able to forgo the BUYERS premium on some items, as consignors often skip the sellers premium. It sure would shed some light on these...ahem. sales

My educated guess is that there are friends of friends bidding cards up...then if they win they work out a deal to make each other whole. But if smart (not really but..) they just jack the price up for the person who bought it.

As for diversification, before I sold my first collection I was card rich and cash poor. I took that money and invested it ...including some degrees for my daughter. I look at my resources as a pie chart. A 401k, a Roth, stocks in the market, home equity and rental property all go into the pie along with the cards. Diversification is good.,.,..
And the first card in my current collection (for Peter because he hasn't seen it enough)

I have ben in no rush to buy or sell over the last couple of years...howewever I did finish a couple of nice sets (52B and 57T). Here's what I dislike about cards as a financial vehicle. If there is a baseball stoppage, and there will very likely be, values across the board tanked. It there was overproduction (and there has been over the last couple of years which has been camouflaged by excessive flippers) it makes it worse.

Having collected through the 1994 interruption, if there is a prolonged strike, I would look for a downward adjustment of at least 35% across the board. What's more, some things become all but unsellable.

What happened then doesn't mean it will happen now, but I think there's no reason to think it will be different either.

No, I paid payroll with it in the mandated time frame, exactly as the rules required. My point was that no one running a business had any idea whether their business would collapse at the time. When I had two great years instead of a collapsed business, my savings skyrocketed because I worked my ass off while going nowhere and doing nothing. FWIW, I also sold a lot of cards into the surging market and banked the proceeds just in case things did go to shit. After two years I had enough saved up to feel like I could afford a big card purchase again while leaving a nice cushion in my savings.

Now, as far as the investment debate, I've been collecting cards on a serious (e.g., setting up at shows, etc.) basis since the 1970s. In that 45 years of watching the card market, there has been an overall gain in value better than the stock market. I think fifty years is proof of concept. These are an asset class regardless of what we may wish in terms of expanding our PCs on the cheap. My wife asked me recently why I hadn't purchased a few of these mega-cards back in the day. I told her if I'd come home and announced that I put the years' IRA contribution into a Babe Ruth RC she'd have divorced me right then and there, and she knows it.

There are times when prices have pulled back (the early 1980s Reagan-Volcker recession, 1994 baseball strike, 2000 dot com bubble, 2007-2008 Great Recession, 2016 price manipulation) but it has always remained attractive as an asset provided you make the right calls on what to purchase. Now we have serious money stepping into the hobby in all respects: auctions, TPGs, even card production. That means others share that view. I am optimistic about the overall potential for the hobby and especially for prewar and interwar cards. There will be short-term pullbacks (has already happened on many sectors of the hobby, like Jordan cards) but if the pattern of the last 50 years holds, it will come back. It is no smarter, dumber or weirder than art, rare books, coins, etc. I have been a strict 'eat when you kill' collector for a decade now: i only buy cards when the proceeds of sales allow for it. Last two years were so good in that regard that I was able to stop panic-saving every cent and buy some cards.

We know for a fact that was happening with some regularity in 2016 and I think it likely is happening again in some form.

it is absolutely the case. If you use PSA's online price database and search for popular postwar cards you see sale after sale of the same cert #s month after month from PWCC and Probstein. That's not a legitimate collector suddenly deciding he doesn't want his 1954 Aaron, it is a shilled card that the winner never closed on because he already owns it.

I totally agree with you it’s just not many people seem to want to bring it up. It’s like fantasy land. People don’t seem to want to talk about it because they want to think that their collection is also going up in that record fashion as well. The last few years a lot of the numbers I agree we’re fantasies

And the "sale" prices get picked up by VCP and off we go.

So did the Frogman really sell in the Fall?

https://goldinauctions.com/Honus_Wag...LOT118039.aspx


because it's back at Goldin:

https://goldin.co/item/honus-wagner-...ollectionqdbfp

No all Puff, Kabuki Theater

Simple laws of economics, there is simply too much money chasing too few goods. Vintage will hold its value or increase. You see the same thing happening with vintage cars, watches, art, etc.and I don't see it abating. Additionally, supply cannot increase while population, money supply, the wealthy getting wealthier, etc. are all increasing rapidly. Relative to using cards as an inflation hedge theoretically it could provide some protection but there are much more efficient ways, ie. buying the TBT which is the double inverse of the 20yr Treasury, as yields rise it trades higher.

Over 40% of money in circulation was “printed” in 2020. It’s just a matter of pouring a ton of cash into the system combined with an industry that was primed for surge. So, “stimulus” related, but not from stimulus checks. And cards weren’t the only thing that went up!

Now the question is if they’re a decent idea for hedging against inflation. Tough call. Some believe there will be a “great reset” with our financial system and economy. Some believe this is just the beginning. With metaverse, NFTs, crypto, etc… we’re either gearing up for another bubble, or an evolutional shift. I’ve read interesting pieces on both sides. With baseball cards, I play it like others have mentioned. The most basic advice. Don’t gamble what you can’t afford to lose and there’s nothing wrong with a little diversification. The bonus is you get to enjoy them!

The answer is probably multifactorial. I'm sure wealthy investors are a factor. Whether they are the primary factor is unknown. However, there are more "common" investors than wealthy ones.

For every Ryan that can purchase a T-206 Wagner, there are probably 10,000 times more looking for a E95 Wagner in a 1. There are more collectors chasing a 1953 Topps Mantle in the 3 - 5 range than there are wealthy investors looking to purchase 8s and 9s.

I'm not sure about the stimulus money, because I didn't receive a nickel. However, wasn't there three separate checks around $1,000.00 each? That's an extra $3,000.00 that collectors had to spend on the hobby. Multiply $3,000 by the number of hobby members, and that is a lot of money that entered the hobby in a short time period. This also only considers the stimulus money, and not money from the collector's personal funds that they also spent.

I think this common collector wave of money at the bottom was more than the big money coming in at the top that was chasing just a few cards. Rising tides lift all boats - even the yachts. Just my two cents.

One Word to Describe this Industry over the past 3 Years....MANIPULATION

American's love collectibles. I would guess cards are one of the most prominent collectibles of all with perhaps the biggest collector base of any collectible that exits. Sure, there may be bumps, but doubt the sky will fall. Certain card sectors may experience more volatility than others, however, the big name vintage/Pre-War sector seems quite safe compared to other sectors. I feel safe and secure holding the good stuff for the long term. Haha, fingers crossed.

I think stimulus funds played an oversize role in the run up in prices. Think about all the business owners in the US (google says approx 31.7 million). There were two rounds of stimulus rounds available to business owners that allowed them to keep workers with funds mandated to cover payroll expenses. The calculation was 3x your monthly payroll amount. So for example if your business employed 75 people with a monthly payroll of $375k you got two checks for $1,250,000 each. $2.5M total. For those business owners who were unaffected by the pandemic, that was just free money to spend spend spend. Hence the huge price increases. What cards would you buy with $2.5m? :-)

If indeed the federal government was funding well-off people's purchases of sports cards in a national crisis, it's little wonder to me why the far left is gaining traction in this country.

Well we can’t exactly question anything anymore. You either get silenced, or laughed at as a conspiracy theorist since they all pull “facts” from the same playbook. Like a clown on fire.. kinda funny, kinda sad.

AJ, this is totally accurate, although I dont know anyone who used the money on cards; I understand most put it into stocks or larger/second homes, both of which have appreciated significantly.

When that all went down, numerous banks and lawfirms approached me asking if they could acquire stimulus for my company. My answer was, we dont need it, we are doing fine. Many said, it doesnt matter, its there for the taking. Or, more politically correct, just get it to be safe bc you never know. I did not take a dime of business stimulus and I was given no personal stimulus check. I think people who took the business money knowing they didnt need it should go to jail for theft. Doing that is as unpatriotic as storming the Capitol (yup, I went there).

To be overly simplistic, just look look at recent wealth distributions in the country with hedge fund managers pulling in billions in income and nasty service jobs go wanting because the pay is crap for unpleasant repetitive work.
This inequity is as big a threat to our system as the political wars being waged in Washington. And what do the ultra rich buy with their seeming unlimited wealth. Toys; massive estates, mega yachts, Ferraris, the best fashions, security. So why not a few top line cards of the Babe, Tyrus and Joe Jax? If sports cards becomes a new acceptable asset diversification it will please us to see cards we hold increase in value because of high prices but may close off many acquisition opportunities

This PPP Stimulus money that was handed out to businesses I was just wondering do the businesses have to pay this back? If so how much time do the have to pay said back and at what interest rate??

I am no socialist, but yes, the wealth gap as it increases is in my opinion something that could have catastrophic consequences eventually. To quote William Blake, and again I am no socialist,
A dog starv'd at his master's gate
Predicts the ruin of the state

Some of these numbers make me laugh.

If you put an e95 wagner psa 1 on Ebay, youd hardly get 100 (likley 10) watchers, let alone 10,000 people interested. Yet, ebay is the biggest platform collectors have. There is a lot of money at one end of the hobby, very little in the middle, much towards the shallow end of the pool. The speculative buyer on their credit card are running thin, and PSA backlog almost broke more than a few I assume.

If the money was used for what it was intended (payroll mainly) and you meet other criteria (retaining your employees etc) the loan is forgiven.