Warren Buffett's Thoughts on Card Collecting
 

I just saw this and thought it was interesting. We have had many discussions on this board about whether a baseball card collection is an investment. Here is another opinion to consider.

Warren Buffett once said there are 'two kinds of items people buy' to grow wealth — but only one 'really is investing' (Vishesh Raisinghani Sun, Jul 21, 2024 Yahoo.com/Finance)

If you’re looking for the definition of investing, there’s no better source than the world’s most famous investor, Warren Buffett. In 2018, the Oracle of Omaha explained what he considers a real investment to Andy Serwer of Yahoo Finance. “There’s two kinds of items people buy and think they are investing,” he said. “One really is investing, and the other isn’t.”

According to Buffett, the two items are real investments and speculative assets, and the difference depends on where the returns are generated. Understanding this could save you from gambling your wealth away.

Assets such as businesses, rental homes and farmland generate income organically for the owner, making them real investments. These investments can be made on a private basis. “You don’t really care if the stock market is open,” Buffett told Serwer. “You look at the investment itself to deliver the return to you.”

In contrast, a speculative asset needs a market of buyers and sellers. For example, Bitcoin, art and vintage wine do not produce income organically, so the only way to derive a return is to sell it to someone else for more than you paid. “If you buy Bitcoin or some cryptocurrency, you don’t really have something that produces anything. You’re just hoping the next guy pays more,” Buffett said.

This could explain why Berkshire Hathaway has avoided speculative assets such as cryptocurrencies or precious metals. The key lesson for ordinary investors is that an investment-worthy asset should have robust earning potential.

This is sound advice. Mr. Buffett tried to convince me of this years ago, but sadly I instead bought cards like these to potentially increase my wealth:

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Brian

Not entirely accurate
 

Good read but not entirely accurate. Berkshire Hathaway (and by extension Warren Buffett) did, at one point in time, own one of the largest positions in silver bullion since the Hunt Brothers. So he did see some value in a form of speculative investment.

Maybe he learned his lesson, unlike myself when it comes to card pursuits.

Brian (but still loving the hobby)

Well deserved huge respect for Warren Buffet.
 

That said, I'd point out that businesses, rental homes and farmland are affected by supply and demand similarly to "speculative assets". If there is suddenly less interest in a product or service a particular business offers, more people leaving a particuar real estate market than moving in, or farmland producing products which people no longer want the value of any of the above will fall - they will be "worth less", not worthless. A notable difference possibly at the root of Buffets thoughts is that what he classifies as "investments" in fact start delivering an income stream from day 1 - though at a point if demand wanes, that income stream could become negative. Leaving the value of the enterprise itself "worth less". The speculative assets rely on an increase in demand and a relatively static supply in order to increase in value and while having no positive income stream also are not at risk of producing a negative one.

Like everything else, I sold my A share years ago :(

Countless people have made a lot of money making educated guesses about what the next guy will pay more for.

And countless people have lost a lot of money on businesses that "make money organically."

I don't understand Bitcoin myself, but conventional investors like Buffett have been trashing it all the way up to 59,000.

With all due respect to his thoughts about "speculative assets," it's gotten to the point where I seek to buy Mickey Mantle cards as more or less investment pieces.
If I can walk away from a show landing one at a decent price, by the time I get home that card will already be worth more...and it will continually grow in value with countless people who would buy it at the market price, because the demand does not cease.

Maybe this approach should rightfully be called "specific speculative assets."

My kind of investments, sir. Love that Lena Blackburne most especially. The founder of baseball rubbing mud.

Imma agree with Warren on this one.

For my money, the collection is intended to be all fun. If I happen to make a little extra while doing it, I’m not going to turn it down. But it’s really not a motivating factor in my approach to collecting. If your primary motivation is to invest, particularly for cash that you really need, then I wish you the best of luck, and I hope it works out for you.

Of course, if I’m being honest, I also try to stay disciplined and not swing out of my shoes when a nice piece comes up for auction, although sometimes I struggle with that level of discipline. Usually that’s when I channel the Doc.

Bingo Specific Speculative Asset !!

People always ask for Mantle...I would say in the vintage card world it's the number one card I get asked for..it's really something.

Great info from Warren.

Another great quote is from Peter Lynch "The most important organ in investing is not the brain, it's the stomach." Don't get get caught in the emotions if you view baseball cards as investments.

I'll bet if someone asked Warren about the benefits of asset diversification, he might concede that a portion of savings in gold, silver, or collectibles might not be a bad idea.

Another reason to use a sniping service whenever possible. It keeps fervor-based bidding at bay. Place your logical max bid and don't keep monitoring the live bidding.

https://investingnews.com/daily/reso...-buffett-gold/

He doesn't seem to be real excited about gold just yet. But maybe someday.

I'll be that guy and point out that nothing in the original post is even indirectly about card collecting, ie: acquiring items for personal enjoyment. It seems like the oracle of Omaha would not be a fan of sports card investing, which seems like a reasonable opinion.

+1

Title talks about collecting

Post talks about investing


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I still have 2 I bought in the slump of 2000.

I am a follower of Buffet, for sure. I still own more Apple than my other 2 stocks, Amazon and Nvidia. That said, I would say relatively speaking, real estate has been my best investment over the long term. I have stayed in my house for 24 yrs, and it's appreciated a good bit. That's my investing in real estate advice. Buy right and hold forever :).... And baseball cards, don't forget the baseball cards!
One last real estate investing tip. Location, Location, Location. .....and yes, you can quote me!

Buffet advise on collectable is not as good as

Buffet AS a collectable. Take the time to look up his autograph on a book, baseball, or any of the many things connected to his yearly share holder meeting.