Quote:
Originally Posted by Mark17
Right. Suppose the national emergency gets really bad, for a long time. What's that card's intrinsic value? In other words, what's it worth as toilet paper?
|
We’ve had a bull market for over a decade. During this time, 401k and salaries have increased. This, in turn, has increased disposable income for investing or hobby purposes.
Investors and collectors alike have used this disposable income to purchase cards: high-end items for eventual profits, and mid-to-low end items for collecting purposes. This strong demand for cards has sky-rocketed prices.
If this virus continues and we enter an extended recession, 401k values will significantly fall. Moreover, people will lose their jobs. Those that do not have jobs will not have disposable income to spend on cards. Those that do not lose their jobs will save for a rainy day in case they do eventually lose their jobs. They will choose not to spend/invest their disposable income on cards. Cash is king during this period.
The demand for cards will significantly decrease across the board. However, the supply will stay relatively the same. Sure, some will ride it out any pull all their items from eBay, etc. However, those that make a living selling will have no choice but to continue selling. They have bills to pay, and mouths to feed.
Those that lose their jobs will also have bills to pay and mouths to feed. Unemployment insurance benefits only goes so far. To raise funds, these people will eventually sell their cards. They are not going to pay penalties and dip into IRAs and 401ks - or at least what is left of them.
Thus, with demand significantly reduced and supply only slightly reduced, prices will fall. How far is anyone’s guess. I don’t know how many bullets the Fed and government have left in the chamber. They fired a lot of them at the 2008 housing crisis. They have kept this economy propped up for a decade. Money has been cheap. I know the 20s just started, but it feels like the end of the roaring 20s of last century.
This is just a macro view. But, I personally made one last purchase yesterday (a few hundred bucks). I’ve decided to suspend all buying for a while. I suspect others will do the same. Wish everyone good luck during this uncertain time - health and financial wise.