Posted By:
JamieYeah, the tax implications are something I have thought about. By the time you're done consigning to an auction house, which takes a 20-25% cut, and then paying 28% taxes on the capital gains, cards are definitely less profitable than they appear.
Though if you have a card you know has dropped in value, you can wait to sell it until you sell a profitable one. I have some shiny cards I bought ten years ago and is worth about 10cents on the dollar now, but I won't sell them until I sell the profitable vintage cards to help offset the gains.
Getting audited doesn't sound like a lot of fun, and even if it is very unlikely in my income bracket of (ahem) unemployed, I got enough problems that I do not want to mess with the Federal Gov't.
If I had Leon's depth of knowledge about cards, I think his decision could be justified. Truth is that there will probably always be a market for rare vintage cards, and especially high-grade ones.
I have no idea what is going to happen to our economy, but if things do get really bad, the really wealthy people will still be able to buy baseball cards. Therefore, I believe it's vital to acquire cards that not only you personally admire, but that the really wealthy people want. Those things will hold their value, since there is a huge disparity of wealth in this country.
One thing that really scares me is stocks. I don't care if the capital gains rate is less, stocks just drive me berserk. I don't have the risk tolerance to buy a stock for $100 and watch it drop to $70 in one day due to a "negative earnings surprise". If it happens, I will panic and sell, no doubt, within two minutes thanks to online trading. Then the next day is goes back up to eighty bucks.
That's why it seems to be that the best investments are the ones you can stick in your safe deposit box, especially for the risk-averse. Baseball cards, gold and silver coins, I-series treasury bonds that remove the risk of inflation - anything that you can physically stick in there. That makes selling it such a hassle that it takes a while to do it and you can't panic sell. Well, hell, it's the only thing that works for me!!!