Quote:
Originally Posted by kailes2872
For the life of me, I can't understand why people are using it as an investment. By the time you pay 22% buyers premium on the buy side and 10% commission on the sell side (assuming no discount rate is given), it is tough to even break even. If you add to the fact that capital gains rate on collectibles is 28% - more than the tax rate for married filing jointly up to $326,600 (24%) - cards as an investment make other people money but it is tough to break even - even after holding onto the cards for a few years.
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Transaction costs are the most misunderstood and ignored factor by the majority of people (whether it be baseball cards, stock options, making a bet in a sportsbook, you name it). And the prevalence of them for a particular trade or investment is so paramount to someone's bottom line.
I've seen people (who are otherwise great with money and experienced securities investors) buying and selling options with a bid-ask spread of 5.25 by 6.50. Similar to your example of what happens in the card market using ebay or auction houses.
No sign of this changing though. People still like to attempt flipping cards regardless of that uphill battle from the beginning, and the market's done so well lately that it disguises how tough it is during times like this