Investing in baseball cards

[Archive]

Posted By: Gilbert Maines

Hi,

In early 1985 I bought my first used baseball card. It was an OJ common which cost $20. and was in vg/ex shape (and still is).

A financial guy once told me that if your investment value doubles every seven years, you are doing pretty good.

Using that yardstick, by 1992 the card should have been worth $40. By 1999 it should have been worth $80. And by 2006 it should be worth $160.

I think that it is already worth $160. So I conclude that this purchase has been a sound investment, although I never purchased it for resale.

Certainly since 1985 I have made better and worse choices, as we all have. My interest is not in those cards which were bought low and sold high, as much as which type of cards represent the better investment.

That is, will any of you share similar historical performance data which documents cards performance that are more rare, less rare, better condition, etc.?

The price guides do not paint as rosy a picture for cards as investments during the past decade, as they previously indicated.

[Archive]

Posted By: leon

As I mentioned in an earlier post I took some money out of the stock market about 5-6 years ago and put it into vintage cards. I think I have done ok especially relative to the stock market. As with anything it is all about supply and demand. I have always tried to concentrate on the most obscure issues and that seems to have done ok for me. As everyone says as long as you enjoy it and don't lose your butt then all is good. Overall I think cards will go up and down as any volitile asset will. I also think the internet has added a lot of value to our cards in that they are more accessible now as opposed to pre-internet. When I realized what the internet was going to do (add demand) I started thinking more about cards (which equalled buying more).....and I still love the history and everything about them. One of my biggest quandries is "when to sell?". I have one card that has about quadrupeled in value and it could approach 6 figures now. Relative to my other assets it's weighted more than it should be. Good question....regards

[Archive]

Posted By: Gilbert Maines

Leon: INVU. I have a lot to learn about spousal control. For me, I can only imagine converting any asset into baseball cards. ..... brief pause while I think about what cards I could have ..... Right now, every card I buy is one less beer I drink.

[Archive]

Posted By: Peter Thomas

I think you're on to something. Sounds like the begining of a new two step program.

[Archive]

Posted By: leon

Here's a "sort" of funny story about that most expensive card I have. We were on vacation about 4 years ago. There were about 20 of us getting really drunk in a pool. One of my friends yells over "Hey Leon, how did Kimmie feel about you spending 25k on a baseball card?" Kimmie is my wife, who was right in the middle of us, in the pool, and hadn't to that point, known I did what I did..ouch...I had some splainin' to do....It was time for some serious beer guzzling. After that sticker shock it's been all down hill.....good luck....and remember "they are an investment ! " ..that's my story and I stick to it.........,

[Archive]

Posted By: T206Collector

I started putting all my pennies into cards when I was a teen back in the 1980's. Even if the baseball card market has always been poor for 1987 Topps cards, I still believe that this was money well spent compared with my friends who bought twinkies and candy and toys and other crap 13 year olds buy. I still have the cards and they are still worth at least something, if nowhere near what I paid for them.

I apply the same logic to my "investment" in vintage cards today. My excess cash flow would get spent on more expensive dinners, travel and other leisure activities. By putting some of that cash into cards as a leisure activity, at least it holds some value, if not appreciation over the years. That $500 I put down on my first two T206 cards back in 1997 is worth more than $500 on two scales: first, the cards have gone up in value; and second, I would otherwise have nothing left to show today for the $500 that was in my pocket 7 years ago.

[Archive]

Posted By: Gilbert Maines

Leon: !!

[Archive]

Posted By: runscott

Gilbert paid $20 for a beer in 1985?!? This proves to me that beer is a bad investment - you should dispose of it orally as quickly as possible, further evidence to this effect given by Leon.

I have never invested in any vintage sports items, but certainly I hope my stuff will go up in value. When I get a good deal, it's as compared to current market value - in most cases, I've found that my items have NOT gone up appreciably with time, primarily because I generally only keep uniforms, photographs and reference books.

(segway to semi-random thought, ala Julie)

BTW, I just finished reading (most of) Lew Lipsett's "The Old Judge" newsletter compilation from the first four years - what a read! I'm sure the old-time collectors know about all that stuff, but for those of us who are newer to the hobby, I think it's a must-read.

[Archive]

Posted By: Julie

Roger that. I've wanted to say that for EVER so long!

[Archive]

Posted By: warshawlaw

I am a card investor...I admit it. I am also a collector.

I have two groups of cards, in my mind: the core collection I intend to have arrayed around my deathbed and everything else. I sure hope the core collection appreciates in value, but I keep the cards because I enjoy them. If I don't recoup the $275 I am into my Thorpe Exhibit, who cares...it ain't goin' anywhere. Then there are the cards I buy solely because I think they will appreciate. When they hit my target prices, I unload them.

Like every other investment, how you do on cards depends on what you buy, when you sell it and how much you spend. ROI (return on investment) is the measure. I love to buy cards and flip them quickly, trading if possible so that I am into the cards I end up holding for far below market. If you buy the right cards and catch a wave of price rises, you can very rapidly increase the value of the portfolio. The ROI is insane if you hit it right, much better than any stock trade could be, especially if you trade up on cards. I love owning a significant card with little cash into it. The problem is volume; stocks have all the advantage when it comes to making big piles of money bigger with relative fluidity. If I pick up a card for $30 and flip it a week later for $300, my ROI is huge but my resulting gain in an absolute sense is not. If I buy 1,000 shares of Zilchcon at $1.50 and it goes to $5, my ROI is lower than the card deal but my absolute gain is much bigger. IMHO, as we talk about bigger deals and higher priced cards, the ROI falls of necessity. I often make 5-10 times the price of a cheaper card when I finally decide to sell it; I would be happy to double a larger priced card. I have to say, however, that finding stocks to buy is a pain in the butt chore while finding cards to buy is an amusement. Who doesn't love to thumb through 100's of cards looking for that one good one??

I have actually done a head to head comparison with stocks, twice. In the 1990's, when the market was leaping ahead 40%-50% a year even in mutual funds, I put everything into stocks. About a year ago, my wife wanted to start "investing" in stocks again. I say "investing" that way because from what I have seen since the 1990's, there is no rationality to the stock market, it is rife with insider trading, and it has worse odds than craps for the average guy. This last year or so, my card investments have done much better than my wife's stock portfolio, and she follows investment advice from so-called professionals.

I also look at cards as a hedge investment against stocks, real estate and inflation. The hobby has followed an upward trajectory for 70+ years. I don't think we will see it turn to crap unless everything turns to crap, in which case we are in deep caca as a whole. There are sectors of the card market I would not touch right now as investments, simply because I don't think they will grow relative to other card sectors.

Finally, I cannot conceive of an investment like cards, except art. It tends to appreciate over time and you can appreciate it while you own it.

[Archive]

Posted By: Anonymous

This behavior is collecting or speculating. EBay has reduced the spread between what a buyer pays for a card, and what a seller obtains. Investing is the purchase of an asset with a cash flow, or a claim on a cash flow. These pieces of paper are kindling. Topps stock - now, that's investing. Just because your return is higher in cards than in financial assets doesn't mean you're investing. You're a lucky collector.

Ever notice how pictures of politicians and religious figures in the Middle East are readily traded or displayed? I'll trade you my 1967 (you fill in name of spiritial leader) with mustache for your 1986 with full facial hair. Well, I'm not buying.

Finally, Mr. Mint might be alot of things, but Mr. Mint had a nice explanation in his book about "investing" in baseball cards: If bought and sold between dealers and collectors, the collector must enjoy a price rise of about 400% to double the funds committed since most dealers would generously pay no more than 50% of "market value." Mr. Mint claimed he invested great quantities in mid-1980s MINT Topps (ah-hahahahaha) sets. I wonder how he made out? Maybe he hyped them in his book to unload those losers.

[Archive]

Posted By: Chris

I think it is getting much more difficult for dealers to pay 50% or less for cards. With Ebay and the internet in general, it gives the seller many more options than they had in the 70's and 80's when you had to sell to the dealer for 20% of book. Correct me if I'm wrong, but I don't think too many people are selling quality cards for 50% of their real value.

[Archive]

Posted By: Dave

How diligent is everyone when it comes to taxable income from card sales?

I'm not talking about a real dealer, but individual collectors who may also invest or just sell the occasional card. The quick check for the difference is whether sales tax must be charged in his home state.

The proper accounting is to claim gains, long term or short term, as the case may be, and pay your dues. But, it seems that these transactions are really obscure.

[Archive]

Posted By: Anonymous

Yes, the stuff people from this board buy has better pricing due to eBay, especially if displayed properly and with high seller reputation. I disposed much of my high grade cards to pay for some of school in the late 1990s and enjoyed the liquidity brought about by eBay and PSA (#%@&#$'ers). Never would have happened in a Central Illinois card shop - Go Illini! I do not have enough disposable income but hasn't reputation, on the sales side, solved some of the overgrading shenanigans ever since VCBC began the dealer survey? Even if I do not often buy, I still study the survey.

In any event, there are enough people who lack time, effort, or skills to sell on eBay. Further, plenty of people sell what they know not; read this board and learn how information and knowledge gives a buyer a leg up!

[Archive]

Posted By: David Vargha

How diligent is everyone when it comes to taxable income from card sales?

I'm not sure. I've always lost money on every transaction that I've ever made, of course.

DavidVargha@hotmail.com

[Archive]

Posted By: DD

According to the dictionary, investing is "To commit (money or capital) in order to gain a financial return". This makes collectibles, particulary the ones discussed on this board every bit the investment as stocks and bonds. I primarily sell vintage TV and movie photos for a living, along with some sportscards when I can get them, and I know that my ROI is far greater than anything the stock market will bear (long term or short term).

[Archive]

Posted By: PASJD

It's a good justification if the wife catches you spending too much money, or a good self-rationalization. But any prediction as to future values is just way too speculative, the stock market is bad enough and at least there you are investing in real companies that do something and there is some objective data to go on, not a piece of cardboard whose value is inherently subjective. Gotta go look for some deals on 88 Vermont Griffeys and PSA 10 Jordan rookies and Rick Ankiels and refractors, see y'all later.

[Archive]

Posted By: Anonymous

Your return reflects the risk you take. If you consistently earn high returns, you have specific skills and knowledge the rest of us lack - information, customer lists, other intangibles, etc. Either that or you're lucky. When the world goes irrational in some slump, you'll have nothing but pictures.

Then again, I wouldn't consider gold and diamonds as investments either - just inflation hedges. Real estate is an investment, because it may generate a cash flow; it's used in production. Baseball cards, movie pictures, whatever used collectible goods - wouldn't be rented, can't be used in producing new goods, & generates service fees only in sales as income for economy purposes.

It's probably just me, but I fail to see the intrinsic value in old sport cards. I like them; I buy them; I read this board. Reading about your collections is pretty awesome.

[Archive]

Posted By: warshawlaw

Except in the wilderness, things have value only relative to other things that may be acquired for them. These relative values shift over time and with perceptions. Over the last 30 years baseball cards have appreciated more than nearly any other category of tradeable thing, hence their relative value has increased proportional to other valued classifications of items, or as we commonly term them, "investments". If you want to argue intrinsic values, the only "intrinsically valuable" things are food, shelter, fuel and a loaded weapon, and one can argue that the latter is the most intrinsically valuable thing of all because properly employed, a loaded weapon enables me to acquire virtually anything else I want (food, shelter, fuel, money, goods) at little or no cost. For that reason analyzing the merits of an investment by reliance on a concept of intrinsic value is facile and fruitless as it will inevitably boil down to elevating consumables and weapons above all other things on the value scale.

As far as streams of income go, obviously, you've been reading some of the best selling investment books. Limiting "investment" to include only income-producing assets similarly is both simplistic and inaccurate. It works great for real estate (which values property solely as a function of capitalization rates), not so well for most intangible investments, and not at all for any other hard asset investment. The ultimate proof of this is the fluctuating value of pure income producing assets like T Bills. If it was income production uber alles, there would be no revaluations of guaranteed income producing assets. The fact is that trade exists in these securities because of relative value analysis.

It also bears noting that for the vast majority of human history there was no such thing as an income producing asset. Things were invested in by being stockpiled for their usefulness in daily life (food, weapons, etc.) and bartered as need be. On occasion, a centralized government obtained sufficient power to designate an instrument of some sort as legal tender, usually a precious metal, although seashells and beads were used at times. The same governments granted certain citizens (lords, boyars, cossacks, etc.) the right to extract income from the land and other people in return for allegiance and delivery of instruments of force (knights). The only pure income producing investments of the time were the loans made by outsiders (mostly Jews in Europe owing to the Church's outlawing of interest income), but these investments were extremely risky in that the borrowers often defaulted or compelled loan forgiveness. The concept of income-production as an investment arose only with the creation of legal tender as a medium of exchange and the creation of an enforceable legal structure that could enable ordinary people, commoners, to commit money to endeavors with the reasonable hope that they would receive something back when the time came to collect. The income production you tout as the only true form of investment was virtually unavailable until a very short time ago in human history.

Even today, the concept of income streams is not an accurate means of analyzing an investment. The myth that a share of stock entitles one to share in the company's income stream is just that; a myth. Stock ownership does not entitle one to share in the income absent a dividend, which can be taken away at the whim of management. Many companies do not even have streams of income. The basis for valuing stocks is a set of assumptions as to what the market of buyers for a stock will do to it in the future, not a logical connection to income streams. You need look no further than the daily news for proof. A whole host of stories come out every day that have zero effect on the actual incomes of companies but which nevertheless lead investors to downgrade their views of the companies and reduce the values of their stocks. 9/11 was a great example; the stock market dropped precipitously the day after the markets reopened. Those of us who went in and bought blue chips on the dip made 20-40% in a few months on the rebound, even in what was an overall downward trending market.

I'd suggest you take your reading a bit further...

[Archive]

Posted By: Gilbert Maines

Yeah. What Warshawlaw said. But actually I wasn't thinking about the Jews. I thought I meant: has anyone bought something like a Cracker Jack a while ago + how did it do?

[Archive]

Posted By: Bryan

or does anyone else feel like they have just read a script from Law and Order I do love this board.

[Archive]

Posted By: warshawlaw

I wish I wrote for a successful show...I could buy more cards

[Archive]

Posted By: steve k

Warshawlaw had some good points in both of his posts. Having graduated as a finance major from Penn State, his points and history about investing are accurate. Just to expound slightly - there are different types of investments and the stock market and baseball cards are different. Not to get into a stock market seminar - but picking stocks is exactly the same thing as picking random numbers, no matter what someone’s perception might be. As Gordon Gecko said, to strongly paraphrase - if you aren’t on the inside of a company knowing the intimate details of their particular financial operations, then you are on the outside throwing darts at the Wall Street Journal stock price pages in selecting which stocks to invest in. Also, today’s stock prices generally as a rule of thumb are what is expected to happen approximately six months from now. Since no one can accurately predict the future, it is impossible to accurately forecast stock prices. So forecasting stocks and picking stocks is exactly the same as selecting random numbers. The stock market is a good long term investment though for a multitude of reasons, mainly resulting in a growing worldwide population with a constant demand for new and improved products and services. So even since having to select stocks at random, your long term odds of making money in the stock market are excellent. That being said - a hobbyist such as a smart baseball card collector/investor, IS on the inside of the baseball card collecting community. A smart hobbyist has a much better chance of making the right money making decisions in his/her chosen hobby than in the stock market, whereby for all intents and purposes in the stock market that person is simply on the outside trying to look in. Also there are times when a particular hobby becomes stagnant, and then even selecting random numbers in the stock market becomes a better investment. So a smart hobbyist investor knows when to buy & sell and/or when to just sit back and just have fun collecting with no intention of profit. Hey - even hobbyist investing is tough - if it was easy, then we’d all be millionaires. So all this being said, my opinion is that pre-1973 baseball cards are and will continue to be a good investment and I believe better than the stock market for at least over the next few years. Now since I predicted this, watch the Dow Jones go to 20,000 next year

[Archive]

Posted By: Gilbert Maines

With the respect fitting my learned colleagues, may I interject the following notation? My library of unrecorded history differs in content from the account which you cite. The area of specific divergence is in regard to items of intrinsic value and income producing assets throughout human history.

The accounts available to me indicate that the group leaders were always the individuals with the most daughters (not the best warriors, hunters, farmers, etc.). For a man with this asset controls not only the wealth of the local inhabitants, but their health and happiness as well.

You see, it is not seashells which are the universal medium of exchange, nor bullion or other trinkets, it is the availability of a perferred outlet for lust which is the fundamental unit of barter. And today, the rate of inflation and other economic indicators can be correlated with the costs for this service in metropolitan areas.

[Archive]

Posted By: Anonymous

Good points & fair enough.

Money serves as a medium of exchange, among other functions. Money is not an investment. Gold? Past generations trusted the metal more than their governments' promises (for good reason, under monarchy). High class art was a good way for the aristocracy to display and store wealth - in the event heads rolled, and armies marched: bust it out of the frame, roll it up, cross the channel, and sell it in London while waiting out the passing storm.

Baseball cards? Bush wins, the cities burn (so some professors in school, say), revolt breaks out (again, so some know-it-all partisan profs, say) and you take your baseball memorbilia to ... ahhhh ... ahhh ... well, wherever you go, and sell it for ... ??? ... Maybe they buy that stuff in Mexico City or Venezuela or Tokyo or Korea?

Theory says something like: in a liquid market with perfect information, all other factors unchanged, the next price observed for any stock is its last price. It's sometimes extended to the best prediction for tomorrow's closing price is today's. The baseball card market is liquid? OK, maybe more today than in the past. You know and I know that it'd be tough to get the last price since the baseball card market is unregulated (eBay rules? no way!) and we'd have to search for willing buyers.

A bond has a general claim on cash flows and assets. A stock has a residual claim on cash flows and assets. The purchase of a stock or bond is to directly or indurectly take a position in a producer. The long term aim is income or capital gains. One can hold stocks or bonds without sale and still obtain cash through dividends or coupon interest.

A baseball card is a piece of paper that will generate no cash flow unless sold; To get cash the baseball card is sacrificed. Buy a baseball card, stick it in some dark place and wait for a price rise, no cash flow, no entertainment value; to me, that's risky speculation.

Hey, open a museum, charge admission, then the baseball memorabilia generates a cash flow. I'll buy that argument. The baseball cards are an investment in a for-profit entertainment business.

Enjoy. I see the historic returns on high quality baseball cards (those the general pop know about). But common baseball cards (that's most of them in my mind) as a financial asset? A good way to perform major tax avoidance, if anything. In the meantime, I'll eat tuna and scrimp along with my US Savings Bonds; I'll obtain baseball cards with the funds I can afford to lose.

[Archive]

Posted By: Anonymous

Gilbert: Are you writing that the price of baseball cards is a function of the prices for prostitution, gambling and illegal pharmacology services?

[Archive]

Posted By: hankron

I knew a well-educated man (son of a wealthy banker, Phd. in engineering from Berkeley). He said that he picked and chose each stock for his investments until he got eductated enough to realize he shouldn't be the one picking the stocks for his investment.

[Archive]

Posted By: warshawlaw

A little nookie can go a long way but I'll take the food, shelter and guns first. After all, we've all spent long periods w/o hey-hey, but food...Let's just say that there are reasons the photo of the N54 gang in Cleveland was taken in front of a restaurant, not a brothel

As for the issue of income vs. value, sure, if the crap hits the fan our cards aren't likely to be worth much, but neither are stocks, bonds, etc. But I don't believe that day is coming. I fully expect to have a thriving card market for the foreseeable future.

[Archive]

Posted By: Gilbert Maines

Anonymous: I apologize for my lack of clarity. Please be assured that I did not intend to infer that either gambling or illegal pharmacological services were societal staples of sufficient historical significance to be employed as economic indicators.