Comparing the CME/MERC with Cardboard trading

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Posted By: Bob S

I have experience trading on the CME and MERC, and I think that the key reason NOT to chase these cardboard prices is LIQUIDITY. Heck, it's tough enough to get your camel (let's say 10 big cars) through the keyhole at the financial exchanges. Trying to liquidate cardboard with no organized exchanges is just like playing the game in "Lost Wages" (imo)
Just one old goats' opinion, but for you young newbie bucks, just be careful. (Stepping of my soapbox, now...LOL )

For me, I bid low for collectibles, and if I get 1 out of 50, I'm happy. More work....yes....but I like to sleep well at night.

There are predators out there....my advice is don't feed them. Instead stand in their shadows, and pick up the crumbs.

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Posted By: scott brockelman

vintage baseball cards are VERY liquid, thanks in part to Ebay and the BST thread on this board you can sell a card within 24 hours to 7 days, and with paypal be paid instantly, as good or better than the settlement period on most any exchange traded item, stocks, bonds, contracts, ETF's, mutual funds, etc.

for years i tried to rationalize the cards all the while feeding my brokerage accounts, while also buying high dollar cards. 10 years later i have a 7 figure investment portfolio AND also have a 7 figure card collection that acutally had far better returns than the market. Now, was i in the right place at the right time? yes, i had opportunity and took it, it paid off. can it be done now? perhaps not as easily.

but back to your contention of illiquidity, each time i have decided to sell something, either 5 figure or 5 bucks i have been able to, quickly and easily with out fire selling any of it.

scott

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Posted By: Bob S

I want to make a worthwhile response to your comments, but, I don't feel well enough to do it tonight.

I agree with some of what you say, and not with some of your other comments.

As soon as I feel better I will respond.

Thanks for your interest in this topic.

Bob S

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Posted By: Anonymous

Well its true you can buy them 24/7 anywhere. i live in canada and its hard to get t206's, or E93 cards here. so i think its great. only problem is they have soared in price. i bought a E93 Joss on ebay about 1 year ago on eBay for 25 bucks grade a 5. now they are exxxxxxtremmmmely high in value. but like you said 1 out of 50 is my style also! lol

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Posted By: David Vargha

ECON 101 -- Supply and demand dictate price, whether it is pork bellies, sweet crude, T205's or 1984 Donruss. The markets are quite efficient this way. Now if you are "speculating" about whether current conditions indicate a speculative market or not for cards, that is quite another story and a different analysis altogether. But to make an evaluation on a collectible because of a perceived lack of intrinsic value or otherwise is just as foolish as using that same methodology to price diamonds. It all goes back to those darned P/Q charts.

DavidVargha@hotmail.com

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Posted By: Bob S

Thanks for taking time to make your fine comments regarding this topic. It seems to be a characteristic of this forum, to be able to have divergent opinions expressed with great congeniality.
We are all lucky to be here.

Bob S

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Posted By: Anonymous

First off let me say I am a Futures Trader and Avid Card Collector. I have been involved in the Futures Market for well in excess of 20 years.
As with any investment, "chasing" is never a good idea. We all want to invest at the bottom and ride the wave to the top and sell right at the optimal point. However, this is rarely the case. If we are fortuante enough to "get in" close to the bottom before the run and get out at some point prior to the high we may in fact leave some on the table, but we have secured a profit and that is what we as traders/investors hope for.

As far as comparisons to card collecting there are several factors which come into play. First is rarity, a card with a population of 20,000 vs a card with a population of 20 will command a higher premium, just as an option that expires in one month vs an option that expires in 6 months (leaps) will command a higher premium.

Another basis that effects price is condition (quality) a card who's condition is graded a 4 will carry less value then a card with a grade of an 8 (similar card), just as copper (a metal) vs gold (a metal).

Then of course you spoke of liquidity, in the markets liguidty is determined by the spreads (bid/ask) in a particular investment, whereas in card collecting the liquidity is determined by the number of people that can afford the card you are selling. Obviously if you are selling a T-206 red cobb psa 2, vs a psa 9 T-206 red cobb the number of people who can afford that card (psa 9) has dwindled down.

This is the primary reason that Berkshire has never split the A shares, Mr. Buffett feels that anyone who can afford his stock to have a voting right has to have some level of knowledge with regards to his business and wants to keep certain people from having the ablity to purchase his shares, as is the case if I invested in the PSA 9 Cobb. The PSA 9would signify the best (or close to it) and mr. Buffett feels his price signifies that his stock being the most expensive is the best. (We can argue the merits of his beliefs, but for this purpose i am only using it as an example)

So as I see it, card collecting is no different than investing, however, I personally feel a well thought out portfolio of cards, purchased wisely will grow in value and will always be liquid enough to sell at any point in time. And once you do, you can then throw all that money in the market, because after all, you already have first hand knowledge of the game, just take out cards and insert stock for liquidty, price, potential, and rarity.

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Posted By: Bob S

Thanks for a well thought out post. This forum is right up thre in quality with the best forum I belong to devoted to futures trading. (There are really less than a handful of Futures forums worth a look. (free ones, i.e.) LOL

Thanks to all.

bob S

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Posted By: Charlie Barokas

I will take the liquidity of "Babe Ruth" over most any growth stock in the market, let a lone a Futures Contract.

Once again I think this thread wreaks of sour grapes and or the aggrivation of a hobby/business that has matured pasted penny packs.

Everybody wants to buy good quality items at a bargain price but as with the stock market and other markets , "value stocks" and or discounted items might just be discounted for a reason.

This is a homework hobby/business (like the stock market) and if you have done your homework there might just be value in paying up for a high quality card.

Dealers or collectors that are only looking to buy cards strictly on a discount to book price ratio might end up with a portfolio of low-end for the grade cards. In my opinion, low-end for the grade cards are the more susceptible to a decline in value..

I think it is missing the point to always be looking for the cheap card. I would argue that the finest cards in the hobby have gone up far more over the last 10 years than the so called "crumbs" have.

Some collectors might say that they are not buying cards for the appreciation, well then this thread does not apply to you. But the point of this thread is be fearful of expensive cards as they might fall off a cliff and the true seasoned 30 year vet knows how to pick value out of the dime box that will some how be bullit proof to the volatility of the coming ebbs and flows.

Fine wines just keep getting better and better. If you feel like bidding on 50 Goudeys all without the last name Ruth only because you might win them at a discount to SMR, I would argue buy the Ruth and overtime you will be rewarded even though you may have to pay up now. This does not apply to those that are building the Goudey set but rather to the Author who seem to think the "crumbs: are the safe haven of the hobby while all expensive cards are doomed to fall.

Some people will say they cannot afford a Ruth, well in that case, buy the best cards (Scarity, condition etc) within your budget and forget about the deceptive "crumbs". Like in the stock market, its not how many shares you buy of stock that makes you money, its the percentage allocated to the best of breed companies. Would a person have been better off buying 1000 shares of collectors universe at 20 or 100 of Google at 200.

Charlie

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Posted By: Bob S

Another great post in this thread. Even though you were rather muted in your criticism of my original point, and I think I failed to present my view properly, I think I'll just defer to the responses and say well spoken, guys. At 60ish and not in the best health, I should just have kept my opinion to myself, or at least expressed it better, since it was somewhat misunderstood.

Anyway, all the best to vintage card collectors and futures traders alike.

Bob S

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Posted By: cmoking

Hey Charlie,

Do you know when you'll be back in L.A. in the Hollywood Park show?

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Posted By: Charlie Barokas

I am walking out the door right now to catch a plane for the chicago show. I will be at the next Naxcom show as well.

Charlie

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Posted By: davidcycleback

One advantage to baseball cards and memorabilia is that you can buy something at discount (bought in bulk, went cheaper than expected in an auction) and resell it right away for profit. If the 'book price' doesn't budge a penny, or even goes down, you can still make a profit off the item.

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Posted By: Alan

So, here's my take, as if you asked...
I don't collect cards with the intention of selling them for profit later. I collect to collect, and because I enjoy the obsession, and frankly I like "showing off". I doubt there are any amongst us that don't like showing off their cards to people. I do realize that if I take care of my cards that one day they may be worth some money, and in these times, one never knows when they will need some liquid. So, I don't look at collecting cards as an investment, I sort of look at it as putting my money into some sort of low-yield, interest bearing savings account. If I am smart with what I buy and one day I absolutely HAVE to have some money, if god forbid someone in my family/myself gets sick, or loses their/my job I will at least have some way of helping them. But, in no way can I consider collecting cards as an investment. No one can guarantee me that they will be worth money in the future. I know, I know, we all think they will, and they probably will, but there is no guarantee. Also, say one day I amass a collection worth about a million dollars in book value. Wishful thinking, maybe, but for sake of argument, let's say it happens. Then, tragedy hits me or my family and the cards need to be sold (knock on wood it doesn't happen). It isn't as simple as cashing in my money market account or dipping into my IRA early. There are only certain people (i.e., us, the 800 or so unique users on this board and perhaps double that number that don't come on the board) that are going to want what I have, and I am at their mercy as far as selling my cards. If they don't want em, I am S.O.L. How many times have you come across a card for sale by someone else that you yourself have owned (and I dont mean that same card, I mean THAT CARD)? It's because we, and our cards, travel in a small circle. So, while the selling may always be good, there may come a time when we have all filled up our collections and don't need another Cobb or Honus in our collection (GASP!!!! I can't believe I said it). Laugh, but it could happen. It really is simple supply and demand. If no one is demanding your supply, then it isn't worth the cardboard it is printed on. So, do yourself a favor...anyone who is reading this, and plans on buying cards for an investment or for short term speculation/flipping, do me a favor, and yourselves one, and don't do it. Collect for fun. Collect to satisfy that thing inside all of us that makes us collect. Collect to remind yourself and your kids about the players that NONE of us have seen play. By the time 2 generations have passed, and the names Cobb, Wagner or Ruth are uttered, most people are going to say, "who"?

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Posted By: Cat

I don't look at this as investing at all. As such, I overpay all the time. When I want a card, I often do not have the patience to wait until the next one comes along because in my mind it could be a long time before that happens. Not that long ago, I paid $6,200 for a '52 Topps Mantle PSA 4. Damn, I was the first person I had seen pay that much for that grade. Sure, it was a nice "4" but that was a lot and I had buyers remorse for a looonnnggg time ... at least two days. Well, I don't know what the PSA 4 Mantles are going for right now, but the last couple have easily been in the $8,000s. I remember paying $1,000 for a Goodwin Champions Anson. That was maybe five years ago, and again I thought "Damn, that was a lot of money to spend on a card." I sent it to PSA and it came back in a "3" holder. I actually had a little higher hopes. Well about a month ago, a PSA 3 Goodwin Champions Anson was put on EBay with a BIN of $2,400 and it lasted about 3 hours before someone bought it. So although the good stuff continues to have high inflation and everytime I have buyers remorse I quickly realize I shouldn't, here is why I do not consider it investing:

I started collecting again to teach my kid about the game of baseball or at least about baseball players. I fully expect that these cards will be his or his childrens cards. Therefore, whatever the value of the cards, I will likely not ever see the end result of that increase in value. Certainly, if a crises happened, I COULD sell the cards, but hopefully that will not occur. Any asset cannot be viewed as an investment, if in the end, you are not going to convert it to currency. That is my situation and probably the situation of a few others on the board.

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Posted By: Cat

7 figure portfolio and a 7 figure card collection!!! DAMN

Can I count the two figures after the decimal place???