How did this all start?

[bcbgcbrcb]

If you had to name one individual most responsible for the overheated sports card market in late 2020/early 2021, who would that be?

[npa589]

Lab technician in Wuhan.


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[wolf441]

Originally Posted by npa589

Lab technician in Wuhan.


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Well played.

[Fred]

Originally Posted by npa589

Lab technician in Wuhan.


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Dang, all along I thought that was just a conspiracy theory. Gotta be true if you heard on the internet.

[butchie_t]

Wet bats in china.

[Snapolit1]

On a broader scale, I’d say Covid and Michael Jordan ESPN special.

[raulus]

Not really an individual, but…

Near zero interest rates.

Lots and lots and lots of stimulus payments.

Suspended/optional rent, student loan, and mortgage payments.

Everyone locked inside and not able to leave the house, causing them to dig through their old hobbies.

Plus nothing else to throw your money at, except for crypto.

[brunswickreeves]

If there was a ‘who’ started the frenzy and run up, I’d say Rob Gough who paid a record $5.2MM for a ‘52 Topps Mick PSA 9 in January 2021 (https://www.si.com/mlb/2021/01/14/mi...-breaks-record).

Then about 1 week later, one of the great last living HOFers Hank Aaron passed away. There was a lot of buzz in and about the card collecting industry and market at/after that time. Covid had been around for 1 year by then, and people realized it wasn't going to be the end of times, so didn't need to hoard their cash. Ongoing lockdown put more cash in people's pockets from government stimulus and savings from commuting, leaving more for discretionary spending.

The lockdown also put more time on people's hands, so had more opportunity to reconnect with or enter the hobby as an investment. Pre-Feb 2021 you could eBay best offer sellers on any vintage HOFer for a 15-25% discount. Now, you really need to be the highest bidder in an auction or take a chance on an upgraded card. Some cards pre-Feb 2021 included: 52 Topps Mick in PSA 1 for $15K. 48 Leaf Ruth in SGC A for $500. 53 Topps Mays in PSA 2 for $450. 52 Topps Mays in PSA 1 for $450 and $1600 in PSA 2. 09 T206 Cobb Red in PSA A for $1500. 51 Bowman Mays in PSA 1 for $1500. Most of these cards and others have doubled, tripled or better in past couple of years.

[Snowman]

Originally Posted by Fred

Dang, all along I thought that was just a conspiracy theory. Gotta be true if you heard on the internet.

You can't possibly be serious, right?

I subscribe to nearly zero conspiracy theories. I'm also a scientist who demands pretty remarkable evidence before I'd believe something to be true. And even I would place the likelihood of the COVID origins as having come from the lab in Wuhan at very near 100%.

The conspiracy theory, in this case, would be that it, in fact, did not originate from the BSL-3 lab that just so happens to be right across the river from the breakout and which just so happens to F* with bat coronaviruses, to begin with.

[Casey2296]

Originally Posted by bcbgcbrcb

If you had to name one individual most responsible for the overheated sports card market in late 2020/early 2021, who would that be?

The Fed. Oh, and dem folks in Wuhan...

[BioCRN]

Gary Vaynerchuk (Gary Vee) has a huge chunk of responsibility for hyping up the hobby, and especially all the people who were rushing Walmart/Target/retail (though he wasn't advising them to rush retail).

He went all-in with huge hype to the "hustle culture" people about the investment aspect of cards in 2019-2021. Writing, many videos, etc.

All those sneaker heads and others that were a bit out of place in the hobby, or starting breaking streams when they couldn't even pronounce player's names...people like that.

[Johnny630]

Cards=Asset Class …..this was fueled by PWCC. Right wrong or indifferent never underestimate the importance of them being removed from eBay that was the straw that broke the camel's back…

Perception and Money are powerful and meaningful influences.

[bcbgcbrcb]

Finally, some names are coming out from you guys. Was Goldin not the first auction house to see prices explode online during late 2020/early 2021 fueled by the modern basketball card craze that was the driver behind the entire hobby run-up? No attempt was even made to keep things quiet as it was all over the media that NBA megastars were investing in the company along with huge names from the entertainment industry.

[parkplace33]

Lots of good comments on here, but for me, the number one item was the lack of travel for individuals in 2020/21. People spent time at home and got bored, bought cards, etc. Now they can use that money for travel.

There is a post on another board about if you sold your personal collection of cards, what did you do with the money? The number one answer was travel. Disney, overseas, etc.

[BobbyStrawberry]

Originally Posted by parkplace33

Lots of good comments on here, but for me, the number one item was the lack of travel for individuals in 2020/21. People spent time at home and got bored, bought cards, etc.

Bingo.

[Exhibitman]

Originally Posted by parkplace33

There is a post on another board about if you sold your personal collection of cards, what did you do with the money? The number one answer was travel. Disney, overseas, etc.

Man, not me. I hate traveling, except for card shows and visiting my daughter. Otherwise, screw it. Doesn't hurt that I live in a destination city and that a stay-cation in LA can be pretty awesome. We are planning one grand trip when I retire: I plan to go to cooking school in France.

[Peter_Spaeth]

Originally Posted by BioCRN

Gary Vaynerchuk (Gary Vee) has a huge chunk of responsibility for hyping up the hobby, and especially all the people who were rushing Walmart/Target/retail (though he wasn't advising them to rush retail).

He went all-in with huge hype to the "hustle culture" people about the investment aspect of cards in 2019-2021. Writing, many videos, etc.

All those sneaker heads and others that were a bit out of place in the hobby, or starting breaking streams when they couldn't even pronounce player's names...people like that.

Yep. Huge influx of dudes with tshirts, 3 day growths, backwards ball caps, lots of money from some vague online things. 24 hours a day on their devices, etc.

[packs]

I recall some people across multiple boards suggesting that major sales for particular cards may have been artificial and that the tactic would raise the prices on all copies of the card, which may have been the real motivation behind the original record breaking price.

[Peter_Spaeth]

Originally Posted by packs

I recall some people across multiple boards suggesting that major sales for particular cards may have been artificial and that the tactic would raise the prices on all copies of the card, which may have been the real motivation behind the original record breaking price.

In a hobby where the items have no real value, all subjective, there is a huge reliance on reported prices, which IMO has led to much mischief.

[todeen]

Originally Posted by Fred

Then you stop and consider the Game Stop short squeeze (early 2021) and the line of knucklehead investors reading/reacting to the Reddit blogs.

A lot of those Game Stop Reddit readers got burned, badly. The smart ones (probably a small percentage) got out at the right time because they understood the market and the ignorant ones lost quite a bit. Someone had to lose in that scam.

I bumped into an old acquaintance of mine -- hadn't seen him in 10 years. I asked what he was doing for work and he said it was a long story. He hated his healthcare job during COVID, but was considered essential. So he stayed on working. Then he met a guy who started teaching him day trading. He got a pay boost during COVID as part of the stimulus package to retain healthcare workers. So he started putting cash in the Robin Hood app, small stuff like that. He quit his job, because he was getting paid more to be unemployed than to continue working. Then he fell into the Reddit Crowd. He was too late for GameStop, but gambled on AMC Theaters and sold near the top of the hype. He made "Enough." Now he is a self-employed day trader. That's his job.

You also asked the demographic who was investing in cards? My doctor Bro-in-law is about 45 yrs old. He has the money to invest. He follows all sports, but doesn't buy cards. The only reason he did not invest was because he trusted me when I told him to wait it out, things were going bonkers and he could get burned. He was buying at the wrong time.

[Johnny630]

Originally Posted by Peter_Spaeth

In a hobby where the items have no real value, all subjective, there is a huge reliance on reported prices, which IMO has led to much mischief.

A lot of high priced cards played musical chairs multiple times a year from auction house to auction house...

[frankbmd]

Originally Posted by Peter_Spaeth

Yep. Huge influx of dudes with tshirts, 3 day growths, backwards ball caps, lots of money from some vague online things. 24 hours a day on their devices, etc.

Sounds like you Peter

a confession perhaps?

[Rhotchkiss]

This is a very interesting read. I don’t know what “started it all”. But I will argue that for quality/blue chip prewar vintage, “it” started long before Covid happened. The value of quality vintage cards and players have consistently gone up- over time - since I started collecting in the early 1980s. That is a primary reason why I decided to invest in cards when I jumped back into the hobby in 2014-15. Below are screen shots of VCP results of various prewar vintage cards that I pulled randomly (focusing on players and cards issues- I did not cherry-pick results).

The first is t206 Walter Johnson portrait PSA 4
The second is 1914 Cracker Jack Cobb PSA 3
The third is E121 “Babe” Ruth SGC 2
The fourth is 1933 Goudey Gehrig, #92, PSA 4

In the cases of the t206 Johnson and 1933 Goudey Gehrig, there are too many sales over the last 20 years to show them individually, like I do with the Cobb and Ruth, so I show an extended-year charter from VCP showing price growth over time

The point here is that, over time, the good stuff tends to go up. Indeed, it tends to double every 5-10 years and grow from there. A doubling from $15,000 to $30,000 is much more dramatic on a pure dollars basis than a doubling from $2000 to $4000. But it’s a doubling, and nothing more, nonetheless.

These charts clearly show large spikes in 2021(ish), but over the longer history, it’s just a more dramatic example of whats been happening for decades. And if history holds true, which I suspect it will barring some fundamental societal/economic shift (which could happen in this crazy world), prices may recede some, but a new floor will be established and over time prices will rise and eventually double.

I am talking specifically to blue chip players and pre war items. I do not know if Roger Bresnahan or Kiki Cuyler shows similar trends; although I suspect they do, just in a less dramatic fashion. And I expect we will see similar trends with players like Mantle, Clemente, Aaron, Mays, Robison, Paige. Cards have been an asset class/store of wealth for many years, and, in my experience, they have been solid investments. But it’s a get-rich-slowly type of play.

[Casey2296]

Originally Posted by Rhotchkiss

This is a very interesting read. I don’t know what “started it all”. But I will argue that for quality/blue chip prewar vintage, “it” started long before Covid happened. The value of quality vintage cards and players have consistently gone up- over time - since I started collecting in the early 1980s. That is a primary reason why I decided to invest in cards when I jumped back into the hobby in 2014-15. Below are screen shots of VCP results of various prewar vintage cards that I pulled randomly (focusing on players and cards issues- I did not cherry-pick results).

The first is t206 Walter Johnson portrait PSA 4
The second is 1914 Cracker Jack Cobb PSA 3
The third is E121 “Babe” Ruth SGC 2
The fourth is 1933 Goudey Gehrig, #92, PSA 4

In the cases of the t206 Johnson and 1933 Goudey Gehrig, there are too many sales over the last 20 years to show them individually, like I do with the Cobb and Ruth, so I show an extended-year charter from VCP showing price growth over time

The point here is that, over time, the good stuff tends to go up. Indeed, it tends to double every 5-10 years and grow from there. A doubling from $15,000 to $30,000 is much more dramatic on a pure dollars basis than a doubling from $2000 to $4000. But it’s a doubling, and nothing more, nonetheless.

These charts clearly show large spikes in 2021(ish), but over the longer history, it’s just a more dramatic example of whats been happening for decades. And if history holds true, which I suspect it will barring some fundamental societal/economic shift (which could happen in this crazy world), prices may recede some, but a new floor will be established and over time prices will rise and eventually double.

I am talking specifically to blue chip players and pre war items. I do not know if Roger Bresnahan or Kiki Cuyler shows similar trends; although I suspect they do, just in a less dramatic fashion. And I expect we will see similar trends with players like Mantle, Clemente, Aaron, Mays, Robison, Paige. Cards have been an asset class/store of wealth for many years, and, in my experience, they have been solid investments. But it’s a get-rich-slowly type of play.

Thanks for the numbers Ryan,

It will be interesting to see what the 14CJ Cobb "4" goes for in the upcoming LOTG, to quote your phrase, I think it's a "health of the hobby" indicator card. My guess is it makes a new high.

[Republicaninmass]

Originally Posted by frankbmd

Sounds like you Peter

a confession perhaps?

It's called "projecting" lol I kid!

Gary V was a big culprit. I think a few more of these influencer types were buying 1/1 refractors and faking sales. The easy money generation was hoping to capitalize on a swoon. Wvry week a 52 mantle or 33 ruth was bought and sold for more the following week. Just like everything else, when "your neighbor " tells you how much there is to be made, its too late.

The innovator, the imitator then the fool.

Speaking for myself, if your goal is retirement in the next 5-10 years, selling some assets would be wise. 5% in a guxed rate CD should out pace the loss/gain from a "hobby".

[Snowman]

Originally Posted by Peter_Spaeth

Yep. Huge influx of dudes with tshirts, 3 day growths, backwards ball caps, lots of money from some vague online things. 24 hours a day on their devices, etc.

This is probably the 3rd or 4th time I've seen you reference people having facial hair or stubble as a pejorative. It's a very strange take. lol

[Snowman]

Something else worth pointing out is that this ramp up didn't begin during the pandemic. The hobby was already experiencing significant growth prior to that. The Zion Williamson hype began in 2019, and the Luka Doncic, Acuna, and Ohtani hype started before Zion. The market was already sloping upward.

[toothcutter]

[QUOTE=Peter_Spaeth;2385204]Yep. Huge influx of dudes with tshirts, 3 day growths, backwards ball caps, lots of money from some vague online things. 24 hours a day on their devices,
Disagree.

[bmattioli]

Originally Posted by bcbgcbrcb

If you had to name one individual most responsible for the overheated sports card market in late 2020/early 2021, who would that be?

The same dude that was buying 1988 Donruss..

[Fred]

Post #46 -

[bcbgcbrcb]

Also at the very top of causes for the rediculous spike in prices in 2021 was those idiotic fractional share companies such as Rally, etc. Those have all pretty much gone bust by now, huh? Entities that were willing to pay “as much as it takes” to get a card to profit from the fees of a thousand buyers per. Great ethics there, huh?

[Exhibitman]

Wasn't an ethics issue, just a crappy business model. The deal structure to get these items overvalued most of them in the first place. They had to. The only way they lured owners of valuable items to go with them rather than sell with an AH was to give the seller a substantial cashout and a chunk of the float. It is the same thing that has brought down more than one auction venture: if the cash advance is too large and the item underperforms, good luck in getting the money back from the consignor.

The fractional interest model counted on a market for these shares that would generate commissions, but it turned out that people who like to trade baseball cards don’t like to trade shares in them. No one was trading. When prices stopped rapidly escalating on the securitized items, the nascent market for these shares locked up tighter than a bullfrog’s butt.

This is not to say that securitization cannot work and is not something that will be tried again. The securitization of cards was an interesting idea, just badly executed. The financial model was based on a bet on continuous and rapid price increases on the assets that would fuel both profitable sales and a vigorous trade of the shares on its internal market. When the pace of gains sputtered, the flaw in the model was revealed. There have been successful securitizations in other fields (notably, music catalogs) but those rely on an existing owned asset that generates income being turned out to investors, not on a flipping model of the asset itself. If a flipping model is to work the asset has to be obtained at an extreme discount to current market so that it can weather a lull or downturn. To go on the market and buy something in the hope it will soar and pay off quickly enough to keep the investors from forming a lynch mob, that would be a foolish and risky bet on a set of atypical circumstances. In other words, quintessentially American.

[Republicaninmass]

Also, lottery set breaks and pack breaks. Aside from 1 or 2 people who score, they only profit makers are the ones doing the breaks

Oh and Evan Mathis trimming/altering

[Johnny630]

Originally Posted by Republicaninmass

Also, lottery set breaks and pack breaks. Aside from 1 or 2 people who score, they only profit makers are the ones doing the breaks

Oh and Evan Mathis trimming/altering

One Hundred % correct. I see these Raffles all the time on Facebook card groups...some as high as $500 a spot....people buy into them....idk if it was die off like Razzes or not but it’s been hot recently it seems.

[bcbgcbrcb]

The fractional shares thing was tried back in the 1990’s/2000’s. Didn’t work then and didn’t work now and never going to work. The idea would have to be revamped entirely into a managed portfolio of cards invested like a mutual fund.

[Snowman]

Originally Posted by Exhibitman

Wasn't an ethics issue, just a crappy business model. The deal structure to get these items overvalued most of them in the first place. They had to. The only way they lured owners of valuable items to go with them rather than sell with an AH was to give the seller a substantial cashout and a chunk of the float. It is the same thing that has brought down more than one auction venture: if the cash advance is too large and the item underperforms, good luck in getting the money back from the consignor.

The fractional interest model counted on a market for these shares that would generate commissions, but it turned out that people who like to trade baseball cards don’t like to trade shares in them. No one was trading. When prices stopped rapidly escalating on the securitized items, the nascent market for these shares locked up tighter than a bullfrog’s butt.

This is not to say that securitization cannot work and is not something that will be tried again. The securitization of cards was an interesting idea, just badly executed. The financial model was based on a bet on continuous and rapid price increases on the assets that would fuel both profitable sales and a vigorous trade of the shares on its internal market. When the pace of gains sputtered, the flaw in the model was revealed. There have been successful securitizations in other fields (notably, music catalogs) but those rely on an existing owned asset that generates income being turned out to investors, not on a flipping model of the asset itself. If a flipping model is to work the asset has to be obtained at an extreme discount to current market so that it can weather a lull or downturn. To go on the market and buy something in the hope it will soar and pay off quickly enough to keep the investors from forming a lynch mob, that would be a foolish and risky bet on a set of atypical circumstances. In other words, quintessentially American.

Great insight, and well said. It seems like it should have been somewhat predictable, but I think most people didn't see that coming.