Memorabilia as an investment

[lumberjack]

This is related to Leon's poll re the stock market and it relationship to buying memorabilia. Do you look at your cool stuff as being an alternative to conventional investing. Is it bomb proof, can it be easily disposed of in good times or bad, does it promise a better return. Tell us....

[Balticfox]

In a word, "No!" Memorabilia does not, in fact cannot, kick off an income stream which means the success of your "investment" is tied to some future person being daft/starstruck/bent (fill in the term) enough to pay more than you did. Talk about building an edifice on shifting stand! Moreover most memorabilia isn't fungible meaning there's no solid way to check present day "values".

[Mark17]

I define "investment" as something that holds wealth, and hopefully appreciates over time. So, look at what you are collecting, see if prices have been holding relatively steady over time, or preferably, going higher.

Memorabilia is very illiquid. It's probable that when you might need some cash, like in a major economic downturn, that would be the worst time to sell memorabilia.

So, overall, I'd say memorabilia is an investment in that it holds value generally. But it should only be a minor part of a well-diversified asset portfolio.

[packs]

If you're a longtime collector and your collection hasn't appreciated you aren't investing. I don't think that's the norm for people who have collected for decades though. Even your beat up T206 commons have appreciated.

[Musashi]

My cards and memorabilia are purchased out of the entertainment part of my budget. (or money made from flipping non PC items). I'm aware that it has value, but I don't account for it in my financial planning.

With the investment/savings portion of my budget, I only put my money into things that pay dividends or interest.

[Balticfox]

Originally Posted by Musashi

My cards and memorabilia are purchased out of the entertainment part of my budget. (or money made from flipping non PC items). I'm aware that it has value, but I don't account for it in my financial planning.

With the investment/savings portion of my budget, I only put my money into things that pay dividends or interest.

+1

Moreover you can only make money if you actually sell the item. And I can't see parting with a personal treasure.

[Rhotchkiss]

We have discussed this many times before. Ultimately, its personal whether someone buys cards/memorabilia for investment. By definition, anyone who buys memorabilia intending to profit is investing.

The definition of "Investment":

Cambridge Dictionary: "the act of putting money, effort, time, etc. into something to make a profit or get an advantage"

Merriam Webster: "the outlay of money usually for income or profit"

I buy cards with the exclusive intent of selling them down the line for profit. I recognize they do not produce income and that they are somewhat illiquid, neither of which attributes is requisite for an investment. Thus, to me, cards are an asset class that I invest in with the intent of profiting.

And, in my experience, if you buy the right stuff and you are patient, memorabilia can be VERY profitable

Many people buy memorabilia to display or because they like it and want to own it. That's great. These people are not investing in memorabilia. The fact that the memorabilia they own may go up in value does not make it an investment, to them. The key is that the buyer spends money with the intent of making a profit. It’s nice when people collect stuff that could go up in value, but unless acquired to make money, it’s not an investment.

Accordingly, whether memorabilia is an investment is personal and turns on whether someone buys something hoping to profit off it.

[JollyElm]

I treat hobby purchases as (new word) Heirvestments.

Although I am cheap and, except for rare occurrences, always look for turnaround value in anything I buy (in other words, were I to immediately sell something I just bought, I'd be able to realize a profit on it), but I actually have no interest in selling anything.
In essence, my motivation is to enjoy the stuff I have while I'm still here, but have a collection that continues to grow in value, so when I'm gone my inheritors could have a decent payday.*



*Yes, they will probably (with complete disinterest) liquidate everything quickly and turn it into a deceased loss for me.

[Bobbycee]

I first noticed T206 cards when I was about 12, and admired how small yet colorful they were. I started collecting them, 1 at a time in the mid to late 90's & now have a 520- all mid grade. It started for the wow factor but, damn right it's an investment now too.

[bmattioli]

I invest in the Market and collect cards as a hobby..

[bnorth]

Originally Posted by bmattioli

I invest in the Market and collect cards as a hobby..

+1 Plus my Memorabilia collection is mainly Wade Boggs. I have easily 40+ Boggs bats and even though they are all different LS models there are just too many to sell at one time without taking a bath on them. Same with cards it is just fun for me. Granted if I see a card/memorabilia WAY below market and I know I have a buyer I will become a short term investor.

[vintagerookies51]

Intentional or not, a lot of the top cards would have made very good investments over the years. I remember PWCC's "Top 500 Index" or whatever that showed how it compared to the S&P 500. I never looked at the details, but I'm assuming it was very cherry picked. Either way, my memories tell me it was pretty common to find low-grade '52 Mantles for 4 figures when I started collecting in 2011 that would go for $30K today. Many other popular cards have also at least tripled over that timeframe.

[BioCRN]

I mean, I don't care about the value of most of the stuff that I only own a single example of because it's not going anywhere.

A $100 investment I made is worth $500 now? Neat, but I'm not selling it because I own it for a reason.

...but let's not pretend some of the biggest names in the hobby, living and dead, aren't collecting green paper as their major hobby focus.

As a hobbyist I'm glad they're out there finding the stuff and bringing it to market.

[Exhibitman]

It is whatever you want to make of it.

As part of an asset class, sports memorabilia is akin to art, coins, rare books, etc. It has a decades-long track record and is bigger than ever, so those who scoff at the idea of it are deluding themselves. I'd prefer that some things and people did not exist; doesn't make it so.

Many here, myself included, would classify themselves as collector-investors. I have my collecting passions (like H815 Adam Hats premiums) but over the last few years I mostly buy with an eye towards either appreciation or flipping. That said, cards are not part of my formal retirement plan. I am big believer in paying yourself first, then taking on riskier endeavors with excess cash once the core needs and plans are funded. I have had a nice little card business as a side hustle for years and as I wind down my law practice I am stepping into that business more and more. I hope to make it a full time gig eventually.

To be perfectly blunt, I (and many other Gen X collectors) got lucky. I bought my cards over the last 35 years because I enjoy them. The price run-up is an unexpected perk. Managing my portfolio of cards is the sort of problem I am happy to have.

[EddieP]

Memoribilia have no intrinsic value — and so unlike stocks, bonds and real estate— do not generate cash. Their value is extrinsic, i.e. based on appearance and/or what it could be sold for, which may not be its intrinsic value.

In the case of vintage cards you have pictures printed on cardboard. The intrinsic value of cardboard is $0. A T206 Honus Wagner sold for $7+ million. It’s extrinsic value is $7,000,000.

In options the greater the extrinsic value the greater the risk.

[Snapolit1]

Issue with memorabilia is the pool of willing buyers is much smaller than cards. You could have the coolest piece of memorabilia and there might be 5-10 people in the world who would ever consider spending $50,000 to buy it. Because of population reports, VCP, etc., cards are more easily monetized.

There was a breathtaking Christy Mathewson auction on Hunt last year. Truly mind boggling stuff. At the live auction it was clear there were only a relative handful of active bidders when stuff hit the big bucks. The old adage is you only need 2 active bidders to go nuts, but once one of those guys has one of them, the auction next time around might look very different.

[Exhibitman]

You are confusing cash flow with value. Nothing you can invest in has intrinsic value. Income producing real estate is great until you get a deadbeat tenant who digs in like a tick and has to be evicted. Or 60% vacancy rates like we had in office space in recent years. Dividend paying stocks too, until the board decides to cut off the dividends or the company goes tits up. Bonds are great until the debtor declares BK and stops paying.

What does have intrinsic value? Food, shelter, drugs. Stuff you can use or consume. The rest is just value storage or mechanisms that produce the stuff you use.

[EddieP]

Originally Posted by Exhibitman

You are confusing cash flow with value. Nothing you can invest in has intrinsic value. Income producing real estate is great until you get a deadbeat tenant who digs in like a tick and has to be evicted. Or 60% vacancy rates like we had in office space in recent years. Dividend paying stocks too, until the board decides to cut off the dividends or the company goes tits up. Bonds are great until the debtor declares BK and stops paying.

What does have intrinsic value? Food, shelter, drugs. Stuff you can use or consume. The rest is just value storage or mechanisms that produce the stuff you use.

I suggest you read Security Analysis by Benjamin Graham.

[Exhibitman]

Why? Cards aren't stocks.

[EddieP]

Originally Posted by Exhibitman

Why? Cards aren't stocks.

You’re speaking as if a Company has no intrinsic which is totally false. A simple google search can answer that question.

I’ ll make it easy for you:

Intrinsic Value Defined:
Intrinsic value represents the "true" or "fundamental" worth of a company, as opposed to its market price, which can be influenced by market sentiment and speculation. It's essentially what a rational investor would be willing to pay for the company, given its underlying characteristics.
Cash Flow as a Key Component:
Future cash flows are a primary driver of a company's intrinsic value. A company's ability to generate cash, whether through dividends, earnings, or free cash flow, is a major determinant of its worth.

[sb1]

Originally Posted by EddieP

Memoribilia have no intrinsic value — and so unlike stocks, bonds and real estate— do not generate cash. Their value is extrinsic, i.e. based on appearance and/or what it could be sold for, which may not be its intrinsic value.

In the case of vintage cards you have pictures printed on cardboard. The intrinsic value of cardboard is $0. A T206 Honus Wagner sold for $7+ million. It’s extrinsic value is $7,000,000.

In options the greater the extrinsic value the greater the risk.

I used to own that Wagner, do you not think the person that sold it for 7+ bought is an "investment" or to keep in his collection long term??? I can assure it generated them a very large return.

[EddieP]

Originally Posted by sb1

I used to own that Wagner, do you not think the person that sold it for 7+ bought is an "investment" or to keep in his collection long term??? I can assure it generated them a very large return.

I don’t know. You have to ask him. For all we know in hundred years the whole card collecting business could be viewed as another Tulip mania.

[Fred]

I don't look at any of the cards or other memorabilia I collect as assets. All I know is that at some point I need to put a document together telling the family what to do with it all after I kick the bucket. I'm sure they're going to be a little surprised.

For those that have been doing this for a long time, I'm sure the stuff is worth a lot more now than when it was purchased 20, 30, 40 years ago but I'm guessing not many people were thinking, "hey, this stuff is going to be worth bank in 2, 3, or 4 decades." If they did, I'm sure the valuations today are well beyond what they were thinking.

[Exhibitman]

Originally Posted by EddieP

You’re speaking as if a Company has no intrinsic which is totally false. A simple google search can answer that question.

I’ ll make it easy for you:

Intrinsic Value Defined:
Intrinsic value represents the "true" or "fundamental" worth of a company, as opposed to its market price, which can be influenced by market sentiment and speculation. It's essentially what a rational investor would be willing to pay for the company, given its underlying characteristics.
Cash Flow as a Key Component:
Future cash flows are a primary driver of a company's intrinsic value. A company's ability to generate cash, whether through dividends, earnings, or free cash flow, is a major determinant of its worth.

Thank you, you have made it easy to pick apart the fallacies in your argument.

The problem with that classical simplistic definition is that it conflates control of underlying assets and cash flows with ownership of a minuscule unsecured general claim on the business. That is what the securities industry uses to sell stock to retail bettors, er, investors.

Think about it this way: if an alien landed and you had to explain what owning 100 shares of Disney stock means, what would you say you have? Control over the assets or cash flow of the company? Nope. Not unless you are spending millions or billions to gain an appreciable percentage of the entire float, and can get onto the board. Even then, you don't have control unless you control 50%+ of the shares AND can do what you want without the other shareholders suing you in the process. The right to vote on corporate board members? Who cares: you are asked to elect some nominees you don’t know, did not select, and do not control once they are on the board. Dividends? That is not a right, it is a privilege: the board can suspend dividends at will. Anything that someone else can take away is not a right. You don't even have the right to keep your stock. The board can engineer a merger, dilution or sale of the company, or an outsider can make a coercive offer for a majority control of the company and if you hold out you will either be shut out of management or you will be forced to sell. Look at squeeze out and freeze out cases. Oh, and don't forget the creditors of the business: they get paid first before a shareholder sees a dime of the underlying assets. Most companies that are liquidated in bankruptcies yield nothing for the shareholders.

If you don't actually control the assets and can't actually do anything with them, the supposed intrinsic value of what you have as you have defined it is zero. A stock purchase in a public company has value only because the people who are involved in the system with you agree that it does. In other words it is a shared belief system in the value of what the stock represents.

[Peter_Spaeth]

https://www.investopedia.com/article...nsic-value.asp

I think Adam is conflating the risks of common stock ownership with the concept of intrinsic value. That there are appreciable risks does not mean there is zero intrinsic value.

[EddieP]

Dunning Kruger.

[molenick]

This is kind of making me think that nothing has intrinsic value. A pound of Wagyu beef and a pound of chuck steak have vastly different prices but essentially the same nutritional value. The exact same house in one neighborhood could cost three times as much as in another neighborhood. Store brand or generic drugs cost less than brand name drugs with the same active ingredients.

I am not a lawyer, accountant, or economist (which is probably clear from my post). But it seems to me that the "value" of anything is what someone else is willing to pay for it, from game-used bats to stocks to houses. The difference with stocks is that there is an active market that continually sets a price. If you want to sell a stock, you can't just set your own price on a BST board, or consign it to an auction with a reserve. But the upside is that stocks are immediately sellable when you want to sell them.

And regarding a shared belief system, cash itself is based on that. A $1 bill and a $100 bill have the same material value, but we have all agreed that a $100 bill is worth 100 times more that a $1 bill (not that anyone uses cash anymore).

Those are my simplistic economic theories after midnight .

[oldjudge]

Everything that has value is an asset. The value of an asset is the present value of anticipated future cash flows. To Adam’s point, some assets have more risk to the anticipated cash flow stream than others. The risk is captured in the discount factor used in the present value calculation. This applies to stocks, bonds, real estate, baseball cards, etc. Assets with anticipated regular income streams are easier to value. Assets with only an initial outflow(purchase price) and final inflow (sale price) like baseball cards, memorabilia, etc are harder to value. You can look at historical price trends, growth in the population of collectors, etc, but at the end of the day you are betting that someone who looks just like you will at some point in the future pay more than you did for the item. The smaller the pool of possible buyers should imply a higher discount factor to be used in discounting the anticipated future sale price back to the present. Whether you consider something an investment, a collectible, or a friend you can talk to in a lonely moment, is immaterial to its value. Whether you call that Green Cobb you bought an investment or a collectible will be immaterial in to its’ value in X years.

[cardsagain74]

Originally Posted by EddieP

I don’t know. You have to ask him. For all we know in hundred years the whole card collecting business could be viewed as another Tulip mania.

Manias tend to last just a few years. That one, the Nasdaq in the late '90s, the junk wax boom of '89-'92. Or even quicker, like the recent pandemic boom in collectibles.

Sportscards (especially vintage) have had a large, mostly stable market for at least 40 years now. I'd hope that bodes well for the business not being a flash in the pan.

[JustinD]

Originally Posted by Peter_Spaeth

https://www.investopedia.com/article...nsic-value.asp

I think Adam is conflating the risks of common stock ownership with the concept of intrinsic value. That there are appreciable risks does not mean there is zero intrinsic value.

I think there is a basis for discussion if you defer to the some of the reasoning for the .com crash. When a vast percentage of value of a company is speculative, you can lose your entire worth in a few minutes. Depending on your valuation model, the beta for technology can be huge (as in the AI excitement in the current market).

Case in point, Dan Gilbert who I worked for well over a decade, made a fortune taking advantage of the situation to fleece Intuit for a massive fortune. He is easily the smartest guy I have ever met and I sat for lunch with Buffett while I worked for him. Nothing he does is not planned 6 years down the road.

When they came to buy his mortgage company in 1999 he absolutely knew already how it would work out and took the 370 million. They changed the name to Quicken Loans and it was a success, becoming the face of Intuit to many. It slowly warped the investor perception of Intuit as a tech stock and moving it into the financial sector in the market.

You would think this would be good…well far from it. With tech stocks based on intangibles like innovation, licensing, etc. It became a financial which is largely holdings and earnings. The stock dropped as people devalued it as now it was based on physical and not intangible intellectuals. It was a disaster.

In order to realign into tech and change the perspective they needed to dump a strong asset and dump it fast. They called Dan and asked if he wanted it back. He absolutely knew he had them by the short and curlies to have a quick buyer.

In only three years, he bought it back for 64 million dollars. Netting 306 million to lend the company to them as he continued to run it. That move provided the extra liquidity to make further investments and continue to amass billions and the number one mortgage company in the country for years and still the second during this high interest market.

Sometimes minimal intrinsic works for you, sometimes it doesn’t.

[theshowandme]

What would you rather HODL (hold on for dear life) over the next 10 years?

1. $100,000 worth of pre-war baseball cards
2. $100,000 worth of $VTSAX

[aelefson]

In the early 2000s, I decided to collect memorabilia with an eye towards future value but mostly because I prefer memorabilia to cards. Over the past twenty years I have built a collection filled with lemon peel balls, ring bats, tin types, and other early equipment and ephemera. I am very happy with my collection but for investment purposes, I definitely chose poorly. I skipped buying relatively cheap Goudey Ruths and T206 Cobbs (I thought 500 for each was too much as they are so common!) and instead spent the same money on memorabilia. In general, the memorabilia I collected has stayed the same price in the past twenty years and some items have lost value while cards have skyrocketed.

I still think memorabilia is very undervalued but I no longer believe it will get anywhere close to cards like I once did. I assumed most people collecting cards would want actual historical pieces like early bats, balls, and ephemera but that is not the case. I am disappointed in that but am still happy with the collection I have put together.

Alan

[molenick]

Originally Posted by aelefson

In the early 2000s, I decided to collect memorabilia with an eye towards future value but mostly because I prefer memorabilia to cards. Over the past twenty years I have built a collection filled with lemon peel balls, ring bats, tin types, and other early equipment and ephemera. I am very happy with my collection but for investment purposes, I definitely chose poorly. I skipped buying relatively cheap Goudey Ruths and T206 Cobbs (I thought 500 for each was too much as they are so common!) and instead spent the same money on memorabilia. In general, the memorabilia I collected has stayed the same price in the past twenty years and some items have lost value while cards have skyrocketed.

I still think memorabilia is very undervalued but I no longer believe it will get anywhere close to cards like I once did. I assumed most people collecting cards would want actual historical pieces like early bats, balls, and ephemera but that is not the case. I am disappointed in that but am still happy with the collection I have put together.

Alan

I agree with this. I don't collect equipment but I do collect tintypes, cdvs, cabinets, and books.

Except for the rarest of books, these have not only been a bad investment but take up a lot of space. Putnam team histories and biographies, Messner biographies, Barnes MVP series, etc. cost the same or less as they did 25 years ago. I do enjoy seeing them on the shelf, but they were not a good investment. And most other books even less so (again, except for some 19th century or early 20th century rarities). On the other hand, I never really thought of these as an investment, I just like books.

Generic cdvs, tintypes, and cabinets (where there is a a nice image but the player(s) are unknown) have also been pretty stagnant with prices being essentially flat for many years. But this is another area where I just buy them because I enjoy early photographic images, not for future value.

When the time comes for my heirs to decide what to with my stuff, they will have an easier time with the cards. Just decide on an auction house and consign them. Most of the recent books could probably be donated and the others would need to be grouped into lots. The photographic items are at least sellable, but they would need to find the right AH to decide the best way to do this.

[Snapolit1]

Buy what you like and what feels meaningful, but it's common sense that the wider market for late 19th century and early 2Oth century stuff is dying off. A few cards notwithstanding, very few people are going to feel enough of a connection with an 1880 photo or ball to drop a significant amount of money on it. Time moves on. Pretty soon the hot "vintage" collectible might be a Doc Gooden glove from 1985.

I think the entire memorabilia category has fallen through the floor market wise. I have a ton of cool photos and some cool memorabilia and few of them would likely fetch more than what I paid for them if I consigned them tomorrow to an AH.

There will always been the insanely rich guy who wants to pay $800,000 for a hall of famers game used bat, but that says nothing about regular stuff. Look at BST. Some really cool stuff has been listed for seemingly years without a sniff.

[steve B]

Originally Posted by theshowandme

What would you rather HODL (hold on for dear life) over the next 10 years?

1. $100,000 worth of pre-war baseball cards
2. $100,000 worth of $VTSAX

Probably not the cards.
And that's based on my experience as a collector for closing on 50 years.
Some but only a handful of my cards have done very well. Most have not compared to the stock market. I've tended towards quantity, so when T206s were 1.50 for VG commons and 10 for most HOFers, I would buy the commons. I got a bunch of cards to enjoy instead of just one. (I'd actually buy more like 3 -5 VG or less T206s, a 48 Bowman some random junk and a few packs. Which only makes it worse. )

[MVSNYC]

Just offering my 2 cents...I remember a wise man, Scott Levy (Hi Scott), once saying regarding cards, "Buy the best cards, in the best condition, from the best sets, of the best players, that you can afford."

...I find the same philosophy to apply to Memorabilia also. IF we're talking about investing in the category...Look for the best tickets, best photos, best bats, best uniforms, best autographs, of the best players, that you can afford (and also focus on particular seasons, moments, events, milestones). On top of that, I recommend collecting players that you like and will enjoy collecting.

Years ago, I focused on collecting Derek Jeter items. I acquired a few special pieces, including a Game Used/Signed Rookie Bat, and a Game Worn (Home Pinstripe) Full Uniform from his final season. Both items have been loaned to the Yankees for exhibit in their Museum. Regarding "Memorabilia as an investment", they both have appreciated nicely.

[lumberjack]

I started this thread and wanted to jump in for a moment.

Two years ago, Investropedia commented on stamps as an investment. In 1988, there were nearly 58 thousand members of the American Philatelist Society (hope I spelled that correctly). That number had dropped by more than half when the article was written. Boomers made up a disproportionate number of collectors and supply became greater than demand.

Outside events do shape trends. Covid brought a temporary resurgence in stamps. Hey, people were stuck at home....

What I remember about card collecting in the '70s is that there were stamp sellers who left that business behind and became very savvy sports memorabilia dealers.

Does this have anything to do with us? Like Mark Twain (supposedly) said:
History may not repeat itself, but it does rhyme.