Money in the Hobby

[seanofjapan]

I count myself among those predicting things will go down.

In the short term (next year or two) the tax cuts and good employment situation will probably lead to a bump in prices, but in the long term its hard to find any indicators which don't look negative.

The baby boomer's reaching their predicted life expectancy is a big one. All the comments I've read here point to that as a demand problem (these people will stop buying cards when they die) but the bigger problem is on the supply side.

Its safe to say that the majority of vintage cards out there are in the hands of baby boomers. When that generation passes away, most of those cards are going to become part of their estates. Probably some heirs will decide to keep them but I would guess that the majority wouldn't be interested in or financially able to sit on valuable cards.

So you're probably going to see a flood of estate sales full of baseball card collections.

This hasn't really happened to the baseball card hobby before because the boomers were the first generation to collect en masse. But if you look at other, older, hobbies like stamp collecting this has been an issue for a while and prices there reflect that (the relationship between catalog prices and actual prices for stamps is so fictitious it makes Beckett or PSA's prices look like they were made with laser like precision).

Some people have said that younger people do collect, which is true, but the problem is that in order for prices to be maintained over the long term you need each subsequent generation of collectors to be at least the same size as, or larger than, the one that precedes it. Every indication we have is that the opposite is going on. Yeah, I'm sure there are plenty of millenials out there who collect baseball cards, but there just aren't as many as there are Generation Xers or Boomers.

So when all those Boomer collections show up in estate sales, there just aren't going to be enough buyers around to keep prices what they are now.

Another thing worth noting is that the baseball card market is one in which marginal swings in demand can have disproportionate effects on price. Like a 5% increase in the number of collectors chasing a given card won't lead to a 5% increase in price but more like a 50% or even 500% increase because just adding one or two determined bidders to an auction often causes them (the auctions, not the bidders) to explode.

That also works the other way though. Just take 5% of the demand away from a given card ( or set or whatever) and it won't just cause the price to go down 5%, it will cause it to collapse. So these generational changes pose a risk of really causing a disproportionate effect on prices.

You also have to kind of draw a line between the "rich people" part of the hobby and the "everyone else" part. The latter part is much more vulnerable to this than the former. So long as you've got a few millionaires/billionaires chasing vanity projects then the top high end market probably won't be affected much by these generational shifts. But the mid to lower end stuff is really likely to tank. A PSA 9 1952 Topps Mantle will probably keep its value (bar some cataclysmic event that shatters civilization as we know it) but a PSA 4 1967 Topps Mantle is probably going to be a very cheap item in the near future.

You also have a ton of cultural and other shifts that don't look good. Baseball isn't as popular as it once was, people spend more of their time in the digital world and have less time and interest in collecting physical objects, cards in particular have lost their function as a source of information sharing, etc etc.