Money in the Hobby

[seanofjapan]

Originally Posted by joshuanip

Hi Sean,

I don't thing they will immediately die off. I am hopeful advancing med tech will not only prolong life, but also improve it. Regardless, many baby boomers are already paring down/selling their collections or handing them down, as this board has suggested.

I'm all for that! If I don't make it to 90 I'll be very disappointed

But my point is that even if it doesn't happen all at once, and even if cards are disposed of via gifts rather than through estates, there will be a lot more of them coming into the market over a relatively predictable time period (I don't know the years but you could look at actuarial data on the US population to get a rough idea).

I'm not sure how it will play out, but I think its safe to say that most cards bequeathed in some way will end up on the market if for no other reason than the personal tastes of children and their parents are rarely in perfect alignment and selling will probably make sense to most.

Originally Posted by joshuanip

There is more information now than ever, we affectionally call it "big data." You can see how many members are in facebook groups, how many podcasts or apps are being downloaded, online bid volume trends, what cards are being liked, tweeted or instagrammed. What did we have before? card convention attendance counts? Definitely more information now than ever. The issue is how to find it and do you want to pay up for it.

Yes, though ironically the lack of "big data" from before the internet age makes it difficult for us to assess the relevance of that (for the purposes of the subject we are discussing) since there is so little to compare. If a Facebook group dedicated to vintage cards today has 500 members, since we don't know how many members a Facebook group dedicated to vintage cards would have had in (say) 1990 if Facebook had existed then, we don't know if that number suggests there are more or fewer people collecting (and the same for other information sources).

Originally Posted by joshuanip

Regarding where the next generation will choose to spend their money, I do agree with you. There is a change from homes, extra cars and purses towards experiences like dining out and travel. Definitely a shift in preferences, but we haven't been mainstream anyways after the junk bond, whoops I mean junk card rally and collapse.

Yeah, but it takes time for these broader changes to be felt.

Originally Posted by joshuanip

Not to bring in finance, but random walk applies to efficient market hypothesis, not stocks, so it applies to all assets and not just stocks. Stocks are a key example illustrating an efficient market. Whether or not they really are is not the debate (because if they were, I wouldn't have a job).

Oh yes, that was my mistake.

But I suppose that baseball cards are an interesting example which is quite different from stocks. Stock prices under efficient market hypothesis are supposed to reflect all known information about a stock (subject to debate about timing, insider information, etc), which mostly relates to its risk and expected future cash flows.

Baseball cards produce no cash flows, risk is harder to measure, and we pretty much already know all there is about most of them (no insider information), save for where there might be the odd attic find, but those are rare. Plus the market actors are way more irrational in the sense that most purchases are made on subjective considerations (favorite player, etc) rather than objective analysis. Plus there are no institutional investors spending time and money on analyzing the market and providing signals to other investors (instead it has fickle big shots who seem to make purchases for the same reasons small shots do - bragging rights, ability to have something they really really want, etc etc, none of which is predictable or rational). So the market definitely walks randomly, but way more so than with stocks, which I think makes it way more vulnerable to the things I was talking about in my earlier post.

Originally Posted by joshuanip

WRT historical value, I have never seen Ruth play, but I enjoy learning his history and appreciate his cards. So I believe there is enough intrinsic value in his cards for me that I am willing to pay up (my discretionary income for). That aside, I don't think relative value and willingness has been decreasing, we have seen record breaking after record breaking auction prices.

Great debate. Cheers!

Fair enough, but here is an interesting card that always gives me pause for thought about how much the market is dependent on the slightest and most irrational of whims.

As an icon of 1920s culture, Charlie Chaplin is probably about as recognizable and popular as Babe Ruth in America (and considerably more well known internationally). He is huge. This card is from the 1926 Player's Straight Line Caricatures set. Its a really striking card that captures his image perfectly and with an artistic style that is totally suitable to the era. While Ruth cards generally start in the thousands of dollars, you can find this card on Ebay usually for under $10 (in fact you can probably get the whole set it came in for under $20).

The discrepancy doesn't make much sense, the Chaplin card wasn't produced in greater numbers than most Ruth cards and he is culturally about equal. The only reason I can think of for the Chaplin card being so cheap relative to Ruth stuff is that American kids in the 50s were accustomed to seeing baseball players on cards but not movie stars (well, movie star cards existed but weren't as popular). So that association in their minds grew into the modern hobby, while movie cards never took off the same way.

But that association no longer really exists in kid's minds today. While there is a lot of path dependence at work which props up the baseball card hobby, there are so many things like this Chaplin card that are equally interesting out there (at a fraction of the price) which can compete for the attention of younger people with an interest in history. Thus my pessemistic forecast about the future of baseball card prices!