Cards as an inflation hedge ?

Rhotchkiss · #1 01-06-2022, 10:18 PM

Quote:

Originally Posted by Peter_Spaeth

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

ullmandds · #2 01-06-2022, 10:26 PM

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

Peter_Spaeth · #3 01-06-2022, 10:27 PM

Quote:

Originally Posted by ullmandds

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

What's the most anyone could have received from stimulus checks?

ullmandds · #4 01-06-2022, 10:49 PM

Quote:

Originally Posted by Peter_Spaeth

What's the most anyone could have received from stimulus checks?

more business owners receiving money that they didn't need.

Peter_Spaeth · #5 01-06-2022, 10:52 PM

Quote:

Originally Posted by ullmandds

more business owners receiving money that they didn't need.

Ah I see. And they spent it on cards LOL. Only in America.

Exhibitman · #6 01-07-2022, 01:06 AM

Quote:

Originally Posted by ullmandds

more business owners receiving money that they didn't need.

Speaking as one of them...When the pandemic hit I had no idea what would happen to my clients and by extension to my business. The money made available under the PPP and other programs required that you move like hell to get in before the money ran out. I actually was unable to secure a loan the first go-round but got it the second. So it was all uncertain. Once I had the loan secured and was able to apply for the loan forgiveness it provided a cushion. I did not spend it on cards, I held it for an uncertain future. I finally decided it was Ok to spend it, hence a 952 Topps Mantle.

parkplace33 · #7 01-07-2022, 05:26 AM

Having a few higher end cards in your portfolio is fine, but I don�t recommend investing heavily in vintage cards. Put money in a 401k or IRA and you will be fine.

Johnny630 · #8 01-07-2022, 07:24 AM

Quote:

Originally Posted by parkplace33

Having a few higher end cards in your portfolio is fine, but I don�t recommend investing heavily in vintage cards. Put money in a 401k or IRA and you will be fine.

Exactly ! It seems many are emotionally attached to their cards, investments and emotions don�t mix!

3-2-count · #9 01-07-2022, 07:44 AM

Quote:

Originally Posted by parkplace33

Having a few higher end cards in your portfolio is fine, but I don�t recommend investing heavily in vintage cards. Put money in a 401k or IRA and you will be fine.

I personally diversify into all 3 sectors that you mention - Vintage cards, 401K and an IRA.

Theres no right or wrong answer here. To each their own!

darkhorse9 · #10 01-07-2022, 08:26 AM

Quote:

Originally Posted by Exhibitman

Once I had the loan secured and was able to apply for the loan forgiveness it provided a cushion. I did not spend it on cards, I held it for an uncertain future. I finally decided it was Ok to spend it, hence a 952 Topps Mantle.

Not to get too political here, but did you really spend taxpayer money designed to cover paychecks to keep workers from being furloughed on a 1952 Topps Mantle card?

Exhibitman · #11 01-07-2022, 09:05 AM

Quote:

Originally Posted by darkhorse9

Not to get too political here, but did you really spend taxpayer money designed to cover paychecks to keep workers from being furloughed on a 1952 Topps Mantle card?

No, I paid payroll with it in the mandated time frame, exactly as the rules required. My point was that no one running a business had any idea whether their business would collapse at the time. When I had two great years instead of a collapsed business, my savings skyrocketed because I worked my ass off while going nowhere and doing nothing. FWIW, I also sold a lot of cards into the surging market and banked the proceeds just in case things did go to shit. After two years I had enough saved up to feel like I could afford a big card purchase again while leaving a nice cushion in my savings.

Now, as far as the investment debate, I've been collecting cards on a serious (e.g., setting up at shows, etc.) basis since the 1970s. In that 45 years of watching the card market, there has been an overall gain in value better than the stock market. I think fifty years is proof of concept. These are an asset class regardless of what we may wish in terms of expanding our PCs on the cheap. My wife asked me recently why I hadn't purchased a few of these mega-cards back in the day. I told her if I'd come home and announced that I put the years' IRA contribution into a Babe Ruth RC she'd have divorced me right then and there, and she knows it.

There are times when prices have pulled back (the early 1980s Reagan-Volcker recession, 1994 baseball strike, 2000 dot com bubble, 2007-2008 Great Recession, 2016 price manipulation) but it has always remained attractive as an asset provided you make the right calls on what to purchase. Now we have serious money stepping into the hobby in all respects: auctions, TPGs, even card production. That means others share that view. I am optimistic about the overall potential for the hobby and especially for prewar and interwar cards. There will be short-term pullbacks (has already happened on many sectors of the hobby, like Jordan cards) but if the pattern of the last 50 years holds, it will come back. It is no smarter, dumber or weirder than art, rare books, coins, etc. I have been a strict 'eat when you kill' collector for a decade now: i only buy cards when the proceeds of sales allow for it. Last two years were so good in that regard that I was able to stop panic-saving every cent and buy some cards.

rugbymarine · #12 01-07-2022, 07:14 AM

Quote:

Originally Posted by Peter_Spaeth

What's the most anyone could have received from stimulus checks?

An upper middle class family with 3 kids probably would've received $13,900 between the three stimulus payments. I say probably because upper middle class, depending on location, usually wouldn't be enough income to have been phased out of the payments. Each additional child would have resulted in approx. $2,500 more in total stimulus payments.

Peter_Spaeth · #13 01-06-2022, 10:26 PM

To further Ryan's points, there's a lot of new wealth out there and these guys have a lot of disposable income. What cooler place to put some of it than cards if you're a sports fan and you see cards more and more having features of at least good and perhaps very good investments? And they come with bragging rights too, posting about a great card you bought is a little better than posting about how many bitcoin you bought or shares of AMZN.

trambo · #14 01-09-2022, 01:40 PM

Quote:

Originally Posted by Rhotchkiss

+1.

I don�t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin�s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the �hobby�, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how �sticky� are these new entrants. If they are fickle, than card prices could go down steeply if the �market� turns. But I feel the the VINTAGE �card investor� is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth�s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it�s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won�t change much (bc cards are 100+ years old) and I don�t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

agree w/all of this. My family isn't into cards but when we talk about the tobacco era of cards, they are absolutely into the discussion and enjoy looking at some of my PC stuff. Far different than if/when we talk about savings, crypto or anything like that as there's nothing really interesting to see.

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