Sunk Costs in the Hobby Video

[Snowman]

Originally Posted by Leon

Nice analogies but I respectfully disagree about supply. It really just doesn't matter. If I have a unique card and there is no demand then the sales price will be low. That said, there are over 1000 Jordon's in a 10 holder (I believe)....but the demand is through the roof so it's valuable. Supply rarely has to do with price since demand will set the price. All in my humble opinion...

I think obcmac's point (and I think it's a good one) is that supply is an important factor to account for when determining whether or not a card is likely to reach its full price potential if auctioned off.

I see this all the time as an OCD-centering-obsessed collector. If I'm buying a card to complete one of my centered vintage sets that is really difficult to find, I might bid $100 for it at auction but win it for $20 because the right people didn't see it that week. The next time that same card goes up for auction, it might sell for $80 though. It happens all the time with difficult-to-find centered cards in widely collected sets. However, with a Griffey Upper Deck RC, there's no question at all about what it's currently worth or what the next one will sell for because of the supply being as high as it is. It is traded multiple times per day, every day on every major auction site. Just look up what it's been selling for recently, and you can predict with a high degree of certainty what the next one will sell for +/- a few dollars. But if you take a card that trades hands once a year or once every few years, it's much more difficult to predict what the sales price might be if it were to go up for auction, and the variance in prices realized will be off the charts. Instead of a card selling for $X +/- 5% with cards that have an abundant supply, it can easily be $X +/- 75% with something much rarer.

Also, supply in itself can even be a driver of demand. There is a harmonic mean that comes into play sometimes between supply and demand. We see this often. There are a ton of cards with extremely low supply and almost zero demand. This is precisely why the T206 Wagner is worth as much as it is though. The supply of T206s in general is fairly abundant, though not excessive, which operates as one of the drivers of collectibility. This in turn creates added demand. It's similar to 1952 Topps cards being plentiful enough to make the set worth chasing, while still rare enough to support strong prices.

We also see it with the 1948 Leaf set where the supply of regular and short-printed cards causes a divide in the set. There are enough of these cards in total to drive people to want to collect the set, which creates additional demand pressures on the less obtainable cards like the Satchel Paige. Then, copies of the Paige go for bonkers prices because of the harmonic mean between supply and demand of the set. It creates a virtuous loop of sorts.