Poll - The Stock Market and Vintage Sales

[BioCRN]

Money that is sunk into a stock "down in the moment" is money that is not working for you.

It's a lost opportunity.

Eventually you may find yourself back to even or profit, but there's a cost of lost opportunity while it sits there trying to get back to where you started.

It can even make sense to sell at a loss to put your money back to work depending on your next plan.

[Section103]

I think there are indirect impacts. When the market is down, there often is economic uncertainty that can curtail discretionary spending of any kind. If we're worried about the future or our jobs - it has an impact. Also, as the market fluctuates, it has an impact on who is in the market and who is out and that can lead a few speculators to get more into cards (alternatives to the market) or less (heavier focused on the market). It doesnt impact me directly very often as Im a low budget collector, but the impacts are definitely there.

[Peter_Spaeth]

Originally Posted by BioCRN

Money that is sunk into a stock "down in the moment" is money that is not working for you.

It's a lost opportunity.

Eventually you may find yourself back to even or profit, but there's a cost of lost opportunity while it sits there trying to get back to where you started.

It can even make sense to sell at a loss to put your money back to work depending on your next plan.

If you're an active trader, sure. But most people do not have the time, energy, and sophistication that takes. Buy and hold, and broad based funds, work better for most people as I understand it.

[Exhibitman]

For us mere mortals, securities are all about timing, not skill. My wife and I are terrible at it so we retained a financial planner to handle our portfolio. I just have to hope that I am not caught in a downdraft like the 2000s. The S&P 500's total return from January 1, 2000 to December 31, 2009 was a loss of 9.10%. The fact that it came roaring back eventually would not have meant much to someone who had to live on the proceeds for those years.

[Snapolit1]

I wish I was the kind of alpha male collector who welcomes the “blood on the street” and is salivating at the opportunity to pounce, but unfortunately I have an entire life away from vintage card collecting. There is work, kids not yet settled, elderly parents, illness, etc.

[BioCRN]

Originally Posted by Snapolit1

I wish I was the kind of alpha male collector who welcomes the “blood on the street” and is salivating at the opportunity to pounce, but unfortunately I have an entire life away from vintage card collecting. There is work, kids not yet settled, elderly parents, illness, etc.

You can accept that capitalism frequently rewards moral shortcomings without losing your own morals or empathy.

Unless you pull the levers that make the immoral decisions, you're going to live through it whether you're buying into that particular system or not. The stock isn't going to sit around in a pool of "unsold"...someone will hold it.

Celebrating people's pain while also celebrating the gains aren't always tied together. For some people it is a sick bonus, though.

[Snapolit1]

Not really talking about morals or empathy. Just can't divorce spending significant amounts of income on collectibles from the rest of my life obligations. My hobbying don't happen in a vacuum, disconnected from all the other shit going on in my life.

Originally Posted by BioCRN

You can accept that capitalism frequently rewards moral shortcomings without losing your own morals or empathy.

Unless you pull the levers that make the immoral decisions, you're going to live through it whether you're buying into that particular system or not. The stock isn't going to sit around in a pool of "unsold"...someone will hold it.

Celebrating people's pain while also celebrating the gains aren't always tied together. For some people it is a sick bonus, though.

[Yoda]

In praise of portfolio diversification, I wonder how one Elon Musk feels about watching his precious Tesla stock crater, losing billions in the process. Gee, maybe now he is only the second richest man on the planet. Stuff happens, Elon.

Leon, I promise this is financial and not political.

[Brent G.]

Originally Posted by Yoda

In praise of portfolio diversification, I wonder how one Elon Musk feels about watching his precious Tesla stock crater, losing billions in the process. Gee, maybe now he is only the second richest man on the planet. Stuff happens, Elon.

Leon, I promise this is financial and not political.

Other investments -- Twitter and Space X -- are equal shitshows.

[frankbmd]

Originally Posted by Yoda

In praise of portfolio diversification, I wonder how one Elon Musk feels about watching his precious Tesla stock crater, losing billions in the process. Gee, maybe now he is only the second richest man on the planet. Stuff happens, Elon.

Leon, I promise this is financial and not political.

Just realized that Elon and Leon are anagrams,

but then again so are Tesla and least.

[Touch'EmAll]

I listened to a vintage card podcast with guest Joe Orlando. Long story short, because of the emotional attachment (which is different than other investments), he feels nice vintage cards would be relatively safe during economic downturns.

[Peter_Spaeth]

TSLA is up 17,000 percent since it went public. Elon will be OK.

[Snowman]

Absolutely mind blowing that 65% of the respondents so far in this thread think that people won't spend less when they have less money to spend.

[raulus]

Originally Posted by Snowman

Absolutely mind blowing that 65% of the respondents so far in this thread think that people won't spend less when they have less money to spend.

I think most of the responses here are more about their personal plans, and less about what they think that others will do.

But even so, count me as skeptical that a big hit to the stock market wouldn't impact the average cardboard collector.

I suppose we can debate the line where the average collector starts to feel it, even subconsciously. At 5% maybe not. But as you inch your way up to 10% and beyond, at some point, it seems like there has to be some impact, even if it's merely subconscious and psychological and just causes you to be a little less carefree and unfettered when it comes to bidding like drunken sailors in every auction that comes your way.

[Peter_Spaeth]

Do we have any idea who this "average collector" is? What they earn, what they spend, what they buy, how much they have invested in the stock market, what their overall financial picture is? If we don't know, how can we make any generalizations?

[OhioLawyerF5]

Originally Posted by Snowman

Absolutely mind blowing that 65% of the respondents so far in this thread think that people won't spend less when they have less money to spend.

I'm on mobile and can't see the poll. But the title of the thread is about the stock market. Most people don't have less money to spend when the stock market is down. Most of us aren't living day to day on income from the stock market. I have the exact same money to spend when the market is up as when it's down.

[Rickyy]

I budget my card purchases with "fun" money since its a hobby for me. it's not tied to my investments/retirement funds or funds I set aside for everyday living expenses.

Also I fund what I want by selling what I don't want.

It works good for me.

Ricky Y

[JohnnyHatesJazz]

Me personally, when the market is down, it's a good time to make offers.

[lumberjack]

Since I have been doing the memorabilia thing, Paul Volker pulled the plug on money around 1980-81; Black Monday in 1987 where the Dow dropped 22.6% in one day; 9/11, which speaks for itself; the housing crisis in 2008; Covid, 2020-2l...and now this.

The only difference between everything that happened before what has been going on for the last week is that we know how the other stuff turned out.

Oh, yeah, and people who can afford it never stopped buying memorabilia.

[bk400]

Looking at Treasury yields now, it looks like people are indeed selling. The flight to safety might indeed be to somewhere other than America.

[oldjudge]

The difference between what we are seeing today and the prior crises that you enumerated is that this one is self inflicted and can at least partially if not entirely reversed quickly. Will it be--only time will tell.

[Casey2296]

Originally Posted by bk400

Looking at Treasury yields now, it looks like people are indeed selling. The flight to safety might indeed be to somewhere other than America.

-
I can't imagine another country where I would feel safer with my money and potential growth over time than the US stock market. By a wide margin...
-

[Balticfox]

Originally Posted by Exhibitman

For us mere mortals, securities are all about timing, not skill. My wife and I are terrible at it so we retained a financial planner to handle our portfolio. I just have to hope that I am not caught in a downdraft like the 2000s. The S&P 500's total return from January 1, 2000 to December 31, 2009 was a loss of 9.10%. The fact that it came roaring back eventually would not have meant much to someone who had to live on the proceeds for those years.

And of course nobody ever promised us that life was going to be a bowl of cherries. Certainly not our parents.

Moreover nobody ever promised us that stocks had to go up all the time. My initial awareness/experience of the stock market came during the very bumpy markets of 1969-81 so I never developed the expectation that stocks were the road to riches. As I used to say to clients "Well sometimes they go up, sometimes they go down." Had it not been for my underlying ingrained skepticism, I wouldn't have missed out on so many (irrational) booms over the years.

[1952boyntoncollector]

Originally Posted by Peter_Spaeth

If you're an active trader, sure. But most people do not have the time, energy, and sophistication that takes. Buy and hold, and broad based funds, work better for most people as I understand it.

actually its pretty easy, you buy an index fund like sp 500, SPY and hold and sell calls on it and you will outperfrom 95% of the 'expert funds'

[Republicaninmass]

Originally Posted by 1952boyntoncollector

actually its pretty easy, you buy an index fund like sp 500, SPY and hold and sell calls on it and you will outperfrom 95% of the 'expert funds'

Pardon the naivety, however what if you sell calls, and since stocks only go up, you stock gets called away?

[Balticfox]

Since you were willing to sell the stock at that price, you just buy it again. Since you pocketed the call premium already, you're still ahead in the game.

[1952boyntoncollector]

Originally Posted by Republicaninmass

Pardon the naivety, however what if you sell calls, and since stocks only go up, you stock gets called away?

you can roll up the calls, yeah in theory if the market goes up 30 percent you will make 20 percent etc, but assuming the market doesnt go up forever you will eventually catch up to the market with your calls and be always outperforming the market...yeah if market loses 30 percent you will still lose 20 percent etc so you will also get crushed but you will still be out performing the market..which very few hedge funds do ..

[Peter_Spaeth]

Originally Posted by 1952boyntoncollector

you can roll up the calls, yeah in theory if the market goes up 30 percent you will make 20 percent etc, but assuming the market doesnt go up forever you will eventually catch up to the market with your calls and be always outperforming the market...yeah if market loses 30 percent you will still lose 20 percent etc so you will also get crushed but you will still be out performing the market..which very few hedge funds do ..

So why don't all sophisticated investors just do covered calls? It can't be this simple.

[raulus]

Originally Posted by Peter_Spaeth

So why don't all sophisticated investors just do covered calls? It can't be this simple.

We’ll see what Jake has to say. But I would posit a few hypotheses:

1 - there are some real limits to the scale. At some point, the market becomes oversaturated with people writing call options, and not as many people buying them. That would cause the price to fall, which would wipe out your gains. So you can probably write calls for a few thousand shares, and maybe even tens of thousands, but once you’re writing millions or hundreds of millions, you’re going to move the market. And most sophisticated shops are investing at scale.

2 - this strategy probably works best with stocks where there is a lot of interest from individual investors. Think Tesla, or GameStop. Particularly when the good times are rolling and the “number go up” crowd is feeling its oats. In these cases, they’re hyper optimistic and will pay good money to buy the right to buy the stock in the future for a price that is well above today’s price. I’m guessing that those excessively exuberant individual investors essentially over-pay for this right because they have so much confidence in their prognostications.

3 - this strategy probably works best when the market is going up up up. Once sentiment turns more dour, particularly for those individual investors, the demand for these call options probably declines, so the market demand and price paid for the options will similarly decline.

Just spitballing here, but those would be my thoughts about why it’s difficult to replicate this strategy always and everywhere at maximum scale.

Plus there’s that tax issue I raised earlier, where income earned using this strategy is taxed heavily.

[Balticfox]

Originally Posted by Peter_Spaeth

So why don't all sophisticated investors just do covered calls? It can't be this simple.

You're right. It's not that simple. The computer models calculate what "would" have happened over the decades with such a strategy. But that's not real world, and in the real world there's many a slip 'twixt cup and lip. In the real world your trading influences prices.

If you're a little guy, you won't really move prices much but just try selling calls. They're illiquid so you'll end up selling at the bid which (if they even exist) are put in place by sophisticated traders with computerized mathematical models that are designed to give them not you an edge. Moreover you'll pay some kind of commission.

If you're a big fund, your activities always move the market but in the opposite direction you want, e.g. your buying increases prices while your selling depresses prices. Now you will probably be able to find a big brokerage firm willing to act as a counter party for your options, but remember what I said about their sophisticated mathematical models designed to make them money? If these models weren't making them money, they wouldn't be in that business for long. Therefore as a fund your employment of an option strategy consists of betting against the pro traders at brokerages who have a long successful history of making money being on the other side.

So you're right. Not only is it not that easy, it's pretty damn difficult.

[Peter_Spaeth]

Originally Posted by 1952boyntoncollector

actually its pretty easy, you buy an index fund like sp 500, SPY and hold and sell calls on it and you will outperfrom 95% of the 'expert funds'

Yes, I'm sure it's that easy.

[raulus]

Originally Posted by Peter_Spaeth

Yes, I'm sure it's that easy.

Free money! Can't lose!!

[B O'Brien]

Don’t take the “blood in the streets” comment, at least from me as, cavalier. My 401k is one thing, suffers like everyone else.

My other account generates cash each week from selling calls and or puts. That cash goes into monthly dividend paying ETF’s until I need the $ for life, or until there is a downturn in the market, and creates opportunistic buying opportunities. Or some cards!

I started trading like that years ago because I couldn’t afford child support and tuition on my salary (my X is a lawyer!). It was developed out of necessity from the tiny 401k that I got in the divorce.

Everyone has their own style and risk tolerance when running your own account. I bring in cash from people that are willing to gamble on things going up 5% in a week, while I hope they go up 4% and I pocket their $100 bill in the process. Repeat the next week. It took years of practice, working countless hours and continuously researching.

Thanks,
Bob

[Balticfox]

Originally Posted by Peter_Spaeth

Yes, I'm sure it's that easy.

The problem with such an option strategy is that a big spread typically prevails between bid and ask prices on puts and calls. Therefore it's difficult to pocket the theoretically realizable advantage of that strategy (particularly after commissions).

[raulus]

Originally Posted by Balticfox

The problem with such an option strategy is that a big spread typically prevails between bid and ask prices on puts and calls. Therefore it's difficult to pocket the theoretically realizable advantage of that strategy (particularly after commissions).

Pretty sure all of your income from writing options is also ordinary (or short term capital gain), so you get to pay ordinary tax rates. As opposed to generally lower rates for long-term capital gains.

And unlike income from selling cards, this income is definitely getting reported to the IRS, so anyone who might be tempted to use a little accounting legerdemain when it comes to the taxation of their cardboard sales, that's not a possibility here.

I suppose if your taxable income is low enough that your marginal tax rate is low, then that's not a big deal, but for some of us, our marginal rate is at or approaching the current highest marginal rates.

When you factor in state (and sometimes local) taxes, some of us are lucky enough to get to share 50%+ of our ordinary income with the government.

[Rhotchkiss]

The poll asks: Do stock market losses impact YOUR buying habits. However, Leon’s first post asks: Does the stock market impact prices of prewar cards. These are two very different questions. It’s very possible that the stock market could impact overall values but have no impact on an individual’s buying habits.

I feel the health of the stock market must impact the overall health of the card market - people spend more when they feel wealthy and spend less when they feel less wealthy. That said, cards are an asset class (not just hobby) and may serve as a haven (like gold) when the market is down. So I don’t think the correlation is that easy.

To me, it’s economic and political uncertainty more than where the stock market is going. Given current events, do I want wealth in stock, cardboard, real estate, cash, private equity, etc. Diversity is likely the smartest move, but I am heavy real estate - you cannot live in or off a card, stock, or cash. The big question is whether I invest in other countries, and if so, which one(s). Or put differently, when does it make sense to hedge against traditional US investments.

[Peter_Spaeth]

Originally Posted by raulus

And unlike income from selling cards, this income is definitely getting reported to the IRS, so anyone who might be tempted to use a little accounting legerdemain when it comes to the taxation of their cardboard sales, that's not a possibility here.

I would have thought this was the first use of "legerdemain" on this forum, but according to search it's been used once before.