Poll - The Stock Market and Vintage Sales

[Brent G.]

Originally Posted by 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?

The "average collector" is not on this site and has limited knowledge of the things discussed in this thread.

[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.

[raulus]

Originally Posted by Peter_Spaeth

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

Guilty as charged. It's one of my favorite vocab words. Right up there with omphaloskepsis and defenestration. And eleemosynary. Although I learned that one here.

[Peter_Spaeth]

Originally Posted by raulus

Guilty as charged. It's one of my favorite vocab words. Right up there with omphaloskepsis and defenestration. And eleemosynary. Although I learned that one here.

How sesquipedalian.

[raulus]

Originally Posted by Peter_Spaeth

How sesquipedalian.

Good guess! But I wear size 14 shoes. So not quite 18 inches in length.

[brunswickreeves]

Touché!

[Leon]

Duly noted and changed the post wording to more reflect the poll question.

Originally Posted by 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.

[raulus]

Originally Posted by Rhotchkiss

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.

To what extent do you think that large cap US equities cover you here?

It just seems like most of the big companies do so much business around the world and have assets and operations all over the globe that you should be able to get decent coverage that way.

Of course, it's one thing to operate in another country, and another thing to be a local business that is near and dear to the hearts of the local populace and governing class. So there can definitely be some different profiles that way.

[Rhotchkiss]

Decent question. I suppose large caps have foreign risk mitigation, but they are still highly subject to whims of the US. Nevertheless, I am not really thinking stock. More direct investment in real estate or a foreign company. Or holding cash in foreign currencies.

[Republicaninmass]

Iraqi dinars?

Foreign large caps and Lat am plays

[Gorditadogg]

Did anybody watch Mad Money yesterday? Cramer had an executive from AEM gold on the show and they were talking about investing in gold.

The exec claimed gold was a "hard asset" and is used to "store value". He said on the other hand Bitcoin was a "trade asset" like baseball cards. He said you might value a Babe Ruth card at a million dollars but I might think it's worth ten cents.

I think it's good that the exec and Cramer acknowledged there are million dollar baseball cards out there, on a finance show. I can't really argue that cards and Bitcoin are both "trade assets" in the sense that their values are referential only.

Sent from my SM-S906U using Tapatalk

[Peter_Spaeth]

Does anyone take Jim seriously? He's an entertainer at this point.

[BobbyStrawberry]

Originally Posted by Peter_Spaeth

Does anyone take Jim seriously? He's an entertainer at this point.

The program is called "Mad Money". What's not to take seriously?

[Balticfox]

Originally Posted by Rhotchkiss

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.

It is though a mistake to conflate the "health" of any hobby with the loftiness of prices.

[Balticfox]

Originally Posted by BobbyStrawberry

The program is called "Mad Money". What's not to take seriously?

It would also be a mistake to assume that any of his guests are automatically either clueless or incorrect.

[BobbyStrawberry]

Originally Posted by Balticfox

It is though a mistake to conflate the "health" of any hobby with the loftiness of prices.

Agreed.

[bk400]

https://www.wsj.com/economy/consumer...hare_permalink

I stated my views on Leon's question early in this thread. Key takeaway from the article above is that consumer spending from basic food and other staples to airline tickets is down substantially quarter to date, and it appears to cut across all income levels. Maybe baseball cards are different, but I suspect not.

In my mind, the argument for this recent period of volatility being "just another blip" are clear.

But I personally believe that the US equities market, as well as underlying consumers, are pricing in the risk that America's geopolitical primacy is coming to an end. That risk was priced in as zero from 1950 through 2024. The markets -- and the consumer -- aren't pricing that risk at zero today. So is it different this time? Who knows. But I sure don't like what I'm seeing out there.

[Yoda]

I recently sold a nice autographed Geordy Howe class 1 foto to a Canadian friend of mine. Do I have to charge him a tariff? Concerned Patriot.

[Balticfox]

No. But the Canadian government may at Customs & Immigration.

[jingram058]

Originally Posted by Balticfox

No. But the Canadian government may at Customs & Immigration.

And rightfully so.

[jimjim]

Originally Posted by bk400

+1. There's a large body of research that validates your point. We are fundamentally not 100 percent rational when it comes to most decisions, and losses hit us mentally a lot harder than wins.

Agree!! It’s a lot easier for me to list the ones that got away vs the good deals I have had over the years.

[Exhibitman]

Originally Posted by jimjim

Agree!! It’s a lot easier for me to list the ones that got away vs the good deals I have had over the years.

Plus, why publicize the good ones? Bad deals get you sympathy; good ones just garner envy.

[raulus]

Originally Posted by Exhibitman

Plus, why publicize the good ones? Bad deals get you sympathy; good ones just garner envy.

Or condemnation, if people think you took advantage of the seller.

[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 ..

[vintagerookies51]

Everyone would probably have a different strategy. If everyone thought like me, card prices would crash during a bear market because I would typically sell some cards to have extra cash to buy stocks while they’re low

[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.

[BioCRN]

As a "value investor" I find it is a whole lot less work to specialize in a few fields of industry (gas/oil + air transportation for me) and only engage during times when things are advantageous. It's a low-effort way to engage in the market that requires very little "following the market" work.

I will sometimes go many months without inputting a single dollar and re-enter when a buy-low opportunity emerges.

Volume plays can turn small bumps of gains into real money. Not going all-in on the initial buy (unless it makes sense) can help hedge averaging down the buy-in if you don't have the true floor when you decide to enter.

[joshuanip]

IMHO Baseball cards are more correlated to employment than stocks.

The only way I can see baseball cards affected by this market swoon is that it becomes a source of funds. But why would you sell something that retained its value better only to buy a falling knife that is still overvalued.

Employment on the other hand forces your hand. People without a job have other priorities than their hobby, so anything salable is on the table. And supply and demand, when there are more sellers than buyers in an illiquid market, especially the less vintage market, volatility can be exponential.

That also said, similar to the market, the first to go are the “non-investment” cards, then the family heirlooms. So when we do get a bout of high unemployment again, high quality will outperform low quality (same factor analysis phenomenon as in stocks). First five HOF (particularly Ruth’s and cobbs and Wagners) + Joe Jax > other HOFs and non HOF

[joshuanip]

.

[joshuanip]

.

[1952boyntoncollector]

Originally Posted by raulus

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.

covered calls on SPY which is the SP index and tons of liquidity for options..

again if the market goes down you will always outperform the market because you will get some premium on the calls but will be losing money overall.

The way you dont outperform market is if the markets explodes over your calls but you will make money but not as much as the market. If market dosnt go up 30 percent a year for 3 years in a row you should be able to catch up..

lets do a real world example right now..

the SPY ticker is 563, you can sell a 630 (strike price) call in September for 500.


each call is 100 shares so for 56,300 you will make 500 dollars..if stock goes down and you lose 5,000 bucks in September, you would still out perform the market becasue you would 'only' lose 4500 becasue of the Call.

now if the SPY goes higher than 635 (630 plus the 500 you make on the call) you wont share in any more upside..but that would be an all time market high and you would now have at 63,500 dollars from the 56,300. Then you can roll it up to to 650 etc, i dont see the market going up forever and you should catch up..

obviously you can tinker with the numbers, the closer to the strike price you are to the actual current stock price the more premium but yes peter, i dont know how you wouldnt outperform the index market if you constantly sell covered calls...but again losing 25 percent instead of 35 percent etc still would not be good...just outperform the market...

in my example if the SPY got to 610 but not to 630, now you captured the 500 dollars which is better thant he market and can sell another call at whatever....some use these calls sort of as a dividend...also remember you are getting a percent or so on the SPY on your holdings a year as well...its not that hard to get 6-7 percent more on the calls you sell so in theory if the market was even all year you would still make a better return than any CD etc and better tax consequences..

[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.

[1952boyntoncollector]

nah it is that simple, you are 100 percent going to outperform a down market....on an up market it will have to go super super up for you to not outperform but you will still have a large profit..

what can make it more complicated if you starting selling puts to help offset any gains you are missing out of..

but there is a reason on my trading platforms for options, covered calls are 'level 1' they are the easiest and most understood and least risk..if you are going to be holding onto the stock you are doing it on for a long time

[joshuanip]

.

[Yoda]

I have often wondered about the liquidity of sports cards in general. Yes, there has been a great influx of collectors entering the market, many with deep pockets and new methods to buy and sell (private equity funds), but this is not the stock and bond markets. So I wonder if the card market is liquid enough to absorb a major downturn in an orderly fashion without cratering the whole thing. Of course, some of us are pure collectors who don't care if there is a major pullback because they never intend to sell.
But, of course, the card market is unregulated, like crypto so, unlike the NYSE that has breaks when the market crumbles, there is nothing in place to stop panic card selling, just like 1929.

[Gorditadogg]

I guess if the market went up I would feel rich and buy more cards, but it's not and I don't so I'm not. In other words, count me as a Yes.

[Balticfox]

Originally Posted by 1952boyntoncollector

nah it is that simple, you are 100 percent going to outperform a down market....on an up market it will have to go super super up for you to not outperform but you will still have a large profit.

No. You are missing out on the large profits which make up most of the returns with which the market rewards investors:

Timing the Market Is Impossible - Hartford Funds

Originally Posted by Hartford Funds

If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.

There are also very serious problems associated with investing in an index. These actually force you to buy high, and sell low.

[JohnnyHatesJazz]

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

[angolajones]

There are also very serious problems associated with investing in an index. These actually force you to buy high, and sell low.

Can you explain this?

[1952boyntoncollector]

I didnt say cant have big losses with selling covered calls, all im saying is you will out perform the S and P index which like 90 percent of hedges funds cant claim they can do....actually just having the S and P will also outperfrom most hedge funds...you can roll up calls literally 30 percent higher than the current price every 6 months so you wont lose out on big gains, but you wont make much premium.....

[Peter_Spaeth]

From everything I have read and learned from people in the business, thinking you can time the market, or beat it over the long term with your individual stock picks, is a fool's errand for the vast majority of people.

[Balticfox]

Originally Posted by angolajones

Can you explain this?

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Representative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high or at least prevented from selling high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?

The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when it was down to pennies. A TSX index investor therefore automatically rode the thing all the way down!

[Peter_Spaeth]

Originally Posted by 1952boyntoncollector

I didnt say cant have big losses with selling covered calls, all im saying is you will out perform the S and P index which like 90 percent of hedges funds cant claim they can do....actually just having the S and P will also outperfrom most hedge funds...you can roll up calls literally 30 percent higher than the current price every 6 months so you wont lose out on big gains, but you wont make much premium.....

How many hedge funds are 100 percent equities? Sort of a false comparison. They are trying to manage risk as well as achieve returns.

[Peter_Spaeth]

Originally Posted by Balticfox

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Represent ative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?



The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when ii was down to pennies. A TSX index investor therefore automatically ode the thing all the way down.

I thought SPY, Vanguard 500, etc. are weighted.

[Balticfox]

They are weighted. This means the higher the market capitalization of the company, the greater its weight in the index. So as the stock increases in price (in a vacuum), as an index investor the percentage of one's portfolio in that one stock increases.

[Gorditadogg]

Originally Posted by Balticfox

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Represent ative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high or at least prevented from selling high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?

The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when it was down to pennies. A TSX index investor therefore automatically rode the thing all the way down.

That's a good explanation Vai. When you own an index fund, you are buying after everyone else is buying and selling after everyone else is selling.

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[Peter_Spaeth]

Originally Posted by Balticfox

They are weighted. This means the higher the market capitalization of the company, the greater its weight in the index. So as the stock increases in price (in a vacuum), as an index investor the percentage of one's portfolio in that one stock increases.

I used the term wrong but in any event thank you for the explanation. Are there any index funds that seek to maintain an equal percentage of each holding, and adjust as they fluctuate?

[raulus]

Originally Posted by Peter_Spaeth

I used the term wrong but in any event thank you for the explanation. Are there any index funds that seek to maintain an equal percentage of each holding, and adjust as they fluctuate?

Yes. There’s an equal weighted S&P 500, for example.