Memorabilia as an investment

[Peter_Spaeth]

https://www.investopedia.com/article...nsic-value.asp

I think Adam is conflating the risks of common stock ownership with the concept of intrinsic value. That there are appreciable risks does not mean there is zero intrinsic value.

[EddieP]

Dunning Kruger.

[molenick]

This is kind of making me think that nothing has intrinsic value. A pound of Wagyu beef and a pound of chuck steak have vastly different prices but essentially the same nutritional value. The exact same house in one neighborhood could cost three times as much as in another neighborhood. Store brand or generic drugs cost less than brand name drugs with the same active ingredients.

I am not a lawyer, accountant, or economist (which is probably clear from my post). But it seems to me that the "value" of anything is what someone else is willing to pay for it, from game-used bats to stocks to houses. The difference with stocks is that there is an active market that continually sets a price. If you want to sell a stock, you can't just set your own price on a BST board, or consign it to an auction with a reserve. But the upside is that stocks are immediately sellable when you want to sell them.

And regarding a shared belief system, cash itself is based on that. A $1 bill and a $100 bill have the same material value, but we have all agreed that a $100 bill is worth 100 times more that a $1 bill (not that anyone uses cash anymore).

Those are my simplistic economic theories after midnight .

[oldjudge]

Everything that has value is an asset. The value of an asset is the present value of anticipated future cash flows. To Adam’s point, some assets have more risk to the anticipated cash flow stream than others. The risk is captured in the discount factor used in the present value calculation. This applies to stocks, bonds, real estate, baseball cards, etc. Assets with anticipated regular income streams are easier to value. Assets with only an initial outflow(purchase price) and final inflow (sale price) like baseball cards, memorabilia, etc are harder to value. You can look at historical price trends, growth in the population of collectors, etc, but at the end of the day you are betting that someone who looks just like you will at some point in the future pay more than you did for the item. The smaller the pool of possible buyers should imply a higher discount factor to be used in discounting the anticipated future sale price back to the present. Whether you consider something an investment, a collectible, or a friend you can talk to in a lonely moment, is immaterial to its value. Whether you call that Green Cobb you bought an investment or a collectible will be immaterial in to its’ value in X years.

[JustinD]

Originally Posted by Peter_Spaeth

https://www.investopedia.com/article...nsic-value.asp

I think Adam is conflating the risks of common stock ownership with the concept of intrinsic value. That there are appreciable risks does not mean there is zero intrinsic value.

I think there is a basis for discussion if you defer to the some of the reasoning for the .com crash. When a vast percentage of value of a company is speculative, you can lose your entire worth in a few minutes. Depending on your valuation model, the beta for technology can be huge (as in the AI excitement in the current market).

Case in point, Dan Gilbert who I worked for well over a decade, made a fortune taking advantage of the situation to fleece Intuit for a massive fortune. He is easily the smartest guy I have ever met and I sat for lunch with Buffett while I worked for him. Nothing he does is not planned 6 years down the road.

When they came to buy his mortgage company in 1999 he absolutely knew already how it would work out and took the 370 million. They changed the name to Quicken Loans and it was a success, becoming the face of Intuit to many. It slowly warped the investor perception of Intuit as a tech stock and moving it into the financial sector in the market.

You would think this would be good…well far from it. With tech stocks based on intangibles like innovation, licensing, etc. It became a financial which is largely holdings and earnings. The stock dropped as people devalued it as now it was based on physical and not intangible intellectuals. It was a disaster.

In order to realign into tech and change the perspective they needed to dump a strong asset and dump it fast. They called Dan and asked if he wanted it back. He absolutely knew he had them by the short and curlies to have a quick buyer.

In only three years, he bought it back for 64 million dollars. Netting 306 million to lend the company to them as he continued to run it. That move provided the extra liquidity to make further investments and continue to amass billions and the number one mortgage company in the country for years and still the second during this high interest market.

Sometimes minimal intrinsic works for you, sometimes it doesn’t.

[theshowandme]

What would you rather HODL (hold on for dear life) over the next 10 years?

1. $100,000 worth of pre-war baseball cards
2. $100,000 worth of $VTSAX

[aelefson]

In the early 2000s, I decided to collect memorabilia with an eye towards future value but mostly because I prefer memorabilia to cards. Over the past twenty years I have built a collection filled with lemon peel balls, ring bats, tin types, and other early equipment and ephemera. I am very happy with my collection but for investment purposes, I definitely chose poorly. I skipped buying relatively cheap Goudey Ruths and T206 Cobbs (I thought 500 for each was too much as they are so common!) and instead spent the same money on memorabilia. In general, the memorabilia I collected has stayed the same price in the past twenty years and some items have lost value while cards have skyrocketed.

I still think memorabilia is very undervalued but I no longer believe it will get anywhere close to cards like I once did. I assumed most people collecting cards would want actual historical pieces like early bats, balls, and ephemera but that is not the case. I am disappointed in that but am still happy with the collection I have put together.

Alan

[molenick]

Originally Posted by aelefson

In the early 2000s, I decided to collect memorabilia with an eye towards future value but mostly because I prefer memorabilia to cards. Over the past twenty years I have built a collection filled with lemon peel balls, ring bats, tin types, and other early equipment and ephemera. I am very happy with my collection but for investment purposes, I definitely chose poorly. I skipped buying relatively cheap Goudey Ruths and T206 Cobbs (I thought 500 for each was too much as they are so common!) and instead spent the same money on memorabilia. In general, the memorabilia I collected has stayed the same price in the past twenty years and some items have lost value while cards have skyrocketed.

I still think memorabilia is very undervalued but I no longer believe it will get anywhere close to cards like I once did. I assumed most people collecting cards would want actual historical pieces like early bats, balls, and ephemera but that is not the case. I am disappointed in that but am still happy with the collection I have put together.

Alan

I agree with this. I don't collect equipment but I do collect tintypes, cdvs, cabinets, and books.

Except for the rarest of books, these have not only been a bad investment but take up a lot of space. Putnam team histories and biographies, Messner biographies, Barnes MVP series, etc. cost the same or less as they did 25 years ago. I do enjoy seeing them on the shelf, but they were not a good investment. And most other books even less so (again, except for some 19th century or early 20th century rarities). On the other hand, I never really thought of these as an investment, I just like books.

Generic cdvs, tintypes, and cabinets (where there is a a nice image but the player(s) are unknown) have also been pretty stagnant with prices being essentially flat for many years. But this is another area where I just buy them because I enjoy early photographic images, not for future value.

When the time comes for my heirs to decide what to with my stuff, they will have an easier time with the cards. Just decide on an auction house and consign them. Most of the recent books could probably be donated and the others would need to be grouped into lots. The photographic items are at least sellable, but they would need to find the right AH to decide the best way to do this.

[Snapolit1]

Buy what you like and what feels meaningful, but it's common sense that the wider market for late 19th century and early 2Oth century stuff is dying off. A few cards notwithstanding, very few people are going to feel enough of a connection with an 1880 photo or ball to drop a significant amount of money on it. Time moves on. Pretty soon the hot "vintage" collectible might be a Doc Gooden glove from 1985.

I think the entire memorabilia category has fallen through the floor market wise. I have a ton of cool photos and some cool memorabilia and few of them would likely fetch more than what I paid for them if I consigned them tomorrow to an AH.

There will always been the insanely rich guy who wants to pay $800,000 for a hall of famers game used bat, but that says nothing about regular stuff. Look at BST. Some really cool stuff has been listed for seemingly years without a sniff.

[steve B]

Originally Posted by theshowandme

What would you rather HODL (hold on for dear life) over the next 10 years?

1. $100,000 worth of pre-war baseball cards
2. $100,000 worth of $VTSAX

Probably not the cards.
And that's based on my experience as a collector for closing on 50 years.
Some but only a handful of my cards have done very well. Most have not compared to the stock market. I've tended towards quantity, so when T206s were 1.50 for VG commons and 10 for most HOFers, I would buy the commons. I got a bunch of cards to enjoy instead of just one. (I'd actually buy more like 3 -5 VG or less T206s, a 48 Bowman some random junk and a few packs. Which only makes it worse. )

[MVSNYC]

Just offering my 2 cents...I remember a wise man, Scott Levy (Hi Scott), once saying regarding cards, "Buy the best cards, in the best condition, from the best sets, of the best players, that you can afford."

...I find the same philosophy to apply to Memorabilia also. IF we're talking about investing in the category...Look for the best tickets, best photos, best bats, best uniforms, best autographs, of the best players, that you can afford (and also focus on particular seasons, moments, events, milestones). On top of that, I recommend collecting players that you like and will enjoy collecting.

Years ago, I focused on collecting Derek Jeter items. I acquired a few special pieces, including a Game Used/Signed Rookie Bat, and a Game Worn (Home Pinstripe) Full Uniform from his final season. Both items have been loaned to the Yankees for exhibit in their Museum. Regarding "Memorabilia as an investment", they both have appreciated nicely.

[lumberjack]

I started this thread and wanted to jump in for a moment.

Two years ago, Investropedia commented on stamps as an investment. In 1988, there were nearly 58 thousand members of the American Philatelist Society (hope I spelled that correctly). That number had dropped by more than half when the article was written. Boomers made up a disproportionate number of collectors and supply became greater than demand.

Outside events do shape trends. Covid brought a temporary resurgence in stamps. Hey, people were stuck at home....

What I remember about card collecting in the '70s is that there were stamp sellers who left that business behind and became very savvy sports memorabilia dealers.

Does this have anything to do with us? Like Mark Twain (supposedly) said:
History may not repeat itself, but it does rhyme.