Comparing the CME/MERC with Cardboard trading

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Posted By: Anonymous

First off let me say I am a Futures Trader and Avid Card Collector. I have been involved in the Futures Market for well in excess of 20 years.
As with any investment, "chasing" is never a good idea. We all want to invest at the bottom and ride the wave to the top and sell right at the optimal point. However, this is rarely the case. If we are fortuante enough to "get in" close to the bottom before the run and get out at some point prior to the high we may in fact leave some on the table, but we have secured a profit and that is what we as traders/investors hope for.

As far as comparisons to card collecting there are several factors which come into play. First is rarity, a card with a population of 20,000 vs a card with a population of 20 will command a higher premium, just as an option that expires in one month vs an option that expires in 6 months (leaps) will command a higher premium.

Another basis that effects price is condition (quality) a card who's condition is graded a 4 will carry less value then a card with a grade of an 8 (similar card), just as copper (a metal) vs gold (a metal).

Then of course you spoke of liquidity, in the markets liguidty is determined by the spreads (bid/ask) in a particular investment, whereas in card collecting the liquidity is determined by the number of people that can afford the card you are selling. Obviously if you are selling a T-206 red cobb psa 2, vs a psa 9 T-206 red cobb the number of people who can afford that card (psa 9) has dwindled down.

This is the primary reason that Berkshire has never split the A shares, Mr. Buffett feels that anyone who can afford his stock to have a voting right has to have some level of knowledge with regards to his business and wants to keep certain people from having the ablity to purchase his shares, as is the case if I invested in the PSA 9 Cobb. The PSA 9would signify the best (or close to it) and mr. Buffett feels his price signifies that his stock being the most expensive is the best. (We can argue the merits of his beliefs, but for this purpose i am only using it as an example)

So as I see it, card collecting is no different than investing, however, I personally feel a well thought out portfolio of cards, purchased wisely will grow in value and will always be liquid enough to sell at any point in time. And once you do, you can then throw all that money in the market, because after all, you already have first hand knowledge of the game, just take out cards and insert stock for liquidty, price, potential, and rarity.