Same old question, but it is killing me!

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Posted By: boxingcardman

How appropriate that we have this post on tax day! Writing a big check and hating it...

I have to say, there is quite a bit of wishful thinking going on here. I too am effectively priced out of many of the cards I want to collect, unless I get lucky, unload something I have or swing a trade, but I am not betting on a deep "correction" to get me back in. Let's look at reality. First, economically, the people who have the money to spend on big cards are doing better than ever because they are keeping more of their earnings as the government recklessly borrows its way out of taxing them to maintain current spending. The marginal tax rate (the tax rate on the last dollar earned) on the highest income earners has fallen from a high of 88% in 1963 to the current 35% (for those earning more than $336,550), the marginal tax rate curve has flattened so that people who earn megamillions and people who earn $340K pay the same marginal rate, and capital gains are taxed at an even lower rate. With all that money sloshing around in the hands of the rich because of tax cuts and deficit financing, the richest collectors can afford more toys than ever before. In that climate, I am not surprised that we've seen a continuous march upwards in card prices for years now, despite recessions, terrorist attacks and two wars. If you believe there is going to be some massive drop in the prices of cards because the people who can spend $10,000 on a card without blinking are suddenly going to panic, you are deluding yourselves. Short term, we might see some prices back off on some items as collectors drop interest in those items but overall, I think not, unless the tax system is radically overhauled to return it to a much more progressive structure, which would take the excess spending capacity out of the hands of the wealthy collectors who are driving this market. Second, I just do not see the big pool of coldly rational investors buying up cards that they will drop on the spur of the moment that some people wishfully think must exist. What I do see are lots of very wealthy collectors buying lots of new toys for themselves and some brilliant marketing of some of those toys that appeals to the vanity and competitiveness of those collectors (e.g., the registries). The people who seriously think about selling are middle class and professionals who see that their hobby has become a financial monster or powerhouse (depends on whether you are buying or selling) in which they are increasingly marginalized. And of course those who have a personal issue that more or less forces a sale (but that's always been part of the human condition and is not cause for belief in a market drop).

Some people may shift to postwar cards but I do not see it as having much effct on the prewar market. Again, the reality on the ground dictates what will happen. The two eras are not the same; you can't get a career-issued Ty Cobb from 1948. Also, have you looked at the supply side of the equation? There are so many more postwar cards available than prewar cards that there is a huge supply to eat up before the demand side becomes a factor.

You also have to put it into perspective. Since I am a collector, the money in to cards is not really at issue since I have no intention of unloading my collection before I die. I think perhaps we tend to forget that if you aren't selling short term, it really doesn't matter that the cards you have are increasing in value.