Investing or collecting

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Posted By: John Cook

I find this a fascinating subject because, like most serious collectors, I have spent a lot of time trying to justifying putting even more money into my collection by thinking of it as an investment. Anyway, here are my thoughts:

Any "investment" has risks, although there are a lot of card investments that of the truly speculative type. That being said, I do think that there are certain sets that will always hold their value, at least as long as anyone is collecting. The question, with a lot of sets, is whether they will appreciate reasonably, say at the rate of a decent-yielding bond or merely hold value. I think there is very little at this point that will appreciate at the rate of common stocks unless it is of a speculative nature.

One good aspect of cards as an investment, as compared to most collectibles, is that, for the most part, they can be sold quickly at close to their current value, like most stocks and bonds. Professional grading and the availability of a lot of serious active collectors on eBay and at the auction houses, make selling your investments in a reasonable period of time (say a month or two) for a price you would expect possible.

What Would I Invest In?

In my opinion, there are 3 sets I consider can't miss for the long-term. They are:

1. T206
2. 1933 Goudey
3. 1952 Topps

Each set has a number of landmark cards that are scarce and are iconic with collectors (i.e. most collectors can identify the key cards from these sets on sight, T206 Wagner, 52 Mantle, 33 Lajoie, etc.)

Now, the Cracker Jack and Old Judge and caramel sets may also be can't miss, but when I was collecting in the mid-80s, no one spoke of them (except the E90). Also, there are not specific cards (again my opinion) that are iconic with collectors (although that can certainly change.) So, my gut tells me they belong in the class of the other three, but I have no reservations about the first three.

Other Sets

There are certainly a lot of other sets, mostly pre-1960, that may be good investment candidates, because the players have long retired, removing a major volatility factor, and the cards have been traded for long enough that a long-term price history can be established. Among these, the question is, do I invest in heavily traded issues, like, say early 50s Topps and Bowman or do I look at more obscure pre-WWI issues, for example.

It's a tough question, I think, and something each person needs to look at personally. I personally think that the 1953 and 1954 Topps and the 1953 Bowman Color sets are worth some level of investment, at least in key cards, because I know there will be collectors for those cards . There are enough stars that are still resonant with living collectors, the sets are early in the history of post-WWII collecting, and there is enough volume that they can be sold at a predictable price. On the other hand, scarcity is, and should be, very desirable for investment and I can see the wisdom of collecting more rare, obscure pre-war and 19th century sets. The question is, what will the market be for these when I need to sell. For me, that is a little less clear (but of course it depends on the set). Really, it depends on how long you intend to hold and the time flexibility you have on when to sell.

My Biggest Concern?

My biggest concern with investing long-term is the potential risk of high condition cards. All things being equal, the most volatile cards in terms of price are highly-graded cards. And, I know I am not alone in my suspicions of the number of high condition, older cards in the market (I have a stack of auction catalogs full of them). Certainly, there are some people who have "improved" the quality of their cards by artificial means and many of these cards have slabbed and sold at auction. Some have been discovered, but most likely a lot have not. The question is, what will the market's long-term response be to this issue?

I think the steroids issue may prove a decent parallel. For a long time, there were rumors of use and some actual examples, but the average fan didn't really care too much. They either rationalized it wasn't happening to a degree to be concerned (or at all) or they really didn't care. However, when more evidence came out, it became apparent a lot more people cared.

Now, that's not to say it's a certainty that anything will happen related to graded cards. But, it is a risk. And, it seems to me a potentially large one, especially if you are investing a signficant amount of money that you plan to use later in life.

Is there a solution? I think the only real solution, if you are putting in a significant amount of money, is to have an expert that you trust, with no ties to grading companies or card sellers, analyze each card for evidence of tampering (an expert in paper restoration, perhaps?) Nothing is 100%, but at least you'll have piece of mind, even if it requires cracking open your holder and having a card inspected, then re-graded. Better than having someone else do it when you action it in 10 years and void the sale.