Cards as an inflation hedge ?

[KCRfan1]

I know that most of us buy for enjoyment and personal collections.

However, I also believe that in the back of our minds, we are thinking forward in that what we purchase will grow in value. If we need or want to sell, making a profit is a nice thing.

Stocks, metals, crypto, ect all move up and down, sometimes violently and quickly. Downward trends are tough to reverse.

I don't see the same with cards, especially vintage. The newer stuff is "meh" for me. Too much of it, and player careers can flame fast. Zion comes to mind.

So what are your thoughts?

[Johnny630]

To me this current state of the vintage and modern card market is still overbought. I'm of the opinion that 5 guys purchased at reasonable levels in upper mid to higher grade 6-8's are excellent but not at these levels.
Cobb
Ruth
Jackie
Mickey and Willie.

[Tyruscobb]

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

[ullmandds]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

I agree with this…well said!

[Peter_Spaeth]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

[Rhotchkiss]

Originally Posted by Peter_Spaeth

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

[ullmandds]

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

[Peter_Spaeth]

To further Ryan's points, there's a lot of new wealth out there and these guys have a lot of disposable income. What cooler place to put some of it than cards if you're a sports fan and you see cards more and more having features of at least good and perhaps very good investments? And they come with bragging rights too, posting about a great card you bought is a little better than posting about how many bitcoin you bought or shares of AMZN.

[trambo]

Originally Posted by Rhotchkiss

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

agree w/all of this. My family isn't into cards but when we talk about the tobacco era of cards, they are absolutely into the discussion and enjoy looking at some of my PC stuff. Far different than if/when we talk about savings, crypto or anything like that as there's nothing really interesting to see.

[Tyruscobb]

Originally Posted by Peter_Spaeth

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

The answer is probably multifactorial. I'm sure wealthy investors are a factor. Whether they are the primary factor is unknown. However, there are more "common" investors than wealthy ones.

For every Ryan that can purchase a T-206 Wagner, there are probably 10,000 times more looking for a E95 Wagner in a 1. There are more collectors chasing a 1953 Topps Mantle in the 3 - 5 range than there are wealthy investors looking to purchase 8s and 9s.

I'm not sure about the stimulus money, because I didn't receive a nickel. However, wasn't there three separate checks around $1,000.00 each? That's an extra $3,000.00 that collectors had to spend on the hobby. Multiply $3,000 by the number of hobby members, and that is a lot of money that entered the hobby in a short time period. This also only considers the stimulus money, and not money from the collector's personal funds that they also spent.

I think this common collector wave of money at the bottom was more than the big money coming in at the top that was chasing just a few cards. Rising tides lift all boats - even the yachts. Just my two cents.

[Johnny630]

One Word to Describe this Industry over the past 3 Years....MANIPULATION

[Lorewalker]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

Some of your might be true for some buyers but those who are really responsible for prices being driven up do not have to pick between expenditures on entertainment, dining and traveling or buying cards.

[GeoPoto]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing.

Everything you predict could happen and vintage cards would still be a "hedge against inflation". If inflation strengthens and persists (which seems likely, IMO), the Fed will tighten credit, interest rates will rise, and the economy will go into a recession. You are correct that this will cause downward pressure on card values, but only in the near term. The same is true for home values, stock prices, etc.

Assuming inflation is eventually brought under control, interest rates stabilize, and the economy booms again, card prices (like all assets) would be expected to regain their relative value, but in inflated dollars. This is unlike bond values, for example. If I own a bond that matures 10 years from now, I will be paid its face value at maturity regardless of how much inflation has reduced the purchasing power of those dollars during the intervening ten years.

Vintage cards are inherently "hedges against inflation" because their supply is fixed. That doesn't mean they will be good investments. In order to retain their value as investments they will have to remain popular. If their popularity disappears (boomers age out, baseball gets tuned out, etc.), they will be bad investments no matter what inflation does.

[RedlegsFan]

Interesting views, cool topic. My take is that of a struggling collector as myself. Sports cards have a fiat value, measured in a falling fiat currency. Because I’ve no residual income or disposable income, i must do as most collectors do, and buy only what i’m willing to be buried with. If i had 100K to invest in the last few years or so, i’d most certainly have ‘invested’ in some rare high dollar vintage cards, but be super tempted to sell off quickly.

Even though i’m optimistic the card market will fall, i still believe there are many, many cards that i will never legally own. I have to be okay with that.

I remember what happened in the last card boom, and i hold several opinions on today’s card market. First, i believe the wealthy underwrite eachother’s investments.

Second, hardly any kid knows what kind of fish Mike Trout is, even fewer know what a Mickey Mantle is used for, and the only people that know what language you say Tris Speaker or Cy Young in, are likely reading this paragraph at this very moment. When we die with our cards, those kids will be adults, and i’m not willing to bet $10,000 on a piece of crap condition Jackie Robinson rookie, that ANY of our youths will give a rat’s behind what a Frojoy Babe Ruth is for….

Baseball cards: you can’t feed it to your family, they won’t keep you dry. They don’t transport you across town. They are not accepted as currency in any Costco or 711. They are poor self defense weapons. They are even worse for amphibious assaults on a food and ammo cache. You can’t use them to build a shelter, or a boat. In the end, if kept dry, are great for starting a small cooking fire.


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[Republicaninmass]

Lots of folks financing new boxes of panini treasures or whatever at 2k a pop, busting itnopen and hoping to pay off the credit card date and psa fees with the profits. I think that came to a grinding halt. I'd have to think a major deflation in modern would be coming. Goldin had 3 of those 'tom brady season ticket" cards. I realize its limited, but I dont see how rare or demand for a card like that Carries the insane premium. Even still, jordan fleer rcs in psa are thousands? Limitless supply, and demand is due to "them going up". Modern is going to end badly and will spill over into some vintage. I would hedge with cards, try commodities.

[parkplace33]

Great points.

I especially agree with your last statement. Many collectors say, well, my card is worth x, so I should be fine. A card is only worth something when you sell, so until then, it holds no dollar value. And the fact is collectors always overvalue their cards, so they may be in for a rude awakening when they try to sell.

Originally Posted by RedlegsFan

Interesting views, cool topic. My take is that of a struggling collector as myself. Sports cards have a fiat value, measured in a falling fiat currency. Because I’ve no residual income or disposable income, i must do as most collectors do, and buy only what i’m willing to be buried with. If i had 100K to invest in the last few years or so, i’d most certainly have ‘invested’ in some rare high dollar vintage cards, but be super tempted to sell off quickly.

Even though i’m optimistic the card market will fall, i still believe there are many, many cards that i will never legally own. I have to be okay with that.

I remember what happened in the last card boom, and i hold several opinions on today’s card market. First, i believe the wealthy underwrite eachother’s investments.

Second, hardly any kid knows what kind of fish Mike Trout is, even fewer know what a Mickey Mantle is used for, and the only people that know what language you say Tris Speaker or Cy Young in, are likely reading this paragraph at this very moment. When we die with our cards, those kids will be adults, and i’m not willing to bet $10,000 on a piece of crap condition Jackie Robinson rookie, that ANY of our youths will give a rat’s behind what a Frojoy Babe Ruth is for….

Baseball cards: you can’t feed it to your family, they won’t keep you dry. They don’t transport you across town. They are not accepted as currency in any Costco or 711. They are poor self defense weapons. They are even worse for amphibious assaults on a food and ammo cache. You can’t use them to build a shelter, or a boat. In the end, if kept dry, are great for starting a small cooking fire.


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[trambo]

Originally Posted by parkplace33

Great points.

I especially agree with your last statement. Many collectors say, well, my card is worth x, so I should be fine. A card is only worth something when you sell, so until then, it holds no dollar value. And the fact is collectors always overvalue their cards, so they may be in for a rude awakening when they try to sell.

Cards, like stocks, are only worth what someone is willing to pay for them. Card shows, online forums, marketplaces and auction houses are akin to the NYSE, NASDAQ, etc so I'd say there are enough venues to sell cards that they are quite a bit closer to stocks than others may think.

As for the "always overvalue their cards" comment, I actually use average sales for valuing my collection and taking a percentage of that (less than 100%) for an approximate value for any external need I have for that info. Maybe I'm the only person ever who has done it that way but I'd guess likely not.

[Rhotchkiss]

Originally Posted by RedlegsFan

Baseball cards: you can’t feed it to your family, they won’t keep you dry. They don’t transport you across town. They are not accepted as currency in any Costco or 711. They are poor self defense weapons. They are even worse for amphibious assaults on a food and ammo cache. You can’t use them to build a shelter, or a boat. In the end, if kept dry, are great for starting a small cooking fire. Sent from my iPhone using Tapatalk

If that is your measuring stick, then stock (especially if manifested by a paper certificate) and debt/bonds, are a bad place to put money too. I assume you are spending all your excess cash of lighters and matches, lumber, bullets and military rations.... When shit hits the fan, and it just may (in all seriousness), you can tell me you told me so. Until then, here are Tris Speakers, you know, for the kids.....

[ValKehl]

Ryan, I'd say your Tris Speaker back run is nice, if it included a T215 card!

[Exhibitman]

Originally Posted by RedlegsFan

r….

Baseball cards: you can’t feed it to your family, they won’t keep you dry. They don’t transport you across town. They are not accepted as currency in any Costco or 711. They are poor self defense weapons. They are even worse for amphibious assaults on a food and ammo cache. You can’t use them to build a shelter, or a boat. In the end, if kept dry, are great for starting a small cooking fire.


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A Beckett large slab could serve as a roof on a shelter and when thrown correctly could decapitate a soldier in full body armor.

[RedlegsFan]

Originally Posted by Exhibitman

A Beckett large slab could serve as a roof on a shelter and when thrown correctly could decapitate a soldier in full body armor.

LMAO!!!


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