Cards = Investments

[tiger8mush]

Originally Posted by Ulidia

Remember, also, that when buying a high value card, you're typically paying a higher price than anyone else is prepared to. And of course, the thing that all too many overlook are the buy / sell spreads of buying and selling cards which are prohibitive from an investment perspective - for example, you buy a card at $100k in auction? Given premiums etc, you'll need to sell it for a considerably larger amount just to break even.

Good point. So lets you buy a card at auction (more than anyone else is willing to pay, of course) for $1k. Then lets say 15% buyers premium of $150 + $20 insured shipping. So you have $1,170 invested in this card. You hold the card for 5 years as investment and then decide to consign it to an auction company that has 0% sellers premium. You spend another $20 to ship to them, insured. $1,190 now. So the card has to sell at auction for AT LEAST 20% higher than it did 5 years ago just for you to break even. You are taking a risk that it sells lower, you are NOT GUARANTEED it'll sell for that price. Did you also spend extra $ on home insurance for the card or a safety deposit box? So if you want to make 10% in 5 years (only 2% a year), it'll have to sell for at least 30% higher than its previous hammer price. Heck, inflation is higher than 2% a year! So even then you are probably losing money.

[barrysloate]

Best advice I can give is to build a good quality collection and hope for the best. Try to buy nice looking, scarce cards, in the best condition you can afford, try to purchase cards of key players, and keep working at it for as long as you can. Be patient and try to control the addictive nature of collecting, because that will cause you to overpay. No guarantee you will make money, but there's a good chance you will. Timing of course is an important part of it.

One of the pitfalls, however, is that it can be expensive to sell cards. Let's say you've bought a group of cards that have increased in value by 20% in a short period of time. You consign them to an auction and they in fact do sell for 20% more, but the auction house takes most of that profit away in fees. So that's one problem right there.

Rob G. said much of what I said in the previous post. Sorry Rob.

[Sean1125]

Originally Posted by tiger8mush

Good point. So lets you buy a card at auction (more than anyone else is willing to pay, of course) for $1k. Then lets say 15% buyers premium of $150 + $20 insured shipping. So you have $1,170 invested in this card. You hold the card for 5 years as investment and then decide to consign it to an auction company that has 0% sellers premium. You spend another $20 to ship to them, insured. $1,190 now. So the card has to sell at auction for AT LEAST 20% higher than it did 5 years ago just for you to break even. You are taking a risk that it sells lower, you are NOT GUARANTEED it'll sell for that price. Did you also spend extra $ on home insurance for the card or a safety deposit box? So if you want to make 10% in 5 years (only 2% a year), it'll have to sell for at least 30% higher than its previous hammer price. Heck, inflation is higher than 2% a year! So even then you are probably losing money.

If you can't get in the investment at a solid price, why would you invest in it? The money is better sitting around doing nothing than having a reasonable potential to lose.

Purchasing a card that you need to clear 20% more than the previous sale to break even is just putting more emphasis on the risk because you know you can get out of it but you don't know the amount until it actually sells.

Minimize the risk by making sure you purchase correctly in the first place - it would require more time making sure you get into whatever you are buying at a price you know you could get out of it at. So don't buy the card unless you are sure you could get what you paid "tomorrow"

[Nashvol]

Originally Posted by tiger8mush

Good point. So lets you buy a card at auction (more than anyone else is willing to pay, of course) for $1k. Then lets say 15% buyers premium of $150 + $20 insured shipping. So you have $1,170 invested in this card. You hold the card for 5 years as investment and then decide to consign it to an auction company that has 0% sellers premium. You spend another $20 to ship to them, insured. $1,190 now. So the card has to sell at auction for AT LEAST 20% higher than it did 5 years ago just for you to break even. You are taking a risk that it sells lower, you are NOT GUARANTEED it'll sell for that price. Did you also spend extra $ on home insurance for the card or a safety deposit box? So if you want to make 10% in 5 years (only 2% a year), it'll have to sell for at least 30% higher than its previous hammer price. Heck, inflation is higher than 2% a year! So even then you are probably losing money.

And, if there are better options to invest in a recovered economy (savings/CDs, for example) wouldn't today's card investors be a shrunken market? Where would prices be then?

[EvilKing00]

personally if i was making an extra 500 or 1000 due to my CD interest rate i would just spent it on more cards,

[Sean1125]

Originally Posted by Nashvol

And, if there are better options to invest in a recovered economy (savings/CDs, for example) wouldn't today's card investors be a shrunken market? Where would prices be then?

IMO if there was no investment in cards there would be absolutely no way to determine prices and I think they would be ALL over the place. The one collector that "needs" the card will buy it, then there will be no more demand (or much lowered).

Edit* that would all be speculation of course, I don't think in the near future investments will be pulled out of cards

[Leon]

I don't recommend it whatsoever but approx. 13 yrs ago I took all of my money out of the stock market (except a few 401k rollovers in bonds) and put it all into pre-war cards. Best decision I have ever made, financially. I don't recommend it but it's been a lot of fun. And I enjoy the cards a heckuva lot more than I would have pieces of virtual paper. I think I have done ok on ROI too....though I can't know for sure until I sell. I have always been somewhat of a (calculated) gambler.

[Jlighter]

I was reading an article where people put up expensive artwork as collateral for a mortgage. I wonder if the same could be done with vintage Baseball cards?

[Leon]

Originally Posted by Jlighter

I was reading an article where people put up expensive artwork as collateral for a mortgage. I wonder if the same could be done with vintage Baseball cards?

I took out an SBA loan for a little over a half a million dollars nine years ago (paid back last year). I scheduled my cards, on the loan, as assets. They were used in the equations. They weren't collateral but they were listed as assets and were taken into account.