Liquidity & Investing vs collecting

[Cozumeleno]

My problem with investing big money into any slabbed card, pre-war or not, is a grading company's reputation (i.e. GAI) can be damaged beyond belief and severely devalue their cards overnight. As purely a hypothetical example, what if news broke that any of the big two/three companies was caught giving many faulty grades for personal gain, etc.? Or purposefully slabbing trimmed/altered/fake cards?

If I ever poured $30,000 into a card, I'd feel much more secure putting it into a rare card in general than I would putting it into a nominal card marked up 100x simply because of a grader's opinion. That's always seemed incredibly risky to me. I have no problem with graded cards and especially enjoy the protection they can provide to cards that could be damaged without a slab. But I just wouldn't have the desire to pay that kind of a premium for something based on opinion.

[Leon]

Originally Posted by Cozumeleno

My problem with investing big money into any slabbed card, pre-war or not, is a grading company's reputation (i.e. GAI) can be damaged beyond belief and severely devalue their cards overnight. As purely a hypothetical example, what if news broke that any of the big two/three companies was caught giving many faulty grades for personal gain, etc.? Or purposefully slabbing trimmed/altered/fake cards?

If I ever poured $30,000 into a card, I'd feel much more secure putting it into a rare card in general than I would putting it into a nominal card marked up 100x simply because of a grader's opinion. That's always seemed incredibly risky to me. I have no problem with graded cards and especially enjoy the protection they can provide to cards that could be damaged without a slab. But I just wouldn't have the desire to pay that kind of a premium for something based on opinion.

This is why I bought into what I think is the safest bet in the hobby. I wasn't going for a 20k HOF'er OJ which Richard, Keith and Jay already own.

[Snapolit1]

The idea of something like Jordan cards being a riskier investment because he's still alive and his story isn't finalized yet is something I never really thought about. Sure at some point OJ Simpson and Bonds were fetching big bucks too. The guy who paid big bucks for a Sammy Sosa homerun ball has likely jumped off a bridge long ago. Jordan's reputation hasn't exactly taken off since he retired and who knows what he's gambling on these days.

By the way, I have zero interest in Jordan cards and never plan to buy one. I'd drop big bucks on Ruth any day over Jordan.

[Peter_Spaeth]

Why even own the physical card? The flips could be traded on an exchange and your online account will show your holdings. The cards themselves would be as obsolete as stock certificates.

[Econteachert205]

Originally Posted by Peter_Spaeth

Why even own the physical card? The flips could be traded on an exchange and your online account will show your holdings. The cards themselves would be as obsolete as stock certificates.

If PSA can figure this out, it will happen. Others can chime in but I think they would need the ok from the SEC and get all the necessary securities licenses to act as a broker and then it could happen. Pretty unlikely though...

As for the Jordan, I have mine (a psa 8 oc). It's probably the best investment card I've ever bought. I wish it was a straight 8 but it presents really well and was reasonable about 1 1/2 years ago. I also agree with liquidity as a key factor to investing.

[Exhibitman]

A real investor would not bother with already vastly appreciated cards but would be looking for the next wave cards so as to maximize returns.

All cards are liquid; the issue is a red herring. The discussion should be liquid at what price. Right now certain cards are flying off the shelf because we are in a mania. Anyone who has collected for a long time has seen it before. Remember E cards? T206 errors? Chasing the tail of a mania is a bad idea. Better question is what cards are still undervalued.

The PSA 10 Jordan discussion is incomplete. The relevant pop is not PSA 10 but is 8-10. Many collectors will simply downgrade rather than chase a ten. There may be a better ROI on a lesser grade card unless you expect the Jordan to go from $30k to $60k. Maybe it will. But maybe the better play is several 8s that have the potential to triple in the same time. If you are an investor. If all you can afford is one Jordan 10 you aren't an investor you are a person trying to sell yourself on a splurge.

Buy what you like and assume you will own it for a while. If you want liquidity and transparency go buy a security and leave the cards to the collectors. Trust me you won't be missed.

[Peter_Spaeth]

I think 10 flips are almost always a better "play" than 8 or 9 flips due to relative scarcity and perceived value among people who can afford them. Obviously more people can afford 8s than 9s, and more people can afford 9s than 10s, but that isn't material to this discussion because the supply of 8s and 9s is also correspondingly much higher.

[T206Collector]

Originally Posted by Exhibitman

Chasing the tail of a mania is a bad idea. Better question is what cards are still undervalued.

+1

I bought a 1951 Bowman Mantle SGC 60 for $3,200 a few years ago primarily as an investment because, to me, it was obvious they were undervalued. Sold it for twice that this year. What's next is ... ?

[ls7plus]

Originally Posted by Exhibitman

A real investor would not bother with already vastly appreciated cards but would be looking for the next wave cards so as to maximize returns.

All cards are liquid; the issue is a red herring. The discussion should be liquid at what price. Right now certain cards are flying off the shelf because we are in a mania. Anyone who has collected for a long time has seen it before. Remember E cards? T206 errors? Chasing the tail of a mania is a bad idea. Better question is what cards are still undervalued.

The PSA 10 Jordan discussion is incomplete. The relevant pop is not PSA 10 but is 8-10. Many collectors will simply downgrade rather than chase a ten. There may be a better ROI on a lesser grade card unless you expect the Jordan to go from $30k to $60k. Maybe it will. But maybe the better play is several 8s that have the potential to triple in the same time. If you are an investor. If all you can afford is one Jordan 10 you aren't an investor you are a person trying to sell yourself on a splurge.

Buy what you like and assume you will own it for a while. If you want liquidity and transparency go buy a security and leave the cards to the collectors. Trust me you won't be missed.

Adam has absolutely hit the nail on the head. Buy on the leading, cutting edge, thinking outside the box a bit, and looking for rare, significant AND UNDERVALUED (which really means outside the hobby's current focus). If you're buying on the trailing edge, which is much more expensive and may only offer the illusion of lasting value, you may well find yourself in that last group of lemmings as the herd heads full blast off the cliff. John J. Pittman followed this course of action and put together a $40 million coin collection over his lifetime, never being able to obtain the real "trophy" items (he was a chemical engineer for Eastman Kodak, and died in the '90's).

Best wishes, to Adam and all,

Larry

[pcoz]

I'm astounded by the record prices of the Mantle/Clemente RC's, but especially the Jordan RC, with thousands and thousands slabbed. I do have a Clemente because I'm a Pirates fan, but I collect and invest in prewar for their scarcity and investment potential. I'll buy a Ruth RC with approx 75-80(a bunch have been crossed), who was the best baseball player of all time, having a 100 year old card, than chase a holder and grade of the cards today. Modern cards for that reason to me are significantly riskier. Prewar prices have been consistently solid and increasing, postwar with the PSA registry driving prices have done great as well, but modern cards to me are a risky proposition. Too volatile, too many of them, and too unpredictable in the future for me. Great point on that the players story may not be done yet even though they're done playing. No one is going to rewrite Ruth, Jackson, Cobb or Wagner's stories.