Liquidity & Investing vs collecting

[the 'stache]

Sure it does. Gambling is defined by the act itself, not the possible financial implication of the outcome. Suggesting otherwise is reckless, in my humble opinion.

If a billionaire goes to the Luxor in Las Vegas, and puts down a $1 million chip on black at the roulette table, regardless of the outcome, or how he tolerates any potential loss, he's gambled. He may have risked a very small portion of his net worth, but he's gambled, nonetheless.

As I said before, I've got no problem with the guy doing whatever he wants with his money. To each their own. If he wants to rent a limo, and blow $100k on hookers at the Bunny Ranch, God Bless America! But that's not how he framed this whole discussion. He came here espousing an extremely risky investment strategy, and gently chided those who are going to, or have already "missed the move."

"Give me the liquidity, give me the commodities, give me the transparency."

First of all, in this hobby, I find there is a shocking lack of transparency. If there is any, at all, it is because hobbyists, like the fine folks here on Net 54, are fed up with the rampant criminality that has become all too commonplace. Unlike commodity trading, there is no inherent transparency within the hobby. There is no regulatory body in baseball cards; no oversight. One of the third party grading companies began its existence by facilitating a gross misrepresentation of a Wagner T206's quality. Major auction houses have been complicit in criminal behavior warranting FBI investigation, and federal prosecution (cough Mastro cough); and, you've got rampant shill bidding on Ebay. Oh yeah, and you've got a criminal mastermind somewhere in Mexico flaunting their ability to create high-value graded cards out of thin air. This is the environment in which I'm going to risk hundreds of thousands of dollars? Discretionary income, or not, to bank on the continued upward trend in pricing, which day and night is being responded to here with utter disbelief, is displaying questionable logic.

"Past performance is not necessarily indicative of future results." Especially when the system is being gamed against the individual investor. Even the most principled auction houses, through no fault of their own, and even after employing the strictest guidelines, and independent transparency--they get caught in the muck. We've seen highly-visible persons on our own board, people who work their tails off to make this hobby as safe as is humanly possible, caught up in the middle of dealings with stolen goods. If a man with that level of hobby sophistication, with this incredible tool at his finger tips, can get blindsided, what chance does an honest investor truly have?

I may no longer be able to work, but when I became a broker, I vowed to be held to a higher level, ethically, in my business dealings. I had a fiduciary responsibility to my clients, and though I'm no longer actively associated with a broker-dealer, I still take that responsibility very seriously. I cannot sit idly bye while I see risky investment advice, even in the guise of a "friendly suggestion", being dolled out.

Originally Posted by LukeLyon

His second post was phrased nicer, but he is right either way. $300k (since we're using that number) is a lot of money to a lot of people on this board, but that doesn't mean that it can't represent a small and reasonable percentage of someone's net worth to be invested. High end sports cards have been a good investment in recent history. Calling it gambling just because the number is big doesn't make any sense.

[Joshwesley]

VERY well said and put!



QUOTE=the 'stache;1548152]Sure it does. Gambling is defined by the act itself, not the possible financial implication of the outcome. Suggesting otherwise is reckless, in my humble opinion.

If a billionaire goes to the Luxor in Las Vegas, and puts down a $1 million chip on black at the roulette table, regardless of the outcome, or how he tolerates any potential loss, he's gambled. He may have risked a very small portion of his net worth, but he's gambled, nonetheless.

As I said before, I've got no problem with the guy doing whatever he wants with his money. To each their own. If he wants to rent a limo, and blow $100k on hookers at the Bunny Ranch, God Bless America! But that's not how he framed this whole discussion. He came here espousing an extremely risky investment strategy, and gently chided those who are going to, or have already "missed the move."

"Give me the liquidity, give me the commodities, give me the transparency."

First of all, in this hobby, I find there is a shocking lack of transparency. If there is any, at all, it is because hobbyists, like the fine folks here on Net 54, are fed up with the rampant criminality that has become all too commonplace. Unlike commodity trading, there is no inherent transparency within the hobby. There is no regulatory body in baseball cards; no oversight. One of the third party grading companies began its existence by facilitating a gross misrepresentation of a Wagner T206's quality. Major auction houses have been complicit in criminal behavior warranting FBI investigation, and federal prosecution (cough Mastro cough); and, you've got rampant shill bidding on Ebay. Oh yeah, and you've got a criminal mastermind somewhere in Mexico flaunting their ability to create high-value graded cards out of thin air. This is the environment in which I'm going to risk hundreds of thousands of dollars? Discretionary income, or not, to bank on the continued upward trend in pricing, which day and night is being responded to here with utter disbelief, is displaying questionable logic.

"Past performance is not necessarily indicative of future results." Especially when the system is being gamed against the individual investor. Even the most principled auction houses, through no fault of their own, and even after employing the strictest guidelines, and independent transparency--they get caught in the muck. We've seen highly-visible persons on our own board, people who work their tails off to make this hobby as safe as is humanly possible, caught up in the middle of dealings with stolen goods. If a man with that level of hobby sophistication, with this incredible tool at his finger tips, can get blindsided, what chance does an honest investor truly have?

I may no longer be able to work, but when I became a broker, I vowed to be held to a higher level, ethically, in my business dealings. I had a fiduciary responsibility to my clients, and though I'm no longer actively associated with a broker-dealer, I still take that responsibility very seriously. I cannot sit idly bye while I see risky investment advice, even in the guise of a "friendly suggestion", being dolled out.[/QUOTE]

[Luke]

Using roulette as an example is a logical fallacy. When you play roulette, you have a known loss rate. It's small and static (let's call it 3%). You can't compare that to investing in baseball cards, or stock, or real estate where the returns are unknown.

There is every reason to believe that a person can make money investing in baseball cards. Just look at recent returns. There are a lot of people that feel comfortable investing in that way. Any investment can lose value, and cards are no different.

People that are calling cards a gamble are just missing the point. Your investment portfolio should be diversified. If you have a diversified portfolio, I'm certain that you own some investment instruments that are far riskier than a PSA 9 Jordan rookie. They are just offset within that particular fund by other, less risky investments.

[trdcrdkid]

Originally Posted by LukeLyon

Using roulette as an example is a logical fallacy. When you play roulette, you have a known loss rate. It's small and static (let's call it 3%). You can't compare that to investing in baseball cards, or stock, or real estate where the returns are unknown.

There is every reason to believe that a person can make money investing in baseball cards. Just look at recent returns. There are a lot of people that feel comfortable investing in that way. Any investment can lose value, and cards are no different.

People that are calling cards a gamble are just missing the point. Your investment portfolio should be diversified. If you have a diversified portfolio, I'm certain that you own some investment instruments that are far riskier than a PSA 9 Jordan rookie. They are just offset within that particular fund by other, less risky investments.

As someone who writes about investing for a living, and has done so for the last 18 years, I have to chime in here, even though I'm at work and don't have time to write a lot. Yes, sports cards can be seen/used as an investment. But Bill Gregory's point, which I agree with 100%, is that they are a very risky investment, given the high price volatility, the lack of regulatory oversight, and the documented fraud and other shady doings in the industry. Whether you want to call investing in sports cards "gambling" is a matter of how you define gambling; no, buying high-end cards is not like playing roulette, a pure game of chance with known odds, but it's a very risky strategy, akin to buying penny stocks or something similar.

Yes, of course it's possible to make money buying and selling high-end cards, especially when you do it in a rising market like we're in now. And it's not like playing roulette; knowing what you're doing is definitely helpful. But it's very possible to lose money investing in cards, especially if you pay top dollar for a hot card near the top of the market. I know Luke made this point in the post I've quoted above, and I'm not trying to pick on Luke, just putting all this in terms used for other investments.

Luke is also right that any investment portfolio should be diversified, and that if cards are part of your investment portfolio, they should be a relatively small part, just like any other risky investment. Putting all of your net worth into sports cards would be like putting all your money into internet stocks in 1999; some people who did that made money in the short term, but they eventually got burned big-time. I'm not saying that card prices are necessarily going to crash as badly as internet stocks did in 2000-2002; maybe high-end cards would be more comparable to blue-chip growth stocks in 1999, most of which were very overvalued in retrospect and suffered significant losses over the next few years. Some of them (e.g. Amazon) eventually gained all those losses back, and more, but some (e.g. Cisco) did not, and remain far below the peaks they reached in 1999-2000.

The question of whether cards (even graded cards) are really comparable to commodities is a whole other question that I don't have time to get into now. Maybe later.

[botn]

Originally Posted by trdcrdkid

As someone who writes about investing for a living, and has done so for the last 18 years, I have to chime in here, even though I'm at work and don't have time to write a lot. Yes, sports cards can be seen/used as an investment. But Bill Gregory's point, which I agree with 100%, is that they are a very risky investment, given the high price volatility, the lack of regulatory oversight, and the documented fraud and other shady doings in the industry.

I am not sure I would ever feel comfortable suggesting to someone to invest in sports cards but for those who understand the market overall, I would not call it high risk at all. Typically there is not high volatility in prices. It is a market which is easily to navigate and has a great deal of transparency. Sure the hobby has plenty of fraud but is that more or less than has been happening for decades on Wall St? The fact that Wall St is regulated has not protected the average investor.

Yes, of course it's possible to make money buying and selling high-end cards, especially when you do it in a rising market like we're in now. And it's not like playing roulette; knowing what you're doing is definitely helpful. But it's very possible to lose money investing in cards, especially if you pay top dollar for a hot card near the top of the market. I know Luke made this point in the post I've quoted above, and I'm not trying to pick on Luke, just putting all this in terms used for other investments.

People have been making a living off of cards in all markets, not just the rising ones. In fact I would suggest the rising market we are in now is far riskier than previous times in the hobby. I have a business/finance background and I know I feel far more comfortable putting my money into cards than I do investing in a publicly traded company where I am a complete outsider and have no insight as to the way the company is really being run and which market makers are gonna dump the stock or load up before earnings. By the time the average investor gets news that they need to move out of a position it is too late. I do not see that same issue happening with cards.