Money in the hobby

[drcy]

Originally Posted by 58pinson

My worry on the whole vintage card front is the increasing sophistication level of technology. I really believe that the day is not far off when a counterfeit of - name your iconic card - will be produced and be undetectable even by the most "trusted" authorities at grading companies. What happens if that scenario eventuates?

I addressed that concern in a SABR post:

My guess is a lot of entombed high grade cards have been altered, or 'prepped,' but that's a different issue.

[58pinson]

Originally Posted by drcy

I addressed that concern in a SABR post:

My guess is a lot of entombed high grade cards have been altered, or 'prepped,' but that's a different issue.

Hopefully my first use of the quote function is correct.

I linked into your SABR article. Fascinating and obviously very informed. Light years ahead of my own level of expertise. I have no quibble with any of the points you made. I was, however, drawn to your use of the non-linear concept in your opening. That is where my concern lies in the future regarding counterfeiting, in this case specifically sports cards, but in other areas as well.

While I don't refer to the current technological advances as exponential they are not linear. I don't think it's an unrealistic stretch to visualize a time in the near future when the WTF moment hits and the cat is out of the bag as far as the sudden ineffectiveness of traditional counter fraud measures.

Pleasure to read your article.

[barrysloate]

Here is something I simply do not understand regarding the large sums spent on baseball cards. Let's take two lots in the recent REA Auction: Lot 12, a PSA 9 Hank Aaron rookie which sold for 216K; and lot 13, a PSA 9 Sandy Koufax rookie which sold for 156K. We all know those are both very common cards, and only attained those lofty bids because they were graded Mint 9. For someone willing to pay such an extraordinary amount of money for them, there had to be a strong belief that what they were buying is exactly what it says on the label. But here is what we also know:

1) A card submitted for grading that comes back "Evidence of Trimming" can be resubmitted a month later and come back NR MT 7.

2) The same card can be submitted three times and come back with three different grades.

3) Countless trimmed and altered cards make it into holders with numerical grades with alarming frequency.

So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

[Peter_Spaeth]

Originally Posted by barrysloate

Here is something I simply do not understand regarding the large sums spent on baseball cards. Let's take two lots in the recent REA Auction: Lot 12, a PSA 9 Hank Aaron rookie which sold for 216K; and lot 13, a PSA 9 Sandy Koufax rookie which sold for 156K. We all know those are both very common cards, and only attained those lofty bids because they were graded Mint 9. For someone willing to pay such an extraordinary amount of money for them, there had to be a strong belief that what they were buying is exactly what it says on the label. But here is what we also know:

1) A card submitted for grading that comes back "Evidence of Trimming" can be resubmitted a month later and come back NR MT 7.

2) The same card can be submitted three times and come back with three different grades.

3) Countless trimmed and altered cards make it into holders with numerical grades with alarming frequency.

So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

Because the flip is the commodity, not the card. Flips sell, and nobody scrutinizes what's in the holder very much, at certain strata anyhow. I've seen cards posted here that I would bet my life are altered, but many just see the flip and ooh and aah.

"What we said of it, became a part of what it is." -- Wallace Stevens.

[ngnichols]

Originally Posted by barrysloate

Here is something I simply do not understand regarding the large sums spent on baseball cards. Let's take two lots in the recent REA Auction: Lot 12, a PSA 9 Hank Aaron rookie which sold for 216K; and lot 13, a PSA 9 Sandy Koufax rookie which sold for 156K. We all know those are both very common cards, and only attained those lofty bids because they were graded Mint 9. For someone willing to pay such an extraordinary amount of money for them, there had to be a strong belief that what they were buying is exactly what it says on the label. But here is what we also know:

1) A card submitted for grading that comes back "Evidence of Trimming" can be resubmitted a month later and come back NR MT 7.

2) The same card can be submitted three times and come back with three different grades.

3) Countless trimmed and altered cards make it into holders with numerical grades with alarming frequency.

So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

All of the things you talk about involve human decisions/opinions. Take the human out of the equation and you won't have those issues. It's coming.........

[glchen]

Originally Posted by barrysloate

...
So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

Barry, I completely see what you are saying here, and I agree with a lot of it. However, there are a lot of different ways that I could answer this question. However, to focus on the cards that are going for 6 figures, I'll put it this way. The people who are buying these cards go to shows or events like the PSA luncheons and see other collectors like them, and they trust that other rich people like them (e.g., Ken Kendrick, etc) are buying cards, so they know that it's not just them in this market. When they sell their cards, they get paid real cash, real money with no restrictions like you can't sell for 2 years. They see the card prices going up based upon VCP, past auction sales, or other ways that are easily accessible. And which cards are going up the fastest? The ones with the highest number on the flips, which makes perfect sense to them because rich people collect the highest quality collectibles.

[barrysloate]

Originally Posted by glchen

Barry, I completely see what you are saying here, and I agree with a lot of it. However, there are a lot of different ways that I could answer this question. However, to focus on the cards that are going for 6 figures, I'll put it this way. The people who are buying these cards go to shows or events like the PSA luncheons and see other collectors like them, and they trust that other rich people like them (e.g., Ken Kendrick, etc) are buying cards, so they know that it's not just them in this market. When they sell their cards, they get paid real cash, real money with no restrictions like you can't sell for 2 years. They see the card prices going up based upon VCP, past auction sales, or other ways that are easily accessible. And which cards are going up the fastest? The ones with the highest number on the flips, which makes perfect sense to them because rich people collect the highest quality collectibles.

I understand herd mentality, and everyone assumes the card they buy will be just as desirable when it comes time to sell. But I still have trouble with how much faith is put on that label.

If you have 1952 Topps Mantle that grades PSA 8, and you are able to convince the grader that it deserves an extra ".5" on the label- not a full grade, but a half grade- that grader has just created a half a million dollars of wealth out of thin area. How did such a market evolve? Something about this simply escapes me.

And Peter S. is correct that the label, and not the card, is the commodity (and I love Wallace Stevens).

[Peter_Spaeth]

For 10 points Barry name the poem, no cheating.

[barrysloate]

Originally Posted by Peter_Spaeth

For 10 points Barry name the poem, no cheating.

Is it "The Emperor of Ice Cream"? It's just a guess.

[drcy]

Originally Posted by barrysloate

I understand herd mentality, and everyone assumes the card they buy will be just as desirable when it comes time to sell. But I still have trouble with how much faith is put on that label.

If you have 1952 Topps Mantle that grades PSA 8, and you are able to convince the grader that it deserves an extra ".5" on the label- not a full grade, but a half grade- that grader has just created a half a million dollars of wealth out of thin area. How did such a market evolve? Something about this simply escapes me.

Some people put 100 percent certainty in something with 15 percent margin of error. But, really, their concern is financial value. The owner may be well aware of the margin of error in grading and the possibility of alterations, but all that matters is the financial value-- and if others invest in the label, then the label is what matters.

[glchen]

Barry, I don't disagree with you at all in regards to the flips, but for collectibles, people often defer to these so called experts in those fields even when buying extremely expensive things. When someone says that a wine receives a certain rating or the vintage that year was particularly excellent, do most of us have any idea what they are talking about? When some "expert" says this modern art painting is part of the new avant garde in the field right now and is worth hundreds of thousands of dollars, do those people who buy those paintings really have any idea what they are buying? And many collectors may come from collecting coins, where these same issues have been rehashed over and over again. I'm not saying I agree with it but just trying to explain how we got here.

[AGuinness]

Originally Posted by glchen

Barry, I don't disagree with you at all in regards to the flips, but for collectibles, people often defer to these so called experts in those fields even when buying extremely expensive things.

And there are so many other third party experts out there involved in so many other areas of life. Buying a house, for instance, often includes multiple third party experts, such as realtors, assessors and inspectors. Many people consult the Kelley Blue Book (or similar publications) when buying a car. These type of experts, who help establish the condition and comparables of an item, are common in lots of places.

I do "get" the animosity towards TPGs, towards the money in the hobby, etc. but in the end, sports cards aren't just investments or tokens of our childhood or connections to the game, etc. Collecting cards (or whatever) is different things for different people, and perhaps many things for some, and that makes the hobby more nuanced and interesting, to me.

[GaryPassamonte]

Barry- the word "ego" comes to mind in all this. It's not aesthetics. It's not a love of baseball history. It's not rekindling childhood dreams. It's just "ego."

[Tennis13]

I have thought about this a lot. First, I think 1950s-1960s is exploding because a ton of baby boomers are aging and capturing their history. I am much younger but still get excited opening a 1986 Donruss pack and hitting a worthless Canseco. So in that scenario a rising tide lifts all boats.

Vintage: perhaps there is some foreign laundering going on? I learned a ton about Macau and getting onshore money offshore. Throw into that some other country money that needs to be parked and that could explain some of the rise in value.

That said, some of these auctions from late 2015/early 2016 prices look a little inflated. We will see, but if they are inflated and you pay 10% to 15% to launder money, that's ok, right?

You are seeing foreign money that needs a home in a ton of urban real estate markets on the high end. Why not baseball cards if they meet an ultimate need which may not be a collector need?

[Peter_Spaeth]

Originally Posted by GaryPassamonte

Barry- the word "ego" comes to mind in all this. It's not aesthetics. It's not a love of baseball history. It's not rekindling childhood dreams. It's just "ego."

Gary, exactly. It can't be the cards, because the minute differences in the corners (even assuming the cards are actually graded accurately and consistently and that's a huge assumption) are not even visible to most eyes without a loupe.

[botn]

Originally Posted by barrysloate

I understand herd mentality, and everyone assumes the card they buy will be just as desirable when it comes time to sell. But I still have trouble with how much faith is put on that label.

If you have 1952 Topps Mantle that grades PSA 8, and you are able to convince the grader that it deserves an extra ".5" on the label- not a full grade, but a half grade- that grader has just created a half a million dollars of wealth out of thin area. How did such a market evolve? Something about this simply escapes me.

And Peter S. is correct that the label, and not the card, is the commodity (and I love Wallace Stevens).

Hi Barry,

It may have been touched on but I think the people who are buying cards that cost in excess of 100K don't even notice a dip in the account balance after paying for that card and they have a belief that PSA is too big to fail.

Greg

[barrysloate]

Hi Greg,
I don't doubt that some people have so much money that a few hundred thousand won't make a dent, and I also see how there are those who will pay anything to get the best. That's the easy part of the equation. What I can't fathom is how something so imprecise, and so subjective, as grading is accepted with so much blind faith. I guess PSA has done a remarkable job of building their product. That's the best answer so far.

[Exhibitman]

Originally Posted by barrysloate

If you have 1952 Topps Mantle that grades PSA 8, and you are able to convince the grader that it deserves an extra ".5" on the label- not a full grade, but a half grade- that grader has just created a half a million dollars of wealth out of thin area. How did such a market evolve? Something about this simply escapes me.

Rich dudes comparing pee-pee's. Nothing new about that. Same as faster cars, bigger boats or trophy wives.

[ls7plus]

Originally Posted by barrysloate

Here is something I simply do not understand regarding the large sums spent on baseball cards. Let's take two lots in the recent REA Auction: Lot 12, a PSA 9 Hank Aaron rookie which sold for 216K; and lot 13, a PSA 9 Sandy Koufax rookie which sold for 156K. We all know those are both very common cards, and only attained those lofty bids because they were graded Mint 9. For someone willing to pay such an extraordinary amount of money for them, there had to be a strong belief that what they were buying is exactly what it says on the label. But here is what we also know:

1) A card submitted for grading that comes back "Evidence of Trimming" can be resubmitted a month later and come back NR MT 7.

2) The same card can be submitted three times and come back with three different grades.

3) Countless trimmed and altered cards make it into holders with numerical grades with alarming frequency.

So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

IMHO, Barry (and good to hear from you, by the way), a lot of these guys paying huge, enormous premiums for "9's" vs "8's" and "10's" vs "9's" are quite literally paying for the holder/flip inside. There simply is no way that the difference in the quality of the card can match the price differential, so what are they getting for their money? A holder with a piece of paper in it, for which they have paid tens or even hundreds of thousands of dollars more than they would have for a beautiful card graded just one level lower. Far better to invest in something like the 1907 Seamless Steel Ty Cobb rookie Orlando Rodriguez of this board won in the REA auction ($24,000?), where both grading services have slabbed a total of four examples, and both Orly and I believe that that number is not going to increase much at all over the next few decades. Same with cards like the 1914 Baltimore News Ruth (11 total graded?), the Dietsche Fielding Pose and Wolverine News Cobb rookies, etc., etc.

I have studied the coin hobby extensively, as it has followed essentially the same path as that of cards, only with a 120 year head start. In that context, where there is a vast difference in the price of a coin, for example, in Mint State 67 vs Mint State 64 or 63, but little substantive difference of any real note between the quality of the two, and the item at issue is not all that rare, the values of the higher numerically graded items have tended to be cyclical, ebbing and flowing with the ingress and egress of investor types. On the other hand, truly rare and significant items tend to keep appreciating in virtually linear fashion (although those gaining the most in value over time among that group are those in better condition). And while on the subject, coins have also been the target of many counterfeiting attempts, with very little real success over the years. Items made through different methods always tend to leave different footprints, so I don't think we will be seeing a few hundred undetectable, newly manufactured Baltimore News Ruths in the next decade, century or even millenium! Same case scenario with Orly's Seamless Steel Cobb rookie (and presumably my own Wolverine Portrait and Dietsche Fielding Pose Cobbs).

Regards,

Larry

[hcv123]

Originally Posted by barrysloate

Here is something I simply do not understand regarding the large sums spent on baseball cards. Let's take two lots in the recent REA Auction: Lot 12, a PSA 9 Hank Aaron rookie which sold for 216K; and lot 13, a PSA 9 Sandy Koufax rookie which sold for 156K. We all know those are both very common cards, and only attained those lofty bids because they were graded Mint 9. For someone willing to pay such an extraordinary amount of money for them, there had to be a strong belief that what they were buying is exactly what it says on the label. But here is what we also know:

1) A card submitted for grading that comes back "Evidence of Trimming" can be resubmitted a month later and come back NR MT 7.

2) The same card can be submitted three times and come back with three different grades.

3) Countless trimmed and altered cards make it into holders with numerical grades with alarming frequency.

So can somebody tell me why there is such a blind faith in that little white label? To me there is a disconnect here that makes no sense. Why is something so subjective and so inconsistent treated with such absolute trust? You don't spend a quarter of a million dollars on something if you are not completely confident you are getting what you are paying for.

I believe many people do put their faith in the holder. Of course most of these people are not hard core collectors that know better (and know the market better), but apparently there are some/many? with deep pockets. Doing this a long time and also stunned at some of the numbers.

[mark evans]

I agree with Barry that, given the inherent subjectivity in grading, it is hard to justify the enormous disparities at the high end of valuable cards, like 8 v. 8.5 for example. It would seem to me that these disparities would diminish over time.

Further, while I would never offer unsolicited advice, it seems fair to speculate that the increase in values of vintage cards will taper off over time due to aging baby boomers and general economic conditions.

Finally, I am not offended by folks who approach the hobby for its investment value. I recognize that infusion of serious money engenders unpleasant consequences, like fraud, but think these problems can be adequately addressed by self-regulation assuming sufficient desire, and by law enforcement efforts where necessary.

[ullmandds]

Originally Posted by mark evans

I agree with Barry that, given the inherent subjectivity in grading, it is hard to justify the enormous disparities at the high end of valuable cards, like 8 v. 8.5 for example. It would seem to me that these disparities would diminish over time.

Further, while I would never offer unsolicited advice, it seems fair to speculate that the increase in values of vintage cards will taper off over time due to aging baby boomers and general economic conditions.

Finally, I am not offended by folks who approach the hobby for its investment value. I recognize that infusion of serious money engenders unpleasant consequences, like fraud, but think these problems can be adequately addressed by self-regulation assuming sufficient desire, and by law enforcement efforts where necessary.

I totally agree!