Money in the Hobby

[seanofjapan]

Originally Posted by joshuanip

We are not all going to die in the same time, I expect a transitory orderly process. On the demand side, there are new collectors coming in the market, thanks to the modern cards.

Of course not everyone from a generation is going to die at the same time, but statistically we can say with a very high degree of confidence that a large percentage of them are going to be dying within a time frame of a few years.

And I think its quite unrealistic to expect the number of new collectors entering the market to be enough to replace (or exceed) the number leaving. Modern cards (if that is what is going to draw them as you say) just aren't the cultural staple that they were pre-1990s anymore. While I'm sure there are lots of individual young collectors picking up the hobby, it isn't anything like the shared cultural experience that I had of baseball cards as a kid (I'm 41). Everyone collected baseball cards on the playground until about 20-25 year ago. Since then, its been more of a niche thing, which means it is appealing to a much smaller segment of that demographic than it was for earlier ones. Unless there is some secret society of young card collectors ou there that I am not aware of.

Originally Posted by joshuanip

From channel checks (facebook groups) there are many vintage collectors our there younger than me.

This is a problem of information availability. We have no direct data on the number of collectors out there, so we rely on anecdotal personal experience (like checking Facebook groups) and try to extrapolate from that. The problem is that we can't conclude from there mere fact that some younger collectors exist that they constitute a mass large enough to replace the baby boomers in the market. Other anecdotal evidence (which is also problematic but the best we have) suggests that isn't the case.

Originally Posted by joshuanip

I think their ability to buy cards will grow along with their income. So they will "fit" into our shoes. Give it time.

Of course the younger generation will have more income as they progress through their careers, but the question is whether or not they will want to spend that income on baseball cards. Some undoubtedly will. From what I have seen, I doubt that enough will to replace the hole that the baby boomers will leave in the market a few years from now. I just don't know how you are going to convince millions of millenials (and whatever they call the generation after them) to get interested enough in this thing that most of them don't care about, to start spending the kind of money that boomers did to create the prices that exist today. It just doesn't even remotely seem plausible.

Originally Posted by joshuanip

I disagree, prices in all assets move on a random walk, not linearly.

I didn't describe a linear movement, I described an exponential movement.

But that aside, random walk theory actually applies to stock prices and not all assets. I agree that trying to predict the values of individual cards in the future is a fool's errand, but that is not what I am trying to do, I'm just saying that the overall market faces a lot of factors that will likely put downward pressure on prices over time.

Originally Posted by joshuanip

Baseball is in decline, but its still part of history and will still be relevant after we die.

Just my one cent.

True, but the relative value that people place on it as part of history is decreasing and its likely this has some (as yet unquantifiable) effect on their willingness to buy baseball cards!

[mechanicalman]

Sean, why do you think the card market requires “millions of millenials” to keep prices strong? I’d bet that the card market today is influenced by less than 250000 collectors, perhaps fewer.

[seanofjapan]

Originally Posted by mechanicalman

Sean, why do you think the card market requires “millions of millenials” to keep prices strong? I’d bet that the card market today is influenced by less than 250000 collectors, perhaps fewer.

That number sounds reasonably plausible. But those 250,000 (or so) dedicated collectors emerged out of an initial base of millions of children who had cards as kids, with their numbers being whittled away as they grew up and many lost interest.

So I wouldn't say that you need millions of young people to become serious collectors to sustain it. But if you want to keep that 250,000 number of regular collectors, you do at least need a much larger cohort of young people to at least dabble in card collecting at some point so that they can decide if its something that they like or not, on the assumption from past experience that only a small number of those who dabble will go on to become regular collectors. That is where I get that "millions" number from.

I live in Japan so my direct knowledge of what young people in the US are doing these days is limited, but my impression is that there are nowhere near the same number of young people being exposed to the hobby like they used to.

[joshuanip]

Hi Sean,

I don't thing they will immediately die off. I am hopeful advancing med tech will not only prolong life, but also improve it. Regardless, many baby boomers are already paring down/selling their collections or handing them down, as this board has suggested.

There is more information now than ever, we affectionally call it "big data." You can see how many members are in facebook groups, how many podcasts or apps are being downloaded, online bid volume trends, what cards are being liked, tweeted or instagrammed. What did we have before? card convention attendance counts? Definitely more information now than ever. The issue is how to find it and do you want to pay up for it.

Regarding where the next generation will choose to spend their money, I do agree with you. There is a change from homes, extra cars and purses towards experiences like dining out and travel. Definitely a shift in preferences, but we haven't been mainstream anyways after the junk bond, whoops I mean junk card rally and collapse.

Not to bring in finance, but random walk applies to efficient market hypothesis, not stocks, so it applies to all assets and not just stocks. Stocks are a key example illustrating an efficient market. Whether or not they really are is not the debate (because if they were, I wouldn't have a job).

WRT historical value, I have never seen Ruth play, but I enjoy learning his history and appreciate his cards. So I believe there is enough intrinsic value in his cards for me that I am willing to pay up (my discretionary income for). That aside, I don't think relative value and willingness has been decreasing, we have seen record breaking after record breaking auction prices.

Great debate. Cheers!

[seanofjapan]

Originally Posted by joshuanip

Hi Sean,

I don't thing they will immediately die off. I am hopeful advancing med tech will not only prolong life, but also improve it. Regardless, many baby boomers are already paring down/selling their collections or handing them down, as this board has suggested.

I'm all for that! If I don't make it to 90 I'll be very disappointed

But my point is that even if it doesn't happen all at once, and even if cards are disposed of via gifts rather than through estates, there will be a lot more of them coming into the market over a relatively predictable time period (I don't know the years but you could look at actuarial data on the US population to get a rough idea).

I'm not sure how it will play out, but I think its safe to say that most cards bequeathed in some way will end up on the market if for no other reason than the personal tastes of children and their parents are rarely in perfect alignment and selling will probably make sense to most.

Originally Posted by joshuanip

There is more information now than ever, we affectionally call it "big data." You can see how many members are in facebook groups, how many podcasts or apps are being downloaded, online bid volume trends, what cards are being liked, tweeted or instagrammed. What did we have before? card convention attendance counts? Definitely more information now than ever. The issue is how to find it and do you want to pay up for it.

Yes, though ironically the lack of "big data" from before the internet age makes it difficult for us to assess the relevance of that (for the purposes of the subject we are discussing) since there is so little to compare. If a Facebook group dedicated to vintage cards today has 500 members, since we don't know how many members a Facebook group dedicated to vintage cards would have had in (say) 1990 if Facebook had existed then, we don't know if that number suggests there are more or fewer people collecting (and the same for other information sources).

Originally Posted by joshuanip

Regarding where the next generation will choose to spend their money, I do agree with you. There is a change from homes, extra cars and purses towards experiences like dining out and travel. Definitely a shift in preferences, but we haven't been mainstream anyways after the junk bond, whoops I mean junk card rally and collapse.

Yeah, but it takes time for these broader changes to be felt.

Originally Posted by joshuanip

Not to bring in finance, but random walk applies to efficient market hypothesis, not stocks, so it applies to all assets and not just stocks. Stocks are a key example illustrating an efficient market. Whether or not they really are is not the debate (because if they were, I wouldn't have a job).

Oh yes, that was my mistake.

But I suppose that baseball cards are an interesting example which is quite different from stocks. Stock prices under efficient market hypothesis are supposed to reflect all known information about a stock (subject to debate about timing, insider information, etc), which mostly relates to its risk and expected future cash flows.

Baseball cards produce no cash flows, risk is harder to measure, and we pretty much already know all there is about most of them (no insider information), save for where there might be the odd attic find, but those are rare. Plus the market actors are way more irrational in the sense that most purchases are made on subjective considerations (favorite player, etc) rather than objective analysis. Plus there are no institutional investors spending time and money on analyzing the market and providing signals to other investors (instead it has fickle big shots who seem to make purchases for the same reasons small shots do - bragging rights, ability to have something they really really want, etc etc, none of which is predictable or rational). So the market definitely walks randomly, but way more so than with stocks, which I think makes it way more vulnerable to the things I was talking about in my earlier post.

Originally Posted by joshuanip

WRT historical value, I have never seen Ruth play, but I enjoy learning his history and appreciate his cards. So I believe there is enough intrinsic value in his cards for me that I am willing to pay up (my discretionary income for). That aside, I don't think relative value and willingness has been decreasing, we have seen record breaking after record breaking auction prices.

Great debate. Cheers!

Fair enough, but here is an interesting card that always gives me pause for thought about how much the market is dependent on the slightest and most irrational of whims.

As an icon of 1920s culture, Charlie Chaplin is probably about as recognizable and popular as Babe Ruth in America (and considerably more well known internationally). He is huge. This card is from the 1926 Player's Straight Line Caricatures set. Its a really striking card that captures his image perfectly and with an artistic style that is totally suitable to the era. While Ruth cards generally start in the thousands of dollars, you can find this card on Ebay usually for under $10 (in fact you can probably get the whole set it came in for under $20).

The discrepancy doesn't make much sense, the Chaplin card wasn't produced in greater numbers than most Ruth cards and he is culturally about equal. The only reason I can think of for the Chaplin card being so cheap relative to Ruth stuff is that American kids in the 50s were accustomed to seeing baseball players on cards but not movie stars (well, movie star cards existed but weren't as popular). So that association in their minds grew into the modern hobby, while movie cards never took off the same way.

But that association no longer really exists in kid's minds today. While there is a lot of path dependence at work which props up the baseball card hobby, there are so many things like this Chaplin card that are equally interesting out there (at a fraction of the price) which can compete for the attention of younger people with an interest in history. Thus my pessemistic forecast about the future of baseball card prices!

[1952boyntoncollector]

Well heres another thread such as the 'help the hobby is dieing' type of thread where we will have the same viewpoints over and over....

in a few more months will be another one of these....i think we should just save this thread and add the link the next time someone asks if the card market is taking off due to some recent auction or if asks if the market is falling due to some recent auction....just show this link

seeing the same thread over and over is sort of like watching the NBA semifinals or playoff round when a home team wins the first 2 games...the series is 'over'..but then the other team wins the next 2 game at home..now they suddenly have won it......

or the annual argument in the NFL whether a bye week makes a team rusty or if the rest is better......

[T206Collector]

Originally Posted by seanofjapan

Fair enough, but here is an interesting card that always gives me pause for thought about how much the market is dependent on the slightest and most irrational of whims.

As an icon of 1920s culture, Charlie Chaplin is probably about as recognizable and popular as Babe Ruth in America (and considerably more well known internationally). He is huge. This card is from the 1926 Player's Straight Line Caricatures set. Its a really striking card that captures his image perfectly and with an artistic style that is totally suitable to the era. While Ruth cards generally start in the thousands of dollars, you can find this card on Ebay usually for under $10 (in fact you can probably get the whole set it came in for under $20).

The discrepancy doesn't make much sense, the Chaplin card wasn't produced in greater numbers than most Ruth cards and he is culturally about equal. The only reason I can think of for the Chaplin card being so cheap relative to Ruth stuff is that American kids in the 50s were accustomed to seeing baseball players on cards but not movie stars (well, movie star cards existed but weren't as popular). So that association in their minds grew into the modern hobby, while movie cards never took off the same way.

But that association no longer really exists in kid's minds today. While there is a lot of path dependence at work which props up the baseball card hobby, there are so many things like this Chaplin card that are equally interesting out there (at a fraction of the price) which can compete for the attention of younger people with an interest in history. Thus my pessemistic forecast about the future of baseball card prices!

#this

The irrationality of pursuing Baseball images over Chaplin images should concern us all. Stamps, art, and coins are internationally regarded. Baseball is primarily American, and it’s card values are driven by something in our culture which is probably fixed in time.

Stated another way, the reason why people don’t collect Chaplin cards today is likely to be the reason why people tomorrow would not collect Baseball cards — if we can identify the reason and stop it from happening we stand a chance!

[Snapolit1]

Originally Posted by T206Collector

#this

The irrationality of pursuing Baseball images over Chaplin images should concern us all. Stamps, art, and coins are internationally regarded. Baseball is primarily American, and it’s card values are driven by something in our culture which is probably fixed in time.

Stated another way, the reason why people don’t collect Chaplin cards today is likely to be the reason why people tomorrow would not collect Baseball cards — if we can identify the reason and stop it from happening we stand a chance!

Wow. . . I think you guys are making this a lot more complicated than it has to be.

Charlie Chaplain's last great movie was 1940. 78 years ago.


I was in Port St. Lucie last week for the very first day of the Mets Spring training. The parking lot was crowded by 9 am. By 10 am all of the fences were lined with people including many many young kids holding cards, caps, and other stuff screaming for autographs. Young kids running in jerseys from field to field trying to see the top stars. All holding something to be signed.

I didn't think to ask any of them if they knew who Charlie Chaplain was.

[ullmandds]

the chaplain card is also a british card...and they are never that popular here...even when baseball players are on them!

[seanofjapan]

Originally Posted by Snapolit1

Wow. . . I think you guys are making this a lot more complicated than it has to be.

Charlie Chaplain's last great movie was 1940. 78 years ago.


I was in Port St. Lucie last week for the very first day of the Mets Spring training. The parking lot was crowded by 9 am. By 10 am all of the fences were lined with people including many many young kids holding cards, caps, and other stuff screaming for autographs. Young kids running in jerseys from field to field trying to see the top stars. All holding something to be signed.

I didn't think to ask any of them if they knew who Charlie Chaplain was.

Er...Babe Ruth hit his last home run 83 years ago and most little kids don't know who he is either. They also line up for movies today and ask movie stars for autographs. Not sure how this is relevant.

My point was simply that Ruth and Chaplin as cultural figures are about equalyy recognizable to the general public today. Most people have probably never seen a Chaplin film (or a Ruth home run of course) but could tell you who he is if you showed them a picture. So its odd that cards of one are worth a ton while those of the other aren't. There are a lot of reasons which we all know why that is the case of course, but they all really boil down to the simple fact that American kids grew accustomed to trading baseball cards rather than movie cards. As American kids (and future adults) no longer have that association, this distinction will likely be less and less important. 200 years from now somebody interested in 20th century antiques probably isn't going to value baseball cards per se as highly as we do above other stuff.

[joshuanip]

Chaplin was a silent movie actor. There was never a following of actor cards and they never really had value to begin with so it’s not a strong link.

I’m not saying it’s all rosy but I would put Chaplin more in the spoon collecting camp than sports cards. And yes cards don’t produce cash flow, but there is a personal connection and historical relevance which adds value to it. Art is no different, so as many other precious assets.

Want proof, people still collect hockey and boxing cards...

[SAllen2556]

I think there's a very rational reason this topic comes up so often. These discussions strike me as a group enabling session. People who know better get together and attempt to justify their behavior through “group think”. If I can find other people who tell me my behavior is ok, it must be ok then, right? If I know other people are spending their kids’ college tuition on baseball cards, then it becomes rational for me to do it too.

And as an aside: I think there's a very real possibility of an MLB player’s strike looming in the near future. The strikes of ’81 and ’94 turned a lot of people off to baseball for a long time. What happens to the value of a Mike Trout card if there's a prolonged strike?

[glynparson]

She mildly collected football cards for a couple years. Most of the football playing boys in her class buy football cards and many of them also buy Baseball. Many of those that are not athletic buy Pokémon or magic or some other form of gaming cards. It seems at least in my area that the myth of kids not buying cards is just that a myth. Just cause it may be done differently than we did it doesn't mean it isn't being done.

[Snapolit1]

Originally Posted by SAllen2556

I think there's a very rational reason this topic comes up so often. These discussions strike me as a group enabling session. People who know better get together and attempt to justify their behavior through “group think”. If I can find other people who tell me my behavior is ok, it must be ok then, right? If I know other people are spending their kids’ college tuition on baseball cards, then it becomes rational for me to do it too.

And as an aside: I think there's a very real possibility of an MLB player’s strike looming in the near future. The strikes of ’81 and ’94 turned a lot of people off to baseball for a long time. What happens to the value of a Mike Trout card if there's a prolonged strike?

And how is that different than the millions of people who watch CNBC all day, or participate in stock chat boards?

I'd personally be much more excited when everyone starts yelling to sell.

[packs]

These threads get made out of fear, I think. And the fear is that our collections will cease to have buyers. Threads like this get made all the time and the discussion has taken place over and over again. That's because this fear is very real. But then every time the discussion takes place there's always people who pretend like everything is fine and have some counterpoint to every point someone makes re: the eventual demise of the value aspect of the hobby.

Listen, if these fears were totally unfounded this thread wouldn't be made so often. There's nothing wrong with accepting you've poured money into something that may one day have little value. Just sell soon and buy again later.

[steve B]

Originally Posted by seanofjapan

I'm all for that! If I don't make it to 90 I'll be very disappointed

But my point is that even if it doesn't happen all at once, and even if cards are disposed of via gifts rather than through estates, there will be a lot more of them coming into the market over a relatively predictable time period (I don't know the years but you could look at actuarial data on the US population to get a rough idea).

I'm not sure how it will play out, but I think its safe to say that most cards bequeathed in some way will end up on the market if for no other reason than the personal tastes of children and their parents are rarely in perfect alignment and selling will probably make sense to most.



Yes, though ironically the lack of "big data" from before the internet age makes it difficult for us to assess the relevance of that (for the purposes of the subject we are discussing) since there is so little to compare. If a Facebook group dedicated to vintage cards today has 500 members, since we don't know how many members a Facebook group dedicated to vintage cards would have had in (say) 1990 if Facebook had existed then, we don't know if that number suggests there are more or fewer people collecting (and the same for other information sources).



Yeah, but it takes time for these broader changes to be felt.



Oh yes, that was my mistake.

But I suppose that baseball cards are an interesting example which is quite different from stocks. Stock prices under efficient market hypothesis are supposed to reflect all known information about a stock (subject to debate about timing, insider information, etc), which mostly relates to its risk and expected future cash flows.

Baseball cards produce no cash flows, risk is harder to measure, and we pretty much already know all there is about most of them (no insider information), save for where there might be the odd attic find, but those are rare. Plus the market actors are way more irrational in the sense that most purchases are made on subjective considerations (favorite player, etc) rather than objective analysis. Plus there are no institutional investors spending time and money on analyzing the market and providing signals to other investors (instead it has fickle big shots who seem to make purchases for the same reasons small shots do - bragging rights, ability to have something they really really want, etc etc, none of which is predictable or rational). So the market definitely walks randomly, but way more so than with stocks, which I think makes it way more vulnerable to the things I was talking about in my earlier post.



Fair enough, but here is an interesting card that always gives me pause for thought about how much the market is dependent on the slightest and most irrational of whims.

As an icon of 1920s culture, Charlie Chaplin is probably about as recognizable and popular as Babe Ruth in America (and considerably more well known internationally). He is huge. This card is from the 1926 Player's Straight Line Caricatures set. Its a really striking card that captures his image perfectly and with an artistic style that is totally suitable to the era. While Ruth cards generally start in the thousands of dollars, you can find this card on Ebay usually for under $10 (in fact you can probably get the whole set it came in for under $20).

The discrepancy doesn't make much sense, the Chaplin card wasn't produced in greater numbers than most Ruth cards and he is culturally about equal. The only reason I can think of for the Chaplin card being so cheap relative to Ruth stuff is that American kids in the 50s were accustomed to seeing baseball players on cards but not movie stars (well, movie star cards existed but weren't as popular). So that association in their minds grew into the modern hobby, while movie cards never took off the same way.

But that association no longer really exists in kid's minds today. While there is a lot of path dependence at work which props up the baseball card hobby, there are so many things like this Chaplin card that are equally interesting out there (at a fraction of the price) which can compete for the attention of younger people with an interest in history. Thus my pessemistic forecast about the future of baseball card prices!

On the Chaplin card, one thing that should be considered is that different groups collect things in different ways.
With cards, the British way of collecting centers around sets rather than stars. Another major consideration is condition. There are a LOT of Players sets in great condition. It's almost harder to find well worn ones.

Those different ways of collecting come from a few places. One is that generally the sets are consistently small. Usually 50 cards. So completing a set isn't all that hard. Another is that since the majority of cards were issued with Tobacco, it became an adult hobby much sooner. So they didn't have the "mom threw my cards out" effect. Without that periodic destruction, there wasn't the focus on stars. Here when the cards were being tossed, some star cards got saved. One of the few collections I bought came to me nearly untouched, enough that I could figure out the kids ages and difference in age pretty closely. But I didn't get any of the Mantle cards they'd had since he was the kids favorite player.
Adult collectors culturally focused on set collecting don't have that at all.


Steve B

[ZiggerZagger]

Like all of us, who knows how the factors will all end up playing out for the hobby in general. I hope it continues to be sustainable, and doesn't die a slow death as other peer hobbies have such as stamps and, to a much lesser degree, coins.

I certainly think it's optimistic to expect vintage to continue to appreciate as it has done in the past 5 years. I got back into cards full-throttle in about 2011/2012 and it was phenomenal timing -- a good bulk of those purchases from 2011-2015 have increased by 70-100% in value in the last few years. My personal feeling is that we are on the back end of the recent run-up in prices, and folks who were able to be drawn in to spend considerable amounts in the market have indeed been drawn in. Were prices to continue accelerating at current rate, I would personally take a hard look at the wisdom of continuing to be in a strong acquisition mode.

A reckoning certainly came in 2008 by all accounts, and we also had a significant correction in post-war prices after the "alleged" market manipulation in Spring 2016 on certain cards (Rose, Aaron, Clemente RC's, etc.). It was actually reassuring to see the market find a new level after that fiddling, and then relative stability, albeit still with some soft pricing on those cards in particular.

Some food for thought, courtesy of my cousin who is a PhD Social Psychologist and always good for a fresh perspective... The group characteristics of the Millenial generation are truly different from the generations prior (BB, GenX, GenY), insofar as they choose to prioritize Experiences over Material Goods. As apparent proof of this, they spend a disproportionate amount of their disposable income on Vacations/Travel, etc. Not sure where a baseball card fits into that ethos... Certainly doesn't preclude individuals behaving differently, blah, blah, but this is an apparent reality.

Last random thought, as a late GenX'er it's interesting to think back and recall the mid/late 80's and early 90's. I recall that absolutely *everyone* was buying/collecting baseball cards. Not to get rich, but it was a cultural phenomenon. It was an absolute fantasy for me to ever think of owning a Mantle. I still remember the awe I felt when a friend told me he had a beat-up '58 Maris (and the thrill when he finally sold it to me for $35 and about 5 Todd Zeile Score Rookies...). Card collecting seems a lot more compartmentalized today, but I do expect that a good number of those who collect modern today will someday hear the siren song of vintage.

Let's hope the numbers bear out enough willing collectors to dedicate their disposable income to vintage to keep us ticking along, or at least keep our heads above water.

Oh, and for a prediction, I'll throw out my suspicion that high-end vintage commons (8's, 9's, 10's) will crash and burn someday price-wise. Right or wrong, I'll go with that.