Pricing and flight to quality

[swarmee]

There is a big thread on the main board about this to take a look at.

[MCoxon]

Thanks will look there. Figured it was a well-discussed topic, just wasn't sure where discussed or when. Haven't been on the boards for a couple of years even though I have still been collecting

[62corvette]

Regarding the non-mainstream/regional group, the 1975-1979 Hostess have increased in value significantly.

[Seven]

It was mentioned over posts in the other thread but the popular theories that were being thrown around are.

1. More people are getting into/getting back into the Hobby due to the amount of downtime because of Coronavirus. A good portion of people are working from home due to the pandemic, or have outright decided to retire. The amount of free time available to get back into hold hobbies or pursue new ones is a factor.

2. People using cards as a vehicle for investment. Whether for better or worse something will happen with the market come November. Gold is being invested in more heavily and it appears cards are also being seen as a viable investment. There's always a market for big names.

3. More disposable income. Traveling has become difficult. Can't go to Europe or a tropical destination (Aruba withstanding) during this time. Hell it's even difficult to travel from state to state depending on where your going or coming from. Social gathering places are limited as well. No one is going to a club, or a concert, broad way show, etc. People have money left over that they would've normally spent by now. Might as well put it into a hobby they enjoy.

Whether you think the prices will come down or not is a different story. I'm in the camp that believes they will. Others, not so much. One thing's for sure, the Hobby is doing well.

[kailes2872]

Originally Posted by Seven

2. People using cards as a vehicle for investment. Whether for better or worse something will happen with the market come November. Gold is being invested in more heavily and it appears cards are also being seen as a viable investment. There's always a market for big names.

For the life of me, I can't understand why people are using it as an investment. By the time you pay 22% buyers premium on the buy side and 10% commission on the sell side (assuming no discount rate is given), it is tough to even break even. If you add to the fact that capital gains rate on collectibles is 28% - more than the tax rate for married filing jointly up to $326,600 (24%) - cards as an investment make other people money but it is tough to break even - even after holding onto the cards for a few years.

Somewhere along the way, the collection moves from a hobby to an asset class. I don't want to have to go to a safe deposit box to visit my collection. I don't want to have a ton of value in the house and have them at risk for fire or theft. This thread has me thinking long and hard about what to do in the future. For the first time, I have been clicking on the consign now banners and investigating what that means. It is something that I wouldn't have even thought to consider even a year ago.

[swarmee]

Oh, you think these guys are paying taxes on their earnings?

[kailes2872]

Originally Posted by swarmee

Oh, you think these guys are paying taxes on their earnings?

Well, since it is a public forum and our names are in listed, then I assume that all taxes are paid.

[savedfrommyspokes]

Originally Posted by kailes2872

For the life of me, I can't understand why people are using it as an investment. By the time you pay 22% buyers premium on the buy side and 10% commission on the sell side (assuming no discount rate is given), it is tough to even break even. If you add to the fact that capital gains rate on collectibles is 28% - more than the tax rate for married filing jointly up to $326,600 (24%) - cards as an investment make other people money but it is tough to break even - even after holding onto the cards for a few years.

Don't forget (unless they reside in a handful of states) that these investors are also now being charged 6-10% for sales tax.....unless of course they also have a resale license.

[puckpaul]

Newsflash....too late, it has already happened. You need to consider all you are afraid of.

Originally Posted by kailes2872

For the life of me, I can't understand why people are using it as an investment. By the time you pay 22% buyers premium on the buy side and 10% commission on the sell side (assuming no discount rate is given), it is tough to even break even. If you add to the fact that capital gains rate on collectibles is 28% - more than the tax rate for married filing jointly up to $326,600 (24%) - cards as an investment make other people money but it is tough to break even - even after holding onto the cards for a few years.

Somewhere along the way, the collection moves from a hobby to an asset class. I don't want to have to go to a safe deposit box to visit my collection. I don't want to have a ton of value in the house and have them at risk for fire or theft. This thread has me thinking long and hard about what to do in the future. For the first time, I have been clicking on the consign now banners and investigating what that means. It is something that I wouldn't have even thought to consider even a year ago.

[cardsagain74]

Originally Posted by kailes2872

For the life of me, I can't understand why people are using it as an investment. By the time you pay 22% buyers premium on the buy side and 10% commission on the sell side (assuming no discount rate is given), it is tough to even break even. If you add to the fact that capital gains rate on collectibles is 28% - more than the tax rate for married filing jointly up to $326,600 (24%) - cards as an investment make other people money but it is tough to break even - even after holding onto the cards for a few years.

Transaction costs are the most misunderstood and ignored factor by the majority of people (whether it be baseball cards, stock options, making a bet in a sportsbook, you name it). And the prevalence of them for a particular trade or investment is so paramount to someone's bottom line.

I've seen people (who are otherwise great with money and experienced securities investors) buying and selling options with a bid-ask spread of 5.25 by 6.50. Similar to your example of what happens in the card market using ebay or auction houses.

No sign of this changing though. People still like to attempt flipping cards regardless of that uphill battle from the beginning, and the market's done so well lately that it disguises how tough it is during times like this

[MCoxon]

Originally Posted by 62corvette

Regarding the non-mainstream/regional group, the 1975-1979 Hostess have increased in value significantly.

Thanks Mike. The fact that Hostess has gone up is interesting, this was the crux of my post

I have spent lots of time with oddballs like Bazooka, Kahn's, Kellogg's, team picture packs and autograph cards (e.g., Pirates/Clemente)

And what I noticed is that my common, PSA 6-7 1955 / 1956 HOF Topps cards, with large pops, like Aaron and Mays, have doubled and even tripled in price. Meanwhile, the rare Kahn's of Clemente, the low pop high grade Milk Duds boxes, the low pop high grade Nabiscos, the low pop but high grade Dormand Mantles with Bat on Shoulder haven't moved much. Feels like I wasted $$$ buying the low pop cards, rather than just continuing to upgrade mainstream Topps issues

I was wondering if anyone had noticed that it's all mainstream issues (Topps for baseball, Fleer for basketball), and not the other non-mainstream issues appreciating so much

[Tere1071]

The oddball cards often present an artistic value apart from the regular issue cards. You didn't waste your money.