Bursting Bubble

[Mark17]

What caused the bubble to burst in the late 1980's, primarily, was that the card companies realized they could print huge amounts of money, so they kept the presses rolling and absolutely flooded the market. That's always going top be the danger with modern - there is nothing to stop card companies from continuing to crank out stuff. Unless they state something is a 1/1 they can make as much stuff as they want, even years after the original release. I remember buying 1987 Topps "cut" cases well into the middle of 1988 and being told by someone that those sheets were still being printed.

Even with the 1/1 concept, they can come up with different gimmicks to create dozens of 1/1s by making them different in some way - different photos, different border colors, whatever.

Bottom line, with this kind of crazy money being spent on modern, expect the card companies to start capitalizing on it.

Vintage, aside from the ever present counterfeit and doctoring threats, has a finite supply, save for the occasional "new to the hobby" find.

If I had any modern stuff that had gone crazy price-wise, I'd be dumping it. If I had any big ticket vintage that was moving up, I'd hang onto it awhile longer, maybe forever.

[Aquarian Sports Cards]

Originally Posted by Mark17

What caused the bubble to burst in the late 1980's, primarily, was that the card companies realized they could print huge amounts of money, so they kept the presses rolling and absolutely flooded the market.

I hear this all the time and it has always confused me. They didn't "flood the market" they met demand. Blaming them for the demand is bassackwards.

Card companies are basically printing companies. Even now they don't give a rip about the secondary market except in the most indirect way. They care about selling boxes, packs, and sets. If a 1/1 purple neon snowleopard autographed laser refractor sells a bunch of boxes today they don't care what it's worth tomorrow.

Hell, you can't even get Topps to protect their own intellectual property on Ebay and demand the counterfeits be removed. Coach, Tiffany, Micahel Kors all protect their property even though they don't make any money on the secondary market. The point being, all the card companies care about is selling cards TODAY. If they need 100,000 cases they're not printing 1,000,000 and "flooding the market."

[Eggoman]

I GOTTA agree with Scott!

I bought AND sold during that time and EVERYTHING was GREAT until the Collector/Investor/Get-Rich-Quick guys on one side of the Dealer's Table stopped buying from the Dealer/Investor/Get-Rich Quick guys on the other side of the table.

Before that, I could sell Junk Wax as fast as I could get it! Canseco Rookies, Benito Santiago, Mike Greenwell, Gregg Jefferies, Ripken FF cards, on and on and on... Baseball, Football, even Hockey & Hoops - it all sold as fast as I could replace it.

1987 Topps was EASY to get, but still sold GREAT! 1987 Fleer was HARD to get, but still sold GREAT!

Prices went up every week, every day...

But then, new product seemingly started coming out every week with all of the new companies joining in. It seemed to render Last Week's stuff nearly unsaleable.

I couldn't get rid of Last Week's product fast enough... Manufacturer's met demand so fast. Everyone got theirs and moved on to what was next... Inventory sat on the shelves, but I still bought NEW product.

[moogpowell]

Impossible to ascertain magnitude and timing of any selloff but I think HOF baseball players from 1950s to 1970s roughly graded PSA 6 to 8 offer a healthy risk/reward regardless of market conditions. Sort of equivalent to large-cap value with a 2.5% to 3% dividend yield. You won’t get make a lot fast but downside seems limited.

[joshuanip]

Originally Posted by moogpowell

Impossible to ascertain magnitude and timing of any selloff but I think HOF baseball players from 1950s to 1970s roughly graded PSA 6 to 8 offer a healthy risk/reward regardless of market conditions. Sort of equivalent to large-cap value with a 2.5% to 3% dividend yield. You won’t get make a lot fast but downside seems limited.

They are absolutely different. The former, regardless prewar or postwar high grade vintage are non income producing alternative assets. They are also illiquid assets, unique in each example similar to real property.

The latter are income producing assets that carry a risk premium (cards cant default or cut your divy) and are based on discounted cashflows of that stock (whether to use the dividend discount model or discounted free cashflow yield remains to be seen). Liquidity is much better as transaction costs are minimal and there is a open marketplace that provides daily liquidity. Also, those stocks are dictated by passive ETF investing and are subject to flow.

I think what you mean is that those investment grade cards are better investments, which I agree, due to the fact that there will always be higher liquidity and demand for that type... but not the same as large cap stocks.

[moogpowell]

Originally Posted by joshuanip

They are absolutely different. The former, regardless prewar or postwar high grade vintage are non income producing alternative assets. They are also illiquid assets, unique in each example similar to real property.

The latter are income producing assets that carry a risk premium (cards cant default or cut your divy) and are based on discounted cashflows of that stock (whether to use the dividend discount model or discounted free cashflow yield remains to be seen). Liquidity is much better as transaction costs are minimal and there is a open marketplace that provides daily liquidity. Also, those stocks are dictated by passive ETF investing and are subject to flow.

I think what you mean is that those investment grade cards are better investments, which I agree, due to the fact that there will always be higher liquidity and demand for that type... but not the same as large cap stocks.

Think we ultimately agree. I am extremely well versed with investing and recognize the difference between non-income producing assets and income producing assets. I didn't mean for my words to be taken literally. I was making a quick comparison in three sentences and said "sort of equivalent" to underscore that the parallel was meant in spirit.

I read your previous long take in this thread. You clearly know your stuff. What do you have most conviction in be it that player x's cards, or such and such sport's cards from a year or decade etc. are undervalued/overvalued.

I am starting to think that the increased grading, volume and visibility of cards will make a somewhat (but less so over time) inefficient market place, regarding price, become ever more "liquid" and dynamic and reduce the variance between prices. A stock market comparison is apt. I think the internet changes a lot for the hobby for the better. It makes it global and grading facilitates buying/selling/trading and adds trust.

I have zero interesting in cards from the '90s to present and would not cry myself a river if the sky high prices in modern basketball tanked. Some hard lessons wouldn't be bad for novices chasing outsized gains.

[joshuanip]

Originally Posted by moogpowell

Think we ultimately agree... I was making a quick comparison in three sentences and said "sort of equivalent" to underscore that the parallel was meant in spirit... What do you have most conviction in be it that player x's cards, or such and such sport's cards from a year or decade etc. are undervalued/overvalued...

I am starting to think that the increased grading, volume and visibility of cards will make a somewhat (but less so over time) inefficient market place, regarding price, become ever more "liquid" and dynamic and reduce the variance between prices. A stock market comparison is apt. I think the internet changes a lot for the hobby for the better. It makes it global and grading facilitates buying/selling/trading and adds trust.

I have zero interesting in cards from the '90s to present and would not cry myself a river if the sky high prices in modern basketball tanked. Some hard lessons wouldn't be bad for novices chasing outsized gains.

I gotcha. “Brevity is the soul of wit” - quote from another board member...

I have no conviction, I have no clue, but collect who I like . That said, I am using this time to move some of my less liquid sets and less popular players. As Kennedy said, “The time to repair the roof is when the sun is shining.” By next month 2/3 of my small collection would be Ruths and Cobbs, with an example or two of Gehrig, Williams, mantle and Aaron. If I had to choose a popular sport, basketball... but my heart is in baseball.

I agree on your comment regarding the grading. I made a comment a few months ago that the standardization of grading cards, plus accessible online venues like eBay, have led to commoditization of our hobby. This is a good thing; increased fungibility and liquidity, increasing inherent card values.

[pherbener]

Originally Posted by Eggoman

I GOTTA agree with Scott!


1987 Topps was EASY to get, but still sold GREAT! 1987 Fleer was HARD to get, but still sold GREAT!

Prices went up every week, every day...

But then, new product seemingly started coming out every week with all of the new companies joining in. It seemed to render Last Week's stuff nearly unsaleable.

I couldn't get rid of Last Week's product fast enough... Manufacturer's met demand so fast. Everyone got theirs and moved on to what was next... Inventory sat on the shelves, but I still bought NEW product.

I was in undergraduate school in 87 and it was near the Topps plant.. I got as many 800 count boxes of Greenwell, Santiago, Joyner, Bonds etc. that I needed. Crazy stuff! Helped put me through school!!

[dio]

Prices are softening. Not much bidder at heritage that ends in 3 days

[joshuanip]

Originally Posted by dio

Prices are softening. Not much bidder at heritage that ends in 3 days

The real bidding starts in extended bidding. All those that bought a ticket are just waiting for the show... no need to bid up this early right now...

[troutbum97]

Originally Posted by joshuanip

The real bidding starts in extended bidding. All those that bought a ticket are just waiting for the show... no need to bid up this early right now...

Exactly.
I got my placeholder bids in on Day One.
Bidding now is suicide.

[joshuanip]

Originally Posted by dio

Prices are softening. Not much bidder at heritage that ends in 3 days

To your point, I have just found better places to put my capital (today).... I still have my eye on two lots, but cutting bait on the rest...

[Peter_Spaeth]

If prices are softening, you wouldn't know it by various ebay auctions I saw last night where I felt like, in the words of the Disney song (and very politically incorrect one), I had seen an elephant fly.

[Snapolit1]

Originally Posted by dio

Prices are softening. Not much bidder at heritage that ends in 3 days

Ha ha. That's a good one.

A Jackie photo sold last night in Heritage for $360,000, that I'm pretty sure I once took a pass on for $22,000. A card I sold a friend for $9,000 two years ago sold for $75,000. Yep, it's the beginning of the end.

[dio]

Originally Posted by Snapolit1

Ha ha. That's a good one.

A Jackie photo sold last night in Heritage for $360,000, that I'm pretty sure I once took a pass on for $22,000. A card I sold a friend for $9,000 two years ago sold for $75,000. Yep, it's the beginning of the end.

Nope, bubble not bursting, tonight's heritage still strong

[rjackson44]

Originally Posted by Snapolit1

Ha ha. That's a good one.

A Jackie photo sold last night in Heritage for $360,000, that I'm pretty sure I once took a pass on for $22,000. A card I sold a friend for $9,000 two years ago sold for $75,000. Yep, it's the beginning of the end.

Hi steve lol your funny

[Mark17]

Originally Posted by Aquarian Sports Cards

I hear this all the time and it has always confused me. They didn't "flood the market" they met demand. Blaming them for the demand is bassackwards.

That's true from the perspective of the card manufacturers. If they sold everything they printed, then they didn't "over-produce." They met demand, as you say, and there was insatiable demand.

I sold 100 card lots of single players back then, and several customers bought rookie cards by the 800 count box. One fellow in New York bought 4,500 each of about 40 different 1987 Topps cards from me, which was basically a 300 vending case custom sort. I always wondered what the end game was supposed to be, when a guy had 4,500 Wally Joyner or Mike Greenwell rookies. Some day find another buyer who wanted thousands of those guys' cards I guess.

So I'm not placing blame on card companies for printing and printing and printing cards in the late 1980s. What I'm saying is that tons and tons of the stuff was printed, making its long-term value impossible to sustain.

[68Hawk]

Today's collector isn't buying the way the wild eyed 90's collector was. Not grabbing everything in sight in pure blind hope... it's targeted and based on a punters eye for talent.
If they buy packs/boxes/cases or in to breaks, it's in the hope of landing a prized rookie from that year - one whose name they already know and are praying for, or high end material/parallels of established superstars.
The flotsam players they gather in the wash mostly go in the bin.
No one's building entire sets from an issue, holding all the cards hoping a gem player floats up from the dust. They build subsets of one players' cards, or a few from their team, that have specific meaning whether fan based or monetarily.

People aren't buying the huge amount of product that's being made because they believe somewhere within it all they'll get lucky opening it up in 5 years after it's sat gathering dust in the closet.
They make their estimation much like Mel Kiper or any other so called draft expert and hope to predict the next young big thing whose cards will be worth big big dollars.

The new collector isn't going to have 50,000 junk cards he's got $50K in to, and needing to dump because they didn't play out. He's going to have a selected collection that may or may not pan out, but will probably take 5-10 years to truly make that evaluation. So he holds, waits, and watches sports.

There are still plenty of high end collectors holding significant Aaron Rogers collections and Russell Wilson collections who believe there still a chance, with say a run of 3 super bowls somehow materializing, their fancied horse having a chance to be considered as all time greats.

They've had that money in those players for 10+ years.
There's no dump, no bubble. Price corrections sure, but in quality players a baseline of value for rarer material holds strong.
Just some wins, some losses, and next years possibles.
There are more non KC Chiefs supporting collectors on the Pat Mahomes thread in Blowout than the idiologues. They buy his cards because of the slight promise of what he may one day achieve.

In my opinion, the hobby is at the OPENING of a chance to go truly mainstream. No bubble, no overproduction, just a free floating market like the stock exchange with an enormous number of people participating and prices for players will flow up and down accordingly. Only way more enjoyable because sportcards are awesome - yes even modern - and can have meaning even outside of their financial performance.
Vintage should likely be the stable steady earner.

The idea that more people in means more likely bubble is silly.
In fact it's the opposite.
More in, more believers, better understanding that it's a market to play and just like stocks the long hold in blue chip is safe, and the flutter on speculatives can be exhilarating and rewarding or flat loss making.
Aaand, they will feel far more knowledgeable about what they own than the faceless stocks with fake profit loss sheets they're currently indentured to.

Or none of it might happen, and sportscards recede back into the niche it's always held.
We'll know pretty shortly. Next 12-24 months should tell everything.

[Peter_Spaeth]

Historically, trying to time any market usually fails more often than succeeds. It's easy to pontificate but a lot harder to be right.

[JohnnyKilroy]

Originally Posted by 68Hawk

The idea that more people in means more likely bubble is silly.
In fact it's the opposite.
More in, more believers, better understanding that it's a market to play and just like stocks the long hold in blue chip is safe, and the flutter on speculatives can be exhilarating and rewarding or flat loss making.
Aaand, they will feel far more knowledgeable about what they own than the faceless stocks with fake profit loss sheets they're currently indentured to.

This is absolutely incorrect. You are giving humans way too much credit. It’s a very basic economic principle... The more people you throw into this, the more people are involved that have no idea what they’re doing. They get sucked in because they see their friend, brother, sister, mother, etc.. crushing it. They see how easy people make it look to turn huge profits. It’s one of the main contributors to a bubble! It’s those same people that loose their shirt, or throw the towel in early, or cut losses and dump cards. Once the initial fear hits, that happens on a MASSIVE scale. I applaud you for having that kind of faith in man kind, but statistically it’s incorrect. And every single economic crash will show you that.

[Tyruscobb]

Originally Posted by JohnnyKilroy

This is absolutely incorrect. You are giving humans way too much credit. It’s a very basic economic principle... The more people you throw into this, the more people are involved that have no idea what they’re doing. They get sucked in because they see their friend, brother, sister, mother, etc.. crushing it. They see how easy people make it look to turn huge profits. It’s one of the main contributors to a bubble! It’s those same people that loose their shirt, or throw the towel in early, or cut losses and dump cards. Once the initial fear hits, that happens on a MASSIVE scale. I applaud you for having that kind of faith in man kind, but statistically it’s incorrect. And every single economic crash will show you that.

I agree. The increasing heard number only increases the heard mentally and its adverse effect when the selling starts.

[bmattioli]

Once people get their ass's back to work and stop pretend zooming all day while looking at E-Bay and other outlets spending money instead spend the day sitting in traffic jams thinking about the next vacation to spend their cash on will the bubble burst. Only my opinion..

[joshuanip]

Originally Posted by Tyruscobb

I agree. The increasing heard number only increases the heard mentally and its adverse effect when the selling starts.

Herd aka crowd effect, is a signal that most of the entrants have jumped in the pool and are drinking the coolaid. But crowdedness doesn’t cause the bubble to pop. Bull markets don’t die of old age, they get murdered. The 2000 bubble popped because people were using relative price/sale valuations on companies with no earnings and poor fundamentals (like today’s SPACs). The 2008 financial crisis was caused by systemic risk in the financial system brought by greed and lipstick pigs, aka private-label, securitized liar loans.

This current bubble has shades of it all. The dot com valuations of 2000, the inflated home prices of 2008, and the possibility of a 70’s Nixon style inflation that killed the nifty fifty back in ‘73. Interesting that the nifty fifty, or the country’s fastest growing large caps is analogous to FANG/tech. Which is plausible as we move away from zero bound discount rates, impacting growth company valuations the most (as their terminal out year values are shrunk by a rising discount rate). If you were wondering why growth underperformed value (dividend/materials/energy/financials), this is why. This may not happen, we may continue to get a Goldilocks economy for a little longer because the economic disparity is creating a very unbalanced economy not conducive to sustained inflation. But the risk is still there.

Long winded way of saying herd mentality is a signal on how much juice is left to squeeze, but not necessarily for a top or end of the bull run. FOMO and herd mentality can last for a while - exemplified in this 12+ year bull run in the market.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” - John Templeton

And yet I find it interesting outside of the MDs, none of the analysts have been around the last time there was a bear market...

[68Hawk]

Originally Posted by JohnnyKilroy

This is absolutely incorrect. You are giving humans way too much credit. It’s a very basic economic principle... The more people you throw into this, the more people are involved that have no idea what they’re doing. They get sucked in because they see their friend, brother, sister, mother, etc.. crushing it. They see how easy people make it look to turn huge profits. It’s one of the main contributors to a bubble! It’s those same people that loose their shirt, or throw the towel in early, or cut losses and dump cards. Once the initial fear hits, that happens on a MASSIVE scale. I applaud you for having that kind of faith in man kind, but statistically it’s incorrect. And every single economic crash will show you that.

Interesting, but not having any idea of what they're doing never stopped this nation making the stock market it's default retirement plan.
I think there's room for people to own cards, and I think you waaaaaay overestimate the brain matter and knowledge it takes to pick some cards to buy.
Sports may be the one area this nation actually invests significant cognitive energy towards, and that's all it really takes. Know the players you think are good, ride the guestimates of the 'experts' as they announce the next big thing, and spend time on ebay.

It's hardly rocket science.

No, they're not going to spend time learning every esoteric vintage issue.
So what?
They need to know the names of 15-20 players and look online at what cards are available, where the money seems to be flowing suggesting desirability, and perhaps cruise to one of the many sites showing historical sales data.

I'm not giving enormous credit here. This place isn't home to the Mensa society, but simply a cross section of society who share a common interest.
It's cardboard, not carbon nanotubes.

[Exhibitman]

Originally Posted by JohnnyKilroy

It’s a very basic economic principle... The more people you throw into this, the more people are involved that have no idea what they’re doing.

Could not agree more. A lot of newbies are making it easy for us veterans to make money when the bubble does pop. Sitting on a pile of cash waiting. If it takes a couple of years to pop and flush through to the point of capitulation, that's just fine by me. Stuff I bought up several years ago is selling like hotcakes at a multiple of what I paid for it, so I am selling into it; looking forward to doing it again. Yet we must not forget the most important thing: cards are fun. Speaking of which, this thread needs one:



Ty Says Relax