Cards as an inflation hedge ?

[Johnny630]

To me this current state of the vintage and modern card market is still overbought. I'm of the opinion that 5 guys purchased at reasonable levels in upper mid to higher grade 6-8's are excellent but not at these levels.
Cobb
Ruth
Jackie
Mickey and Willie.

[Tyruscobb]

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

[ullmandds]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

I agree with this…well said!

[Peter_Spaeth]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

[Rhotchkiss]

Originally Posted by Peter_Spaeth

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

[ullmandds]

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

[Peter_Spaeth]

Originally Posted by ullmandds

I also agree that the commoditization of bb cards has contributed the the rise of top cards...but I also know people who got a lot of free money during covid who are the last people on the planet who need it...and many "splurged" on "things!" Additionally the time at home and surplus of funds got many back into the hobby at the lower tiers...some higher?

What's the most anyone could have received from stimulus checks?

[ullmandds]

Originally Posted by Peter_Spaeth

What's the most anyone could have received from stimulus checks?

more business owners receiving money that they didn't need.

[rugbymarine]

Originally Posted by Peter_Spaeth

What's the most anyone could have received from stimulus checks?

An upper middle class family with 3 kids probably would've received $13,900 between the three stimulus payments. I say probably because upper middle class, depending on location, usually wouldn't be enough income to have been phased out of the payments. Each additional child would have resulted in approx. $2,500 more in total stimulus payments.

[Peter_Spaeth]

To further Ryan's points, there's a lot of new wealth out there and these guys have a lot of disposable income. What cooler place to put some of it than cards if you're a sports fan and you see cards more and more having features of at least good and perhaps very good investments? And they come with bragging rights too, posting about a great card you bought is a little better than posting about how many bitcoin you bought or shares of AMZN.

[trambo]

Originally Posted by Rhotchkiss

+1.

I don’t think those stimulus checks a year+ ago are the reason auction houses regularly have many $100k+ cards in every auction or why/how Goldin’s current auction has over 200 lots currently sitting at $10k+ BEFORE Buyers premium. Goldin is almost 100% ultra modern and likely less than 20% baseball, which is a different animal from what we normally dig on this forum, and I do believe modern and vintage are two different beasts. But I agree with Peter that, for whatever reason, a new waive of entrants have come into the “hobby”, except they view cards as assets. This applies to both vintage and modern. And, perhaps people view the asset as an inflation hedge.

To me, the real question is how “sticky” are these new entrants. If they are fickle, than card prices could go down steeply if the “market” turns. But I feel the the VINTAGE “card investor” is not fickle and is more sticky. I think investors who invest in t206, e90-1, goudeys, Ruth’s, 1952 Topps, etc, on whole, grow to enjoy the cards and start to morph into somewhat of a collector.

Cards are cool because you can hold them, they have a culture and fellowship (forums, shows, etc), they are dynamic and diverse, they have history, the players have stories and personalities. Cards are not bars of gold, mutual funds/stock, Bitcoin, or other more available investments. They can become much more personal, and it’s this quality that I believe makes the new entrant-investor sticky and insures many cards will retain real value. In other words, the supply is pretty fixed for vintage and the demand recently has been off the charts, and values have skyrocketed. Gross Supply won’t change much (bc cards are 100+ years old) and I don’t think demand goes down too much because the new demand is stickier. Thus, I think cards have unique qualities that make them a relatively safe investment, probably especially in times of inflation- I think the cards go up as inflation persists, but because of sticky investors, not stimulus checks, extra money bc of lockdown, etc

agree w/all of this. My family isn't into cards but when we talk about the tobacco era of cards, they are absolutely into the discussion and enjoy looking at some of my PC stuff. Far different than if/when we talk about savings, crypto or anything like that as there's nothing really interesting to see.

[Tyruscobb]

Originally Posted by Peter_Spaeth

My sense is the demand for the most part is being driven by wealthy people who see cards as an asset class for their portfolio, not by the collector who had an extra K from a stimulus check and had no outlet for it.

The answer is probably multifactorial. I'm sure wealthy investors are a factor. Whether they are the primary factor is unknown. However, there are more "common" investors than wealthy ones.

For every Ryan that can purchase a T-206 Wagner, there are probably 10,000 times more looking for a E95 Wagner in a 1. There are more collectors chasing a 1953 Topps Mantle in the 3 - 5 range than there are wealthy investors looking to purchase 8s and 9s.

I'm not sure about the stimulus money, because I didn't receive a nickel. However, wasn't there three separate checks around $1,000.00 each? That's an extra $3,000.00 that collectors had to spend on the hobby. Multiply $3,000 by the number of hobby members, and that is a lot of money that entered the hobby in a short time period. This also only considers the stimulus money, and not money from the collector's personal funds that they also spent.

I think this common collector wave of money at the bottom was more than the big money coming in at the top that was chasing just a few cards. Rising tides lift all boats - even the yachts. Just my two cents.

[Johnny630]

One Word to Describe this Industry over the past 3 Years....MANIPULATION

[Touch'EmAll]

American's love collectibles. I would guess cards are one of the most prominent collectibles of all with perhaps the biggest collector base of any collectible that exits. Sure, there may be bumps, but doubt the sky will fall. Certain card sectors may experience more volatility than others, however, the big name vintage/Pre-War sector seems quite safe compared to other sectors. I feel safe and secure holding the good stuff for the long term. Haha, fingers crossed.

[ajjohnsonsoxfan]

I think stimulus funds played an oversize role in the run up in prices. Think about all the business owners in the US (google says approx 31.7 million). There were two rounds of stimulus rounds available to business owners that allowed them to keep workers with funds mandated to cover payroll expenses. The calculation was 3x your monthly payroll amount. So for example if your business employed 75 people with a monthly payroll of $375k you got two checks for $1,250,000 each. $2.5M total. For those business owners who were unaffected by the pandemic, that was just free money to spend spend spend. Hence the huge price increases. What cards would you buy with $2.5m? :-)

[Lorewalker]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing. The 2020 Covid lockdowns brought people into the hobby. The stimulus money then gave people extra money to purchase cards. The new collectors and “free” money increased the demand, which, in turn, drove prices up.

However, when the lockdowns ended in 2021, people had other entertainment options to spend their hard-earned money. Plus, there were no more stimulus rounds - “free money” - and this is why the demand and prices began falling in March 2021. I think this trend continues.

First, inflation will further deplete card budgets. People will have to make cuts. Cutting the card budget or not paying bills is an easy choice. Thus, I think the demand further falls. Second, all those cards stuck in third third-party grading backlogs will eventually come online and enter the market. This will further increase the supply.

Weakened demand and increased supply is not a combination to higher prices. Sure, rare items will fair well, but I think the overall market comes down further.

Some of your might be true for some buyers but those who are really responsible for prices being driven up do not have to pick between expenditures on entertainment, dining and traveling or buying cards.

[GeoPoto]

Originally Posted by Tyruscobb

I see the opposite occurring - card values decreasing.

Everything you predict could happen and vintage cards would still be a "hedge against inflation". If inflation strengthens and persists (which seems likely, IMO), the Fed will tighten credit, interest rates will rise, and the economy will go into a recession. You are correct that this will cause downward pressure on card values, but only in the near term. The same is true for home values, stock prices, etc.

Assuming inflation is eventually brought under control, interest rates stabilize, and the economy booms again, card prices (like all assets) would be expected to regain their relative value, but in inflated dollars. This is unlike bond values, for example. If I own a bond that matures 10 years from now, I will be paid its face value at maturity regardless of how much inflation has reduced the purchasing power of those dollars during the intervening ten years.

Vintage cards are inherently "hedges against inflation" because their supply is fixed. That doesn't mean they will be good investments. In order to retain their value as investments they will have to remain popular. If their popularity disappears (boomers age out, baseball gets tuned out, etc.), they will be bad investments no matter what inflation does.