Sunk Costs in the Hobby Video

[Snowman]

I used to joke with my business-major friends in college that they were just getting a degree in common sense. However, reading through the comments every time this topic gets discussed, and hearing Chris say that 75% of his classmates got it wrong, highlights the fact that common sense isn't quite as common as one might think.

Sometimes, people just over complicate things. In this case, whether or not a dealer, for whom running a profitable business is the primary goal, should sell a card or not depends only on two factors: what it's worth, and what the buyer is willing to pay. Everything else is completely irrelevant.

As a side note, asking, "what is my replacement cost?", while perhaps a more helpful way of looking at it for some, is just another way of saying, "what is it worth?".

[Snowman]

As someone pointed out above though, determining a card's value as a buyer isn't always as simple as seeing what a similar one last sold for at auction, unless it is a highly traded commodity card like an 89 Upper Deck Griffey or a red T206 Ty Cobb. The same is true for realizing a card's potential as a seller. Some cards have much stronger valuations in very niche segments of the hobby, and if you just toss one of those cards up for auction on eBay, you're gambling on whether or not the right buyers will see it, because if they don't, you could easily end up taking a bath on the card if it sells to someone in a different segment of the hobby.

When a card is difficult to price, I think sometimes dealers who aren't very good at pricing/math will often just resort to looking at what they paid for a card as a surrogate for what it might be worth today because they're not confident in what they could actually get for it and they're afraid of making a mistake. Especially for a card that's not easy to find.

As an example, I primarily collect perfectly centered mid-grade cards with strong eye-appeal. Historical sales prices for these cards have extremely high variance because the hammer prices depend heavily on who happens to be watching the auctions. If you take a card like a perfectly centered PSA 4 Hank Aaron RC for example, there are multiple cohorts of collectors who will value it very differently. This card is notoriously difficult to find perfectly centered. The VCP median price for recent sales of a PSA 4 is around $4500 for an off-centered copy of this card. But when a perfectly centered copy hits the auction block, you have investors/flippers who might bid $3500-$4000 hoping to turn a profit on it if they get lucky and win. Then you have collectors who zoom in on the corners and shrug their shoulders over the centering that might pay $4500 for it. Then you have the largest cohort of the market that will notice the centering and will add a premium to it, perhaps bidding it up to $5000-$5500 or so. Then you have a smaller cohort of what I call the "true collectors" who really care about eye appeal, and they might pay upwards of $7k for it, reasoning that it's worth a full grade bump in price due to the eye appeal. Then, you have an even smaller cohort of the truly OCD-centering-obsessed collectors like myself who even cringe at a 55/45 copy and that have been looking for a dead-centered Hank Aaron RC for years to replace their "off-centered" 51/49 copy, knowing that there are only a few dozen of these to have ever surfaced. Those buyers will gladly pay $10k for it because they'd MUCH rather have it than an off-centered PSA 6, 7, 8, or 9 and $10k sure seems like a bargain in contrast.

Someday, I might start a thread about estimating the value of cards that are difficult to price, as there are some fairly interesting mathematical nuances or mechanisms that can come into play. One of the more interesting ones is the non-linearity of centering premiums across both grades and sets.

[raulus]

Originally Posted by Snowman

Then, you have an even smaller cohort of the truly OCD-centering-obsessed collectors like myself who even cringe at a 55/45 copy and that have been looking for a dead-centered Hank Aaron RC for years to replace their "off-centered" 51/49 copy, knowing that there are only a few dozen of these to have ever surfaced. Those buyers will gladly pay $10k for it because they'd MUCH rather have it than an off-centered PSA 6, 7, 8, or 9 and $10k sure seems like a bargain in contrast.

Curious about how you differentiate between true 50/50 and 51/49 centered cards. Are you using lasers and high-def cameras? Maybe I'm just old with bad eyes, but it seems like it would be challenging to identify the 1% shift based just on the eyeball test.

[rhettyeakley]

Buyers get annoyed by sellers talking about what they have into the item.

I know as a seller I get annoyed by buyers bringing up “comps” (especially on rare or thinly traded items)

Each of those approaches are simple negotiating tactics that are only brought up when it benefits the person bringing them up

[raulus]

Originally Posted by rhettyeakley

Buyers get annoyed by sellers talking about what they have into the item.

I know as a seller I get annoyed by buyers bringing up “comps” (especially on rare or thinly traded items)

Each of those approaches are simple negotiating tactics that are only brought up when it benefits the person bringing them up

Maybe we need to move to a system where negotiations are entirely non-verbal, like something out of Gulliver's Travels:

"We next went to the School of Languages, where three Professors sate in Consultation upon improving that of their own country. The first Project was to shorten Discourse by cutting Polysyllables into one, and leaving out Verbs and Participles, because in reality all things imaginable are but Nouns. The other, was a Scheme for entirely abolishing all Words whatsoever; and this was urged as a great Advantage in Point of Health as well as Brevity. For it is plain, that every Word we speak is in some Degree a Diminution of our Lungs by Corrosion, and consequently contributes to the shortning of our Lives. An Expedient was therefore offered, that since Words are only Names for Things, it would be more convenient for all Men to carry about them, such Things as were necessary to express the particular Business they are to discourse on. And this Invention would certainly have taken Place, to the great Ease as well as Health of the Subject, if the Women in conjunction with the Vulgar and Illiterate had not threatned to raise a Rebellion, unless they might be allowed the Liberty to speak with their Tongues, after the manner of their Ancestors; such constant irreconcilable Enemies to Science are the common People. However, many of the most Learned and Wise adhere to the New Scheme of expressing themselves by Things, which hath only this Inconvenience attending it, that if a Man's Business be very great, and of various kinds, he must be obliged in Proportion to carry a greater bundle of Things upon his Back, unless he can afford one or two strong Servants to attend him. I have often beheld two of those Sages almost sinking under the Weight of their Packs, like Pedlars among us; who, when they met in the Streets, would lay down their Loads, open their Sacks, and hold Conversation for an Hour together; then put up their Implements, help each other to resume their Burthens, and take their Leave.

But for short Conversations a Man may carry Implements in his Pockets and under his Arms, enough to supply him, and in his House he cannot be at a loss: Therefore the Room where Company meet who practise this Art, is full of all Things ready at Hand, requisite to furnish Matter for this kind of artificial Converse.

Another great Advantage proposed by this Invention, was that it would serve as a Universal Language to be understood in all civilized Nations, whose Goods and Utensils are generally of the same kind, or nearly resembling, so that their Uses might easily be comprehended. And thus Embassadors would be qualified to treat with foreign Princes or Ministers of State to whose Tongues they were utter Strangers."

[Snowman]

Originally Posted by raulus

Curious about how you differentiate between true 50/50 and 51/49 centered cards. Are you using lasers and high-def cameras? Maybe I'm just old with bad eyes, but it seems like it would be challenging to identify the 1% shift based just on the eyeball test.

I can spot a 51/49 card from across the room lol. I don't know why or how, but it bugs the hell out of me. I'm extremely OCD with centering (and many other things in life). Perhaps it's because I'm neurodivergent, I'm not sure. But I consistently pass on cards that are 48/52 or 49/51 because they don't cut the mustard for me. I will occasionally allow myself to go upwards of 45/55 in one direction for a high-end key card that is notorious for centering issues, but I'm never happy about it.

As far as measuring the shift goes, it's easy to do on your screen. I just count the pixels of the borders. But I've done it so many times that I can tell what the exact number will be with fairly alarming accuracy. I think it's similar to how I used to be able to pick up a package by hand and know exactly how much it weighed to the ounce (for packages less than 1 lb) without needing a scale simply because I had weighed and handled so many packages.

[todeen]

I was at an antique show in early October. There were two baseball games (cardboard mat and paper mat) I was interested in buying. The paper mat was also associated with a gas station. I had already spent my budget for the day, and I told the dealer I was willing to meet his price + shipping if he would give me his business card and I could contact him later. He told me he refused to ship because he was retired and didn't want that hassle in his life. I walked away without them, and he missed a sale because he valued his "free time" more than the shipping cost. I was completely blown away by that decision.

[JollyElm]

For me, the 'A seller saying "I have this much into it" debate' can be assessed thusly (can't believe I just used "thusly"):

• If his number is a true evaluation like, "I bought this graded Aaron card for XX dollars recently, and would like to make a bit of a profit on it," then it is a reasonable 'request' in a two-sided negotiation. No problems whatsoever.

• When a seller has a stupid price, saying I have this and this and this into it, so I need to get a king's ransom for it, I'll walk away and talk to someone else who has the same card available.