2021 Exit Strategy

[Peter_Spaeth]

Originally Posted by G1911

Get reason out of here and pump! Inexorably upwards! The ups are up and the downs are future ups.

If Olajuwon was such a great bargain at his falling knife price of 450, there would be more demand and that would put upward pressure on the price. There is every risk he could go lower.

[G1911]

Originally Posted by Peter_Spaeth

If Olajuwon was such a great bargain at his falling knife price of 450, there would be more demand and that would put upward pressure on the price. There is every risk he could go lower.

I've been told this is unpossible, cards are a money printer.

[rjackson44]

Hang in octavio

[Republicaninmass]

I'd just like to make a comment here. I saw what happened during the late 80s early 90s boom of collecting, and that's why I sold off 90%. It's hard to believe people who lived through that, didnt/don't see what's happening. I guess it's the hopium similar to stocks. The hope that this time it will be different.

I followed a portion of Casey's advice. Paid off all debt, and put money into dividend stocks, IRA and CDs. I had actually cashed out my 401k during the Great Financial Crisis to buy real estate and cards. In that respect, it took about a decade to come full circle. I couldn't see what might be me and my family's future, resting on "cards might keep going up"

[bcbgcbrcb]

Phil:

Thank you for adding some humor to the thread, I can sure use it.

Unfortunately, that fateful day in 2014 when I had the heart attack, Phil the Collector pretty much went away, possibly forever, as my income stream from my job went from a high 5-figure salary prior to that to $10K, $10K and $25K over the next three years before zeroing out in 2018 and every year thereafter. Thus, Phil the Investor was born in 2014 as I would need to make the most out of the sports memorabilia collection that I had accumulated up to that point and make it last for the rest of my life, not a "collect what you like" situation anymore. I've had some other things fill in the gaps over the years including Mego's, comics, dollar box cards, etc. but the only significant money comes from the old collection. I feel that I made all of the right decisions handling that original collection, including selling everything throughout 2021, thus, maximizing my return by selling at the peak of the market. Of course, the entire reason that I am in the position that I am in now is because of my ill-fated decision to buy up HOF rookie cards as fast as the sales money came in to keep ahead of the rapidly rising market. You know where things went from there.......

[samosa4u]

Originally Posted by Republicaninmass

I'd just like to make a comment here. I saw what happened during the late 80s early 90s boom of collecting, and that's why I sold off 90%. It's hard to believe people who lived through that, didnt/don't see what's happening. I guess it's the hopium similar to stocks. The hope that this time it will be different.

I was born in the 80s and so I don't remember this boom. The same goes for most of the people who got burned during the pandemic. They were too small or weren't alive then.

[Snapolit1]

There is a lot of BS in the investing world, but the idea that one should diversify broadly is a new brainer. Stocks go down, bonds usually go up . . . . real estate goes up and down . . . etc. Don't put all your eggs in one basket.

[glchen]

I'm going to come off as a contrarian, but all of this sell everything advice, I do not agree with. If you look at financial history, many of the best times to invest are in a down or bottoming market, and the people who end up being worst off are those who sold during these "falling knife" times. Obviously, Phil has to sell something because he needs money to survive on, but I don't believe in this selling everything philosophy. Instead, if it were me, I would use the dollar cost averaging scenario. Just as dollar cost averaging is a recommended investment/saving strategy for buying, it can be the same thing for selling. The idea is that it is very difficult to time the market. Using dollar cost averaging will flatten out your risks, so that you will get some of the highs and some of the lows, ie, you won't get the best gains or the worst losses, but you will be somewhere in the middle.

I don't know how many cards Phil has, but I would try to put all of his inventory in a spreadsheet if he doesn't have one already. I would use the 2017 prices as the reasonable "floor" on the lowest the prices will go. I arbitrarily chose this year since it is pre-pandemic before the huge rise that happened there, and therefore, the prices for this year were not "irrationally exuberant." You can choose another year if you think that is better. Phil's cards will not go to 0. All of his cards as far as I know are HOFers, and not modern cards that folks are "betting" will be big stars in the future. If he held Stephen Strasburg rookie cards, I would say to sell those immediately because those cards could defiinitely go to 0. Hakeem's rookie cards will not go to 0. Saying that, I would still categorize him as a "minor" HOFer and not a gold mint one such as Lebron or Kobe, and put him on the sell earlier.

Therefore once the spreadsheet is put together, I would list the cards with their purchase price, current market value, and 2017 market value. Then based on this information, and Phil's own expertise on future ROI, I would rank each card with the smaller number being sell early, and larger numbers being sell later. Once the list is finished, review the totality of it to see if Phil is comfortable with the selling order, and the expected returns/income that he would be getting by selling each tranche. He would then sell these at regular intervals to get the income he needed to live on, have an emergency nest egg, as well as seed money for whatever business he is thinking of starting to generate future income such as card flipping. As I mentioned in my previous post, he should also consider tax consequences to minimize any liabilities there.

Speaking of taxes, he should also look to getting a seller's permit if he doesn't have one already. Getting a seller's permit means that you don't need to pay sales tax on your purchases, but it does mean that you will need to start filling out Schedule C on your taxes to declare your business income to the IRS (as well as your state's business sales tax forms). Schedule C income is added to your gross income on your income taxes. Typically the capital gains rate on collectibles is at a lower rate that the tax rate for your income taxes, so people often prefer just paying the sales tax and using the capital gains rate. However, if Phil's income is basically around 0 these days, he won't be paying income taxes, and getting the reseller permit may be more advantageous from the tax perspective. Obviously, it can also be a pain to do all of the record keeping if he doesn't have that already, so he still may not want to get the permit.

I want to add one more note to this sell everything discussion. There is an opportunity cost here. If you are selling the cards, you must believe you have a better alternative for your money somewhere else. If you are selling everything and getting a 5% CD, you are saying that you don't think the cards you would be keeping would return you 5% in the next year. If that is what you believe, then I agree, sell. If you think the cards will go up more than 5%, then keep those cards you think will beat that return rate. Of course, you must keep an emergency fund if things go sideways and take into account your risk tolerance threshold.

[Republicaninmass]

Originally Posted by samosa4u

I was born in the 80s and so I don't remember this boom. The same goes for most of the people who got burned during the pandemic. They were too small or weren't alive then.

Hence the reference to "people who lived through that". I was born in 76, but was a part time "dealer" in 1990

[egri]

T-Bills are yielding over 5% right now, are much less risky than cards, and have short durations so you can take money out as needed with a little bit of planning.