How did this all start?

[bcbgcbrcb]

Also at the very top of causes for the rediculous spike in prices in 2021 was those idiotic fractional share companies such as Rally, etc. Those have all pretty much gone bust by now, huh? Entities that were willing to pay “as much as it takes” to get a card to profit from the fees of a thousand buyers per. Great ethics there, huh?

[Exhibitman]

Wasn't an ethics issue, just a crappy business model. The deal structure to get these items overvalued most of them in the first place. They had to. The only way they lured owners of valuable items to go with them rather than sell with an AH was to give the seller a substantial cashout and a chunk of the float. It is the same thing that has brought down more than one auction venture: if the cash advance is too large and the item underperforms, good luck in getting the money back from the consignor.

The fractional interest model counted on a market for these shares that would generate commissions, but it turned out that people who like to trade baseball cards don’t like to trade shares in them. No one was trading. When prices stopped rapidly escalating on the securitized items, the nascent market for these shares locked up tighter than a bullfrog’s butt.

This is not to say that securitization cannot work and is not something that will be tried again. The securitization of cards was an interesting idea, just badly executed. The financial model was based on a bet on continuous and rapid price increases on the assets that would fuel both profitable sales and a vigorous trade of the shares on its internal market. When the pace of gains sputtered, the flaw in the model was revealed. There have been successful securitizations in other fields (notably, music catalogs) but those rely on an existing owned asset that generates income being turned out to investors, not on a flipping model of the asset itself. If a flipping model is to work the asset has to be obtained at an extreme discount to current market so that it can weather a lull or downturn. To go on the market and buy something in the hope it will soar and pay off quickly enough to keep the investors from forming a lynch mob, that would be a foolish and risky bet on a set of atypical circumstances. In other words, quintessentially American.

[Republicaninmass]

Also, lottery set breaks and pack breaks. Aside from 1 or 2 people who score, they only profit makers are the ones doing the breaks

Oh and Evan Mathis trimming/altering

[Johnny630]

Originally Posted by Republicaninmass

Also, lottery set breaks and pack breaks. Aside from 1 or 2 people who score, they only profit makers are the ones doing the breaks

Oh and Evan Mathis trimming/altering

One Hundred % correct. I see these Raffles all the time on Facebook card groups...some as high as $500 a spot....people buy into them....idk if it was die off like Razzes or not but it’s been hot recently it seems.

[bcbgcbrcb]

The fractional shares thing was tried back in the 1990’s/2000’s. Didn’t work then and didn’t work now and never going to work. The idea would have to be revamped entirely into a managed portfolio of cards invested like a mutual fund.

[Rhotchkiss]

Originally Posted by bcbgcbrcb

The idea would have to be revamped entirely into a managed portfolio of cards invested like a mutual fund.

This idea has always intrigued me, and I think it could work. It doesn’t have to be limited to cards either, or only sports. It could encompass all sorts of alternatives - comics, entertainment, historical, art, rare books, etc.

[toothcutter]

Originally Posted by Rhotchkiss

This idea has always intrigued me, and I think it could work. It doesn’t have to be limited to cards either, or only sports. It could encompass all sorts of alternatives - comics, entertainment, historical, art, rare books, etc.

Shotwell looking strong.

[Snowman]

Originally Posted by Exhibitman

Wasn't an ethics issue, just a crappy business model. The deal structure to get these items overvalued most of them in the first place. They had to. The only way they lured owners of valuable items to go with them rather than sell with an AH was to give the seller a substantial cashout and a chunk of the float. It is the same thing that has brought down more than one auction venture: if the cash advance is too large and the item underperforms, good luck in getting the money back from the consignor.

The fractional interest model counted on a market for these shares that would generate commissions, but it turned out that people who like to trade baseball cards don’t like to trade shares in them. No one was trading. When prices stopped rapidly escalating on the securitized items, the nascent market for these shares locked up tighter than a bullfrog’s butt.

This is not to say that securitization cannot work and is not something that will be tried again. The securitization of cards was an interesting idea, just badly executed. The financial model was based on a bet on continuous and rapid price increases on the assets that would fuel both profitable sales and a vigorous trade of the shares on its internal market. When the pace of gains sputtered, the flaw in the model was revealed. There have been successful securitizations in other fields (notably, music catalogs) but those rely on an existing owned asset that generates income being turned out to investors, not on a flipping model of the asset itself. If a flipping model is to work the asset has to be obtained at an extreme discount to current market so that it can weather a lull or downturn. To go on the market and buy something in the hope it will soar and pay off quickly enough to keep the investors from forming a lynch mob, that would be a foolish and risky bet on a set of atypical circumstances. In other words, quintessentially American.

Great insight, and well said. It seems like it should have been somewhat predictable, but I think most people didn't see that coming.