Memorabilia as an investment

[EddieP]

Dunning Kruger.

[molenick]

This is kind of making me think that nothing has intrinsic value. A pound of Wagyu beef and a pound of chuck steak have vastly different prices but essentially the same nutritional value. The exact same house in one neighborhood could cost three times as much as in another neighborhood. Store brand or generic drugs cost less than brand name drugs with the same active ingredients.

I am not a lawyer, accountant, or economist (which is probably clear from my post). But it seems to me that the "value" of anything is what someone else is willing to pay for it, from game-used bats to stocks to houses. The difference with stocks is that there is an active market that continually sets a price. If you want to sell a stock, you can't just set your own price on a BST board, or consign it to an auction with a reserve. But the upside is that stocks are immediately sellable when you want to sell them.

And regarding a shared belief system, cash itself is based on that. A $1 bill and a $100 bill have the same material value, but we have all agreed that a $100 bill is worth 100 times more that a $1 bill (not that anyone uses cash anymore).

Those are my simplistic economic theories after midnight .

[oldjudge]

Everything that has value is an asset. The value of an asset is the present value of anticipated future cash flows. To Adam’s point, some assets have more risk to the anticipated cash flow stream than others. The risk is captured in the discount factor used in the present value calculation. This applies to stocks, bonds, real estate, baseball cards, etc. Assets with anticipated regular income streams are easier to value. Assets with only an initial outflow(purchase price) and final inflow (sale price) like baseball cards, memorabilia, etc are harder to value. You can look at historical price trends, growth in the population of collectors, etc, but at the end of the day you are betting that someone who looks just like you will at some point in the future pay more than you did for the item. The smaller the pool of possible buyers should imply a higher discount factor to be used in discounting the anticipated future sale price back to the present. Whether you consider something an investment, a collectible, or a friend you can talk to in a lonely moment, is immaterial to its value. Whether you call that Green Cobb you bought an investment or a collectible will be immaterial in to its’ value in X years.