Minimizing your Losses

[celoknob]

I admit to being "haunted" by a number of difficult things that happen in life, but the resell value of my collection is not one of them.

This is one thing in my life I just try to enjoy. I consider it entertainment and diversion. As another poster mentioned some others spend money for other types of entertainment--play golf, go to expensive restaurants, buy boats, cars, etc. for their pleasure and don't expect their money back.

[Rich Klein]

That story about the waitress is not any good without pictures

Rich

[sportscardpete]

Originally Posted by celoknob

As another poster mentioned some others spend money for other types of entertainment--play golf, go to expensive restaurants, buy boats, cars, etc. for their pleasure and don't expect their money back.

I think the money spent on golf is crazy. And people that play golf probably think collecting cards is crazy. But the two have fun with their hobby. So it is a wash.


Technically speaking - if you only collect cards, and never sell, you never really lose money.

[dstraate]

I'd tend to agree that this more frequently happens with modern cards.

Everybody remember the Strasburg Superfractor? It sold for more than my house. I bet that buyer is seeing a lot of red ink when he looks at that card, and not because of the Nats road jerseys.

PreWar players are established. You know what their career totals will be, because they're dead. There's a lot of speculation in modern cards. If you ever doubt that, look at the ebay auctions after the next no-hitter, or 3 HR game.

[bbcard1]

[QUOTE=sportscardpete;943070]I think the money spent on golf is crazy. And people that play golf probably think collecting cards is crazy. But the two have fun with their hobby. So it is a wash.

Which reminds me of a joke.

Guy goes up to his buddy and starts laughing and says,"You wouldn't believe what I saw the other day at 5 O CLOCK IN THE MORNIN!

These guys were out there PLAYIN' GOLF AT 5 iin th morning! Can you imagine getting up that early to hit some little ball and chase after it. It's crazy.

So the guy's buddy says, what were you doing up at that hour, Vern?

I was going fishing.

....to each his own....

[drc]

There are a million things that can be said about the subject, but I will pick three.

To prevent losses, avoid investing in what is hot now, what's the in thing now-- especially if it's modern.

Buy at good prices. No matter what it is is, it's not a good investment if you buy at 3x going price. At 3x overpaying, you'd still lose money if it doubled in market value in a week.

Sell items once in a while, so you get a feel for what things really sell for. People who never sell often have their heads in the clouds about value and usually overvalue their items, while people who actually sell items have a real world view of what they'll get and make wiser purchases.

A positive of selling at an unexpected loss (which has happened to everyone, by the way!) is it can make you wiser for the future.

My old saying is the worst thing that can happen to a newbie stock investor (or casino better) is that his first pick wins money, and the best is it loses money. If his makes money he's suddenly sure he knows it all and is a stock picking genius. If it loses money, he is now aware that he can easy lose money, doesn't know everything and has to be careful and smart when making future picks.

[Exhibitman]

My cards aren't going anywhere until I'm dead and I suspect I will have bigger things to worry about at that point. Besides, as I always tell my wife, I don't ski or golf or play tennis, I don't belong to country clubs, subscribe to the symphony or opera [OK, I hate those regardless, so probably not a good example], or spend big money on art or antiques. I collect cards. Collecting is way cheaper than the things I might do otherwise and I enjoy it most. The fact that I might recoup my expenditure down the line is an added bonus. I simply enjoy my collector-friends and my cards now.

[smtjoy]

I think everyone who buys cards hope to at least break even but it’s very hard to do.
I really think it boils down to how you collect, I see 4 broad types. I do think people can be a part of more than one type, like one part of their collection is life time say like a player collector of WaJo or Waddell but a flipper with the rest of their collection-

The Life Time Collector- A person who collects and rarely if ever sells, they are the top of the food chain because generally when they really want a card they are willing to pay what it takes to own it. They are not worried about SMR, VCP or past sales, they want the card period. Resale value means nothing to them. They do no real selling except if they do get a lot with extra cards they usually send it to someone else to sell it at what it can get now.

The Collector/Investor- A person who collects a certain area but is very aware of the value of their collection and is reluctant to pay much over market for their items but will gladly pay VCP type numbers on much of their collection. They understand they may miss out on certain cards to the life time collector but if they are patience and wait for the card at their price, many times they will get it. They mostly buy single cards, as it’s too hard to value lots and don’t want to deal with extra cards and how to sell them. They generally pay more than the flippers and dealers so they get the cards they want but if they ever do decide to sell they will lose a bit when selling – 10-20% if sold within a few years of purchasing. I have also seen that they will change directions in their collection and in life and just sell all or part of their collection; they are not as tied to their cards as the life time collector.

The Collector/Flipper- This collector is pretty savvy in that they realize that in order to really get some of the best deals out there it’s to purchase lots and break them up or hunt ebay/auctions house for deals. Having some capital to spend is important and they will always have money tied up in cards to sell. They are very adept at selling extras and many times can buy lots and sell off all but 1-2 and get them for free to build their collection. Their collection will have more holes in that they are content to wait for the right price or a certain lot to appear. They will pay more than the dealers at times if cards they want are out there in lots or such. They are open to buying any card they feel they can turn into profit and additional cards for their collection. They are open to selling most cards in their collection for the right price. They can do very well and can make money on most purchases.

The Dealer- They are only in it for the money, they care more about what they can buy and sell a card or lot for. The most important thing for them is capital, inventory and having lots of both. They are the ones who can purchase the 10k, 50k, 100k sets/lots/collections and break them up. Since it’s a job for them they are at it all the time and should have the best feel for the market (or they will not be in business long). If properly funded they can wait to get their price (ala 707) and take whatever strategy to sell that they want to (high margin low volume, low margin high volume, etc). They rarely win single card auctions unless its to get a card they have a buyer for or if they feel its at the bottom of the market. In most cases they are the bottom of the food chain in prices paid for single cards.

Also on taking a loss, anyone who purchases a single graded card and decides to sell it within 2-3 years can expect more times than not to take a 10%+ loss on it to cover at minimum selling fees. In order to make real money on cards purchased at market prices I would think 10-20 years is needed.

[Rich Klein]

Levi (AKA 707) does collect some cards as well ----- so he is not a PURE Dealer in the way that Rob Veres *Burbank* is

Rich