Can Sportscards Legitimately Be Considered HARD Assets?
70ToppsFanatic
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Over the past few months I have found myself in several discussions with other board members about the current "uptick" in the
card market coming from a shift of investments into "hard" assets. There is also some talk along these lines in the Dimitri Young SCP
thread.
So I want to pose the question to the board for discuss, can sportscards actually be classified as "hard" assets?
Don't get me wrong. I understand the perceived value in rare collectibles as much of the rest of you. However, to consider them
true hard assets is a bit of a stretch for me. Some of the significant reasons I find myself questioning this classification include:
1) Hard assets are usually things like food/livestock, fuels/energy and metals. What makes them "hard" is that if the economy were
to go completely to hell and paper money became effectively worthless, these assets have value because they are needed for basic
survival. I acknowledge that many of us need sportscards for our basic survival, but sportscards can nourish a human body, you can't
really build things (tools, shelter, etc.) out of them and while you can burn them and generate a bit of heat (BTW, this is highly recommended
option for most 1987-1989 BB Topps products) they are not likely to provide a meaningful source of energy for any practical purpose needed
for basic survival (transportation, heating, cooling, etc.)
2) Liquidity for sportscards is dramatically more limited than for most other assets. The number of buyers and sellers in the market is much more
lmiited. The market is not a "formal" market like a stock exchange, futures exchange, commodity exchange, etc. And thus the price swings from
transaction to transaction are often significant.
3) As far as I have been able to find, sportscards are not recognized by the government as valid investment options for retirement accounts. You
cant own them in an IRA or 401K. Before it went private you could own shares in Topps, or you could own CLCT shares today. But you could not
have used your IRA money to purchase the Dimitri Young PSA 10 Clemente and list it as a holding in your IRA. I am not sure if this can be done
with rare paintings or comic books either. Coins and stamps are a little different, as coins are made from precious metals that are hard assets
while stamps (at least US stamps) have a monetary "face" value for a US-government provided service.
Forget about which side of the current US political debate you are on for a moment. What I guess I am getting at is to ask what people think about
investing in sportscards as a hedge against the US economy effectively going over a cliff? Are the enough people out there who, in a real economic
crisis situation, would exchange the basic necessities of life for your high-end sportscards?
I strongly believe that in the long-term, as any crisis stabilizes and corrects, there is an intrinsic value in high-end sportscards. However, I think treating
them as a potential hedge against a short term crisis of confidence/inflation or classifying them as hard assets is a bit too much of a stretch to make.
So I put it to the board. Your thoughts?
card market coming from a shift of investments into "hard" assets. There is also some talk along these lines in the Dimitri Young SCP
thread.
So I want to pose the question to the board for discuss, can sportscards actually be classified as "hard" assets?
Don't get me wrong. I understand the perceived value in rare collectibles as much of the rest of you. However, to consider them
true hard assets is a bit of a stretch for me. Some of the significant reasons I find myself questioning this classification include:
1) Hard assets are usually things like food/livestock, fuels/energy and metals. What makes them "hard" is that if the economy were
to go completely to hell and paper money became effectively worthless, these assets have value because they are needed for basic
survival. I acknowledge that many of us need sportscards for our basic survival, but sportscards can nourish a human body, you can't
really build things (tools, shelter, etc.) out of them and while you can burn them and generate a bit of heat (BTW, this is highly recommended
option for most 1987-1989 BB Topps products) they are not likely to provide a meaningful source of energy for any practical purpose needed
for basic survival (transportation, heating, cooling, etc.)
2) Liquidity for sportscards is dramatically more limited than for most other assets. The number of buyers and sellers in the market is much more
lmiited. The market is not a "formal" market like a stock exchange, futures exchange, commodity exchange, etc. And thus the price swings from
transaction to transaction are often significant.
3) As far as I have been able to find, sportscards are not recognized by the government as valid investment options for retirement accounts. You
cant own them in an IRA or 401K. Before it went private you could own shares in Topps, or you could own CLCT shares today. But you could not
have used your IRA money to purchase the Dimitri Young PSA 10 Clemente and list it as a holding in your IRA. I am not sure if this can be done
with rare paintings or comic books either. Coins and stamps are a little different, as coins are made from precious metals that are hard assets
while stamps (at least US stamps) have a monetary "face" value for a US-government provided service.
Forget about which side of the current US political debate you are on for a moment. What I guess I am getting at is to ask what people think about
investing in sportscards as a hedge against the US economy effectively going over a cliff? Are the enough people out there who, in a real economic
crisis situation, would exchange the basic necessities of life for your high-end sportscards?
I strongly believe that in the long-term, as any crisis stabilizes and corrects, there is an intrinsic value in high-end sportscards. However, I think treating
them as a potential hedge against a short term crisis of confidence/inflation or classifying them as hard assets is a bit too much of a stretch to make.
So I put it to the board. Your thoughts?
Dave
0
Comments
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My Sandberg Topps Master set
The only thing that will matter if paper assets are no longer valid are guns and ammunition because those that have enough force will be able to steal the valuable gold and silver and anything else they want.
The art market and wine market have been tremendous asset classes to have investment dollars allocated to. Those markets are not necessary liquid per say but because the participants in most cases remain constant and new buyers enter the market the prices over time go up.
If you want to reclassify the collectibles market as a non discretionary hard asset that is fine or perhaps as an alternative asset class that works too. The bottom line is that most view a tangible asset that you can hold in your hand as a true hard asset.
We are still very much in a financial crisis and quite frankly in several years it is highly probable that we will have another financial event that shakes the globe as the current spending with debt globally is not sustainable. That being said you could see a correction in prices but longer term I think many cards are going much higher. If a piece of art can sell for 119 million why should an extremely rare baseball card not be able to sell for $432,000?
At the end of the day the people driving the top end of all collectibles markets have a lot of money. Unless their circumstances change dramatically or they lose interest many of these items won't be coming for sale. At the bottom end of the market these items will never in most cases gain steam as those collectors are much more likely to have to sell these items due to personal circumstances.
There are many like me that view our collections both as a hobby and an investment. I have a ton of cards that have appreciated well in excess of 1,000% in the past few years. They may go down, they may go up but if I thought I was throwing my money out the window I would no longer participate. I chose to investment a great deal of time and money into my collection for fun and the return on investment. I could have put these funds into stocks, or bonds but chose an alternative investment wrestling cards where no one else was putting real money. Because I can touch them and they can't evaporate unless of a fire or theft I call them a hard asset.
Collectibles do and can provide good investments, if one was to only concentrate on certain sport cards, such as Mickey Mantle cards, and middle hype-demand HOF RC's. (Higher end HOF RC's can be good investments if purchased right, but prices can be extreme either way, and seem more risky, and the purchase is usually where you make or lose your money, rather then the sale.)
High end aport cards, paintings, extreme rare vintage cars, and the like, will almost never lose value, and have histories of 2-3x returns on them. Lower end, or collector level, collectibles, almost never go up in value.
One can however might note that the U.S. dollar has consistantly lost about 5% (without looking up actual numbers) every year since the euro came out. It use to be 1 euro made about 0.50 and now it is almost the other way around. This was great a few years ago for those of us selling collectibles overseas, early 2000s were great, and perhaps might not be of discussion when considering investments and future dollar values, but perhaps should be considered to see a bigger pichure.
In other words, if your collectible retains its value, while the dollar slowly drops, then in a long way around, it has increased in value. (Assuming US dollar is your typical method.)
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
<< <i>The idea that metals will work if we get into a real melt down where paper assets lose all of their value is laughable. >>
Wrestlin' cards are where it's at if there is a meltdown.
Wrestling holds a lot of sentimental value to me so these will work for me.
MY GOLD TYPE SET https://pcgs.com/setregistry/type-sets/complete-type-sets/gold-type-set-12-piece-circulation-strikes-1839-1933/publishedset/321940
With the largest buyer being the US that is not really true. A major prolonged decline in the US economy is not a positive obviously for the card market.
If we experience hyper inflation that is a great thing for card prices. The people who already have dollars will still have purchasing power on a relative basis and not be affected by the currency issue. The potential problem is obviously hyper inflation if reported will derail the economy even further because monetary policy will shift to combat inflation and instead of deflation and interest rates will be dramatically higher and thus the borrowing costs of the world will be higher forcing more cuts in budgets just because of the change in interest rates.
The Dollar is not at risk of losing it's reserve currency anytime soon. If that did happen it would be awful. That being said the Euro is at great risk Vs. the U.S. Dollar and therefore the notion of the dollar losing it's reserve currency in the short run is not a major risk. In the long term losing it to a Asian based currency is a very real threat and that would certainly change many outcomes good and bad.
Either way in the short run the public is scared to invest their money into stocks and cards or art or other collectibles feels like a good bet and since it has been working it is attracting new money.
MY GOLD TYPE SET https://pcgs.com/setregistry/type-sets/complete-type-sets/gold-type-set-12-piece-circulation-strikes-1839-1933/publishedset/321940
I don't think most collectibles can really be considered a hard asset. You can't always instantly have someone waiting with cash in hand for the collectible you are trying to sell. Kind of like all the Walking Dead original comic book artwork I am selling now on eBay. The Walking Dead is crazy hot in the comic market right now but the artwork is a lot harder to move.
The Walking Dead comic is great, nice to see it up its schedule (every three weeks) to #100. The TV show was pretty good, but the comic is so much better.
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
<< <i>Nice Brendan.
The Walking Dead comic is great, nice to see it up its schedule (every three weeks) to #100. The TV show was pretty good, but the comic is so much better. >>
Don't get me going on issue #100.
I was one of the biggest presellers of all the covers on feeBay. I will be getting a drop shipment of around 1250 copies of #100. Not looking forward to the couple days worth of work to repackage and ship these out. I did it though to get a bunch of the rare 1:200 variants that are coming out for #100.
Up until a couple months ago I had one of the best Walking Dead Comic collections out there but I started selling off some of my high grade / signed issues. #1,2,3 and #19 sold for around $3000 total. I only had $400 invested in them. I plan to buy them back when the market cools down some.
<< <i>Excellent post Dpeck! BTW...if we ever did lose the dollar as the reserve currency, then I agree with your earlier statement about having plenty of guns. >>
Not sure how having lots of guns would help. If such an event did happen, those in position will lock up what resources they could within hours. A gun will not help you make clean water or provide food from the grocery store....which will no longer exist as we know it.
One could use the gun for hunting animals, if one did not live in a city, but I imagine if even 10% tried this, we would deplete any game within a couple weeks.
I suppose one could use guns for short term gain to go around and pick off your weaker neighbors.
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
If one looks at cards as an investment, then there has to be a separation in emotional attachment. If that attachment is there then I think it has to be considered as just a fun hobby.
I have a decent collection of cards that I have been putting aside. A real big mix of years and sports. I try to think it has some balance. Just like a portfolio, you don't want everything in one basket.
Most people have 3 types of money. Now, Future, and Never money. Checking and savings, money markets I would consider now money. It gets transferred around to pay bills, have reserves, etc. Future money is designated for exactly that the future. IRA's, 401K's, 403 B's, CD's, Annuities, and for me cards. I don't really have never use money, that usually gets developed once retirement is reached and can be passed down to ares, and charities, church, etc.
For now my cards are going to help college possibly, maybe a house purchase, and maybe assist in retirement. And hopefully some will fall into never use or a legacy leave-behind.
I agree with the true definition of a hard asset, but also agree people are using all types of collectibles as an investment. I think there will always be a market for collectibles, and my guess is that market will continue to grow. That Clemente 5-10 years from now very well may sell for 50%-100% more in value. Look at unopened material, Mantle RC's, the Wagner. Go back 20 years and growth pattern is phenomenal.
For now it's a hobby and an investment, and I love every part of it. Not having it in my life would be very hard. Who knows what the future will bring, but I hope we can all be just as happy about this hobby 5, 10, 20 years from now.
"Live everyday, don't throw it away"
"Live everyday, don't throw it away"
Ive always felt that the "Whats it worth" and "Investment" collecting mentality has cost the hobby the involvment of the kids
and ruined the simple innocence that the hobby all had for me as a kid.
The younger generations have already become less and less interested in the hobby. While some of the Pre-war items might hold,
I truely believe that in 40-50 years there won't be any kind of market for any of the modern stuff, It will be render totally worthless
due to the lack of generations of youth in the hobby.
The "whats it worth" and "Investment" collecting mentality is also largely responsible for all the corruption we now see in the hobby.
With the Autograph field already so plagued by corruption and the TPGing becoming more and more corrupt and inconsistant every day.
I can see a time that once the "Nostagia" collector has had enough of the corruption and greed and exits the hobby, there will only be "Whats it worth" sellers trying to pitch their cards for profit to each other and the hobby will eventually become void of any true collectors.
John
The next hot video game will cost $60, and will sell 100 million or more copies. So it is not that kids can not afford cards, they don't care for them. The same can be said about stamps and comic books.
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
<< <i>
<< <i>Excellent post Dpeck! BTW...if we ever did lose the dollar as the reserve currency, then I agree with your earlier statement about having plenty of guns. >>
Not sure how having lots of guns would help. If such an event did happen, those in position will lock up what resources they could within hours. A gun will not help you make clean water or provide food from the grocery store....which will no longer exist as we know it.
One could use the gun for hunting animals, if one did not live in a city, but I imagine if even 10% tried this, we would deplete any game within a couple weeks.
I suppose one could use guns for short term gain to go around and pick off your weaker neighbors. >>
For me and my family's personal protection.
MY GOLD TYPE SET https://pcgs.com/setregistry/type-sets/complete-type-sets/gold-type-set-12-piece-circulation-strikes-1839-1933/publishedset/321940
<< <i>
<< <i>
<< <i>Excellent post Dpeck! BTW...if we ever did lose the dollar as the reserve currency, then I agree with your earlier statement about having plenty of guns. >>
Not sure how having lots of guns would help. If such an event did happen, those in position will lock up what resources they could within hours. A gun will not help you make clean water or provide food from the grocery store....which will no longer exist as we know it.
One could use the gun for hunting animals, if one did not live in a city, but I imagine if even 10% tried this, we would deplete any game within a couple weeks.
I suppose one could use guns for short term gain to go around and pick off your weaker neighbors. >>
For me and my family's personal protection. >>
I have been to many places in Africa and South America without local official "law" and believe it not, people don't run around and steal and kill everyone. They didn't do that in the wild west days either.
Do not take me as anti-gun, I own two handguns and a 22 rifle. More then I can shoot at one time. But I usually find the buy more guns comments funny, as these always comes from people with multiple guns.
Raw: Tony Gonzalez (low #'d cards, and especially 1/1's) and Steve Young.
If there is someone out there in CU land more enlightened on the tax treatment of cards, I would like to know more.
Last October, my area (Southern New England) got hit by an unusual autumn ice/snow storm that knocked power out for 5 days. By day 3, people were being arrested for stealing generators from peoples yards and breaking into hardware and home improvement stores.
Just for the record about the guns, I have a Class A large capacity LTC, and the only gun I own is a 12 gauge shot gun and some bird shot ammo. I don't hunt, and I hope I never have to use it for protection.
MY GOLD TYPE SET https://pcgs.com/setregistry/type-sets/complete-type-sets/gold-type-set-12-piece-circulation-strikes-1839-1933/publishedset/321940
<< <i>am proud to say that my #1 hobby is firearms and building them. Just added another AR15 to the collection to celebrate it being an election year. >>
I literally had an armory available to me, M4's, M2's and MK19s, night vision, etc..,,but since my move, all I have are golf clubs.HAHA... For fifty cents each, I bought about 10 drivers. Great for a little while but I'd imagine a gun would be more threatening to someone. I'm looking at an AR sometime early next year.
You can go to ebay and sell your quality sports cards.
Both are hard assets. They both can turn into cash.
If the dollar goes in the toilet, then having chickens, land, and guns will be better then having gold and cardboard.
However, having gold and cardboard would not hurt you either.
If there were bonds that had a negative interest rate, it could be a good asset, despite being a foolish investment
According to this definition, cards are not Hard Assets
According to this definition, they are
<< <i>The younger generation/s never had the interest in baseball (the game) we did. These kids were never lost to the hobby, they were never in the hobby.
The next hot video game will cost $60, and will sell 100 million or more copies. So it is not that kids can not afford cards, they don't care for them. >>
Exactly! So if they don't care for them now, Who is going to care enough about them in 40-50 years once the older generations that "Do care for them" are dead and gone?
Pre-War and certain post War 50's issues might likely hold. Possibly even some 60's issue.
But I don't see the "Manufactured Fools Gold" modern special foil insert cards ever holding the kind of crazy values they now command.
Im glad you made the point clear. Its not that they can't afford them, but rather they simply have NO interest in them. If they have no interest in them now, Again, who will have enough interest in them in 50 years? A handful of "whats it Worth" Collectors? Some old Stock Brokers? Who will they sell them to? Each other?
John
Where do kids fit into all of this? I have no idea--I'm an adult, and I don't even think that I really fit into all of that anymore. But back to the question posed by the thread--can sports cards be considered "hard assets", I say--why not? Sports cards these days don't seem to be about anything other than their "value"--their scarcity, their condition. They used to be marketed to kids, as toys--something to "play with". Those days ended back about a quarter-century ago. Sure, many people may have lost money "investing" in cards since then, but when compared to other collecting hobbies, the sportscard hobby is extremely viable--nobody has ever paid nearly a half-million dollars for a mint condition Elvis Presley Sun 78 record from 1955. I mean, those old Sun 78's are scarce, and are worth decent money, and Elvis fans are not shy about spending money, but it's just never happened. But again--the reason a 1955 baseball card can go for that kind of price has, I think, nothing to do with baseball but rather, the fact that it is a collectable that has innate advantages (size, historic interest, visual appeal) over other collectables, and as such, been proven to at the very least, hold it's value. But the fact that a Roberto Clemente baseball card is worth a half-million dollars still doesn't change my mind about whether Clemente should have been named to the "All-Century Team" back in 1999--as far as I'm concerned, Frank Robinson needs to be on that team before Clemente.
OK, now I've forgotten what the thread topic was.