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Changing of the Guard: The Commoditization of Sportscards
PWCCAuctions
Posts: 15 ✭✭
I tend to detach myself from reading and posting as I believe the message boards offer the hobby a forum for discussing issues openly without the influence of businesses like ours. I’m writing this post to share my thoughts on how the hobby is changing due to an influx of buyers using sportscards as an investment, and trading them like commodities. This is in part a follow up to a post on the Net54 Baseball message board here about the ethics of “market pushing”. The purpose of this post is to share my opinion on the root causes of this phenomenon; and why this may be uncomfortable, is perhaps a sign of a maturing industry.
Those of us who have been in the hobby for longer than 10 years are surely seeing the recent market trends and simply shaking our heads. Clearly the world has lost its mind and we are undoubtedly headed towards the biggest bubble bursting event in the history of collectibles. Maybe… or maybe not. Here’s at least one argument for why what’s happening is both justified and has even been predicted.
In general, the “brand” of sportscard collecting is maturing. We’ve seen this trend trickle forward over the last five years especially for the top 1% of cards. Clemente RC PSA 8s traded readily in the $8000 range five years ago, then they went to $15,000 three years ago…. then $30,000 last year… and now $100,000 seems to be the new benchmark. How is this possible? A 1000% return on investment in five years?
For the overwhelming majority of the industry, the “hobby” element of card collecting remains strong and vibrant and seems destined to stay that way. However, the top 1% (especially top 0.1%) of vintage cards are re-branding themselves away from pure collectibles to instead take firm root in the world of commodities. Just like pork bellies, bonds, and orange juice concentrate.
Within this new “commodity” element, the only two variables that matter are supply and demand; that’s it. And there’s the catch… supply. Sportscards are some of the rarest commodities in the world where even the highest population high-profile cards (i.e. Jordan RC PSA 10s, Clemente RC PSA 8s, etc) are rarely seen on the market at any one time in quantities higher than 2 or 3. Sure the populations of these cards may be 100 or more, but who cares? Any highly-prized commodity with population in the hundreds or less is absurdly low; perhaps to the point of creating a sheer frenzy when these investments surface on the open market. And that’s what we are seeing.
It is important to note that when it comes to high-value collectibles, sportscards are not a trailblazer. In particular, coins and fine art are far beyond the current market of sportscards, even in light of the recent trends. Compared to these other industries, sportscards have a long (long) way to grow before competing for market cap alongside these other collectible based commoditized markets.
Let’s also take a moment to see the potential and speak positively for a moment; sportscards are a heck of a lot more fun to most people and certainly appeal to more investors than most other portfolio diversifications. What’s more fun to your average ‘guy’ investor… a fancy painting, some rare 5-cent nickel, or a Roberto Clemente Rookie card? Assuming the three options had equal investment potential, which would you most enjoy owning? I know what I’d say and I know a few other folks who feel similarly
One point of pessimism that I feel warrants discussion is the claim that “this must be a bubble because there’s only a handful of people responsible for most of the recent price increase”. In other words, this trend must be fragile indeed if only a few people are responsible for the change and what happens if one of them runs out of money or leaves the hobby? What if the market is flooded by the recent sales history and these few individuals can’t keep up? These are all fair and reasonable fears to harbor and I don’t have all the answers; to a large degree I am riding the waves with everyone else, trying desperately to keep some view of the horizon (and it’s been tough of late).
Let’s get a couple things straight:
a) Yes, I do believe this hobby is getting pushed hard by a limited number of collector/investors. Not sure exactly how many heavy investors there are, but I’d say the people most responsible number more than 10 and probably less than 30.
b) Should even a few of these 10-30 people vacate their position and nobody replaces them then this could possible turn into a bubble bursting event for certain cards. Supply and demand rules supreme and if supply goes up too high or demand goes down too low, the market will lower. Just a fact.
The above statements are both true; no reason to hide from it or run for the hills. In light of these truths, I have never been more confident of the bright future we face in this hobby than I do today. This is not a bubble, or at least I am confident from my position that this is not a bubble. Sure, some individual cards may get pushed higher than is sustainable and need to eventually correct, but I can’t help but view the above comments from a glass-half-full perspective… the fact that only 10-30 people can change a market is incredible! What happens when the 10-30 investors becomes 20-40? What happens when it gets to be 100-200?
Considering the recent unprecedented ROI with sportscards and also considering the love of sports and the inherent wealth investors are ready and willing to invest towards collectibles, it seems awkward indeed to argue that demand for the top 1% is going anywhere but up. As the largest auction house in the country for sportscards, we are already seeing a new generation of investors entering the hobby and this trend is on an upward track. Sure, supply may run in spurts as some more nervous collectors may choose to fire-sale in light of recent trends, but these mini-liquidations will soon dry up and the sturdier breed will be happy to continue betting on the market. I suppose it’s possible that greater supply could also come from new cards being graded, but this too is unlikely to add any meaningful % to the current population. I for one will be shocked if the population of 1952 Mantle PSA 8s rise by more than 10% in the next five years (same for PSA 8 Clemente rookies). Yep, I for one feel the “well is dry” and what little water we have is all we’ll ever have. Just my two cents but in light of the harsh supply/demand principals considered, I feel the 1952 Topps Mantle PSA 8 may be the most undervalued card in the entire hobby. As a pure commodity it might someday be considered “priceless” to some investors.
Those of us who have been in the hobby for longer than 10 years are surely seeing the recent market trends and simply shaking our heads. Clearly the world has lost its mind and we are undoubtedly headed towards the biggest bubble bursting event in the history of collectibles. Maybe… or maybe not. Here’s at least one argument for why what’s happening is both justified and has even been predicted.
In general, the “brand” of sportscard collecting is maturing. We’ve seen this trend trickle forward over the last five years especially for the top 1% of cards. Clemente RC PSA 8s traded readily in the $8000 range five years ago, then they went to $15,000 three years ago…. then $30,000 last year… and now $100,000 seems to be the new benchmark. How is this possible? A 1000% return on investment in five years?
For the overwhelming majority of the industry, the “hobby” element of card collecting remains strong and vibrant and seems destined to stay that way. However, the top 1% (especially top 0.1%) of vintage cards are re-branding themselves away from pure collectibles to instead take firm root in the world of commodities. Just like pork bellies, bonds, and orange juice concentrate.
Within this new “commodity” element, the only two variables that matter are supply and demand; that’s it. And there’s the catch… supply. Sportscards are some of the rarest commodities in the world where even the highest population high-profile cards (i.e. Jordan RC PSA 10s, Clemente RC PSA 8s, etc) are rarely seen on the market at any one time in quantities higher than 2 or 3. Sure the populations of these cards may be 100 or more, but who cares? Any highly-prized commodity with population in the hundreds or less is absurdly low; perhaps to the point of creating a sheer frenzy when these investments surface on the open market. And that’s what we are seeing.
It is important to note that when it comes to high-value collectibles, sportscards are not a trailblazer. In particular, coins and fine art are far beyond the current market of sportscards, even in light of the recent trends. Compared to these other industries, sportscards have a long (long) way to grow before competing for market cap alongside these other collectible based commoditized markets.
Let’s also take a moment to see the potential and speak positively for a moment; sportscards are a heck of a lot more fun to most people and certainly appeal to more investors than most other portfolio diversifications. What’s more fun to your average ‘guy’ investor… a fancy painting, some rare 5-cent nickel, or a Roberto Clemente Rookie card? Assuming the three options had equal investment potential, which would you most enjoy owning? I know what I’d say and I know a few other folks who feel similarly
One point of pessimism that I feel warrants discussion is the claim that “this must be a bubble because there’s only a handful of people responsible for most of the recent price increase”. In other words, this trend must be fragile indeed if only a few people are responsible for the change and what happens if one of them runs out of money or leaves the hobby? What if the market is flooded by the recent sales history and these few individuals can’t keep up? These are all fair and reasonable fears to harbor and I don’t have all the answers; to a large degree I am riding the waves with everyone else, trying desperately to keep some view of the horizon (and it’s been tough of late).
Let’s get a couple things straight:
a) Yes, I do believe this hobby is getting pushed hard by a limited number of collector/investors. Not sure exactly how many heavy investors there are, but I’d say the people most responsible number more than 10 and probably less than 30.
b) Should even a few of these 10-30 people vacate their position and nobody replaces them then this could possible turn into a bubble bursting event for certain cards. Supply and demand rules supreme and if supply goes up too high or demand goes down too low, the market will lower. Just a fact.
The above statements are both true; no reason to hide from it or run for the hills. In light of these truths, I have never been more confident of the bright future we face in this hobby than I do today. This is not a bubble, or at least I am confident from my position that this is not a bubble. Sure, some individual cards may get pushed higher than is sustainable and need to eventually correct, but I can’t help but view the above comments from a glass-half-full perspective… the fact that only 10-30 people can change a market is incredible! What happens when the 10-30 investors becomes 20-40? What happens when it gets to be 100-200?
Considering the recent unprecedented ROI with sportscards and also considering the love of sports and the inherent wealth investors are ready and willing to invest towards collectibles, it seems awkward indeed to argue that demand for the top 1% is going anywhere but up. As the largest auction house in the country for sportscards, we are already seeing a new generation of investors entering the hobby and this trend is on an upward track. Sure, supply may run in spurts as some more nervous collectors may choose to fire-sale in light of recent trends, but these mini-liquidations will soon dry up and the sturdier breed will be happy to continue betting on the market. I suppose it’s possible that greater supply could also come from new cards being graded, but this too is unlikely to add any meaningful % to the current population. I for one will be shocked if the population of 1952 Mantle PSA 8s rise by more than 10% in the next five years (same for PSA 8 Clemente rookies). Yep, I for one feel the “well is dry” and what little water we have is all we’ll ever have. Just my two cents but in light of the harsh supply/demand principals considered, I feel the 1952 Topps Mantle PSA 8 may be the most undervalued card in the entire hobby. As a pure commodity it might someday be considered “priceless” to some investors.
PWCC Marketplace
market@pwccmarketplace.com
833-333-7922
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Comments
One of the hardest parts of investing is being early in a trend and staying on the bull. It is so much easier said than done. Scads of people have said I wanted to buy that stock at $10 and now it is $100. Had I put x amount in it I would have x. Yeah sure. Along the way you have to deal with death defying pullbacks that can easily shake a human out. The easy part is you can go right back into the market and get your shares back essentially anytime you want just at a different price good or bad. With rare cards you can't so there is a much different attachment and fear of selling.
You make a great point about supply. The total population is only one metric to look at. The immediate supply is more important and there are a multitude of cards locked up in collections that buyers know aren't coming to market.
I personally view most high end cards as appealing to a persons bragging rights. The higher the prices go the more bragging rights associated with them and the more others want them.
I sum up the market with a line from this clip.
The illusion has become real and the more real it becomes the more desperate they want it.
The illusion has become real
My wrestling cards were considered garbage, worthless, only for losers, gay and any other negative comment one can make. It wasn't just people in the card collecting community but personal friends and associates in the financial services industry. Now that they aren't worthless they are cool, awesome, so unique and so on. People hate things at low prices and love them at high prices.
Telling someone you own a perfect mint Michael Jordan rookie sounds great. The first question is how much is it worth. (2010) $6,500. Wow that is pretty cool. Fast forward to 2016 and it is $35,000+. Man that is so awesome!!! Bingo.
Let's not forget that every time someone wins an auction, to everyone else in the market (at that time) for that card/set/pack/box, the winner "overpaid". I assure you, if there are only 10-30 collectors bidding up the prices of these certain cards... it is indeed a bubble. That is not enough market participation to sustain prices that are primarily driven by demand (and emotions). If I were one of those 30 (assuming they're not flipping them), I would seriously be concerned about who will be willing to buy these cards in 50 years. I would also be praying that no corruption is ever found in any of the main grading companies.
The owner of a company making money selling high-end sports cards, in a market being driven by a very few buyers, thinks more buyers should get in the game. Duly noted.
+1
George Brett, Roger Clemens and Tommy Brady.
Commodities? I don't think art or sports cards will ever truly be considered a commodity because their value and price have no relationship. The value of art and trading cards is personal... the price is exclusive to one particular point in time. If you want to look at "market value", then you have to look at prices over a much longer period of time... but that still doesn't factor in personal value and what someone is willing to pay.
Let's not forget that every time someone wins an auction, to everyone else in the market (at that time) for that card/set/pack/box, the winner "overpaid". I assure you, if there are only 10-30 collectors bidding up the prices of these certain cards... it is indeed a bubble. That is not enough market participation to sustain prices that are primarily driven by demand (and emotions). If I were one of those 30 (assuming they're not flipping them), I would seriously be concerned about who will be willing to buy these cards in 50 years. I would also be praying that no corruption is ever found in any of the main grading companies.
I posted a story from the WSJ about the art market. The dynamics of the market have changed and buyers are treating art like any other investments to be traded like stocks. Pieces that used to sit in collections for years even decades before being sold are now being bought and sold much more frequently.
We saw the same rise in unopened (albeit at a slower pace) a couple of years ago and the market has pretty much stabilized at a much higher level (off the peak for some products).
I'll be the first to admit that this rise has changed my buying habits. I was in the market for a 1975 Brett PSA 9 and a 1979 OPC Gretzky PSA 8. At these current prices I cannot justify paying $4K+ for these cards. So I moved on to focus on other cards - early 1980's RC in PSA 10 and Key Tiffany RCs. The hobby is large and diverse, I don't need to own the trophy cards to enjoy it.
However this rise has put me in a tough situation. I do own many of the current "hot" cards. I bought them years ago at much lower prices. On just 10 of the cards I'm looking at a potential high five figures. I never ever thought about selling them when I originally bought them, but it is really hard not to put them up for auction (with PWCC of course!).
I think the mid grade (5-7) and raw market has a lot of growth potential too. Consider the unreal prices of high end recently.
Those prices are obviously out of reach of 99.9% of us without those deep pockets.
That being said I don't think a mass exodus of collectors will leave the hobby rather those crazy prices of high end cards will drive the VAST majority of hobbyists to the mid and lower grade cards.
Looking at this auction of a PSA 5 Clemente RC (272264704553) which closed at $2,700 a few weeks back and this PSA 8 Clemente RC (282071534341) that closed at $94,600 a few days ago.
Yes, it is a beautiful card, but that buyer pool for that card is tiny when compared the the much larger market for the PSA 5 but what happens when those deep pockets stop buying?
Then what happens when those same buyers decide to sell? Who will be their buyers?
Maybe I am missing something but with a larger potential market (yes there are more PSA 5 Clemente RC than PSA 8) seem to me the growth potential is better on mid grade cards.
It will be easier, IMO to buy X card for $2,700 bucks and see that card rise 10 or 20% or whatever just based on having more potential buyers.
Who really knows? Just my thoughts and I for one am priced out of the high end market, but I still buy what I like and can afford. The hobby is moving into 2 distinct markets high end and the rest of us
Thank you first for taking the time to post and give your opinion on what is driving the sales. I totally agree with your points on increased monies being spent on cards from investors/collectors. I also personally believe there is a group of people pumping the bids up on collectors too.
Shane
I've brought this up before, but we can't underestimate how many people in their 30s/early 40s collected cards as a kid and now earn 6 figures. The pool of buyers who can purchase cards has probably doubled in the last few years alone. I'm sure some of the group of 10-30 high purchasers are in that group, but many more are in the lower 4 figures buying range and don't have a problem buying a psa 8 Jordan rookie for 2500 opposed to 800 only a year ago.
One big internal watch-out I've noted to myself is if I hear of any of my peers from this group who haven't been a collector, suddenly jumping in and buying cards purely as an "investment". I.e. the hobby's example of when your neighbor starts giving you tech stock tips...When that day comes, that's a definite sign for me to start getting out (or back down to a purely hobby $ level)
Bowman Baseball -1948-1955
Fleer Baseball-1923, 1959-2007
Al
At the same time though, there are probably thousands in the market on the mid-grades of those same cards....and so prices are naturally going to follow along on that rise across the board with HOF rookies. I see no reason for any kind of correction any time soon.
I laugh when I think back to a few years ago on all of those doom-and-gloom threads that the entire card market was about to collapse....and a bunch of people bought into that and sold off their stuff. In those threads, I was adamant that not only would there not be a crash...but that we were more likely to see a rise with former collectors from the peak era of the late 80s/early 90s coming back to the hobby.
This is what I keep coming back to. If new blood is coming into the hobby purely to invest, then why are these guys spending 2x, 3x or even 4x what a card sold for just months ago? That seems like a very risky investment strategy to me. Also, why would these new buyers all emerge at once, which means driving up prices for each other?
This is what I keep coming back to. If new blood is coming into the hobby purely to invest, then why are these guys spending 2x, 3x or even 4x what a card sold for just months ago? That seems like a very risky investment strategy to me. Also, why would these new buyers all emerge at once, which means driving up prices for each other?
Maybe they got a copy of the frozen orange juice report from Beeks?
I don't read Net54 so have no knowledge of what triggered this, but am trying to fathom what the purpose of this writeup is:
Attempt to calm a nervous collector base? If so, finding out that as few as 10 people can drastically shift the market in this short of a period of time doesn't do that, for me at least it does the exact opposite.
Econ 101 for collectors? I think everyone here understands how supply/demand works. The commodity comparison doesn't really hold up for me either. Perhaps in the mid-grade/large pop this would be more applicable.
Predicting bubble or lack thereof? Only time will tell.
I've been in the hobby perennially for almost 30 years - here for over 12.
There's plenty of people here who just enjoy their projects - period.
If someone is cashing out due to these buyers? Congratulations on your sale.
I'd like to see more threads on the fun people are having with their respective projects.
Bowman Baseball -1948-1955
Fleer Baseball-1923, 1959-2007
Al
Dan, know when to say when. Assess the league of discussion and bow out when not in it. The man probably just bailed from here again for another decade and his periodic input would have much interest to the real world. Excuse this reply, but, stfu.
Edit: The dude's post above was edited in order to not be sooo DanBessettish. It was like a smurf attacking Daernerys' Dragons. Quite humorous.
The bid retraction issue is an ebay problem, not Brent's or Rick or bigboyd or Kruk or any other large ebay seller. Ebay allows buyers to do it and there is nothing any seller can do to prevent it.
There are times when it hurts, physically, holding in sarcastic comments.
Dan, know when to say when. Assess the league of discussion and bow out when not in it. The man probably just bailed from here again for another decade and his periodic input would have much interest to the real world. Excuse this reply, but, stfu.
ditto
Sure glad I collect 1989 Topps Hockey.
Possibly the greatest true collector response ever. NICE !
Yeah yeah, Brent, that's nice. But what about the astounding number of bid retractions on your auctions? You must be the record holder and, right or wrong, it gives the impression of rampant shilling. Does this mean the record prices are somewhat artificial? Why does PWCC get a higher percentage of bid retractions on your auctions than any other seller? I mean, we're talking hundreds per year. What say you?
Bid retractions are a serious issue in our auctions and in other eBay auctions, and I understand why you raised this comment.
We imagine many in the hobby harbor similar concerns and frustrations about the legitimacy of the bidding environment; as a business owner and collector, I certainly do. I appreciate everyone’s patience as we work to address these issues.
For the past three years, we have partnered with eBay to develop new methods and tools for ensuring an honest bidding environment, with a particular focus around bid retractions. We await several final decisions from eBay, but PWCC will initiate a new post on this and other message boards announcing PWCC and eBay’s jointly-created plan to limit fraud on the eBay platform, and restricting bidding from users with a history of bid retractions will be specifically addressed. I expect to make this post by the end of next week.
As always, please don’t hesitate to reach out if you have any concerns, suggestions, or questions.
PWCC Marketplace
market@pwccmarketplace.com
833-333-7922
What happened to post #35?
Retracted.
IG: goatcollectibles23
The biggest lesson I've learned in this hobby, and in life, is that if you have a strong conviction, you owe it to yourself to see it through. Don't sell yourself, or your investments, short. Unless the facts change. Then sell it all.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
“The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels, at which he would be wise to buy, and high price levels, at which he certainly should refrain from buying and probably would be wise to sell.” – Benjamin Graham, The Intelligent Investor
IG: goatcollectibles23
The biggest lesson I've learned in this hobby, and in life, is that if you have a strong conviction, you owe it to yourself to see it through. Don't sell yourself, or your investments, short. Unless the facts change. Then sell it all.
Dave
What happened to post #35?
I don't see post numbers, but whose was that?
"The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It's *****. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you." - Gordon Gekko
IG: goatcollectibles23
The biggest lesson I've learned in this hobby, and in life, is that if you have a strong conviction, you owe it to yourself to see it through. Don't sell yourself, or your investments, short. Unless the facts change. Then sell it all.
Maybe I am wrong, however all of this makes me chuckle. Everybody is trying to solve some master puzzle if this is a bubble or not. Who cares? To me this is simple...
I say people should buy cards and have fun with what you are doing and if you are not comfortable with the price then don't buy it.
Carry on...
What happened to post #35?
I don't see post numbers, but whose was that?
HaveLearned
I went to click on the thread and it was gone.
Maybe I am wrong, however all of this makes me chuckle. Everybody is trying to solve some master puzzle if this is a bubble or not. Who cares? To me this is simple...
I say people should buy cards and have fun with what you are doing and if you are not comfortable with the price then don't buy it.
Carry on...
Words of wisdom.
Baseball, it is said, is only a game. True. And the Grand Canyon is only a hole in Arizona.
-George F. Will
Bowman Baseball -1948-1955
Fleer Baseball-1923, 1959-2007
Al
Sure glad I collect 1989 Topps Hockey.
Possibly the greatest true collector response ever. NICE !
I agree, that was funny! That being said, two months ago I could have said the same thing about 1990 Fleer Basketball, which I would have thought was the epitome of worthlessness. Heck, I couldn't even give wax packs away to kids at garage sales, and now look!