Trading cards. Many investors remember the early days of baseball cards, but trading cards haven’t gone away: in fact, they’re currently seeing a fast-paced resurgence as an alternative form of investment. But will trading cards eventually go the way of the Beanie Baby, or are they still a viable model for someone who wants to creatively diversify their portfolio?
Much like art, trading cards have value in a few different ways. The diversity of their value is what secures it, even if there still is some amount of risk involved.
In some ways, investing in trading cards is just like investing in stocks or like investing in gold or silver. Like stocks, trading cards are valued on the open market, and they vary depending on investor sentiment, price history, and fundamentals (such as condition).
Like gold or silver, they’re finite: a certain print run of a trading card is only ever going to have that amount of cards available. Trading cards degrade, like art or stamps: the condition of a trading card is important. Since trading cards are deflationary (they are fewer and fewer of them as they get lost or destroyed), their value theoretically has to continue to grow.
It’s not untested. There are people who have built fortunes with trading cards. As an investment, trading cards are doing extremely well.
It’s a tangible asset. It’s something that someone can hold and display, again not unlike fine art. And it’s something that people can base a hobby around: many people investing in trading cards are also avid collectors who want to be able to hunt for the best deals. In this case, trading cards aren’t just an investment, but also a hobby or a job.
Of course, baseball cards aren’t the only type of trading card that is heavily valued. Others are investing in alternative trading cards such as “Magic the Gathering” cards, which can be priced at up to $3,000. For smaller investors, this type of alternative trading card isn’t high yield, but it is low risk: a lot of the cards retain their relatively low values fairly well, as they are both a collectible and usable commodity (they have uses within a game).
Baseball trading cards can fetch millions, and they are a more stable, sustainable market. The most expensive trading card ever sold was sold for $3.12 million. While this may pale in comparison to art, it’s also more accessible than purchasing a Picasso or a Van Gogh for the average investor.
As mentioned, trading cards have an additional appeal due to the process of collecting them. Often, investors aren’t just purchasing cards they believe will go up in value: they’re looking for and scouting out cards they personally want. Investors can purchase unopened packets of cards for $10 and open them hoping to find a $2,000 card within them. Essentially, it’s a lot like the lottery.
Investors who are good at statistics may even be able to calculate the value of an individual, unopened packet based on the year and the type of packet it is, thereby figuring out what the risk is of purchasing a bundle of such packets. It’s these types of statistical calculations that make trading cards a very unique type of collectible venture: investors need to know a great deal about the hobby, and investors who understand the hobby are substantially more likely to make money.
In a world in which the stock market can feel like a supremely random place (to say nothing of the volatility of forex trading or crypto currency), the idea of a tangible investment that makes sense can be an allure to an investor. Investors know which cards are more rare than others, know where to look for these cards, and understand that their investment should theoretically grow as long as the entirety of the trading card industry doesn’t go into decline.
All these factors are making trading cards an interesting new alternative investment, and bolstering the trading card market. And, of course, even if the bottom drops out on trading cards, investors still have their collection to enjoy and display.
Regards,
Ethan Warrick
Editor
Wealth Authority
