Baseball

Lessons of History: Sports Cards Collectors & Investors Should Not Bank on ‘Last Sale Price’

If you are purely a collector of sports cards and sports memorabilia or other collectibles, it is no secret that you might not make money on every purchase when you go to resell that asset down the road. In fact, every honest collector who has been around for a couple decades or more has a serious sob story about how they thought they were buying a card that would only rise in value.

Investors buy assets with the sole purpose of making a profit, knowing they won’t always succeed. Sometimes life brings disappointments for collectors and investors alike. There is a major lesson to learn, particularly in the run-up and run-down in card prices of 2021. The last price paid doesn’t matter! And worse, the price you paid doesn’t matter!

The Collectors Dashboard has tracked the prices and developments of sports cards and collectibles for decades. In all fairness, this article cannot be just another third person faceless article without a voice. The rise of some sports card prices and other collectibles prices from 2020 to 2021 has brought many instances which are very hard to justify.

Let’s just be honest here with the number of six-figure and seven-figure sales — some bubbles formed, and some bubbles needed popping. The stock market doesn’t care what price an investor pays for a stock. This is a lesson that card buyers need to keep in mind when they want to sell.

Collectors Dashboard would warn buyers and sellers not to count too much on what has happened in the collectibles and sports card market prices solely during the pandemic and since the reopening of the economy. The harsh reality is that some of the price corrections that have started to be seen in 2021 needed to happen. Some price corrections that should have happened did not. And some values will continue to rise instead of fall.

Collectibles of all sorts have matured into an alternative asset class. As asset classes mature, some people get squashed in the process. It’s never fun to see it happen at the time, but history has some harsh lessons for many new collectors and investors.

As a on-again off-again card dealer and card collector in my teens and into college, I saw some unbelievable froth occur in sports cards from the mid/late 1980s into the early 1990s. Hot rookie cards that were selling for $10 and $20 and $30 at the time were being bought by people who expected them to rise to $50 and $100 (or more). It was as if all the new hot players were going to be worth more than the limited counts of the high-priced 1950s and 1960s rookies and superstars.

What was not known back at the time was just exactly how many cards were being produced. It is safe to say that it was millions and millions of cards being produced. The graded population of 1980s and 1990s cards is of course massive. There are untold (exponential) counts of raw cards in albums, boxes, cases and unopened packs of those superstar players that would score high in grading today if collectors sent them in for grading.

Many card buyers in the so-called “Junk Wax” era failed to consider anything about supply and demand pressure that an economist or investment analyst would warn about. They also failed to consider that many of the 1980s rookie greats and 1990s rookie greats would go on to suffer through legal scandals, drug addiction, performance enhancing drugs, domestic abuse and so on.

The late 1980s and the early 1990s brought a period where there was just a glut of cards. While the Big-3 of the 1980s were Topps, Fleer and Donruss, there were many more card-making brands (some also produced by the Big-3 under special sets or different names). Without breaking out cards by sport, collectors had to absorb sets from the likes of Upper Deck, Score, Leaf, Classic, Finest, SP, Sportflics, and many regional limited editions which are hard to recall.

Zoom forward to the period of 2020 and into 2021 and some of the same problems exist. The market for collectibles, including sports collectibles, has become much more transparent and liquid due to online sites and apps aiming to democratize the process. And some literally want to act like the stock market. Transparency in a market is a good thing. It can also bring some wakeup calls.

One issue that is hard to ignore now is the raw number of cards and sets that are again there for collectors and investors to pick and choose from in 2021. Sure, stores have empty shelves of card boxes that look a lot like ammunition shelves during the shortages we have seen. And most of the grading houses are either off-line or backed up for months and months due to an exponential influx of card grading demand.

Without getting into premiums, rookies sets, refractors, and other issues, the run-down of the list of easily “quotable” card choices of Bowman, Topps, Panini, and Finest does not even count the variations and premiums that are available on the market in 2020 and 2021. Some of it may not looks as voluminous in brands as the 1980s turned into the 1990s, but the combinations of how many unique and limited edition cards have been issued now almost feels impossible to keep up with.

The number of $1,000 cards since the year 2016 for prized PSA 10 samples even in the January 2021 monthly Sports Market Report from PSA was also mind-numbing. There were more than 30 baseball cards and more than 50 basketball cards all of new players selling at well over $1,000 and countless numbers that were close. That’s without considering the price action that was seen in February and part of March.

As asset classes rise in price and expand in depth, bubbles happen. Now sports cards are seeing a new challenge and opportunity alike in the digitalization of assets from the likes of cryptocurrencies (crypto) and non-fungible tokens (NFTs). How this ends is of course an unfinished chapter, but there cannot be a scenario where an endless supply of choices for collectors and investors is also met by a limitless expectation that prices will rise higher and higher each and every month.

As Collectors Dashboard wants to offer both sides of the coin so that buyers and sellers can make the most informed decisions possible, there is a valuable lesson that comes from investing in stocks and commodities over time. That less is easy to say but hard to always swallow, particularly when you are in the middle of it — “High prices will cure high prices, and low prices will cure low prices.”

Below is a photo I took in 2019 at the Baseball Hall of Fame in Cooperstown, New York that should spell out at least some historical context about collecting and investing woes in the sports card market and hobby alike.