Saturday, January 11, 2020

Cardboard Finance - An Investment Time Capsule

During the course of last year, I took an increased interest in the financial side of this hobby that I enjoy so much.  Yes, I know that baseball cards are supposed to be fun (they sure are to me!), and that some consider it sacrilege to even mention something like dollars and cents in the same sentence as baseball cards.  To each his own!

I'm a nerd who works on computers for a living, and an amateur math geek to boot (probably one of the many reasons I enjoy baseball so much), and I can't help that I've got an interest in finances as well as sports cards.  I'm sure the fact that I'm a child of the late '80s/early '90s, when the hobby was in the first stages of "investment frenzy" mode, may contribute to my curiosity about how these two passions intersect as well.

Anyway, last year I sold off some parts of my collection that I realized I wasn't enjoying as much any longer, and used most of the proceeds to bulk up my small, start-up investment portfolio.  I learned a lot through the process about investing, which was cool given that it's a topic I was pretty much totally ignorant on up until a couple of years ago (and am now only mostly ignorant on).

During that process I realized that, while not my intention, I'd turned a tidy profit on some of the cards I'd sold since purchasing them about a decade earlier.  It brought up a question in my mind that I've tossed around a few times, and that is "If done carefully and knowledgeably, is it viable to think one could make a solid profit investing in baseball cards?".  Is it any crazier to put your financial faith in your favorite player's rookie card than it is to put it into a faceless, emotionless mega-corporation?

My gut instinct answer to the question is that yes, baseball cards can be profitable, but only in very select circumstances.  With few exceptions, I don't think buying tons of modern unopened product and locking it away for the future is ever going to work (unless you were smart enough to snatch up and sit on, say, a case of 2011 Topps Update baseball!).  Didn't work out for the folks who did it during the '80s and '90s craze I mentioned above, wouldn't work out now.

I do firmly believe, however, that certain cards will absolutely increase in value predictably and significantly in the coming years.  For example, I'd bet that if you had the means to pick up a mid-grade Michael Jordan Fleer RC today, which will run you around $1,500, that it will be worth at least twice that amount within a decade.  Obviously nobody knows for sure, but I've seen it happen time and time again with key, iconic cards of the greats of the game within my own collection over the years.  Think Mike Trout's 2011 Topps Update RC.  Connor McDavid's Young Guns RC on the hockey side, or the Wayne Gretzky at the top of this post.  Those types of cards.

Anyway, I thought it would be fun to test the validity of sports card investing through a real-world experiment, one that I know at least one other blogger (Fuji) has considered as well.  Throughout the course of last year I worked slowly at accumulating a dozen different cards that I predict will increase in value over the next few years, with the thought of locking them up in a "time capsule" and revisiting them down the line to see how my "investments" have done.

As the calendar flipped to January of 2020, I attached a post-it note to each of the twelve cards indicating what date in 2019 I purchased them on, where I picked each one up (eBay or COMC), and most importantly what I paid for each.  I then bundled them up and stashed them away in this old Calvin Klein cologne box I've kept lying around because it's sort of a cool storage mechanism.  It's going to serve as my time capsule for these dozen cards for the next five years!

Now, obviously I'm not in a financial situation where I was able to stuff this thing full of Mike Trout and Michael Jordan RCs by any means.  I don't think those are the only types of cards that could become profitable either, though.  The selections I've packed away here were acquired from January through the end of December of last year, and ran me anywhere from $1.50 on the low end, to one significant card that went well into the triple digits.

My plan is to open this box in January of 2025, five years from now, and do a series of blog posts covering the results of how my "cardboard portfolio" performed.  I think it will be a fun exercise, and an interesting real-world test.  Maybe I'll be able to prove that an informed collector can make for an effective investor, or maybe we'll validate once and for all what many claim is true; tangible items like sports cards and art are almost never good investments.

Or, maybe the truth will land somewhere in the middle.  I think this is the most likely outcome.  There are one or two cards in the time capsule that I feel fairly confident will be solid picks and perform well, and then there are a couple of others that I'm unsure about at best, but were fun to include anyway.

That's all for now.  So begins the most drawn-out two-post series in the history of card blogging?  I'm not sure, but if you're still around and I'm still around (and blogging is still a thing), check back in January of 2025 and we can see how I did!

Until then...


Nachos Grande said...

I'm all sorts of intrigued about your project. I'm also a math nerd who is just now starting to get into a bit of investing (mostly learning the ropes, so to speak). I love the time capsule idea and I can only hope that blogging about baseball cards is still a thing we are all doing in 2025!

gregory said...

Along with posting the results on your blog five years from now, you might be submitting them in article form to the Wall Street Journal ;-)

sandyrusty said...

Short term investing with quick timely turn-arounds, yes. Long term, not so much as this market is too volatile. As well, it will be interesting what the PSA scandal will do to that part of the "market".

Fuji said...

Awesome! Can't wait to see the recap in 5 years. I was waiting to add a few more cards to my time capsule... but I never did... and never wrote my post. Maybe I'll use this post as motivation. By the way, I love your box. I'm using a cheap PSA graded card holder for my time capsule.

Shlabotnik Report said...

An interesting concept, I hope it works out for you. A few years ago I would've been super jealous about your Gretzky rookie, but I've come to terms with my never owning it and have officially given up on collecting that set, so I'm merely happy for you. :-D

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