Are we in a bubble?

General
23

“An asset bubble is when rise in price over a short period that is not supported by the value of the product.”

Some factors to look at

For bubble:

  • new supply is temporarily near 0 with psa closed
  • most sales are buy it now or private
  • there is great euphoria within the market
  • the current real world economy does not support an increase in non productive, luxury collectibles

Against bubbles:

  • number of new collectors is high (virbank went from 14k members in 2018 to 24k in 2020)
  • the auctions occuring seem to have a number of bidders at the top
  • new youtubers reaching new collectors, no doubt the pack openings of tca, zandg and pokerev have lead to explosion of new people entering the market
  • mint cards are harder to find
  • QE infinity

These are only a few factors at play but enough to start critically thinking if we’re in a bubble or not.

4 Likes
24

@pichufan , Honestly, a card that was $46 and like 6 months later sells for $500, there’s no way this is ‘‘organic growth’’

Ill give you another example, The PSA9 Dark Charizard 1st Ed PSA9 with several hundred copies (Pop1109 to be exact), that used to be around $150 now currently being auctioned with bids over $550.

I dont need anyone to convince me that this is not organic growth.

What’s happening here is simple (and these are facts):

People getting money literally for nothing: Several governments gave ‘‘stimulus money’’, not only the US one.

:ninja: There’s no supply to reach the demand, why is that?

Mostly because there are not hundreds of returns being delivered, PSA is slowly coming back, and was shut down for quite a bit. And dont tell me there’s no wotc product to be graded at a 9 or higher degree because thats a complete lie, me and several friends have solid subs awaiting to get graded, with tons of WotC Stuff.

While this should not be considered a fact, i think bit of inflation could happen-be happening; make sure you check how much money the US printed during last few weeks considering the monetary base.

3 factors that play a huge role in what’s happening now.

Would i buy stuff? Yes, i wuold, there are some low pop cards that im still trying to get; but i wouldnt grab a PSA9 Dark Charizard for U$S600 because that for me is a complete nonsense, or the Pikachu you pointed out…

My 2 cents.

6 Likes
25

I would push back against the notion that inflation is occurring right now. In fact, a large reason for printing so much money and getting it out there is to combat deflation. With so much economic activity being erased, there is a large risk of a deflationary environment which means we need money flowing somehow which is what the stimulus checks are meant to do.

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26

Good point, what about the rest of the post?

27

I generally agree with your other points. I am not too entrenched within the WOTC market so I don’t have the greatest grasp on those market trends, but I do suspect that some cards have overshot their “true value”.

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28

FOMO is undeniable as a factor. “BUY NOW BEFORE IT’S OUT OF REACH FOREVER!” is something I read multiple times over the past days, regarding everything sealed pre-XY and WotC holos - doesn’t mean things are in a bubble though, probably just that the increase is sharper than it might have been and that cards that are a bit more available will decrease again, in my opinion. Just not with the same price floor.
Sidenote, I had likely the biggest month of spending in march and almost everything I bought was within 10% the price range of 2019 :wink:

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29

I think that a PSA 9, 1st edition WOTC holo being sold for under $50 was the unsustainable part.

The ratio of copies available relative to the low cost didn’t make sense. The hobby in general and buyer pool is growing daily. Prices had to course correct eventually. It just happened faster than we thought it would.

2 Likes
30

Honestly I could see the cards taking a little dip due to many factors such as when the economy goes back to normal. I think the stimulus checks also made items increase a little due to people spending the checks on non-essential items such as collectables (i’m guilty of this). Pokemon isn’t the only hobby that has seen an increase. So maybe collectables as a whole is in a small bubble. I can say with confidence that prices will not fall back to what they were pre covid-19.

31

As someone who’s buying in spite of market changes and not influenced by stimulus, there’s more to do with availability than affordability. If receiving a $1200 stimulus was all it took to dry up the market than the increase in value would have happened anyway, given time.

@pichufan

  1. Jolteon was $160-$170 around the 24th of January, before the pandemic hit the mainstream. I bought two of them around that price because it was a good deal and they had been becoming scarce.

  2. The 1st ed Shadowless Machamp in 9 was not $19 8 months ago. It’s been $90-$110 for years and crept up to $130 or so around January time.
    For many cards, there hasn’t been a significant availability for 8 months to a year. :blush:

2 Likes
32

Short answer : No
Long answer : Nooooooooooooooo

Jokes aside, I do think this growth is due to the limited availability. I always believe availability pushes price higher more than demand but that is just from my personal experience.

Most 1st ed WOTC PSA 9/10 are being absorbed at a higher price and this instantly brings me back to 2017 when Shadowless, especially the PSA 9 Shadowless Charizard was all the craze.

Pop was slightly above 300 at the time for the zard but there was only 0-2 copies available at any one time. Prices went up from $450 around March 2017 to a high of $3000 in Nov. When prices hit $2500-$3000, everyone started selling, even those who bought at $2000+, causing market saturation at 10+ copies being available at any one time and the price went down ever since to a low of $900 early to mid 2018 via eBay auction.

Whether this is a bubble or not, no one knows. Only time will tell. Personally this current market situation brings me back to 2017 when you can buy a graded card and flip it in a month or less to make that 20-30% after fees.I don’t see this happening yet but also no one did at the start of the 2017 boom after the PSA 10 1st ed Zard hit $16k.

A little history lesson for those who came in after 2017.

5 Likes
33

No bubble, but we should see a dip once supply starts hitting the market in a month of so after PSA gets rolling.

34

PSA has been closed for weeks, not months or years.

And even before grading stopped, we were barely seeing any increase in supply for WOTC gem mints.

The sealed product remains too expensive to open without taking a financial loss.

I think the biggest increase in supply is going to come from Near Mint-ish WOTC cards, as people see that even PSA 7s-9s are fetching great returns.

1 Like
35

Does anyone know when PSA is re-opening? Or have they already?

36

PSA has started processing regular submissions and allows more submissions. Bulk submissions are backed up and no more submissions accepted as of today.

37

So its just a coincidence that the supply has dried up once PSA closed? You’re saying it would take months or years of PSA shutdown for us to notice? I think not…

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38

Of course, PSA being closed contributes to supply shortages.

But PSA being closed for slightly more than a month does not come close to totally explaining why prices have increased in general.

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39

I agree with that. Not saying its the whole reason, but I think its a large portion of why. I think we underestimate the supply coming out of PSA that hits the market every week.

40

I think an important question to ask is who is buying at these prices and for what purpose? If a large percentage of these buys are speculative flippers, then we are likely in a bubble. On the other hand, if most of this activity is going into long term collections then we are not. It’s hard to know this in the present, so we’ll just have to wait and see. I do agree with several others that PSA 9 1st ed WOTC holos were perviously under-valued, and it’s not surprising that they’ve gone up.

10 Likes
41

Pokemon is, of course, in a speculative bubble. Pop culture based collectibles are almost always in a state of bubble. That doesn’t mean that where prices are now are wrong given the numerous factors already discussed in the thread (namely, the drying up of supply). Keep in mind, when that person last year bought the Pichu for $46, the seller was probably pretty happy to get that price. In 2015, that Pichu was probably $15. It’s all relative.

That being said, buying something with questionable scarcity after it’s jumped 1000% in a year is not my cup of tea either but it could certainly be worth $1000 in the future or $2000, etc.

1 Like
42

way i see it is that last year sealed product exploded. The thing is the poeple who own sealed vintage product are older wiser and been here longer, they aren’t the type of people to press the panic button when some cards jump 200%. I don’t have any sealed product so please dont think I am biased. The set cards HAD to move as well, but since everyone has set cards (experianced and newbs) we see crazy behavior