A lot of the discussion we have been having recently on the forum falls under the umbrella of, as the discord would term it, :whatshouldibuy:. Basically, people (often new members) will post a list of items and ask the forum which is a better long-term “investment” decision or which item or class of items will hold its value better. While these individuals are often ridiculed on the forum and on the discord, I believe the issue often lies in a simple misunderstanding about collecting and how to go about it.
I’d like to go over the differences between financially smart collecting and so-called “investing” in Pokemon cards. I think many people are asking about “investing” when in reality they simply want some advice on how to collect cards in a financially sustainable way.
FINANCIALLY SMART COLLECTING
The mindset of financially smart collecting can basically be described as maximizing the value of the items in your collection while minimizing your expenses. The goal is to buy the items that interest you most while paying the least amount of money in order to get them. This will manifest itself differently across each collector, but I’ve been collecting under this mindset for years and I’ll share some of the key things that I’ve learned.
- Don’t buy sealed product to open. You will almost always be taking a loss on it, even if you do make a profit it will be minimal and the odds will eventually even themselves out over multiple iterations of sealed product. Whether it’s heavy packs, booster boxes, or collection boxes, you are almost always better off buying the single cards. Occasionally I will buy sealed product, but only for the enjoyment value I get from it.
- Prioritize your goals and focus on them specifically. Is your goal to buy PSA 9 WOTC holos? Maybe don’t go after that new super glittery SWSH card or the PSA 10 version of your favorite Pokemon from SM. You will be surprised how quickly purchases that are not part of your main goals will add up, before you know it you’ve dropped a couple hundred dollars on cards that have not advanced your primary collection goals, while prices for those cards continue to climb. Within this I would also recommend buying the most expensive cards first within your goals.
- Take advantage of auctions and the occasional deal, but don’t let the cheap mindset overpower you. If you want to get one of the cards in your goals, I guarantee you will eventually have to pay above market value. Remember that the goal here is to collect smart, it’s not to only buy cheap cards. The money you save by following the top two points will more than cover the extension for these cards.
Occasionally within financially smart collecting you’ll need to make a decision on when to buy a graded card you think is due for a price raise, when to take a chance on an ungraded card you think may grade within your goals, or what out of many cards to buy first. But here’s the important part: no matter what decision you make, you will likely not lose a significant amount of money. It is actually quite hard to lose a lot of money in Pokemon no matter what you buy. Cards don’t drop by 50% overnight, and as long as you are being smart with your collecting your collection will at worst sell for 15-20% less than your purchase prices simply due to platform fees and market fluctuations.
INVESTING IN POKEMON
Investing is fundamentally different from collecting. The goal of investing is not to collect the cards you like, it’s to make the most money possible. You are purchasing assets, you aren’t purchasing nostalgia items. Investing in Pokemon is much more specific than financially smart collecting. Here are the basics:
- Develop exhaustive knowledge of the Pokemon hobby. Knowing the average prices for WOTC cards is not enough, knowing populations for Neo holos is not enough, you must know nearly every card. You can’t simply look at any one item and ask if it is a good investment, you have to look at the entire market and ask what is the best investment. I did a very small example of what this looks like in September with Charizard cards, you can find the article here.
- Access substantial capital. I would say that $100,000 would be a good start for investing in Pokemon. Maybe you could get in with lower-end trophies at the $10-50k mark, but in order to develop the kind of diverse portfolio that would begin to guarantee solid returns, I think $100k is the starting point. Just because some people have made significant money without this capital in the past doesn’t mean you can do it today. Throwing a couple thousand dollars at cards here and there will not work out for you.
- Purchase high-end cards. I would almost exclusively limit this to short-print trophies, promos, etc. If it doesn’t have a limited print number, it’s probably not for you. The only exception to this may be 1st edition base, but to be honest there are much better places to put 40k than an 1st ed. PSA 10 Zard if you are investing.
- Wait. You need to have the financial stability to wait the decades it will take to see significant returns. This is exacerbated by a lack of liquidity in high-end Pokemon.
The hard truth is that investing is vastly out of reach of the average Pokemon collector and the only people who have successfully done so started many years ago and made nearly perfect investment decisions along the way. Frankly, compared to other investment products out there (stocks, real estate, etc) Pokemon is objectively subpar. If you’ve got money and really want to see some returns, go see a financial advisor and put together a stock portfolio.
THE MIDDLE GROUND
A lot of people want to believe that there is somehow a middle ground where you can make money on appreciating cards. This is technically possible but is nearly impossible to consistently pull off. I got lucky and made $4k off of one card once, and I’ve been in the hobby for a little over five years. It is not sustainable and is why many flippers and “investors” cannot financially stand to keep any of their “investments.” They’ll buy an expensive card but won’t have the ability to hold it long enough to see a return. Sometimes they’ll dump after a year or two and make a couple hundred bucks, which gets cut down very quickly when you factor inflation and seller fees. It is a not a good model of collecting and you will nearly always be better served by sticking to the financially smart collecting goals.
The best way to collect is not to worry about what will return the most money. The returns on set cards are negligible and inconsistent, which is why everyone says not to invest in them. Actual investing requires a level of capital and knowledge such that I can probably count on one hand the number of people on the forum who can do it properly.
tl;dr Lose the investment fantasy, buy what you like and do it smart, at worst you will have a negligible financial loss.