Never said the prices can go only go up. In fact, we have already seen retraces for some WOTC cards in the most recent PWCC block, for example, the crystal charizard fell from $8k+ to $7k. But recommending modern products for investment purpose because “You have a huge risk buying a WotC psa 10 and seeing it go down”, that simply doesn’t sound right to me.
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Dude. You just provided evidence for my statement… I think the discussion can end here…
I want to get in on this discussion.
As background, I have a strong financial background; as my professional career included International management positions and a 7-year stint as a full time professor at a major business school.
I started actively collecting things (baseball cards)in 1962, as soon as I had free money from delivering newspapers. Since then I have dabbled into (and in many cases out of) collectible coins, stamps, muscle cars, Magic and Pokemon cards, and vintage audio equipment. I have made back my investment on virtually all of these collections, although it took a while for some of them. I have made great returns on a few.
I have collected to collect, as a personal obsession and as a form of entertainment. I have never considered any of the short term moves (buying, selling or trading) from an investment perspective. Such moves were either speculation or even known losses to obtain desired items, valuing my time more than the amount of money involved. True collecting should be done because of the non-financial enjoyment the hobby brings to you.
If you need to aggressively buy and sell to make money to live on, you are either a dealer or a speculator (the collectible version of a day-trader). This doesn’t mean you can’t also have items in which you invest for the long term, it just means your focus is by necessity short term. One benefit of such a large number of transactions is that you typically know the short-term market extremely well, and can limit short-term losses no matter what happens. Even if you are doing a lot of short term buying and selling to build the long term collection of your dreams, that might still be within the “dealer” realm, because you are speculating on short term trends, or at least the buy wholesale sell retail mentality.
Investing is done with the expectation that you will sell for more than you buy over the long term. Let me repeat, investing is almost always a longer-term game. Especially with collectibles, this means you need to be spending only money you don’t really need in the short term. Just like the money you invest in a retirement account. In the US you can access retirement money before you reach a certain age, but usually with enormous taxes and penalties for early withdrawal.
As the OP already explained, collectibles can become extremely hard to sell for anything close to what you paid in the short term. My Pokemon collection is a perfect example. When my kids suddenly switched card games I considered selling everything Pokemon I had, since I collected simply to do something with them. At the time (~ 2001 to 2002) I would not have received even 50% of what I had spent. So I simply stored everything away. As such, an active collection effectively became a speculative long term investment. Letting the cards sit for a few decades has done wonders for their value. There was luck involved, since there were many other card games from the period that have not fared well.
Given that Pokemon has redeveloped into a popular collectible, if you compare the investment potential to something like baseball cards the prospects for continued growth are promising. With baseball cards, the best cards and the rarest cards are still seeing price growth after more than a century. Even some newer cards are showing appreciation. This despite there being nothing else to do with baseball cards than collect them, despite baseball being primarily a US (or at least North and Central American) collectible base, and despite most collectors being at or approaching retirement age. In contrast, for Magic and Pokemon you can play an extremely enjoyable (and if you want, competitive) game with the cards, the fan base is world wide, and the demographics skew much younger.
And collectible cards, as an alternative investment to traditional thing like stocks, bonds, even real estate, seem promising. Bonds yield almost nothing, most stocks are extremely pricey by traditional valuation metrics, and real estate (beyond possibly buying your own home) requires a lot of knowledge and a lot of work. No one knows how these traditional investment instruments will respond to the post-pandemic world. Collectible cards tend to be uncorrelated to these traditional markets, and you get enjoyment from your collection for as long as you have it.
One issue that wasn’t addressed by OP, and that may or may not impact Pokemon collectibles, involves those who try to hide wealth. I was a major Magic collector for many years, and encountered individuals who used collectible cards as a way to shield wealth from taxes. My belief is that at certain points they had strong influences on pricing. My first interactions with bitcoin involved individuals seeking non-traceable conversions in or out of the cryptocurrency with expensive Magic cards. I am sure there were similar types moving undeclared cash into collectible cards. In the US, most any bank deposit of more than $5,000 in cash is usually logged. Credit card statements effectively last forever. Paypal and Ebay sales above certain levels ultimately generate tax declarations. Paying cash for a number of valuable cards can eliminate a paper trail. The resulting purchase is typically less volatile than a cryptocurrency, while offering the potential for longer term appreciation. Card wealth can be very portable and very discrete, as you can carry cards around with most people clueless about the value.
There is always concern that large speculators can manipulate markets up or down. Magic has dealt with such rumors for more than a decade. For the tax averse, a large percentage of the most expensive Magic cards are locked away in long term holdings. If Pokemon is anything like Magic, the recent price increases will make Pokemon cards more attractive. Enough purchases by the tax-averse would certainly boost long term prices. But like other stores of wealth, there is always a possible downside.
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lmao professor of business school in thread. What a time in pokemon. Good to have your opinion.
@hammr7, when did you get back into pokemon cards seriously? Was good choice to hold those cards in '01.
TLDR dont go after those new zards coming out. Go put your money in a 401k so I can have a crack at them
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Lots of different people collect pokemon cards.
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@smpratte I hear you. The notion of being overly concerned with others’ affairs within the hobby gave me the biggest hesitation about creating this post, as I didn’t want this to be seen as a finger-wagging dictatorial exercise, or alternative investment advice, when it is instead intended to address the question of those who look to Pokemon TCG purely as a financial investment vehicle, and not a collector’s hobby. i.e. in the same way that someone might ask, “should I invest in real estate?”.
I’d never assume to have an answer to the question “should I collect Pokemon cards?”. Unfortunately, given the current trends of investment advice-giving and speculation being peddled as sound financial advice, there’s a sliver of the community who have moved away from discussing the philosophy of the hobby itself, and instead honed in on “Pokemon the Hedge Fund” which in my view is dangerous and a potential pitfall for both new and existing collectors. I feel there is an onus on the more experienced members of our community to provide a resource of information (not forcibly so, again very conscious of hypocrisy here) to help counter-act any financial harm - separate from influencing someone’s personal collection decisions - that might be incurred through these new trends.
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Don’t be mad I encourage to you buy more pokemon cards from new sets.
You too @hammr7, you should be buying the psa 10 slabs. Unless they’re too pricy for you.
This. What I hear a lot from collectors is „I wish I was collecting back when you did“ „Wish I could have bought card X for Z amount“. What people don‘t understand is:
- spending $5k back then was a lot of money, also considering majority of collectors were much younger (as the hobby was still quite young“.
- we did not buy the cards back then for investment, we bought what we truly liked and didn‘t really care about possible profits.
- Nowadays people spend several k$ on a card and expect the value to increase, back then nobody imagined prices to develop how they did, the market was tiny compared to today.
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Very well thought through post. To my wife spending $5 on a booster pack is an absurd amount of money. I can’t do any purchases in front of her for anything non essential since our daughter was born 3 years ago.
She doesn’t seem to get mad though when she wants to sign our daughter up for something like Swimming lessons or gymnastics at a moments notice and I flip a card to pay for the class. She can’t believe that 1 card could easily pay for a $150 class. She doesn’t bother me too much anymore about my collecting. Now if she only knew how much money my vintage Pokemon collection is worth now she’d make me flip it all : )
Everyone has a different definition of finical responsibility. I have seen many marriages end over disagreements on it or relationships ruined.
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I really like how you summed it up. To me, this sounds like a lot of investments (whether intentional or not) have turned out. What ifs and could have’s. There’s a reason why people who are in certain Fields consistently for long periods of time and enjoy it are successful. I think some people are starting to get off of this exciting roller coaster ride of constantly increasing price increases. From my experience within this group it seems like the majority or any purely for the love of collecting. However, there is a new wave of people pushing it as an investment and giving financial advice as if they were qualified. For me, I’m just concerned about the health of a small percentage that’ll be negatively impacted by listening to bad financial advice regarding this hobby. even though a minority are probably maxing out credit cards or leveraging things, that small percentage is still a large amount of people. so I think it’s good that we are getting perspectives from a different side of this unprecedented growth.
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I pretend I do not see it…
Definitely. First to market = the highest risk.
Buying a trophy 10 years ago was much more of a risk because there was no indicator of growth. Today there is so much sales data. While the price is higher, it’s much “safer”. Everything is more proven = Less risk.
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Personally, I believe that whenever someone mentions ‘invest’ especially in Pokemon, it is taken out of context and is thought of only in terms of monetary gain.
If we stop and think about it, each one of us ‘invest’ our time, effort, resources, and money in what we love each and every day. This is not always motivated by financial gain, but rather in terms of what makes us happy! However, due to time constraints as well as our budget, we can’t do or have everything that makes us happy. So as long as we make smart choices according to our budget and collect what makes us happy, then the monetary gains will come secondary. This is the mentality of a ‘true collector’ as they truly love what they are collecting and their choices are not entirely motivated by monetary gains - these are also the biggest and most successful ‘investors’ of a hobby!
Now I don’t mean to come off as disregarding the whole ‘investment’ topic as I know of the monetary implication, but I’m just trying to provide some perspective on the subject. I’m sure most of us here already know this mindset too, as it’s why we have most the cards we love and also why each collection differs in it’s own unique way!
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Correct.
There’s quite a few different tiers of collectors and I believe your advice (initial, and ongoing) is excellent for a vast majority, especially new people to the hobby.
For the tier like Scott and Gary that have become wealthy due to a strong and unwavering belief and love for Pokemon, there is nothing a financial advisor can say, because they already won lol For the tier like Jeremy and others that are independently wealthy and have an appreciation for the cards and want to get in now, again there is nothing an advisor can say lol The vast majority of the people in this hobby are not like the average efour members, however. They are people that remember Pokemon (and probably like it) that watch hype/“investment” YouTube videos or MSM articles that say your busted binder collection could be worth thousands. There are also a lot of speculators, just like there are in any alternative “investment” especially collectibles. The get rich quick types. A lot of people jumped back in on the Pokemon Go hype and a lot of people lost money in the ensuing years, even on the mighty Charizard (just not in psa 10 1st ed), which allowed more savvy efour members to make really nice pickups.
As long as people have a plan, everyone is free to do what they want with their own money, but you have to know that there is a very real chance of losing money over the short and long term. You also have to know that a succession and estate plan for Pokemon cards is not the same as it is with stocks and real estate for all those who are planning to take these cards to the grave. Do you want your kids/an executor to have to figure out the cost basis of your boxes of psa cards just so they can dump it on an auction house and take a 30% hit later anyways? If the plan is not to have the cards forever, what is the plan? Do you have one? Will people care about that rare Milotic Ex in 20 years? 40 years?
If Pokemon is your livelihood, rock on…if you love the artwork, rock on…if the cards remind you of a time when you didn’t have adult responsibilities, rock on…just KNOW WHY you are collecting and what YOUR plan is.
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I collected Pokemon for about a year (US Base, Jungle and Fossil), then switched back to Magic as my kids took up the game. I don’t actively collect Pokemon any more, but since I was around at the beginning I wanted to make sure some of the stuff I learned decades ago got passed on and evaluated by modern collectors. That brought me to E4.
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Just hang in there and be able to provide that surprise support when truly needed. It will buy you a ton in credibility over time.
I never spent so much on my collection that it hurt family finances. It was the one vice that consumed my allowable mad money. But it was a sometimes messy nuisance that my wife couldn’t understand for the early decades we were together. That changed once we started planning for retirement. She wanted a beach house to retire to and thought we couldn’t afford it. A chunk of my Magic collection proved otherwise. A few years later she wanted a major kitchen renovation that went way over budget. Another chunk of Magic cards took care of that problem.
Now her biggest fear is that if I died she wouldn’t know what things of mine are actually valuable or how to properly sell them. It took a while but she finally understands that my collecting madness has had a happy ending. (the value of my collections, not my death!)
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Good read, reminded me of some of Dave Ramsay’s financial advice.
Great post summarizing a lot of things new collectors and investors are probably over looking. I think A lot of people coming into the hobby right now are looking at pokemon cards with rose tinted glasses because they see the success of people who have been in the hobby for years and think it is instantly replicate-able.
Nice to see a post about investing that is much more down to earth about the risks and pit falls.
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Bears make money. Bulls make money. Pigs get slaughtered.
What you have to ask yourself can you be impartial on selling that Sealed 1st Edition Base box when conditions dictate selling?
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