Risk and risk management is definitely a broad subject with lots of different viewpoints and variables in finance. I would say that with more risk comes more potential reward, but also potential downfall, which is why I feel you really need to know as many things as possible about what you’re buying if you’re after something new or with limited data to work with (i.e. something niche, obscure, etc).
I honestly don’t know if Pokemon is at a level where one can truly make a ‘calculated’ risk on any one card because the value of so many inherently comes down to what we as individuals are willing to pay or value these cards at, combined with the interest we have in the card. They’re not like a stock or business that has a financial statement tied to everything they do in terms of income, expense, liabilities, etc where investors can model the data and calculate risk more accurately so to speak.
So for me personally, I don’t really look at the upside of what an investment can do (since I’ll never for sure), but more so I look at the potential downside risk or how much that investment can fall. To give an example, I recently added to one of my long-term stock holdings I’ve had since 2014. Since 2010, it has only had 6 times when it has dropped more than 25% from its high. On every other year or month, it either went up in price or it trended in a neutral/sideways direction.
So for me, I’m comfortable buying more of it now because over the span of 10+ years, there’s only been 5 other similar buying opportunities, and after 6-12 months (or less), the 25% discount got bought up or the stock went higher than ever after.
Could it fall lower? Definitely. Could it stay sideways? It could. But I’m willing to accept that it’s at a more fair value relative to the historical trend, and it’s a historically rare opportunity that only lasts for a short time. At the same time, I’m not going ‘all in’. Given the circumstances, I’m willing to be patient for now.
A Pokemon example I can provide is that I bought a bundle of NM/pack fresh 1st Ed Base Set cards recently. They’re ungraded, and I got a good deal on them. I personally just don’t feel that in 5 or 10 years they’re ever going to be worth much less than I paid, if at all. At the very least, I’d probably break even, or make a small return if I ever decided to sell them. I feel this way because of how popular Base Set is to a lot of collectors, and the fact that it’s such an optimized set in many ways.
On the other hand, there are a lot of other cards that I just don’t know enough about or would feel as good about buying. I just don’t have the time or knowledge in the hobby to say ‘that’s a good potential risk’, especially with things like Japanese cards or unique promo cards and similar offerings. A lot of those are out of my comfort zone, but for people who have the knowledge or experience would consider a lot of these ‘low risk’ or ‘medium risk’ compared to my ‘high risk’.
tl;dr - People measure risk in a variety of ways. Levels of risk will vary from each individual and for me personally it comes down to knowledge more than anything else. The more you know about it, I feel the higher your odds are for success. We as individuals can only reduce our risk so much, and without it, there’s no reward either.
