What in the “Geovani Scheme” is going on here? 
Trying to slab up the best cards and turning a profit sounds like Team Rocket to me JK JK I’m just playing, I’m just enjoying the Eevee collecting. I just hope my great grandkids don’t put it in the dump pile when I get senile. I do wonder how y’all turn large boxes of slabs into sales… Seems hard to move product at the rate I see large psa lists.
I like the discussion of a hedge fund, but I don’t see it working.
Either you have a percentage of the card sold off, to the point that one person holds the majority and gets to keep the card and makes decisions regarding the cards future. This is the easiest way of doing it, as it allows people to buy a portion of the card. The problems come from having someone else in charge of your ‘investment’. Whenever the card would be sold it would have to be sold in full, you can’t just sell a portion of the card, unless you find someone willing to buy 51% of a card, which as far as I’m aware of there isn’t anyone looking. Most people are going to want to actually have physical ownership of a card and 100% and 51% would be the only ways of doing it in this scenario. Not to mention the huge scam potential this option brings. Selling 49% of your card then selling the card to a friend far below market value and paying out the other owners their share. Which would mean you would almost have to have everyone on board with selling the card, or go for the 51% sale, which would stagnant the market.
Another way you can do it is the way @kaldoverde said. Instead of a 51% owner, you have a company hold the card and build a platform that allows percentages of the card to be sold. Good luck in preventing a ponzi scheme, where the holding company sell off fake items, or sell the real one off market. The auditing just becomes too expensive. The better option would be to have a holding in a museum of sorts where the company would profit from having the cards on display rather than having people pay fees which inevitably would ruin the reason for a hedge fund.
In all I don’t see the appeal of owning a percentage of a card, the only people that are going to be interested in this are looking at the financial side of things and if that’s all you want partner up with someone or a group of people and pile up the cash between yourselves to buy a card, much like what Gary did. To me, in the financial aspect, the benefit of owning a physical asset is that it’s a physical asset. I have it in hand, if I want a piece of paper saying I have something I’ll buy a stock/timeshare/bond.
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I’ll give you a hint, you don’t have to move them all. Just enough to get your investment back. After that the time it takes to sell the rest doesn’t matter. I like to put in one or two big ticket items into my subs that I can focus on selling off that way I only have to sell a few items to get my investment back.
@kaldoverde, I get the idea in a general emotional sense, but have yet to hear actual examples of how people are priced out of the market. For example, Rudy has been buying up shahrazad, and it peaked in the high hundreds, but is now on ebay all day for about half at $300ish.
I should also mention I put together card by card Legends and Antiquities and had no problem finding everything below “market value”. The buyout practice in itself is inefficient, and certainly not systemic. It lacks permanence and requires minimal patience to navigate as a buyer. Mostly a temporary inconvenience.
Overall I think the idea of buyouts is overblown and unexamined. When you start looking at long term value, the concept doesn’t stick. Also, the intersection of someone with millions of dollars who wants to “invest” can put that in much better & safer outlets. With that type of capital it’s pointless to even bother trying to move a $100 card to $200. The process alone is such a waste of time.
@cullers, well said.
I know you are talking about MTG buyouts here but doesn’t this also apply to the topic of the thread? It just seems that anyone with enough money to be looking into investing in hedge funds can just buy these cards to hold themselves outright. That would be a much cheaper and more attractive way to hold this type of asset for most people I think.
I mean even though there are a long list of cards that aren’t available on the market today, if someone with $10M liquid cash ready to deploy decided he wanted to start collecting they most definitely could assemble nearly any collection they wanted at current prices. If you refute that last line, then I would say that any card unavailable to someone with $10M cash today would also be unavailable to this theoretical hedge fund also which is another inherent problem with this whole thought experiment IMO.
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@smpratte, I do understand what you are saying, and actually agree with your point on self-entitlement since you made it in a video a few weeks back. But that is in the context of people saying a certain card is too expensive in reaction to an organic price fluctuation.
By the way, despite being accused of being evil, I see Rudy as someone who contributes to organic growth because he buys reserve list to hold and not to flip, and he increases his positions over extended periods of time.
What I am refering to is something like this. You are a collector with a monthly budget of $300 and want to have the full PSA 10 1st edition Fossil set. Based on your initial calculations it will take you about 3.5 years to complete your colection.
For the first two years everything goes smoothly, but eventually financial speculation starts to permeate the hobby. You are still missing an holo Zapdos which based on organic growth would cost you $200, but for the past week it seems to have sold out completely and the price has been hovering around $400.
You know there is speculation, but you fear that the price keeps going up to a point that prices you out, so eventually you sucumb to the pressure and buy it for $400. After a week, price goes up to $600 and you feel relieved that you took the risk of buying it for $400. A month goes by, and as speculators dump their positions to flip for a profit and move on to ‘attack’ their next target, price comes crashing down to $250 and stays like that for years.
Now, imagine this happens not once, nor twice, but dozens of times in a year. Price discovery gets removed, and your collection will take 4 or 5 years to complete, not because of organic growth (which would have been fine), but because each time you need to buy a card, you need to account for the ‘speculator’s fee’.
There are hundreds of examples of this in MTG but let’s take a totally unplayable Reserve List card, Urza’s Miter:
In a matter of weeks, this card went from $4.50 to $50, then down to $8, back upto $35, down to $15, and so on and so forth. You mentioned Shahrazad, same thing. In September price was $380, then during October it moves to $740, and in December it crashes down to $415. How do you budget for collecting with such huge price variations? How do you define what is an actual fair price and make sure you don’t get hosed?
So when it comes to price increases I think we are both on the same page when it comes to finding organic price increases a part of the hobby and not accepting the self-entitlement people have around what a price should be.
Where we probably disagree though is that for me quick 1000% price spikes followed by equally sharp declines in a short timeframe are clear market manipulation and have little to do with real interest or scarcity, and that, in my opinion is the type of activity I think our hobby can live without. To be honest that was the reason I moved from MTG into Pokemon, because you actually get rewarded by your knowledge of the market without being subject to random volatility.
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@gottaketchumall, Yes and no. Yes someone with that much capital wouldn’t dive into a collectibles hedge fund head first. Obviously this is all hypothetical, so in that fiction, the idea would be a lower cost to entry.
In relation to someone with 10m wanting to put together any collection they want, the answer is no. I interact with these buyers. The issue isn’t capital, it’s the inability to locate and acquire the desired items.
The contents of the theoretical hedge fund, emphasis on theoretical, would include the most valuable cards. I am intimately close with the most valuable collections in this hobby. Therefore the cards/collections would be compiled into the theoretical fund, which is one of the primary aspects.
I would totally invest in this…great idea.
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I love the idea of a Pokemon hedge fund (anything that gets the hobby more recognized) but this is the best argument against it.
I think everyone here has made some money on cards every now and then, but what us casual collectors don’t realize is that we aren’t paid for the time we put in to searching, organizing, grading, listing, shipping, and researching. For us it doesn’t matter because it’s a hobby and we love it, but once you get into it as a full time business you have to make enough money to pay the bills.
For the fund to succeed you would have to find someone with extensive knowledge of the Pokemon card hobby, price trends, supply numbers, contacts in various markets, etc. What’s their time worth? How much would you need to pay a Scott or a Gary or a Glenn or a Charlie to run this fund full time (because that’s what it would take at minimum)?
As of now I don’t think the capital is present in Pokemon to make it sustainable. But maybe I’m thinking of it as needing to be far larger than actually needed in order to function.
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It appears this fund would need to feature product that was either beyond the investors means to own fully or simply unavailable.
I like the idea and would be interested in investing. Also @smpratte I write software for a living so if you need any help on the tech side happy to lend a hand.
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I’d be for it. I do something similar now with loans and cash advance. If I like the deal, me and my friends will give the money for the loan and collect the interest.
For example if we do a 25k loan, instead of the bank getting all the interest and us gettinf a commission, we do the whole thing. We split it up to a few grand each. I’m guessing the amounts that you’re talking about are much larger. Which is fine.
Even if you only have a few people who want to do it at first, do it as sort of a trial run. I’d be down for it.
I mentioned this idea to DJ on Discord earlier today, which led to me discovering this thread…
just a couple of short comments
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this hedge thing will not be a full-blown hedge fund like in the financial world. it’ll be mostly for a few elite collectors/investors, not most of the collectors out there, i would think.
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i am all for allowing more people to own the highest end cards and this is probably the best way. i think most collector do not like the fact that they can’t own a piece of cardboard outright, even though % ownership is totally normal. think sports franchises.
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rudy arguably does affect mtg in negative ways and is probably one of the evil investors as well. he is an mtg business, so he has to make business decisions. i think we’d be naive to think otherwise.
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i am a collector/investor. i don’t think being an investor is bad, inherently. i mean you can’t really separate the two in any collectors market, whether it be art, mtg, or pokemon. a good balance is the best state. what metric do you use to say anything is “organic” growth? organic is just an emotion and that is typically linear because the human mind works only in linear ways. i mean do you really think a da vinci is worth $100 million? a $1 billion? why do you think we still debate about climate change and its effects/cost 19 years into the 21st century?
to me, i would be okay with pooling funds into buying/holding onto a high end card such as an illustrator and do a rotational ownership. let’s say we get 12 people to invest in a $240k theoretical card. each person puts down $20k, holds onto the card for 1 month out of the year like a time-share.
basically, for pokemon, i see it as a very small operation. we sign an agreement which is legally binding. after its establishment, similar to a NYC co-op housing, we approve sale of shares/transfers based on fair-market value at that point. it can’t be like a stock market where shares are being sold constantly, creating too much admin work and overhead cost which we can’t cover with such an “investment.” time is a factor in the holding of this asset. this prevents this from becoming a flipping/investment vehicle, more for collectors.
if this is something a few of you are thinking of, i would be more than happy. we don’t necessarily make this a scale thing to let everyone in, only those who want to become an owner of a premier piece of pokemon card utiliizing a financial tool that has been retooled for our pokemon market.
This is the crap that will ruin the hobby
Pokemon is about nostalgia, its about reflecting on the past and how great that era was. It’s about collecting what you can with what you have because of how youve progressed in life and how good those times were. Starting hedge funds and like Gary did with his friend is cool. Normalizing it? 99%of collectors could give a flying fuk about the illustrator. That wasn’t part of my childhood or anyone elses.
This seems like somebody with a lot of financial power is trying to influence the market. I’m not with it
@kymed, The Illustrator was part of your childhood?
The cards that would be a part of a hypothetical hedge fund, which was just a thought exercise, are cards you and 99% of the world will never own. It would just be a way to feel more involved. If anything its driven from that collector/chase desire.
Either way this was just a thought exercise. Regardless if everyone was a the most pure, truest, best possible collector with a super blue verified check mark, the cards would still be unobtainable for majority of collectors. So if this type of thing exists, it won’t change that reality whatsoever.
no it wasn’t part of my childhood or anyone else’s is what I said. Look man I watch your videos religiously. You got me back into the hobby. And I’m not going on the extreme here like this is a reality or anything. But if this was hypothetically normalized for high end cards it would open the door for all kinds of "scumbags and scammers from the bottom down. You probably have more influence on this hobby than even the private investors that are more financially able than you. I’m not bashing you or this idea. Itd influence a lot of people to spend what they don’t have even if they have it and it just in my eyes takes away from the point of collecting. I still look up to you and listen to everything you say and I’m about to finish college myself. I really didn’t even realize it was you who posted this. But I still feel like it should cement as a hypothetical.