This idea has been tossed around before but I don’t think anyone’s taken steps to start one. If you have, how can I help? If you haven’t, would you help start one?
Idea is to raise money, use that money to buy what I believe is undervalued items, and then when the client chooses to sell, take a % of the lrofits generated from the sale. There will also be a small fee for handling the money since the % paid out won’t be given until the client decides to sell.
I know there are a bunch of legal loopholes I’d have to jump through to start this. What if they need the money back quickly? What if, when they sell, the item I bought happens to lose money? Can they slap me with a lawsuit?
What’s everyone’s opinions on this?
That’s actually a great video that highlights what not to do. I wouldn’t do fractional shares of a card. I would just manage the money, buy what I think is undervalued, and then when they sell, just take a small % of the profits.
Will there be any guarantees? No. Any contract I do will have to have a clause in there stating that nothing is guaranteed.
Any lawyers on here that could help with language?
So far my rough approach is to use the funds I’ve generated from my 2nd business to advertise, hire lawyers to write bylaws, and see if i have to register as a hedge fund with the sec. If yes, I’ll register as an Investment Advisor.
Since I don’t expect to raise tens of millions of dollars right away, I think I can get away with not having to register at first since it would be so small. The marketing I think would be relatively easy since I already have a network with my first business that I can reach out to.
Any advice?
From a collecting standpoint, I’d much rather have cards in my collection than held by a third party. From a financial standpoint, I’d rather retain control over my investments and build my own positions based on which cards I think will appreciate. If I didn’t have the funds to invest in the top tier collectibles, I would either take out a loan or choose collectibles that I could afford.
That’s just my personal take on the situation, but I would be extremely wary of any sort of shared investment in regard to Pokemon, especially, since the fun of the hobby is primarily in the acquisition of the cards themselves.
You posted about buying a 1st edition shining raichu for $2k and believed it would double to $4k by the end of this year with your reason being that it has cool artwork and evolves from the pokemon mascot. I don’t see how that type of model would attract investors. If anything, an investor interested in pokemon would seek advice from experts with proven track records (such as Scott) and buy the items themselves.
Also, pokemon has had and will have downturns. Prices can settle and even retrace, they’re not always on a sharp upward trend. It’s easy to toss around this type of idea in the current environment, but this boom wasn’t predictable.
I understand that 100%
The same goes with traditional investing. But some people that get an inheritance or have a windfall, and don’t know how to invest, goes to a bank or someone who runs a hedge fund and has them invest for them. Someone that’s licensed and knows what they’re doing. Obviously there are no degrees in Pokemon yet. So people might look back on this as the Wild West.
I would like to see if i can work out a way they can either have the card(s) shipped to them. But some people who buy commodities like gold will have them stored someplace other than where they live. Euro Pacific Capital does that with their clients
You’re missing the part where I used my formula where the 10 usually sells for 5-8x what the 9 sells for. It’s not 100%, accurate with every 1st edition worc holo but it is damn near correct in almost every card I see. 10x is the upper end and 3x is the lower end.
If this doesn’t work out and market seems to demand paying someone just to consult, that’s fine. They can pay people like Scott and others. But similar to the way that there are multiple big banks, I can see there being multiple consultants on this topic.
Again this is just an idea
Bad idea that has been discussed multiple times. Too expensive to make anything work at any scale.
If you and a buddy want to pool $25k each into offering on a PSA 10 base 1st zard and can trust each other enough to make it work then good on you. Discuss what happens if/when someone wants to get out and how the other would be valued for their share in a buyout etc. That’s already complex enough but can be workable.
It doesn’t scale though. If you tried to make it you’d end up with some complex abomination like in Rudy’s video and people buying into it would only realize a fraction of the gains the underlying collectibles realize. With stocks, you can realize the full share of a portfolios return less a reasonable 1% or less fee typically. A Pokemon hedge fund would be lucky to be able to have customers realized half of the gains of the underlying assets.
@chavycat, that’s fair, I’m just emphasizing that you’d really need a track record of success. And even then, consulting/YouTube/Patreon would probably be best.
You have to ask yourself the critical questions: Who is the target audience? Why would someone take money that can buy them actual collectibles and invest with some rando (no offense). How would you scale? As mentioned in Rudy’s video, its a paradox. The people qualified can simply buy the actual cards.
I understand the fractional shares frustration that could occur if I were going to do that. That’s why I wouldn’t take the Robin hood or cash app route of having that option. These are good points to bring up though
Consensus is that this is unrealistic. I still think it’s a good idea and I think I could make it work eventually. Maybe now isn’t the right time. I do appreciate the feedback. That’s why I asked. Wanted to see what everyone’s opinions was before I invested massive amounts of money in it. Maybe one day I’ll get it done. Thanks for feedback guys!
The average salary of a hedge fund PM: “We gave a range of $500K to $3 million USD in the hedge fund career path article for the “average” PM, with median pay in the high-six-figure-to-low-seven-figure range.”
that salary comes from a % of returns. let’s say the fund makes a 20% return in cards per year, and the hedge fund manager gets paid 5% and the investor takes 15%. let’s also assume the lowest paid hedge fund PM at 500k - i.e. you need to invest in US$10mm worth of cards to pay him his salary - can you find US$10mm worth of cards to buy at fair market value? and even if you could, can you outperform the market given you’re likely buying everything on sight?
include the infrastructure, legal team etc. which costs millions per year to maintain, and it becomes quickly apparent why you don’t really see hedge funds investing in collectibles. the market is just too small. even if pokemon card values were 10x-50x higher the market would still be too small
It’s worth mentioning that you would need to limit participation to accredited investors. As mentioned, anyone with that kind of money is likely going to invest in collectables themselves and/or pay someone to help them.
Until this works at scale for art, I don’t see it coming to Pokemon anytime soon. Even if it did make sense for a niche collectable like Pokemon, it’s more likely that existing art funds would expand to collectables (first sports and comics, then Pokemon) since they already have the infrastructure set up.
Just my opinion and trying to apply some common sense.
