What will happen to trading cards in 5 years?
A beginner's guide to sports cards
There are 75 people watching this listing on Ebay right now. The question is, are they watching with excitement and open wallett or are they merely looking at it nervously while flipping through their own collection?
The pandemic has fueled a great rally in the price of numerous trading cards and collectors as well as investors have been enjoying the return ever since Rudy Gobert tested positive back in March. Basketball has returned with a bubble, the baseball season is already behind us and the NFL is getting closer to the playoffs as well. Yet, most cards are on a downward trajectory compared to some of the all time highs we have seen in August and September and people are getting desperate and are asking whether this is the time to get out of the bubble.
Whenever we are talking about current markets I always look at Luka Doncic, who is currently one of the most sought after players in all sports. The July/August surge in interest has definitely driven his price tag up, as his 2018 Prizm Base card in a PSA 10 holder was logging sales around $1900 on auction.
The latest sales are around the $1500 range, which is about a 33.4% drop in the price of the Slovenian phenom. However, if we take into consideration the prices in late March when everyone thought we will not hear the buzzer for at least a year, this same card was selling around $400 dollars. People were panicking, I myself almost picked up a few of these cards, which would have given me around 369% return on my investment in just over a few months.
You have to understand Supply and Demand
In order to get a better understand of why prices have gone up and down a lot recently, we have to look at the supply in the trading card world. Panini (hopefully) only prints a certain amount of all these cards carefully looking after the overprinting issues card companies had in the early 90s. But if we only look at cards as investments, most people will buy graded cards to preserve the condition of their gems.
When people had to stay at home after the world shut down, most collectors got attached to their cards and the government stimulus has fueled a surge in prices as people started looking to buy more and more with the free money they just got. When all this happened, grading companies like BGS and PSA had a certain number of cards in their population reports, and many people have realized that if one of their cards gets a 10 grade after authentication, the value of the card can grow exponentially. Therefore, everyone in their right mind would sacrifice the $20 that it cost back then to get some of their cards graded hoping for 'gem mint' condition. Since this grading process takes way longer than advertised, mostly because of the fact that the PSA office in California had to close because of the pandemic, the supply on the market changed very little but when Luka started breaking records in the NBA bubble, the demand for his Rookie cards has seen highs like never before.
That is why if you took a chance on some of those cards back in March for $400 a piece, in August you were...frankly very wealthy.
What if you just started?
Understandably, if you jsut got into collecting, you probably don't want to throw $1500 into a market that you do not know very well. However, these Luka cards were around $100 once before people realized that he was the next Michael Jordan, Cristiano Ronaldo, Usain Bolt or whatever analogy works best for you.
So what you can do is look at statistics, data and game footage and try and predict the next guy in the league that will catch the attention. There unbelievable talents in the NBA right now so it is easy and difficult to do so at the same time. If you seek my advice, this is what I would do:
1. Do not buy into the hype
I have been here myself and have lost quite a bit of money as well. My pitfall was Michael Porter Jr. in the bubble. I have been eyeing him for a few months, expecting him to transition into the Nuggets lineup but never pulled the trigger because of injury fears. Then once he arrived in Orlando and had an excellent game, I picked up a BGS 9.5 Prizm Silver for $800 and I thought I hit the jackpot. I was telling myself that the same card for Luka or Trae Young from that same class costs double or triple the money I paid for it, this is a great investment. As I later learned his price was at its peak right after that big game, had I only waited a week or two I would have had to pay a few hundred less for that same card. Lesson learned!
2. Do your own research
There are countless Instagram influencers and Youtubers promising that you will start rolling in the Benjamins the second you sign up for their subsrciption plan. While that might be true, doing your own research on Ebay will make you way more successful than if you signed up for any service and here is why: I see this happen all the time, an instagram influencer tells you (and 100 other subscribers) that Kristaps Porzingis Rookies are way undervalued. Those 100 people all jump on a single card of a single player and that drives up the sales volume and the supply stays the same, the price will increase. However, this is only temporary as those subscribers will not keep buying up every single card that is listed and after that fake demand generated by the influencer slows down, the actual value of the card will slowly come back down.
On the other hand if you do your own research and data collection, you can get ahead of these Sports Card masters and enjoy the rewards.
3. Stay patient
Back in June I bought two Patrick Mahomes Prizm Rookie Cards in a PSA 10 holder expecting to get a monster contract soon which would drive up his prices, especially the ones I bought.
I paid $1500 for each of them on auctions and once they got to me, I stashed them in my drawer waiting for the news to break. After a week, two weeks even a month, nothing happened and I started getting impatient. How is it that my idea was not right, now I have $3000 in these cards that will move nowhere. Finally, I got so fed up with the situation, I sold both for around $1700 a piece to just break even.
A week later Mahomes became the highest paid Quarterback in the history of the NFL and the cards I sold for $1700 jumped to $3000 a piece overnight. As you can imagine I was not thrilled but it was a lesson about patience and trusting my intuition, I will never forget.
What will happen to this market down the road?
That is all good and all (you might say) but what was the point of all this? Well, I am not a future teller so I cannot say what will happen to this market in 5 or 10 years time but I am definitely optimistic. First of all, incredible amounts of people joined this hobby since March bringing in high dollars, which is why uber rare cards started selling for all time highs. Like any well working market, there was definitely time for a correction, especially since people started getting their PSA and BGS submissions back when the demand slowed down as well (to be honest, because of this I expected a much bigger dip in prices than it happened). I believe that in the short term the attention is still there and will be for at least a few more years (obviously don't quote or sue me over this). I am not encouraging anyone to jump into the hobby but I will stay and keep buying and selling as long as there is interest.
I am still unsure where this storytelling will end up, but I will keep posting and if you read this, let me know what you think.