BUYER BEWARE: THE LATEST CARD-COLLECTING CRAZE IS A RISKY BUSINESS

There is an art to card collecting. And like any collectible art, there is passion, there is joy, and then there is the monetary value.

None of this is reflected in the current hype, the investment bubble being created around collectible trading cards. When a major newspaper runs an article comparing card collecting to a Wall Street portfolio, my first reaction is, “Are you kidding me?” And I’ve got a rather significant investment in both the cards and the industry. My company, Collectible Xchange, provides a platform for collectors to buy and sell thousands of collectible items, including trading cards.

This reminds me of the cryptocurrency market. Who understands how Bitcoin works? No regulation, no comprehensible standards, but the price is going up, so let’s put our money there.

I’ve never been one to say, “Let the buyer beware.” Instead, let the buyer be educated. Do you know what you’re investing in? Do you know where collectible cards come from? Most important, do you recognize that the chances of finding a card that has significant value are somewhere between slim and none?

Card collecting is a hobby with a business aspect. I have always suggested that people invest in collectibles for the joy and fun of it. If it goes up in value, great. That would be better than most gifts you give yourself. But to categorize this as something to put in your investment portfolio is outrageous and appalling. Consider the risk: A sports card investment means you’re one athletic injury away from having a worthless piece of pasteboard. That’s not an energy company having a bad quarter; a bad card never comes back.

I can’t fathom comparing card collecting with the stock market or any realistic investment vehicles—which have balance sheets, revenue streams and valuations that makes sense. To buy a serious business, you would want to see a supply chain, a spreadsheet. Who knows how many trading cards the card companies are pumping out? The trading card companies have no regulation of which cards or how many of each they can print, or even of the quality of the printing!

For that matter, why are trading companies putting out anything other than flawless cards, known in the market as perfect 10s? Most businesses, including printing, have quality control standards. Why not an industry touted as a producer of an investment commodity?

It gets worse. If you find a card that has some value, you can’t just go sell it on the open market. You have to go to a company to have it graded, and there are just two companies that have an oligopoly on the card-grading business. The “investor” doesn’t know the parameters for grading, and whether his card is being graded by an expert poring over it through a jeweler’s loupe, or some kid in a warehouse. Grading is almost completely subjective, so the chances of your card being graded a 9 or a 10—the Holy Grail—are infinitesimal. And, as oligopolies do, the two grading companies have tripled or quadrupled their prices in a booming market. Without knowing who is grading your card or what standards they are using, you’re paying more than top dollar and waiting five to seven months for them to tell you if your card is worth $5,000 or five cents. You can send in a good looking, clean, sharp card and get a 7 grade. While a 7 is called “near mint,” there is nothing “near” about the price difference between a 7 and a 10.

There are trading cards that, if you could find a perfect 10, could be worth $100,000. But you won’t find it. The same card graded 8 or 9 would be valued at $5,000.

The last boom in trading cards as collectibles came in the 1990s. People saw the opportunity to sell their trading cards to collectors (if they were able to keep their mothers from throwing them away), and cards from the ‘60s and ‘70s had some value. The trading card companies also saw an opportunity—they started mass-producing filler. Now, any cards you have from the late 1980s through the mid-‘90s are virtually worthless. Collectors come to me with cases of cards, in one case a room full of trading cards. The entire room was worth about $4,000.

Over the past few weeks, as the “trading card as investment” PR blitz goes on, parents have been calling me for advice as their kids are spending their bar mitzvah money on baseball cards, thinking they’ve hit the mother lode. They haven’t. First, they’re buying the cards at the top of the collectible bubble, paying a fortune to have them graded, and in five or 10 years they’re going to come back thinking they’ve made this fantastic investment that will put them through college or jumpstart a business. Unfortunately, like the people who stockpiled cards from the 1990s, they’re in for an unpleasant surprise. And it’s going to be another black eye to the collectible business, an industry that is finally being taken seriously.

There are people coming up with collectible get-rich-quick schemes, selling boxes of cards as if there’s a winner in every box. Make no mistake about it: Opening a box of baseball cards is a gamble, and everyone knows in gambling, it’s the house that wins. The people making money are the card companies, the graders, the leagues and the teams. People who collect for any reason but joy and fun end up like the little old ladies at the one-armed bandit, sleep-deprived and empty-handed.

In addition to founding Collectible Xchange, a new sports marketplace for buying and selling collectibles, Steiner is the author of three books and has been a leader in the sports marketing and memorabilia industries for 30 years

 


4 comments


  • Mark Hood

    Well said! Thank you for sharing this reminder.


  • Kurt

    My problem is I have every card I ever bought and I’m 60 years old….I have a ton of valuable cards and tubs of commons from 60’s till today….all sports
    The only cards graded cards are the ones I bought through an auction
    To your point….Is it worth to grade a 100 or 200 cards
    I’m not getting any younger and I’m worried if I leave to my kids……they may get swindled on px. I’m at the crossroads of collecting….Any suggestions would be greatly appreciated
    Happy Collecting


  • Peter Schurma

    As a card collector for over 40 years…Well said, a very accurate summary of the past 30 years of card collecting. I recently put a 1956 Topps set together purely for the passion of collecting. I was able to buy a base set and find many of the cards at near mint for good to fair prices. Collect for the love of collecting… I also have a Mets Topps collection that I started when I was 13 and now with all the variations of cards and sub-sets it makes it impossible to collect them all. They are cool but just too expensive to collect. Stick to the base sets or should we say ‘basics’.


  • Larry Pauley

    Well stated, sir. Like you, “I have always suggested that people invest in collectibles for the joy and fun of it. If it goes up in value, great.” The difference is that maybe some will listen to you. Thanks for being clear-headed and plain spoken.


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