(While this essay refers to baseball cards, most of the information presented here is applicable to sports cards in general - especially the inability of most newer cards to maintain their long-term value) 
North Americans love both baseball cards and investing, and the two have gone together for at least the past 25 years. Like most relationships, investing in baseball cards has had its share of ups and downs. During a ten-year period spanning 1982 to 1992, card collectors and investors alike were treated to a "bull-market" for virtually all sports collectibles. By the early nineties, however, it had become obvious that overproduction of the cards had formed a crack in a once strong base of collectors. Prices on many cards and sets, especially the ones from 1981 and later, began a decline that can still be seen today.
There are still ways to successfully invest in baseball cards, but it requires a knack for sifting gold from the rubble, so to speak. Here are five basic factors investors should consider when trying to decide what, and when, to buy:
1. THE ECONOMY - Baseball cards are considered collectibles, not stocks or commodities. As with all collectibles, prices tend to suffer when the economy suffers because collectors have less money to spend on non-essential items such as cards. In addition, a person who needs money during hard times would be more likely to sell his card collection before his automobile or home. Selling cards during a time of recession will usually drag the values lower. Of course, this is a great time to buy collectibles if you have the funds available.
2. AVAILABILITY - The easier a card is to find, the lower the price will usually be. It is much easier to find cards today than ten years ago thanks to the Internet. Instead of calling and writing to dealers and fellow collectors, or searching numerous tables at shows, one can now locate that missing 1967 Topps Tommy John card with ease. Several copies of virtually any card can be found on the Internet at any given time, which gives interested buyers a chance to offer what they consider fair prices for these items. Savvy investors must be aware of this to avoid paying too much for their purchases.
3. SUPPLY VS. DEMAND - This is the "golden rule" of all investments. Why is a 1977 Topps Nolan Ryan card worth three times more than a Johnny Bench card from the same set? Quite simply, the marketplace (the collector) has determined this. These two cards were printed in the same quantity (supply), but there are more collectors seeking the Ryan card (demand). The same can be said about the 1990 Score baseball set, which has dropped the past fifteen years from $50 to a current value of about $12. The set, which was printed in quantities meant to satisfy the demand of the day, can still be found by the unopened case for a fraction of the original cost. Even the Sammy Sosa rookie found within this set is not enough to change the supply vs. demand imbalance that exists.
4. PAST, CURRENT AND FUTURE TRENDS - Understanding what people want both now and in the future is the key to being a successful investor. A study of the past is quite helpful. For example, rookie cards have been highly collected for many years now, and seem to be going strong (assuming you pick the right rookies!) Insert cards have proven to be poor long-term investments, as collectors quickly lose interest in old bells and whistles. Buying complete sets are usually a safe bet, assuming they aren't purchased during the peak of their popularity. Taking the time to study past trends such as these may help give you a glimpse at what to buy now and down the road.
5. TIMING - Do you always seem to pay too much for the latest "hot" cards, which usually lose their value quickly? Or, did you pay $50 for a card yesterday that is worth $100 today? Most of us have probably experienced both scenarios at one time or another. Once again, much can be learned from studying the past. It is usually not a good idea to buy cards of a player shortly before of after he breaks a record, or is otherwise in the limelight. If you can find star players who are having sub-par seasons or are mired in temporary slumps, it may be a great time to snag some bargains! Set these cards aside and be ready to pull them out of the shoebox later. Timing is equally important when considering when to sell. Should you sell your Mark Prior rookies now to cash in on his current popularity, or should you hold them for another ten years to see if he has a Hall-of-Fame career? Anyone remember Fernandomania? Deciding when to sell is rarely an easy decision, but remember you will never lose money by taking a profit.
Investors have many choices when it comes to which kinds of cards to buy. Here are a few observations and comparisons:
STARS: ACTIVE VS. RETIRED - There is a certain excitement associated with collecting cards of players that are still active and in the public eye. Will Barry Bonds break the all-time home run record? Will Casey Kotchman live up to expectations? A "speculator" who believes a particular player has the potential to accomplish great things may try to buy those cards before the prices increase. On the other hand, many enjoy buying cards of players who have already retired. These former stars have already earned a place in history, and their card values tend to remain stable to slightly higher as time passes. It is sometimes wise to avoid buying cards of a player who is retiring THIS SEASON, as his card values will probably soften over the next couple of years as he fades from the spotlight. When you notice this happen, buy, buy, buy! (i.e. Tony Gwynn, Mark McGwire).
SETS VS. SINGLES: NEW - If one has the knack of spotting future stars before other collectors, he may have a great opportunity to purchase the prospects' rookie and minor league cards before the prices rise. It should be understood that very few prospects ever bloom into major league superstars, so the gains made by the "hits" will need to outweigh the losses incurred by the "misses." The investor who wishes to play it safe by owning a copy of ALL the rookie cards may wish to purchase complete sets. Once again, it is usually wise to wait a few months after the release of a set before buying, to avoid paying an inflated price due to the initial demand. Assuming the set was purchased at a fair price, it has a greater chance of retaining its value over single prospect cards.
SETS VS. SINGLES: VINTAGE - Investors should be on the lookout to obtain ungraded vintage sets and star singles (pre-1980) in near mint condition or better. It is becoming increasingly difficult to find quality copies of vintage star cards that haven't yet been graded, but when found they should be priced less than a graded copy of equal quality. The one who gets the card graded is the one with a chance to make an immediate profit, assuming the grade given to the card is a high one. When purchasing vintage sets, it is imperative that each key card be inspected closely. Don't ignore the small dings and creases! Keep tabs on these problems and make your offer accordingly. Vintage cards are being graded by the thousands daily, and the demand for nice vintage star cards and pre-1970 commons should remain steady for years to come.
COLLECTIONS - Buying collections to resell piece by piece can certainly prove to be lucrative with a little legwork. An old-fashioned classified ad in the local newspaper is probably the best method to send non-collectors and former collectors your way. To save your time and theirs, prepare a series of questions to ask them over the phone. They should be able to tell you approximately how big the collection is, how old the cards are, and possibly how much they want for the cards. Try to make sure their collection hasn't already been cherry-picked by another buyer. If you are still interested after your phone conversation, arrange a meeting, try to take a friend along, and bring cash! Money talks and these cards are probably just taking up space in their hallway closet.
On a final note, always keep in mind most sellers are trying to get the most money possible for their collections. Don't allow the seller manipulate how much you are willing to pay by telling you that someone else is interested in the collection, or he doesn't really need the money right now. If that's the case, politely hold your ground. You may walk away without the collection, but I'd rather find a deal that leaves me room to actually make money after spending all the time and effort selling a collection will take!
Anthony Nunez  |
