The most important lesson here: keep calm, don’t try to solve everything at once and prioritize on obtaining necessities like food, shelter, health and safety then start thinking about next few moves. It’s only when you are able to think that life may start to get better. Pegging back on the same principles and applying these concepts to the investing world, to become sustainably good in the long-term, you will most likely need to build the foundations of your portfolio, whatever that maybe. To do so, you have to first know what you are doing including how to identify and evaluate investment opportunities however small it is. Pouring a large amount of resources into something you are not too familiar with usually don’t end too well. Opportunities can be positive life changing events for the prepared but can equally be a disaster for those who are not prepared yet still decide to gamble away their future. Seizing an amazing opportunity like closing a deal requires some luck no doubt, but to do so consistently may take years of fundamental preparations. Many people do win some times, but to win often and mitigating losses from defeats take real skills and experience. Typically, starting capital is required to do almost anything which reinforces the phrase “it takes money to make money.” However, in the TPC world, Money is medium of exchange for resources. Surprising enough, there are many other types of medium of exchanges besides money, like time hence the phrase time is money. Using time to substitute for money is basically investing in something that is so beyond “out of the money” range that there is almost no pressure in failure.
Like anything else in life, it takes time to become established. Not having ample disposable income to invest be it in mainstream investments, collectible cards or in other alternative assets just mean you will have to take it slowly but that doesn’t mean you won’t be able to in the long-run. In my opinion, the best cash flow and risk-adjusted ROI investments in collectible cards are the small dollar in aggregate yet large bulk purchases. These are the kind of deals that allow you to buy with $50 for like 5,000 cards. Unsurprisingly, these deals are not that commonplace to find but they are also not that difficult. These deals can definitely be found in the wild once in a while, however, in order to save transaction cost including but not limited to driving to a bunch of places, these kinds of deals are typically offered on a consistent basis to those that the vendor have an established relationship with. Establishing a relationship with these vendors usually does not require much except being polite and showing some intention and abilities to buy something. Believe it or not, transaction costs will end up being one of the biggest costs and mental fatigues when you are implementing this type of buying strategy. With the popularity of case breaking, there will be a large sum of relatively undesirable cards that vendors that engage in these activities want to get out of their site ASAP. The mentality of many of these breakers is about getting that big chase card and some very good cards, many may not want to spend a large sum on shipping fees to get all the non-chase cards back which could be a lot of cards per day for a breaker to keep in a locale at any given time. There are scrap dealers that collect metal scrap from business for fractional of a penny on the dollar, sometimes for free and other times getting paid to haul it all away all together.
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How to make money in alternative assets when you have no dispensable income.
Think yourself as the card scrapper who actually is part of the card vendor’s supply chain. Obviously what you could get from doing so depend on what the vendor actually is willing to get rid of in bulk, I think the prize are not necessarily the common-common cards but rather the rookies and other non-common cards. Most likely, the rookies you get from implementing this strategy will be the non-hyped up players, however, remember this, the hyped up players, the high draft picks, the rookie of the years and the all-star rookies do not usually make up all of the future hall of famers in a rookie class. In fact, I estimate probably near half of the future hall of famers are the players that gets very little publicity. The issue is, these players typically take longer to develop professionally and their card values will only rise once they obliterate most if not all doubts with superstar like performances.
I think in a 5,000 card count box of baseball rookie cards issued in the last three years of the acquisition date and after seven years of acquisition, that cost approximately $50-$100 dollars, you might get 30 future anniversary team level, 70 future hall of frame level, 100 future borderline hall of fame level and maybe 200 future outside chance hall of fame level rookie cards. The rest of the cards are probably are not going to be worth much. The superstars who aspire to be GOATs in baseball and really in many major sports leagues, barring early career-ending injuries can play 20 plus years and typically is expected to play 15-20 years in order to chase records and greatness. That means at any point once they become established as at least a GOATesque trajectory player, their cards will be at somewhat peaked levels within a given range. Obviously if they become GOAT, their cards may very well appreciate even more from their cards’ peak values, however, if they don’t at least maintain GOATesque overall career level at the conclusion of their professional sports career, their cards’ values may drop from the peak value gradually. All this to say is, based on the estimation provided in the above, and presuming a $20 average rookie card value for the anniversary team level player’s rookie cards, we are talking about $600 just for the those cards in the box and probably $1,000 of value for the whole box after approximately 10 years after acquisition.
Yes, I really wrote 10 years. Unfortunately that’s the trade off for using time as the primary medium of exchange to invest. However, what if you bought multiple boxes a year every year for the next 20 years in addition to earnings from a regular job and potentially 401k? Now that wait really don’t seem that bad. An approximate 20X in 10 year period even if it’s only paper gains until it is sold with higher liquidity risks are probably not that bad given how small of an investment it is to the average working person. I think even heavily giving it a haircut of a discount rate for liquidity, maintain, storage and other costs, we are probably talking about a return level much much higher than the S&P in the same period. Plus, if you enough the hobby, you know this is actually pretty fun to do and pretty enjoyable to look at than showing people your securities investment’s stock charts. People who are in this hobby love cards. Having big cards at the shows is certainly a conversation starter, in that aspect, no different from collecting art pieces in front of the right crowd. Once you get some good rookie cards, you may consider upgrade by executing trades of your rookie cards for autograph cards. Autograph cards, specifically Numbered rookie-patch-autograph cards (numbered RPAs) of GOATs or GOATesque players have astronomical multipliers on the open market. The logic goes like this, every rookie card is a card and every numbered RPA is an RPA, a numbered card, a rookie card, a patch card and/or an autograph card and of course is also a card.
Contrary to public opinions, due to the variation overprinting of number cards, I don’t believe a 1/1 RPA should be any more than 20X of a /5 or less non-1/1 RPA for a card of the same attributes except for the difference in variation and numbered to unit. Anything greater than that multiplier for the same attributes mentioned above may have significant arbitrage opportunities. I also believe autographs are inherently unique anyways. I would also probably gradually de-risk my portfolio unsystematic by diversifying my asset allocation while not diversify so much that creates significant variable transaction fees. People often say diversification doesn’t necessarily work for de-risking systematic risk. However true that is, I think the other way to think about this is what system are we talking about here? If the alphas and betas are vastly different across markets and your assets are global and not just regional with a wide spectrum of price ranges creating easy arbitrage opportunities, in that case, the issue here are not so much the system but rather the universal transaction fees that may need to be optimized while trading across diversified market places. In summation, Point being, everything is possible when you know what possible is and when you can take on the impossible whenever possible.