The future of the collectible cards industry? The Permanent Contrarian’s view on investing in alternative assets.

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It is clear that most people have accepted cards as a medium of expression. I think in the medium to the long-term the global collectible cards market will breach the annual $100 billion dollar mark. 

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Here is what I wrote previously regarding this and similar topic(s):

“Pokemon and Pokemon cards of course are relatively new compared to some other brands/franchises and other classes. This may be why the price premium multiplier between newer more modern Pokemon cards and the older vintage WOTC era cards are not as significant as other types of certain types of vintage sports cards. I think the complete human history can not be fully told without the inclusion of the collectibles phenomenon therefore I view Pokemon cards as potential major human artifacts. The collectible cards industry may reach $100 billion dollars within a decade or two due to likely high CAGR which will be a major milestone in human history and have broad impacts on society. A likely large, critical mass  percentage level of the world’s population are already collecting cards. This trend may continue to grow at the current or a more rapid pace in the near future. When one Pikachu card can increase by $10+ million and more than double its worth in a matter of a few years, cards that may share certain attributes may also be positive affected, the rest are just multipliers. There may be many examples of this phenomenon happening in recent times, one of which is how the popularity of Gengar cards are affect its “downstream/evolutionary downstream lineage” Pokemon cards like Haunter and Gastly. 

With sports cards, because there are millions of athletes in all different kinds of sports who played in different eras, in different leagues and who played with different levels of completion, investing in these is more like buying a house with each having distinct characteristics like its location, neighborhood median income level, local economy etc and all these things constant evolve over time.  This is precisely why English Pokemon holographic cards, especially the vintage ones cost more. Not just because of the language or potential market size difference, but mostly due to pull rate of holographic cards where the Japanese vintage packs essentially guaranteed one holo card per pack whereas the English version packs did not. Hence because the GOAT of a sport is literally just one person or a handful of people at the most, a title that take frequently decades of work to achieve and is often only publicly recognized and granted with consensus years later. 

One would argue identifying a potential GOAT who likely had to be benchmarked against hundreds of thousands of contemporaries and predecessors in the few popular sports that actually have a large sports cards collecting fan base, the premium for the massive amount of effort and resources that are poured into this search is akin to finding a specific atom with just the right amount of electrons, protons and neutrons in whatever its required final form be it ionization, fusion or whatever else in a forest in the dark racing against time and with a copious amount of other hunters now that they smelled the money from  a potentially $100 billion dollar future industry,  have to be huge for all this expenditure to be worth it. Most people like winners and matters with certain desirable attributes, some people are actually willing to pay for these features. 

The animation and TCG aspect of the Pokemon franchise will likely prevent it from issuing true rookie cards, numbered cards, memorabilia cards including autographed cards any time soon, things that are highly valued in sports cards collecting. One thing that could be a Pokemon card trend in the future is collecting the cards of a Pokemon’s first introduction or appearance in the TCG. This concept is currently not valued in the Pokemon TCG world with the first edition labels on certain Wizards of the Coast sets being the closest concept. This concept could take off some time in the future, however, given most of the super popular Pokemon’s were introduced during the WOTC era and they had 1st edition labels back then, the ceiling on this concept taking off is probably mild at best. Yes, timing is more important in sports cards investing and it requires up to date information and data to make the most optimal decisions, kind of like what a short term investor or a day trader need to do to be successful in their craft. 

Wait, investing in sports cards sounds like a lot of work, why don’t I just stick with Pokemon cards since they are way more stable and also grows pretty fast! There is a reason why investors prefer to diversify their portfolios. Sports cards have higher alphas but also have higher betas, translation, higher risk and higher returns. With Pokemon cards, you mostly only have to worry about systemic or market risk once you come up with a prudent collecting strategy. In some sense, the cards of desirable Pokemon characters like Pikachu and Charizard, mostly introduced in the mid to late 1990s and the early 2000 during the Wizards of the Coast era are kind of fungible in that you mostly can’t go wrong buying them because the storylines are already fundamentally set and its future storyline is not too difficult to predict ballpark wise. Hence regardless of the cards of the sets you buy for some of these Pokemon characters, the baseline values will likely be perceived as the same by bellwether investors, attribute differences like artworks are just multipliers to the equation. 

With sports cards, because there are millions of athletes in all different kinds of sports who played in different eras, in different leagues and who played with different levels of completion, investing in these is more like buying a house with each having distinct characteristics like its location, neighborhood median income level, local economy etc and all these things constant evolve over time.  This is precisely why English Pokemon holographic cards, especially the vintage ones cost more. Not just because of the language or potential market size difference, but mostly due to pull rate of holographic cards where the Japanese vintage packs essentially guaranteed one holo card per pack whereas the English version packs did not. Hence because the GOAT of a sport is literally just one person or a handful of people at the most, a title that take frequently decades of work to achieve and is often only publicly recognized and granted with consensus years later.”