A lot of newer investors coming into the hobby have likened sports cards to stocks. They have touted how card prices can spike or how the market can suddenly dip. And while those things certainly ring true, here are five reasons why the sports cards market can’t be merely oversimplified as a Wall Street clone.
Lack of Regulatory Oversight
This is the biggest reason why the two are different. There is virtually no oversight or federal regulation in the hobby. There are several illegal tactics in the stock market that are legal, if unethical, in the sports card market. For example, it’s very easy to collude and inflate the price of a card then immediately sell it and take advantage of the profit (aka the pump-and-dump scheme). You can also price-manipulate the market by buying a card then not pay for it but have the sale price still show up in pricing tool data as “sold.” This, of course, influences other buyers to pay a “market value” that was never paid in the first place.
Additionally, it’s a cinch to perform insider trading, as athletes and high-profile public faces get more involved in card collecting. If you’re, say, an NFL running back and you’re collecting your own cards but learn you’ve been traded to the Kansas City Chiefs, there is no regulation stopping you from listing a 1/1 Flawless RPA and reaping a huge profit. Same for a team owner who learns a friend of his in another league has signed a megastar free agent, so they list that player’s card on the market. Even a team doctor who learns of a season-ending injury would be able to take advantage by listing the hurt player’s cards and buying up those of his backup.
Purchasing a Stock Means Automatic Payment
Cards are sold in a variety of ways, from trades and deals at shows to best offers and online auctions that don’t have specific prices going into them. That’s the opposite of the stock market, where the price you pay for a share of stock is the listed price. There is no haggling to be done with a Google stock. There is no telling somebody, “Hey. I’ll give you $100 and 50 shares of Tesla stock for 100 shares of Apple.”
As mentioned previously, thanks to shill bidding tactics, it has become somewhat common for certain card auctions to get bid up to a particularly high price only to not be paid. You can’t do that with stocks. Some investing platforms may even require a minimum amount to be invested before you can open an account.
There’s No Index Fund/ETF Sports Cards
One of the most popular stock-market tactics is investing for the long term with an index fund or exchange-traded fund which acts like a mutual fund. Unlike a mutual fund, ETFs can be purchased and treated like an actual stock but can cover an individual commodity such as silver or gold or cover an entire sector of the market. As an example, the S&P 500 (since adopting 500 stocks into its index) has had an average return of 8.22% from 1957-2021 when adjusted for inflation.
When you look at the sports card hobby, there is no S&P 500-like equivalent. There is no total stock index fund. You can’t buy a stock that covers the entirety of MLB card production or one that only highlights Prizm. As a result, cards are incredibly individualistic and make the ability to diversify a collection much tougher. Unlike the stock market, there are no large cap or small caps based on business size either so one can argue that their Justin Herbert RPA out of 25 could have the same valuation as a 1984 Star Michael Jordan, if the market dictated as such. Try arguing that a Shopify stock is in the same realm as something like Apple.
This may be a touchy subject, but the fact is that tax manipulation is rampant in the sports card hobby. How many people are attending shows like The National and reporting to the IRS how they traded a card valued at $500 along with $1,000 cash for a card worth $1,500? Hats off to those who are but those folks are likely in the minority. Simply put, it’s a pinch easier to work around the IRS with cards than it is with Coke stocks.
Shares Are Not Scarce
With the evolution of serial-numbered cards in the hobby, many people have jumped onto the parallel bandwagon, targeting items numbered to 10 or 50 or even those inserted with extremely high pack odds that make them appear to be printed less. This obviously isn’t the case with the stock market, where there may be a finite amount of shares with regards to cash value but there is no finite amount of shares themselves.
Unlike a 1/1 card with a sole owner, Joe the Gardener can spend $115 for a single share of Amazon just like Patrick the Billionaire. While Patrick may be able to afford more shares, the availability of that one share remains the same for both. Somebody who owns a Josh Allen National Treasures RPA /99 has just ninety-eight other people in his shoes because there are literally no other copies of that card.
With the Sports Card Investor app, you can profit from the hobby you love by keeping up with trending cards, tracking real-time prices with Market Movers and buying items on eBay. Download the industry-leading app here for Apple or Androi
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