Craps, Cards and Crappy Cards
Years ago, I became obsessed with craps. The table game kind…smartasses. It all started because I went to Las Vegas every year on a bar convention trip. One year, my brother-in-law and sister-in-law came with my wife and me. One evening, after a lavish dinner with the broads, B-I-L decided he wanted to go to the casino. I was a neophyte, never played craps before, and I watched him roll up $1500 in under half an hour. I was intrigued, to say the least. He seemed to know what he was doing, and it looked like easy money if you did. I bought a book on craps strategy, studied it meticulously, and applied it to my next visit.
I got cleaned out. Again and again.
I missed the big picture, as was made apparent to me several trips (and thousands of dollars) later. On that fateful day, I was rolling, and I went on a run, the sort you dream of, where you roll for 45 minutes before crapping out. It was so good that one of the other players tipped me $100 at the end. I made several hundred dollars betting the strategies I’d studied. Others around me made thousands. Tens of thousands. They bet every stupid proposition bet on the table, bets that gave the house double-figure odds advantages, and they scored way bigger than I did.
I reflected on my roll later and realized that my underwhelming outcome as compared to the others meant I had misread things. The many strategies and facts I studied obscured a much more basic truth that I missed: all strategies are meaningless unless your experience and the metrics behind the strategy match up. Craps odds are calculated based on one million plays, but people playing craps don’t play a million rolls. They play a few dozen, or maybe a hundred if they have a run like I did. What this means is that the odds are irrelevant to the player. That’s right, odds are meaningless, and all the strategies based on odds are pointless. Where your rolls come out on the distribution in the million reps that goes into calculating odds is not dependent on math, it is dependent on luck. Catch a hot roller and you make money no matter what the odds are on the bets you place and no matter how recklessly you bet; catch a choppy table and you get cut to ribbons in minutes no matter how carefully you play to the odds.
Which brings me to the card-related point of this little screed about not letting the trees obscure the forest. In card investment terms, one of the most critical skills to develop is the ability to spot manias and trends. Like the surge in modern card prices from 2020-2022. The people who bought into modern product as it was surging were buying into the equivalent of a great craps run. They aren’t smarter than the rest of us (though they will shout out from every social media outlet that they are) they were chasing a roll. I know it is hard as hell to avoid it, but if you want to keep value in your card portfolio over the long term, if you want it to be a money-maker not a money pit, you must try to stay out of these trends, and if you go into them, have a clearly defined exit strategy and the discipline to implement it, or a huge loss tolerance. When there is a mania with rapidly surging prices, it is easy to look like a genius no matter how stupidly you buy because everything makes money when you sell and everything you have appreciates on paper. It is what happens when the table gets choppy that you need to understand.
Spotting when the table is going to turn choppy is the hard part. I wish I had an infallible formula for that, but I don’t. I do have some experience, though, and I am pretty good at figuring out how to separate the wheat from the chaff. My warning sign #1: if everybody is selling everyone else the same stuff, in quantity, in the same condition, with lots more still unopened, that is a bubble that will pop. We saw this in the 1990s with the rookie card craze, in the 2000s with insert cards, and even with basketball cards in the early pandemic when the Michael Jordan documentary series hit the air and lit a fire under that market (spoiler alert: I sold into it and am thrilled that I did). Look at whatnot and you will see hundreds of live streams a day, nearly all of which are selling recently-manufactured product in pack-fresh condition to buyers who are themselves trying to flip modern cards in their own streams. I’d hazard a guess that enough modern breakers and buyers are flippers that it affects prices pretty dramatically, as we saw in the way modern cards have plummeted over the last several months. When people are buying and selling the same cards to each other, it is time to pull the rip cord and get out, or stay out if you are not already in, because that little circle jerk will burn itself out faster than you can say “blue diamond cracked ice refractor”.
The good part is that when shiny crap is hot, vintage blue chip often is not, so the smart play is the contrarian one. As card prices skyrocketed from 2020-2022, lots of people went all-in with modern cards; I bought lots of vintage. Now the Mod Squad is bobsledding down the slope towards massive losses feeling a bit like a Christian Scientist with appendicitis, and vintage is surging.
The mania is what you don’t buy into; we will discuss assessing what to buy in future columns.