Well, How Did We Get Here?

Last weekend I was watching the close of Love of The Game’s 10th anniversary auction.  464 lots in all, 25 of which closed over $10,000 each.  That was in many ways just another mundane weekend for the hobby of 2022.  This weekend Robert Edward Auctions’ fall auction closes.  It has ten times as many lots and it will likely have hundreds of lots over $10,000.  Think about that: we have become so accustomed to four and five-figure prices that we don’t even bat an eye over a $10,000 card or photo. 

Those of you who’ve ridden along with me on the card wagon since the 1970s are likely pinching yourselves all the time to see if you are dreaming.  How did a bunch of nerdy teenagers and odd incel young men meeting in church basements to play with essentially worthless toys and junk end up at the heart of a multi-billion-dollar industry?  How did this odd thing we did become mainstream? 

I think the answer is straightforward enough: the Boomers and Gen Xers grew up and took our cards with us.  Many of us got into professional careers, some built businesses, a few became the alpha males of the business world, and we all then came back to our childhood obsession.  At first, we did it just for nostalgia, for fun.  Then, as often happens when relatively wealthy people become obsessed with something, it sprouts money like mushrooms on a log. 

I confess: the evolution of card collecting from a hobby for spazzes, dorks and geeks like me into a massive industry certainly took me by surprise.  Now, I could say that I knew something, that I predicted the future, that every Babe Ruth card I purchased was bought with the steely-eyed glint of someone who knows he is making a shrewd investment.  If I was trying to sell you an investment advice subscription, I probably would.  But I’m not.  What I knew was that I was engaging in a pastime that I loved, which is why my Babe Ruth cards are nearly all lower grade: why buy a single nicer card of The Bambino when you can spend the same money on several lesser grade cards and HAVE MORE BABE RUTHS?  Made perfect sense to me… 

Thing is, my obsession dovetailed with those of many smart, rich, successful people who were driven to get what they wanted and were willing to pay for it.  With a mix of alpha dogs in there, though, it was inevitable that things would move in the direction they did.  When guys sleep on friends’ floors or in their cars rather than pay for a hotel room but have $30,000 bankrolls for cards (I actually saw this sort of thing more than once), that intensity translates into big money entering the field.  But collecting is also a profoundly egalitarian force, which is a big part of the explosion in interest.  The price of entry can be as little as finding a box of cards at a flea market or garage sale and pulling out something worth fifty bucks.  I remember one dinner at a National sitting at a table with the CEO of a public company, a hedge fund guy, lawyers, doctors and other professionals, middle managers, retirees, a teenager with his father, and a guy who worked in a bowling alley.  All classes, all over the country, all collectors united in our obsession with the hobby.  If you know your stuff, you are welcome. 

So, that’s a nutshell overview of how we got to today.  What the future for the hobby looks like is a theme I will return to over and over in future columns, but let me start with one experience-based observation.  After 45 years of dealing cards, going from the basement of a church in Northridge, CA, to traveling to major trade shows thousands of miles from home, it is apparent to me that card pricing, just like everything else we invest in, is cyclical.  My experience is that card prices lag other investment prices by about 9-12 months.  The stock market shits the bed in January, the card market as a whole will decline in the following fall-winter.  I’ve seen this with every recession, great and mild, for decades, and have no reason to think that it will stop now.  The real question is how badly specific sectors will be hit, and why, and how to guard against getting killed when it happens.  In coming columns, we will delve into it in depth. 

See you next week, when we take a brutally honest walk through the investment weeds.