Investing in Collectibles - Is it dumb?

[twbird18]

I played MTG for a number of years, has some mild success on the GP/PT/SCG circuit, worked for multiple of the big name singles sellers, wrote articles for money, collecting, and for a time made most of my money by 'day trading' cards at large events. I eventually sold out of both paper and digital and used the money to do things like pay off my car and support the downpayment of my house. Just a background for where I am coming from.

MTG seems to be the weird exception to the rule, and I think there are a number of reasons for that I am not really gong to dig into. Here's a quick example though:

For a quick real world data piece for individuals not as familiar, a Beta Edition Tropical Island sold for on average $662.40 in November 2010. In November 2020, it was up to $3395.90. That's a CARG of 18% over 10 years. Reference:

https://www.mtggoldfish.com/price/Limited+Edition+Beta/Tropical+Island#paper

I don't have data to back it up, but I recall back in my day picking up Tropical Islands in the mid-late 90s for about $20-40 bucks each depending on the condition, so the true CARG could definitely be bananas.


In general, my experience and opinion is that MTG can function as an investment in 2 different ways:

1. you are effectively a day trader requiring lots of time and energy (keeping up with current format markets, travelling to events to buy/sell, looking out for banned/restricted announcements like a hawk, etc)
2. you are a long term holder of a somewhat illiquid long term play that is likely good provide returns, but carries some black swan risk greater than the stock market (WotC kills the reserve list, MTG paper dies and only digital is supported, you are identified as a high end collector and get robbed, etc).

Either way, I can see the potential, but I am no longer interested in the market.

I used to run an online MTG store as my side hustle & that's very much like day trading. I eventually sold my store for $35K because I moved and didn't know if I could find a reliable person to sort & ship. It was a huge time sink and I loved it when I was heavily into Magic, but I realized there was no way I would keep that up for an extended period of time. Unlike day trading, MTG requires you to spend an excessive amount of time tracking trends & new releases. Honestly, day trading is a lot easier, but is much more effected by outside forces IMO.

The only reason I didn't hold my sealed collection & complete land collection as LTH is because you really don't know when the market will fall out. Already they're developing more and more for digital only. Also, there is surely a ceiling on what a card can be worth. I guess there's some kind of historical collectible world where a Mint graded Black Lotus could sell for $1M one day, but a tropical island? It seems commander is the driving force there not collectors. There has to be a limit to how much people will pay to show off.

[PDXTabs]

Which is why I don't invest in illiquid hard to store items. A rifle has some intrinsic value, but it is hard to argue that a 60 year old rifle is better than a rifle that you can buy today.

Firearms are an interesting case for collecting in that legislation can make a huge difference in the price. A transferable 60 year old AR-15 is worth a heck of lot more than a new one you can buy today thanks to the 1986 NFA. A permanent repeat of the 1994 AWB could be a huge boon to people with large collections (although the market is largely saturated so it would take a while for the effects to be seen).

I know people that stocked up in 2004 expecting a repeat that never came. Also, fun piece of trivia, the 1986 law is called the Firearms Owners' Protection Act.

[JAYSLOL]

For collectibles, flipping is definitely more work, but way better return over buying collectibles and holding long term.  For example, I always check with my bank if they have old coins or bills, and sometimes I get lucky and they have some old stuff.  I can usually take it straight to my local auction house and double or triple (or sometimes way more) my money within in a few weeks, and no amount of “it keeps up with inflation”, or “it beat the s&p500 if you don’t count dividends” that I could maybe, possibly get (but also risk not getting) by holding it long term beats that. 

[waltworks]

For collectibles, flipping is definitely more work a job, but way better return pays less than a real job.

FTFY.

-W

[PDXTabs]

For collectibles, flipping is definitely more work a job, but way better return pays less than a real job.

FTFY.

-W

I was going to say that if you like flipping collectibles, go for it. To me it sounds like another job that I don't want. I suspect that flipping collectibles is one of the things where you need to really know about the collectible in question.

[aFrugalFather]

LEGO to the moon!

[JAYSLOL]

For collectibles, flipping is definitely more work a job, but way better return pays less than a real job.

FTFY.

-W

Ouch, I’m going to call my local hospital and see if they have room for me in the Burn Unit.  But yeah, you’re definitely not wrong.  I only do it because I enjoy it and get a kick out the treasure hunt aspect of searching for interesting/valuable stuff, so and it’s more of a hobby that earns me a bit of money instead of costing me money. 

[waltworks]

Oh, no worries. I don't have any kind of problem with monetized hobbies!

I just don't call monetized hobbies "investing", per the thread title.

I know a guy who is a beachcomber/metal detector person. I pointed out once that the chances of even paying back the cost of the metal detector (couple hundred bucks) were really slim. His response was that he just loves digging up random stuff to see what it is. He's not expecting to find a doubloon or a wedding ring, he's totally ok with finding an old shovel blade or whatever, just because it's fun.

So hobbies are great, and they're even better if you make a few bucks. Just don't come and tell me about your metal detector investment because you found $3 in change in 4 hours.

-W

[JAYSLOL]

Oh, no worries. I don't have any kind of problem with monetized hobbies!

I just don't call monetized hobbies "investing", per the thread title.

I know a guy who is a beachcomber/metal detector person. I pointed out once that the chances of even paying back the cost of the metal detector (couple hundred bucks) were really slim. His response was that he just loves digging up random stuff to see what it is. He's not expecting to find a doubloon or a wedding ring, he's totally ok with finding an old shovel blade or whatever, just because it's fun.

So hobbies are great, and they're even better if you make a few bucks. Just don't come and tell me about your metal detector investment because you found $3 in change in 4 hours.

-W

But that’s thousands of percent return!  Haha j/k.  Yeah, flipping isn’t investing, and as one of those hobbyists that has a metal detector, I can confirm $3/4hs is about the going rate. 

[leighb]

My dad owned a business specializing in collectables. He supplied a rather large region with those same collectables. Things like beanie babies, so many cards and coins. There's money to be made on supplying the collectable and on the storage containers. Growing up I would see a warehouse full of cardboard "collectables." So for me as a kid, I just saw tons lot of boxes (which I enjoyed climbing on). The overwhelming volume of it really mades it impossible for me to see most of these items as rare or as good investments.

The one exception in my mind is the coins. Not the proof sets, or anything marketed as "collectable" but there are some pretty cool coins out there. I don't know if I would put it in the category of investment. But I like having money stored in something that I would not want to sell and in something that has maintained its value over centuries.

[sonofsven]

I've never "invested" per se, but I've definitely taken advantage of the market when I can. It seems like so many things I bought when I was younger turned into "collectables". A sign of discriminating taste or advanced age?
The best score I had was probably a 1963.5 Schwinn Stingray that I bought from a scrapyard for $1.75 about 1992 and sold in 2007 for $1,200.00 on ebay.