Collectible Cards: COVID Lockdown Drives 1000% Growth
What do you get if you combine millions of Americans stuck at home with a bit of extra disposable income and no access to live sports games? The answer is a booming market for collectible cards.
Prices surged almost 1000% during the pandemic as lockdown clearouts unearthed rare cards from dusty attic collections and buyers sought comfort in nostalgic childhood throwbacks.1 According to leading sports trading card marketplace PWCC, their PWCC 100 index which tracks the prices of the top 100 performers is up 932% since 2013. In comparison, the S&P is up 197% over the same time period.
Fig 1: PWCC 100 Trading Card Index performance against S&P 500
Collectible Cards 101
Before you start digging through the attic or trawling through eBay, let’s start by running through the basics you need to know before you invest in collectible cards.
Types of Collectible Cards
The first thing you’ll need to decide is which type of cards to collect. The most popular cards for investors tend to be sports cards which feature iconic sports players and their stats. Any Millennials reading this will probably remember playing with Pokemon cards, which are an example of game cards, while other popular entertainment categories include Star Wars, Iron Man and even WWE wrestlers. There’s even an emerging NFT trading card market, featuring virtual representations of the physical underlying asset.
Long vs Short-term
If you’re planning to invest for the long-term, it’s best to look at cards that feature stars with wide generational appeal. Sports stars who are hot right now but may not be remembered in a decade or two are likely to decline in value.
“Rookie” cards
There’s a lot of hype around “rookie” cards which are typically the first to feature an athlete after that athlete has participated in the highest level of competition within their sport. Demand can be sky-high for these first official entries into the card-collecting world as investors and collectors compete to get their hands on the next big thing. They’re also the oldest card issued for a particular player, which can add to their perceived value and collectability.
Sealed packs
Buying a sealed pack of trading cards is a bit of a lottery. There’s a chance that you’ll end up with a very rare card, but there’s also a chance you’ll be left with nothing. A great example is Pokemon Booster Packs which regularly achieve record prices like this sealed first-edition box that sold for $384,000 at auction in July 2021.
How Are Cards Valued?
The value of a particular card can be very subjective. For example, when Netflix aired “The Last Dance” documentary about basketball star Michael Jordan during the COVID-19 pandemic, interest in Jordan trading cards skyrocketed.2 Rookie cards featuring Jordan’s teammate Scottie Pippen also doubled in value between November 2019 and April 2020 when the series launched.3
Here’s a checklist of the main value drivers for collectible cards:
Condition: Condition is critical when it comes to purchasing cards, especially if you’re buying unseen from an online auction, for example. Professional grading services exist to help confirm the condition and value of a particular card, reducing your risk. PSA is the largest third-party authentication and grading company, which uses a 10-point scale ranging from GEM-MT 10 (Gem Mint) to PR 1 (Poor). Buying ungraded cards is a higher-risk strategy, but there’s the possibility you’ll uncover a hidden gem and generate a bigger profit. Bear in mind that you’ll also need to store your cards in cardholders or sleeves in a cool, dry place to protect them from damage.
Subject matter: As we’ve already discussed, some cards are more collectible than others because of their cultural significance or simply nostalgic appeal.
Rarity: Supply and demand can drive up prices significantly in the case of a very rare card. For example, there are just 33 known 1952 Topps Mantle cards in the world. In January 2021 one exchanged hands for a massive $5.2 million!
Errors: Cards with printing errors can be highly sought after. A great example is the NNOF (no name on front) Frank Thomas 1990 Topps rookie card which typically sells for thousands of dollars. The regular Frank Thomas 1990 Topps, on the other hand, can be picked up for under $10.
Autographs: Signed cards can also command a premium. Pokemon card collectors are happy to pay over the odds for cards signed by illustrator Mitsuhiro Arita, and in April 2021 a card featuring and signed by the president of The Pokémon Company, Tsunekazu Ishihara sold for nearly $250,000.4
The bottom line is if you’re planning to treat collectible cards as an investment, you’ll need to keep on top of the market and do your homework. Useful resources to learn more include Sports Card Investor, Trading Card Resources, and Sports Collectors Daily.
Sports cards
There’s a huge range of sports cards available, especially for US sports like the NFL, NBA and baseball and Australian sports like AFL and NRL. Prices can be sky-high for big sports stars like LeBron James; in April 2021 a rookie LeBron sold for $5.2 million, making it the most expensive basketball card ever sold5.
Knowing exactly which sports cards to invest in can be a minefield. Generally it’s best to stick to rookie cards with a good track record. According to Gold Card Auctions, the best returns usually come from first or second-year players who are just starting out like LaMelo Ball6, although this strategy does come with added risk should their career not pan out as expected.
Key players in the sports card market include PWCC which is the largest trading card marketplace and also publishes several trading card indices that track the top performing 100, 500, and 2,500 cards. Investors can buy cards through their monthly auctions or by making an offer for cards listed for sale by other collectors in their fixed price marketplace. Another interesting option is Collectable which enables fractional investing in sports collectibles including trading cards.
Pokemon cards
After sports cards, Pokemon cards are the second most important category of investment-grade collectible cards. Once hotly traded in kids’ playgrounds, today it’s mostly Millennials who are reliving their childhood by buying up these game cards that were first introduced in 1996. The most expensive Pokemon card to date is a 1st Edition Shadowless Charizard that sold for $399,750 in March 2021 at Goldin Auctions.7
A useful resource for those just starting out with Pokemon cards is Pokemon Price which tracks record high and low prices and total set prices over time. When you’re ready to start trading, check out eBay, which tends to be the most common portal for Pokémon card auctions, as well as marketplaces like Heritage Auctions, Vintage Toys Auction, and PWCC Marketplace.
Specialist platforms like OTIS can offer a lower-risk solution for those new to Pokemon cards, since they securitize authenticated investment-grade through the SEC and then sell off fractional shares of the item. They also sell shares of other investment-grade collectible game cards that are worth checking out like Yu-Gi-Oh! and Magic: The Gathering.
NFT trading cards
If you’re into NFTs, you might want to look at NFT trading cards which are virtual representations of physical cards. These unique digital assets are “non-fungible tokens” that have been created on Ethereum or other smart contract blockchains. This makes it easy to verify ownership, and even if the physical version is lost or destroyed, the NFT will continue to exist on the blockchain.
In April this year NFT trading cards got a big boost when the leading trading card maker Topps announced that their flagship annual baseball card collection would be issued as NFTs.8 NFT sports cards are already hitting seven-figure prices, including an NFT card of Baseball superstar Reggie Jackson which is worth $2.08 million.9
Acquiring investment-grade NFT trading cards is straightforward thanks to trading platforms like OpenSea and Hoard.
Final Thoughts
Like any alternative investment, collectible cards come with their own set of risks and rewards. It’s always a good idea to test the waters by making one or two small purchases before you commit a larger amount of capital. Minimise your risk by sticking to well-respected trading platforms and cards that have been professionally graded, and diversify your portfolio across different sports and game cards like Pokemon and Yu-Gi-Oh! where possible.
And finally, don’t forget that trading cards are meant to be a passion investment. Pick cards that you’re genuinely excited about. That way you’ll win even if your cards don’t hit six figures.
Disclosure: All opinions expressed herein constitute the author’s judgement as of the date of this article and are subject to change without notice. Statements made are not facts, including statements regarding trends, market conditions and the experience or expertise of the author are based on current expectations, estimates, opinions and/or beliefs. Such statements are not facts and involve known and unknown risks, uncertainties and other factors. Past events and trends do not predict or guarantee or indicate future events or results.