History of Trading Cards as Collectors ’ Items
Most people collect something at some point in their lives . Psychologists have identified a vast range of motivations behind the urge to collect , including pride in amassing beautiful objects , the satisfaction of getting a good deal when a seller fails to recognize the true value of what he or she is offering , the thrill of the hunt in seeking out rare items , the desire to create a legacy to pass on , the social aspect of participating in a sub-community of likeminded enthusiasts and simple nostalgia , among many other conscious and unconscious motives .
Trading cards are among the most popular types of collectibles . They trace their roots back to the 1800s , when people began collecting small illustrated “ trade cards ” that companies printed first as a form of advertising and then as giveaways included with products to boost sales . Tobacco companies in particular adopted this practice , as the cards offered the added benefit of acting as a stiffener to protect the cigarettes .
In 1886 , Goodwin & Company began producing cards featuring baseball players and created one of the first collectible sets . Other cigarette companies followed suit , and collectible cards featuring athletes from other sports , such as hockey , soon became popular as well .
Candy and chewing gum companies eventually took over the trading card market from tobacco companies . The Topps chewing gum company , which printed its first baseball card set in 1951 , has since become the market leader in the trading card industry .
The collectible trading card market also includes non-sports cards ( for example , cards for movies , TV shows , comics and current events ) and cards used in collectible card games ( such as Pokémon , Yu-Gi-Oh ! and Magic the Gathering , or digital Hearthstone cards ). However , sports-related cards have the longest history and are often the most coveted and valuable .
Sports card values are influenced by scarcity and condition , as well as more intangible factors like the player ’ s success ( current performance , if still active , as well as longer term ) and the performance of the team . The most valuable card ever , which sold for $ 3.12 million in 2016 , was a
1909 T206 Honus Wagner , produced by the American Tobacco Company .
After decades of being collected primarily by children and hobbyists , baseball cards suddenly soared in value in the late 1980s . The first price guides appeared , and the press hyped the value of sports cards as an investment . Third-party accreditation companies emerged as well , offering an industry standard to help collectors and investors value their collections . These professional grading services , used by all serious collectors today , will authenticate a card , grade its condition on a 10-point scale , seal it in a tamper-proof plastic holder and assign it a unique serial number .
A speculative bubble formed , and card companies rushed to print millions of cards to cash in on the dramatic increase in demand . Children were essentially priced out of the market during the boom years , and cards purchased by speculators were , of course , kept in mint condition , further ensuring oversupply ( in contrast , many vintage cards , not initially recognized as having any particular value , have been lost or destroyed over the years ). The bubble burst spectacularly , and many observers today remain convinced that trading card values are too volatile to allow cards to be considered a genuine alternative investment .
It ’ s true that most ungraded mass-produced trading cards from the 1980s and 1990s are worth little today , and that modern cards are inherently more volatile , as active or recent players ’ legacies are not yet fully established . However , many cards , both vintage and modern , have continued to appreciate , and elite specimens have held their value better than more common items .
In addition , technology developments since the mid-1990s have done for trading cards what electronic trading platforms have done for securities and other tradable asset classes , increasing price transparency and execution speed , while reducing transaction costs .
While the idea of a National Best Bid / Offer ( NBBO ) for baseball cards may be a bit far off , the rise of online auction platforms — such as eBay — has enabled buyers and sellers to connect faster and more seamlessly than ever before . Prices and spreads on each transaction have become more apparent as a result . Moreover , the increased volume facilitated by auction platforms like eBay has worked to bring down trading costs , or commissions paid to the auction house .
A more efficient market system has made it much easier for collectors to see returns on investment . Previously , individual collectors would find it virtually impossible to make much of a profit if they had to purchase at retail and then sell to a dealer or at auction on consignment . The best margins were achieved by finding hidden gems at estate sales or flea markets and then selling at swap meets — a process that may have been highly enjoyable but was undeniably time consuming . The ease of buying and selling online has created a much more liquid and less fragmented marketplace .
What ’ s more : the availability of historical market data amassable from online auctions has simplified the performance tracking process . Investors require access to market data , analytics and information on historical returns in order to properly vet an investment opportunity , and new technology allows for the aggregation and analysis of sales data in a way that was impossible just a few years ago .
Regardless of whether a collector relishes the in-person treasure hunt at estate sales and antique shops or prefers the efficiency of an online auction , the availability of extensive sales data makes it much easier to value cards accurately , reducing risk .
Trading Card Market Indices
PWCC Marketplace *, the largest seller of investment-caliber trading cards , has recently begun tracking and cataloguing performance data for trading cards , with the idea that such data will inspire a more efficient , informed marketplace and greater confidence among would-be investors . PWCC recently developed three new market indices that demonstrate the investment performance of professionally graded trading cards over the past decade .
The PWCC Top 100 , PWCC Top 500 and PWCC Top 2500 represent the top 100 , 500 and 2,500 most valuable trading cards , respectively , as defined by sales price , tracked against the S & P 500 over the past 10 years . The research team will develop additional indices focusing on subsets of the larger market ( e . g ., pre-war baseball , modern basketball , etc .) as the collection of available data grows .
PWCC uses its own software to capture trading card value , based on original sales data obtained through a partnership
www . MoAF . org | Summer 2018 | FINANCIAL HISTORY 33