Welcome to the WC, wherein you’re trapped in my mind for eight to ten minutes weekly.
Last week, we dug into the ​SEC charges against Hedonova​, and several folks reached out to me, saying they’re struggling to get their money back. If you’re in the same boat, let me know.
This week, we’re focussing on collectibles. Where are the winners today, and how do you avoid losing?
Table of Contents
Who still collects stamps?
The other day, a reader asked about stamp collecting.
Do you ever come across stamp investments or fund pitches – stamps as an asset class, alongside coins, sneakers, etc.? To my eye, every collectible category is booming except for stamps. What do you think?
My immediate response was…ouch.
But the broad trend downward obscures the real story because:
- Google is only ​used​ for 0.4% of web searches in China
- ​Between​ 30% and 40% of global stamp collectors are in China. Hong Kong is another 10% or so. Likewise Taiwan.
For various reasons, people tend to get into stamp collecting once they hit 60 years old. (I guess they’ve mastered the meat-smoking habit they picked up when they turned 40).
In China, that’s folks in this yellow box.
Thanks to the ​Great Leap Forward​, there’s a population depression in China for this age group today, but you can see what’s coming right behind it.
That’s a lot of future philatelists coming down the pike in the world’s second-largest nation.
It’s a good reason to be bullish on the hobby as an asset class.
​Reports​ ​suggest​ stamp returns between 8% and 13% annually, but unfortunately, the indices used to track these prices appear to have ​disappeared​. The most recent data on these is a decade old.
While hard data is scarce, collectors keep breaking records. PIMCO founder Bill Gross recently ​sold​ part of his collection for over $18 million, and the ​world’s most valuable stamp​ is estimated to be worth more than $24 million.
So, how do you invest in stamps?
- Quality: “Buyers ​demand​ mint issues, with prices falling off precipitously for used or average condition stamps.”
- Latin America and Africa: former colonies are ​increasingly​ popular, and China is getting more involved in both regions
- And what’s cold? Israeli, Scandinavian, East German and European Union stamps are old news.
Would you like to know more?
​The One-Cent Magenta: Inside the Quest to Own the Most Valuable Stamp in the World​: James Barron. Focusing on the world’s most valuable stamp, this book dives deep into the passion, obsession, and investment potential that drives high-stakes philately. It provides a narrative that ties the love of stamps with the economics of collectibles.
Box Breaks – a losing lotto ticket
Perhaps more than ever, buying sealed sports cards is a losing proposition.
I spoke recently with a sports card broker and sealed product wholesaler (he buys cases directly from the manufacturer and sells them to retail clients).
I asked him if he was ever tempted to open the boxes rather than sell them. He gets a hefty discount, so perhaps that changes the math on whether it’s worth opening a case or two and selling on the individual cards.
Without hesitation, he said, “No, aside from being against our terms with the manufacturers, it’s not good business. Even with the discount, you never pull out enough to justify the spend.”
He confirmed what I think every collector knows:
The value of what you pull out of a box of sports cards is almost always less than what you paid. It’s the ultimate example of something being worth more than the sum of its parts.
The most ​brutal​ recent example was the “Break of the Decade” at Fanatics Fest NYC last week.
During the event, 99 punters paid $5k each to rip a half-million worth of sealed baseball, basketball, and football cases from the last 20 years.
At best, the value of the cards pulled was $100k, probably much less.
Everyone in the hobby, intuitively or explicitly, knows it’s an expected value negative proposition, so why do people still join box breaks and buy cases to rip?
It’s fun, and you’ll hit that lottery ticket occasionally. Chasing and hitting a particular card of a player is the ultimate dopamine hit in a way that buying that same card on eBay can’t compare to.
I suspect the overlap between people who break boxes and those who gamble on sports is very high.
And that’s fine in moderation blah blah blah.
I’m not immune to chasing the dream. Last month, an Altea member launched the world’s first ​ultra-premium cricket card set​.
I bought four boxes and ripped them with gusto, and I’m pretty sure I landed some bangers.
I’m delighted with my purchase and had much fun researching these guys. Now, I just need to learn how cricket works.
That’s all for this week; I hope you enjoyed it.
Cheers, Wyatt
Disclosures
- This issue was brought to you by our friends at ​Sidebar​
