How to Invest
6 Steps to Investing in a Trading Card Portfolio
By Brent Huigens, CEO
This past February, a 2000 Tom Brady Rookie Card (PSA 10) sold for nearly $110,000 at auction, making it one of the most valuable trading cards in the world. Its rise in the marketplace was swift: valued at $5,000 in 2012, it doubled to $10,000 in two years, then reached $35,000 in 2016. While not every trading card generates this level of return, such results highlight why trading cards are becoming a viable alternative investment opportunity.
Those interested in participating in stock, bond, real estate and other markets have no shortage of financial firms at the ready to help build a well-diversified portfolio. For those interested in participating in the promising trading card market, however, expert guidance is not as easy to acquire. Consider these six steps to getting started:
Establish a goal
As with any investment plan, begin with a goal. Whether looking for additional funds for near-term purposes, like a child’s higher education, or expenses in the longer term, such as in retirement, start with determining how long investments will be held and what kind of return is desired. Also consider whether this will be an actively managed portfolio or one that, once card holdings are selected, can be left to appreciate over time. Active management may require a greater time commitment to keep up with demand and pricing trends to ensure your transactions are well timed.
Specialize in a sector
Much like a mutual fund might include stocks that all share some quality – be it a focus on technology, healthcare, emerging growth, etc. – a trading card portfolio should revolve around a type of card. A portfolio may center on new cards or old, sports or non-sports, mainstream or esoteric card productions, or from a specific era within vintage or modern cards. Within each of these “sectors,” investors have ample opportunity to diversify and make an educated play. Advanced investors might have several trading card portfolios, each with their own unique focus.
Personalize to your interests
Trading cards may be an alternative asset class for investment, but that doesn’t detract from their inherent fun. Consider gravitating toward a sector that resonates, as the in-depth research and analysis that is essential to building a portfolio may be more enjoyable with a topic of personal interest. Research of historical sales data and demand trends can lend insight to where the market stands, how it got there and potential opportunities ahead. Trading cards as an asset class afford investors a wealth of detail inherent to the market and how a trading card is likely to perform; a passion for the investment will sometimes separate the most successful investors from the rest of the pack because they are often more willing dig into the industry's detail to beat the average.
Pick a portfolio size
The depth and breadth of a trading card portfolio will depend on the amount available to invest. Whether available funds for this venture are $10,000 or $1 million, it is possible – and highly important – to create a well-diversified portfolio. Clearly, a smaller budget may mean targeting lower valued cards. The good news is the ROI is as bright on both low and high value cards, as affordable cards may experience greater demand and exchange hands more frequently, in turn creating opportunity for steady gains. Ultimately the task at hand is to do your research using historical sales tools like those on our website to study the market, assess historical sales patterns, and build your future portfolio goals predicated on market prices.
Understand eye appeal
Before entering a bidding war for a must-have holding, evaluate the quality. The value of cards can be complex, relying on a combination of the card, its professional grade and the quality of a card within that grade. The quality within a grade can make a significant impact on market value. This concept isn’t new; careful investors have been paying attention to this for many years. Case in point, cards which have received the PWCC Certified High End designation have, on average, sold for 165% of the market value of an average eye appeal card (LINK). In addition, be familiar with the three tiers of trading cards, as each is associated with varying return potential. For most investors, blue chips – which are the foundation of the market – offer the best opportunity for ROI. Cards that are extremely rare and valuable are essentially fine art equivalents and though they may receive the most exciting ROI they also carry the highest risk and can be illiquid. At the other end of the spectrum, “commons” tend to be easily accessible and in relatively lower demand for investors but remain highly desired for collectors and will always hold an important part of the marketplace.
Seek professional guidance
The typical investment firm probably won’t have a trading card market analyst on hand to help you build a portfolio, but help is available. PWCC works to empower participants in this alternative asset class by creating and refining analytical tools and market indices that help investors pinpoint the right cards for their portfolios. We review holdings to ensure that they are aligned with stated goals and offer suggestions to help keep them on track. Simply send us a note and we will set up the consultation.
The trading card marketplace can be whatever you want it to be. Good investment decisions are possible in any number of directions, and you just need to pick which is yours.
Sell on the Auction Marketplace
PWCC manages the largest trading card auction venue in the world, comprised of 11 annual auction events which start every month of the year, excluding December. Each event consistently features some of the finest trading cards in the world in an easily-surveyed format that reaches both hobby and investment minded clients alike.