So what did my hockey card collection got to do with tulips and USA housing? Well, as a kid I did genuinely enjoy simply collecting cards, memorizing stats, and organizing them in a thousand different ways (can you tell I grew up just before computers and game consoles took off?), but I also thought I was building a collection that would be worth thousands of dollars one day. What gave me that impression you ask? Well, the card store I loyally bought my cards from every month or so always had lots of cards on display for dozens if not hundreds of dollars. Plus, they had these little magazines come out that that were called “Becketts” and they supposedly were impartial estimates at what sports cards were worth. According to this guide (not all that dissimilar from many investing guides currently out there) my card collection was literally “worth” probably $10K-$15K as a 13-year old (the collecting stopped once I started noticing girls… I’m fairly certain I wasn’t the only one). These investment guides/becketts would have all these stories about traders have $100,000 collections and buying and trading cards that were worth hundreds of dollars all of the time. It was not hard at all to get caught up in it. Of course the card companies owned most of the becketts that came out, and the ones they didn’t own had a vested interest in keeping the whole industry going (obviously), so they were hardly impartial in hindsight.
What Do You Mean Supply and Demand?
Imagine my surprise when I went to sell some of my cards at the age of 16 (cars trumped cards at that point) only to be told the following, “Son, with so many different cards being printed these days the market is totally flooded and demand has dried up. I don’t even know if I’ll be able to keep this shop open any longer.” I couldn’t believe it. I felt like the rug had been completely pulled out from under me. Here I had spent so much time arranging my cards in special plastics to keep them in “mint” condition and now they were worth next-to-nothing. Sure, in today’s world I probably could have found some buyer on eBay willing to pay about 10-15% of Beckett value for the cards, but even that seems crazy when you consider those magazines were touted as an honest valuation of the market.
…And We Thought Tulips Were Crazy
I even remember getting caught up in this brilliant promotion that McDonalds ran every year. Mickey D’s would allow you to purchase a small amount of their “special edition” hockey card series, but only if you purchased one of their fries and/or hash browns. Think about that for a second. You had to buy their product (which was terrible for my young body by the way) just to get the opportunity to buy a hugely overpriced product from them! It borders on the insane that this tactic worked, but I remember that many locations were constantly sold out of the cards. This is how bubbles work, people don’t have to believe something has an intrinsic value equivalent to what they’re paying for it, they just have to believe it will get more valuable over time.
Needless to say that after “investing” weeks and weeks of my $5-per week allowance, and receiving about a -97% return on it (if I had sold) I learned a valuable lesson. At least I still got some cool cards out of the deal and a fun hobby. It could be worse. I could be an adult consistently adding to a lump of gold somewhere thinking it is a good investment because it will likely increase in value. Why is gold more intrinsically useful than hockey cards again?