But I can’t afford a Brady Championship Rookie Ticket within a $2500 Sports Card portfolio?
Boy, the sports card investing market is going down, I don’t want any speculative or prospect cards in my portfolio!
Certainly, there aren’t many Brady Championship Rookie Ticket to be had in BGS or PSA anything, let alone finding one in BGS 2.5 – so you may be asking – what gives?
Sports Card Investors Portfolio Advice
Frankly speaking, the world of investing and Sports Cards are offering new ways of buying assets. Investing has turned the corner, becoming more democratic and investors certainly have more choice in what they own. You can own farmland, green technology, a technology start-up, wine, whiskey, and of course Sports Cards.
You can own cards directly, through fractional ownership, or even keep an equity stake (keep 60% and sell the rest through the fractional model, if you are fortunate to own a 6 or 7 figure card)
And while the market has certainly started to go down, cards of Acuna Jr, Guerrero, Ohtani, and many others veer up, in spite of a weak market. Picking the right prospect or speculative cards can be rewarding, even in adverse market conditions.
And at some point, the market will find support!
Therefore considering fractional ownership and all of our options may provide for a more complete portfolio.
So you have $2500 to start a Portfolio (or 1/5th or 5 times, whatever), you have set some target allocations and goals within the following categories. In this example, the first figure is our sample portfolio and the second is the target range for that particular category.
Legends – 40%- target range (30-70%)
Beyond HOFers, these are the elite of the elite, iconic status both on and off the court or playing field, and long after their playing careers are over
Examples of legends include Wayne Gretzky, Mario Lemieux, Gordie Howe, Michael Jordan, Magic Johnson, Dr. J, Bill Russell, Kareem Abdul Jabbar, Lou Gehrig, Babe Ruth, Mickey Mantle, Jacke Robinson, Honus Wagner, Roberto Clemente, Derek Jeter, Jim Brown, Joe Montana, and Walter Payton.
Future HOFer – 35%-target range (20-50%)
Sure firelock to be in the HOF. This list includes James, Rodgers, Brady, Kershaw, Ovechkin, Crosby. If you have to question whether a player is a HOFer (after 10 years in the league), then they need not be in this category or in your portfolio. Probably need to take this category to another level and considerable intangibles, popularity, and how this will be revered once they retire.
Active Era Players – 15%- target range (10-35%)
Players who are top 20 status in their respective leagues consistently and ideally in the top 5 or 10, but lack either milestones, championships, or even tenure. Players who fit into this category are Carey Price, Patrick Mahomes, Damian Lilliard, Juan Soto, and Donovan Mitchell.
Yes, if Patrick Mahomes retired today he wouldn’t be a HOFer, but still, a top player, widely remembered from this generation. This distinction is important, as there is likely a decent run-up when players turn the corner and become bonafide HOFers. The ring becomes the thing.
Prospects -10%- target range (0-20%) rookie,
Players in their first or second year, even minor leaguers who are barely established or have a year or two in their league. The H word and P word, comes into play here – Hope and Potential. That said, with these players and their respective cards- it is likely to spread out your risk (10 players at 10% allocation for example). Likely a category easy to avoid, but frankly many of these cards, when the player meets or exceeds the “P word” will do great (or very badly when they don’t meet expectations) irrelevant of the direction of the market.
Too many names to mention, but many fall between era player and prospect- Luka Doncic, Zion Williamson and Vladimir Guerrero Jr. are certainly beyond the prospect stage, whereas Wander Franco and Alexis Lafreniere are a better fit for this category.
Prospects can be an “All or Nothing” play, so keep this category and the era player category within the target range.
Certainly, you can build out a spreadsheet with the top twenty active players and top 25 for all-time and pick and choose from amongst the list. Top 100 Major League Prospects Lists or similar lists from other sports can be helpful for assessing those up and coming players.
While, those more aggressive may choose to have more rookies/prospects allocated, for example:
20% Prospects/25% Era Players/25% Future HOFers/30% Legends.
In theory, this portfolio should yield better returns, due to taking on more risk. But this isn’t Portfolio Theory 101 in the capital markets and bigger, badder returns from taking on more risk don’t go hand in hand.
40% Legends/30% Future HOFers/ 20% Era Players/ 10 % Prospects
Likely will out-perform on both a return perspective, with less risk- whereas the more speculative portfolio is taking on more risk, in both the short and longer-term, with no significant return advantage. This is a distinction between Stock and Card investing at the Portfolio level.
While you are at it, don’t forget to be spread across generations and have investments in at least 3 sports.
PUTTING YOUR MONEY TO WORK
You look at this and wonder, how am I going to allocate anything decent – if I need to put $800 of my money (from a $2500 portfolio) into “Legends” the cards of Jordan, Mantle, and Brady. Well, the democratization of investments and fractional ownership certainly help in this regard. Go onto the APP for Collectable, Rally Rd or perhaps with vincent and grab $300 worth of shares in a 1986 Fleer Jordan PSA 10 and round it up with a $250 holding in an SGC 1933 Babe Ruth card. This will get your iconic and legends allocation covered -pretty awesome, without the headache of insuring, storing or having these cards shipped – even if they were in the budget.
From there you decide on 5 prospects cards (10 is more ideal), both ungraded and graded for $25-$50 per player. Frankly, when the market is getting beaten up, speculative picks should be a lot like small caps. When the market turns, the cards of these players who are doing great should have a lot of torque. These prospects, typically have less than 1 year or no experience, and is a lot like choosing tech start-up companies. Better off spreading the risk amongst many names and sticking with the top organizations. Similar to buying into tech companies where management has a proven track record.
Then you move over to the future HOFer and turn to the cards of Curry, Lebron, Ovechkin. Again, given the variety of rookies for these players you can choose lower graded copies, or non flagship type cards or see what is available fractionally on the higher end of the spectrum. That said, a 2012 Prizm Curry in BGS 9.5 is $250 and certainly, while not a rookie card, an iconic card from an iconic set.
Lastly, you move over to the era player. A classification where a title, or hitting career milestones can catapult the player’s status. These players are not a lock for the HOF, but are certainly on a list of this generation’s best. At a 20% holdings- you grab a BGS 9.5 of Juan Soto, an Upper Deck Young Guns Steven Stamkos and pick off some cards of Lamar Jackson. As you both up in the budget, you can become more discerning and select lower POP cards that fit this bill.
In this example, this is how your overall portfolio looks. Again, this is not advice or a guideline for you to follow, simply a process for demonstration purposes only. In other words, this shouldn’t be taken as advice.
|Segment||Allocation||Breakdown||Amt Invested||Player Name||Card||Grade||Ownership|
|(of overall portfolio)||(direct/fractional)|
|Legends||38%||12%||$300||Michael Jordan||1986 Fleer #57||PSA 10||fractional|
|10%||$250||Babe Ruth||1933 Goudey #144||SGC 8||fractional|
|8%||$200||Wayne Gretzky||1979 O-Pee-Chee #18||PSA 9||fractional|
|8%||$200||Hank Aaron||1954 Topps #126||PSA 8.5||fractional|
|Future HOFers||35%||8%||$200||Tom Brady||2000 Playoff Contenders (2)||BGS 9||fractional|
|10%||$250||Stephen Curry||2012 Panini Prizm||BGS 9.5||direct|
|9%||$225||Clayton Kershaw||2007 Bowman Chrome (2)||BGS 9.5||direct|
|8%||$200||Alex Ovechkin||2005 The Cup RPA||BGS 8.5||fractional|
|Era Players||20%||4%||$100||Luka Doncic||2018 Optic Base||BGS 9||direct|
|8%||$200||Patrick Mahomes||2017 National Treasures RPA||BGS 8.5||fractional|
|4%||$100||Juan Soto||2018 Topps Chrome||BGS 9.5||direct|
|4%||$100||Steven Stamkos||2008 Upper Deck Young Guns||PSA 9||direct|
|Prospects||7%||1%||$25||Zion Williamson||2019 Select Concourse||SGC 9||direct|
|1%||$25||Quinn Hughes||2019 Upper Deck Young Guns||Raw||direct|
|2%||$50||Vlad Guerrero Jr.||2019 Topps Update Rainbow Foil||Raw||direct|
|3%||$75||Lamar Jackson||2018 Optic Base||Raw||direct|
Pretty decent, likely at a decent point since you really started with a game plan.
A couple of key points, again this isn’t advice but just an example. Certainly beating in this point! The chances your portfolio is exactly $2500 are low, but developing a few guidelines is a smart starting point.
In terms of fractional ownership, compare the total card capitalization (Pop count multiplied by current market price) to the market capitalization for that card on the partial ownership site.
For example, the 1986 Fleer Michael Jordan in PSA 10 has a current market capitalization of $243,500 on Collectable and is open for purchase of shares (between 3-4 PM throughout the day), whereas the physical card has had recent sales of $233,700, $270,600 and $295,200 respectively. Certainly, the prices are in line and occasionally, especially in times when the market is weak and volatility is up, one is able to find arbitrage opportunities ( significant differences between the fractional site and single card sales)
Certainly, you would expect some differences, but at a minimum, you are assessing the value. Clearly, this “partial ownership” model helps with storage, insurance, but also allows you to trade around a key core position. The obvious advantage is it helps you get exposure to the “best of the best” and that is frankly pretty darn cool.
Evidently, the exposure to the Prospects list is quite light in this example. Ideally, you want to have multiple positions in a single card, in addition to low POP, that allow you to trade and monitor if this player (and their card) are entering elite status.
Clearly, many of these categories have more than a shade of grey. Players like Connor McDavid fall between the categories of Future HOFers and Era players. Likewise, there may be some ambiguity on which category would you put a player in, especially current players. A few other examples:
Booker– era player, a title and 3-4 more years as a top ten player and he jump to Active HOFer
Bosh – tough call, perhaps legend, but certainly back seat to Lebron, Wade from 2003 class, perhaps we simply pass and grab a bigger name
Guerrero – clearly on his way to an Era player at this point, but still likely between prospect and Era player at this point
Liliard– probably at HOFer, certainly an Era player (too title and no real path to get there). Again, if it is hard to categorize, perhaps you should avoid it altogether
Even Doncic and Ice Trae, while they seem to be ERA players, could be a prospect pick as well.
Simply take a look at many of the current Top 25 list or all-time best lists on some great sites and add your own two or fifth sense. Remember, many players don’t fit on any of the lists, nor should they- add a 5% or separate sleeve for PC (personal collection) if you really feel the need to own a bunch of California Golden Seals players. By setting aside a specified amount to PC, it may help keep it under wraps.
And don’t forget the valuable lesson we have learned, not all sports cards are investments. The status and categorization of the player (Iconic, Active HOFer and LOW Pop on the card itself really matter). The market has spoken, that the iconic cards of many greats are likely served best in the 200-1500 POP count (even lower, if you can find and afford them), while considering dilution (crossing over from other grading companies)
As you begin to budget more to your card portfolio, it may allow for more flexibility- but there still should likely always be a place for a high end Goudey or Sporting News Ruth at a 5-10% allocation. Again not directly, but owning shares through a fractional ownership model, does offer storage, insurance comfort and the ability to buy/sell around a core position. Remember some of these critical hobby cards only show up once every few years, so take advantage of the opportunities when they present themselves and purchase some shares.
Overall, having a portfolio approach will also spread out your time horizon (icons for the long term, prospect, higher POP cards for shorter term trades), across both short and long term. Most of your attention is on the speculative picks, monitoring stats, team progress and card prices, while the Iconic or Legend categorization is strictly a long term investment- you understand there maybe short term dips, but long term steady returns.
Let’s hit on a few considerations
Spread your investment throughout a variety of sports and Eras- catalysts can be unpredictable, missing out on the recent vintage surge or the play of active athletes may result in missed opportunities.
Many collectors are allocated very to the Era or Prospect player category, which ebb and flow as the hobby digests whether they are elite or drop back due to lack of milestones or titles- they doesn’t mean to avoid, but 50% or more to this category is too much – examples are Matthews, even Anthony Davis to an extent.
Why is this the case?
Simply put, we watch these players on a near daily basis and read about them in social media and our favorite sports sites. These players are always top of mind.
Having most of your cards in the Era or Prospect Category, has certainly been a “bicycle with no seat” type feeling over the past few months. Decide what biases you have with card investing, and believe me we all have some. Mine is those darn Bobby Orr and Michael Jordan cards, and sometimes investing too much in players in small markets.
Unless we take a stake in 10 or more prospects, we can likely build the entire portfolio with only 10-15 names. Less can be more in Sports Card Investing. Easily to monitor and easier to manage.
Start with an overview of your portfolio, ball park, what percentage do you hold in each key category (outside of PC, that are not investments- and yes any card above a certain level is an investment)
Do I need a few Legends of baseball or do I need a few Active HOFers for basketball?
Make an effort to consider how this card moves, is it tied to the market moreso than player/team performance, if so take a gauge of Gretzky, Trout, Jordan, Kobe, Lebron (GET JKL).
What is the market sentiment right now?
Where should their flagship rookies find support?
To get an objective view on the market sentiment or price support looks like, there are many tools at Card Ladder,Sport Card Investor or other sites that have great tools for measuring the market.
If your position is more speculative, spend more time looking at advanced stats, reading critical articles on that player, try to extrapolate what their peak years who look like, and don’t forget, especially in football, basketball, and hockey to look at that organization’s success
Now you have decided to move forward, figure out what percentage allocation this holding will or should be. Is this a single purchase, with minimal flexibility moving forward, or can you make two of the same card purchases and reduce your exposure at some point. Many times there is a trade-off here and always lean towards buying the highest quality and best rookie for that particular issue.
Finally, even if you have selected a PSA 10 or high-grade card, especially if vintage, examine the photos closely. Not all PSA 8 cards are viewed as equals, and the market is really starting to reward top example from a specific grade. Ask for better photos of the corners, edges, and the back and quickly look at past sales for comparisons. If you ever go to resell a card, after making a wise decision it is much easier to sell a high-quality card of a specific grade.
Sports Card collecting (and investing) is a ton of fun and a great way to make a few extra dollars. Having YOUR game plan and taking a few minutes to build out a strategy will keep you focused and a better Sports Card Investor.
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