Vintage Basketball Card Values Are Soaring: Can The Momentum Last?
Vintage basketball card prices have been on a roll of late, fueled by speculation and demand for some of the hobby’s most prized possessions from the past.
The boom in values has been fairly widespread throughout most of the vintage sports card market, but the flame seems to have really been held to basketball card values.
Why the increase in basketball card prices? It’s hard to pinpoint an exact reason, just like it’s hard to tell you why Pets.com was one of the most loved stocks at the height of the stock internet bubble in 1999.
Momentum can be a funny thing. Using stock prices as an example, once that excessive demand builds in something that everyone wants to own, the underlying valuation of the item at hand tends to get thrown right out the window.
It’s a lot easier to put a value on a stock then it is a basketball card. With a company, you can evaluate the profits relative to the company’s value and growth prospects to determine if a company’s stock is over or undervalued.
With a sports card, it's a bit more complicated. We have an asset that doesn't produce any cash flows, yet with a fixed, finite supply. We know how many Michael Jordan rookie cards have been produced. We know that number (absent the multitude of fakes in circulation) will never increase. Thus, the supply portion of the equation is known. The demand part is the one that will move the needle on the value of the card.
Right now, collectors have set focus on big time vintage basketball cards, including the Jordan rookie card, the Bird/Magic Rookie card or any of the other big time Hall of Famer rookie cards such as Julius 'Dr J' Erving and Wilt Chamberlain. Not to mention any of the more modern rookie cards of Kobe Bryant and Lebron James which continue to increase in value.
So why is this demand for basketball cards booming right now?
Well, I can think of a few theories. One, the 'Last Dance' documentary which covered the career of Michael Jordan was released at the height of the pandemic earlier this year. At a time there were no sports for anyone to watch. The focus for sports fans was back on a player that finished up his career nearly twenty years ago. The hunt was now on for everyone to get their hands on the most iconic basketball card in the hobby -- the Jordan rookie card.
The boom in Jordan cards isn't a total surprise to me. We've covered this ad nauseum (note the Jordan cards aren't even all that rare), but it's not abnormal for a large swath of people to wake up one day and realize that an asset should be worth more than its current value. Often times this recognition of a higher value isn't justified by any new news that would warrant the increase in value. (Anyone follow Tesla's stock?)
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And once you start to see an uptick in prices for an asset, there's always that FOMO (Fear of Missing Out). Anyone that was thinking of buying a Jordan rookie or any of the other basketball cards sees the uptick in prices, and wants to get in on the action. The same exact thing happens in the stock market. The same thing has happened in the cryptocurrency market and is starting now again with a recent price increase in Bitcoin, fueled by news that Paypal would soon be offering acceptance of cryptocurrency on their platform.
So, let's recap
'Last Dance' starts to reinvigorate a renewed interest in Michael Jordan cards, which then created a sort of chain reaction for collectors to get their hands on any other vintage basketball card of interest.
**Note the same thing happens in other asset classes--in the stock market if a company is seeing a significant increase in value, investors will often look to alternative companies in the same industry that might offer better value or a differentiated return versus the higher flying stock.
And what else?
I think there are a few other factors at play.
Stimulus money, in the form of a $1200 government payment to eligible US workers, I think played a big part in starting the initial momentum early this year. I could see it happening first hand, just anecdotally, but many collectors on Facebook groups looking to put their 'Donnie Dollars' to play. These purchases probably just added fuel to the fire for what already was a flywheel in motion.
And let's not forget the stock market; this past year has been dominated by the highest growth, most aggressive stocks. Investors have had a more willing appetite to accept risk and have sought out and paid up for more growth. Thus, many profits have been made. And it wouldn't surprise me, if many of these investors have taken some of their new found profits and sunk it into some vintage basketball cards.
Yet, here's the thing, a lot of these stock investors (whether novice or not) might not really have any idea of what to do with their stock market proceeds. What cards should they buy? Well, first, like anything, just from a behavioral perspective, the first choice will be the iconic card that everyone else is buying and making money on. Just like the barber or taxi driver handing off stock tips, the same thing happens in the sports card industry.
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Our hobby has certainly become more focused on buying cards as an investment, and we admittedly have supported this idea. However our advice and our actions are based on reason and use extensive data sources to evaluate valuation and whether a card should be worth more or less. But, often the newer, novice collectors will turn to the shiny carnival barkers that can pound the table on an idea and guarantee profits.
If I'm going to make comparisons here, let's start with the stock market side of things. I'm sure you've heard of Jim Cramer. The host of CNBC's Mad Money will answer viewer questions in a rapid fire succession, offering quick bites, providing vapid 'Buy' or 'Sell' information.
Don't get me wrong, Cramer is entertaining and knows his stuff, and he admittedly doesn't have the same sort of market impact as in his early days. But there are many new investors that listen to Cramer without fail. I'd probably say that more of the momentum today in the stock market is driven by the app Robinhood as opposed to guys like Cramer, but I think you get the point.
So if Cramer is the stock market quick byte source for novice investors, who's the equivalent in the sports card hobby?
I think it is quite clear that person is Gary Vaynerchuck.
His sound bytes dominate many of the entrepreneurial social media accounts on Facebook and Instagram. And since he reaches a wide range of self-starters and entrepreneurs, the likelihood that his audience has dispensable cash is quite high.
Vaynerchuck has been pounding the table on vintage basketball cards for a while now. And he's not shy about posting some of his purchases. And interestingly enough, Gary V (as he is also known as) has a lot of YouTube videos and articles devoted to the topic.
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Below is a video with over 300K views posted back in March. Gary is here flaunting his slabs of vintage basketball cards. He often will post on his social media accounts the cards that he recently bought, which has definitely led to a price increase in the cards mentioned. I'm not calling this market manipulation, but it is clear, this guy has a big audience (8.5 Million Instagram Followers) and has a lot of pull with his followers.
Here's an instagram post of Gary V just checking out one of his Dr J Rookies (over some rap song i don't know..sorry not exactly my thing)
This question, posed by one of his followers on the above video wasn't answered by Gary, but is a reasonable question?
I think it's really hard for anyone to say, but I think he definitely has had an impact.
So, you might be wondering my thoughts on whether or not vintage basketball cards are overvalued or not?
Well, it all depends.
While I think there has been some bubble like mentality in the hobby as a whole, I do feel that many vintage basketball cards were undervalued to begin with.
So maybe Gary V was onto something when he was recommending these cards many months ago. So, I do think part of the increase has been justified.
And let's not forget that the supply of any old basketball card is finite. They are not making any more 1961 Fleer Wilt Chamberlain basketball cards. But that doesn't always mean the price will go up by 100% every year forever. At some point there is a market equilibrium where the sellers outnumber the buyers.
For the long run, I still think the vintage Jordan, Bird/Magic, Dr J, Wilt Chamberlain, Kobe Bryant and many other basketball rookie cards are great long term investments. I do however get wary when big media influencers are pounding the table and offering investment advice to people that might not know what they are getting themselves into.
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So, if you're waiting to dip your toes into the market, as long as you examine the supply (meaning examining PSA and SGC populations) and paying near or under market prices, you should be positioned well for the long term.
If you have any opinions on this topic, please feel free to drop a comment below.
And as always feel free to shoot me an email at firstname.lastname@example.org