Friday, July 24, 2020

Stale Gum on the About The Cards Podcast

This week I appeared as a guest on the About The Cards Podcast.  Give it a listen, and thanks to Ben,  Stephan, and Tim for having me on.

 

Wednesday, April 15, 2020

No, Your Stash of 1986-87 Fleer Basketball Waxboxes are NOT Worth More than Microsoft Stock.

So there's this meme that's been circulating on the card-Twittersphere the last few days that I just have to respond to.  You've probably seen it, too.  It looks like this ...


The claim is, if you purchased and squirreled away $1000 worth of 1986-87 Fleer Basketball waxboxes (you know, the one with the Michael Jordan RC) at the time of its initial release, it would be worth almost four times more than if you had taken that same $1000 and bought shares of Microsoft on the date of it's initial public offering on March 13th, 1986.  The cards are (allegedly) worth $8.5 million vs. the stock which is worth around $2.25 million.

Now, if I were a little less sophisticated in the ways and means of The Hobby, this might make me consider taking that $1200 in Trump Bux most of us are about to receive and invest it in basketball cards -- the kind of cards, not coincidentally, some of the propagators of this meme just happen to have for sale. (Visa/MasterCard/PayPal accepted!)

This meme is false, dangerous, and not in the best interests of The Hobby.




Where to begin?

First, let's compare and contrast these two investments.  Stock is, as they say, a liquid asset.  If you had $2.25mm, if you had $1200, heck, if you had $1.49 burning a hole in your pocket right this second, you can buy shares in Microsoft.  But because there's so much $MSFT on the market, your individual purchase really won't affect the stock's price one way of the other -- maybe a few pennies here or there if your order was large enough.  Microsoft stock is there, it's available, and you can buy it right now if you so pleased.

You can not say the same about unopened 1986-87 Fleer Basketball (henceforth abbreviated as "86-87F BK") boxes.

$85,000 for a full, certified, unsearched, box of 86-87F BK is a probably a fair price in 2020  The last documented sale of a 86-87F BK box I could find was $75,000 during the 2017 National.  But just because you bought 100 boxes of the stuff at $10/box 34 years ago, that does not mean you can easily convert that into $8.5mm cash.  That is because Hobby wax (and not just 86-87F BK wax, but any and all wax) is not as liquid as Microsoft stock.

(Before I continue, I have a quibble with how the meme authors calculated the MSRP of 86-87F BK boxes.  All of the packs discovered in the "TG&Y Find" were stamped with a $0.40 price tag.  Since brick-and-mortar Hobby stores and weekly cardshows -- much less internet sales -- weren't as prevalent in 1986 as they would be just a few years later, let's assume that the vast majority of 86-87F BK was sold at mass-market retail outlets like TG&Y who charged the "sticker price" of $0.40/pack.  Since you're buying retail, let's also assume that you live in a state that charges a sales tax and for ease of calculation let's make that tax 5%, YSMV.  This works out to a retail price of $0.42 per pack.

That meant that, in 1986, if you wanted to buy a full 36-pack box, you're paying $15.12/box, and that your $1000 bankroll would have only bought 66 boxes.  At a current market price of $85,000 each, those 66 boxes would have a value of only $5.6mm  For purposes of this article, however, I will use the $10/box price and $85,000/box values cited in the meme.)

Unlike Microsoft stock, Raymond James, J.P. Morgan, and Goldman Sachs are not going to buy your 86-87F BK packs.  Not every Hobby dealer has the available cash to buy an $85,000 box of cards.  Not every Hobby dealer who has $85,000 cash on-hand would be interested on a box of cards.  And not every card collector collects basketball cards.  So the market in potential buyers for an $85,000 box is limited.  86-87F BK boxes are not as liquid as Microsoft stock.

You can probably count on one hand (and have a few digits left over) the number of 86-87F BK waxboxes that are available for purchase at any one time.  And it is this unavailability, and not necessarily the scarcity (and don't get me wrong, these boxes are scarce), that makes 86-87F BK boxes so valuable.

If you were to unload 100 shares of Microsoft stock, it's not enough to move the market.  If you found 100 sealed waxboxes of 86-87F BK in you're late Uncle Larry's storage container, congratulations! Unfortunately, you've just increased the available supply by a factor of five, ten, even twentyfold, should you decide to dump them all.  Sorry, but you're not getting $8.5mm for Uncle Larry's stash.  Not even close.

(Hypothetically speaking, if 100, or even 66, 86-87F BK boxes were to come on the market in one fell swoop, I think fair price would be in the $20,000 to $25,000 range, making those boxes worth ... around the value of $1000 worth of Microsoft stock at the time of its I.P.O.)