When it comes to the topic of investing in sports cards there are strong opinions on both sides of the issue.  And really, that probably isn’t a good phrase to use either because there are many angles to the topic that aren’t easily bundled into an either or scenario.  

In this article, my objective is to define the term investment, share why I feel sports cards can be considered an investment, and my preferred approach.

What is an Investment?

When you look up the definition of investment, you will find some form of the following: 

An investment is an asset or item acquired with the goal of generating income or appreciation. 

Case closed.  

Just kidding. 

Kind of.  

When people discuss “investing in sports cards” this is typically the definition they have it mind.  They are buying an asset with the intention to profit off of that asset at some time in the future.  

Why Sports Cards Fit This Definition

Where I think some opponents of the classification of sports cards as investments get hung up is in the nature of the card as an asset, and the price volatility and level of risk associated with sports cards.

Cards are unlike traditional investments in stocks which have their value tied to the assets and income generated by the underlying business, bonds which have their value tied to the future income streams typically from a company or governmental body, or real estate which has its value tied to income streams from rents or the value of a home or land.

Sports cards are a photo, printed on cardboard, and really have no inherent value.  They are only worth something because someone else is willing to pay for it.  However, cards are assets.  People are willing to pay for them, and there can be potential profit in buying and selling them.  

Collectibles fall into the “alternative investment” category, and most articles and guidance you read from financial advisors caution about allocating significant funds to these alternative investment classes due to the level of risk associated with them. 

Collectors are fickle and the value of sports cards have had significant swings over the last several decades.  This leads to sports cards, and collectibles in general, to be very risky investments.

I think this is a contributing factor for the vitriol that some feel on the topic.  They are worried that instead of saving for retirement through traditional vehicles like 401k plans, IRAs, etc., collectors will instead sink all their money into the latest rookie prospect. This is a terrible idea.  Any investments in sports cards and collectibles should be a relatively small portion of your net worth.

Some cards have led to significant profits, and some have led to significant losses, but I think it is also important to note that the same can be said for traditional investments in stocks, bonds, and real estate.  Not every stock is a good investment, and neither is every baseball card.

Bottom line: Something might not be a “smart investment” or something that significant resources should be sunk into, however that does not preclude it from fitting the definition of an investment.

My Approach to Investing in Sports Cards

When many people discuss investing in sports cards, they mean buying a card and waiting for it to appreciate in value.

My approach to sports card investments contains much lower risk and has led to more consistent cash flow and profit.

Arbitrage is an investment strategy which involves buying an asset  on one platform and almost immediately selling it at a higher price on another platform.  There are market inefficiencies which can be identified and profited from which lead to an investment with lower risk.

For instance, I have found cards in the .25 boxes at shows which I sold on eBay later the same day for $3-$5.  I buy collections from Facebook Marketplace for 1/2 cent per card and begin selling immediately on Sportlots for .18-.25 each.  I am investing funds to buy this inventory and am able to take advantage of the pricing inefficiency that exists between platforms to generate returns.  

When I share this, I often get “That’s a job, not an investment”. 

Well, yes, it does take work, but I would argue  there is some level of work to any investment.  Whether it is researching stocks, mutual funds, or real estate investments prior to purchase, evaluating quarterly filings, or even the act of buying and selling those stocks, they all take effort if you want to do well.

Wrapping It Up

With both traditional investments and alternative investments (including sports cards) you are buying an asset with the intent to profit from that asset.  

That’s it.  

And that meets the definition of an investment.

Whether or not it is a risky investment, what percentage of your net worth should be dedicated to the investment, or even if it is a “smart” investment are factors important to consider, but they are not at all relevant to defining sports cards as an investment.

Based on my finance background, and the research I’ve done from a variety of sources, this is my understanding of the topic. I recognize others view this differently, and in those discussions I have shared sources similar to the things shared above which make my case. I have yet to see anything other than “opinion” from those that disagree. I’m open to reviewing research, sources, or other studies which say something different, so feel free to post those resources in the comments below.

Dialogue and debate are a valuable part of learning and growing!

Also, if you haven’t heard, I started a new Podcast called the WaxPackHero Sports Card Minute!  It’s available here directly on the site at the Podcast link at the top of the page, or on Apple Podcasts, Spotify, Google Play, and TuneIn!  Check it out, let me know what you think, and tell your friends!