Supported by GEICO.
Like thousands of kids in the '80s and '90s, Michael Sommer collected sports cards as a kid. He'd tear into the foil packs, splay the paperboard across his fingers, and prune out the also-rans while savoring the superstars.
Until recently, card prices have remained relatively static over the last few decades—with only the rarest and oldest artifacts in the hobby turning a real profit. That began to change in the 2010s, as a renewed interest in the card industry allowed enthusiasts to play it like the stock market. Literally.
Sommer is living proof of that. He got his feet wet in this business as a collector. Now, he's transformed into an investor.
"I've always had an entrepreneurial streak in me. I had a few extra cards from when I was a kid, and I wanted to try and buy and sell them a little bit to see if I could cover the costs," says Sommer. "I got back into the hobby in 2015 with a couple hundred dollars. Over the last five years I've turned that small starting fund into six figures worth of inventory."
Today, Sommer is the proprietor of WaxPackHero, a blog that dispenses daily advice on the permutations of the sports card trade. Readers log on to suss out the upside of Upper Deck Hockey sets, or the nuances of vintage Shaquille O'Neal print runs. To make money in sports cards—to transform a pastime into a genuine long-term enterprise—aficionados pay close attention to people like Sommer to track the nearly imperceptible shifts in appraisal that can transform a boon into a loss overnight. It's easy to see why.
The card sector is on fire right now. In February, a 2018 Luka Doncic card sold for over four million dollars. Two months later, a LeBron rookie changed hands for $5.2 million. Beyond sports, buying and collecting trading cards of all kinds—Pokémon, Dungeons & Dragons, Magic: The Gathering—has exploded during the pandemic, so much so that the department store Target banned their sale because customers had begun to physically fight over them at various locations. Collectibles are becoming a bonafide asset class, and one that’s democratized the financial ecosystem in fascinating new ways.
"For some of these players, even if you don't have a lot of initial capital, you can still participate, you can speculate that way," says Sommer. "Some companies offer fractional investments in million dollar cards, selling shares of them. And that's opened up another opportunity for people with a lower amount of money to invest with."
The reasons for this boom are difficult to pin down. Some feel the aforementioned pandemic has accentuated a dormant nostalgia for lapsed collectors who have entered their 30s and 40s, and now have the ability to spend their paychecks on these things in a way they simply didn't when they were in middle school. Others believe the Covid-19 era has left many global citizens with the belief that the economy is on shaky ground, and they wish to place their money into alternative assets outside of the core centers of commerce.
Whatever the reason, it’s clear that memorabilia valuation of all types is shooting through the roof. Luka Doncic represents the tip of the iceberg. Sealed video games are selling for more than ever before, same with superhero comic books, Japanese graphic novels, ticket stubs, old toys, and action figures. (In fact, you could make the argument that the NFT revolution (bubble?), as well as the record-setting crypto prices, can be chalked up directly to the sports card explosion.) Any lingering stigma has evaporated; there's nothing strange about diverting funds into an old, laminated Mickey Mantle or a bored ape Twitter avatar.
Geoff Wilson started early. As a teenager he worked in his local card shop, where he first developed a taste for the obsession. But it was years later, after Wilson festooned a career as a tech investor, that he found his way back to foil-packs with some newly-honed profit instincts. Today, he runs the website SportsCardInvestor which keeps a ticker on the front page that tracks the assessments of some of the top options on the trading block. It's rare to transition from Silicon Valley to Topps and Panini, and Wilson understood that he was going to hear some doubts from those close to him.
"The first really expensive card I bought was a 1986 Michael Jordan Fleer rookie for $40,000," he says. "My wife thought I was living out a midlife crisis. Two years later that card was worth around $100,000. That's one of thankfully many that have paid off for me."
Wilson encourages novices in the card industry to become specialists, not generalists. The market for collectibles can be overwhelming, and it isn't easy to parse through the multiple different publishers, vintages, and sets all competing against each other on Ebay. Player cards, for instance, often come in multiple different tiers that can vastly impact their rarity; some LeBron cards cost a few dollars, others demand seven figures and an invitation to Sotheby's. You won't know the difference unless you've spent months learning the language. To cut through the noise, Wilson advises would-be collectors "narrow in.” That way, the necessary homework—the barrier for entry for any collectible—won't be nearly as paralyzing.
"That makes it easier to find the cards and the players you want to invest in, and track the prices," he continues. "That helps you understand what a valuable card to buy might be. Niche yourself."
Of course, some may still wonder why anyone would put their hard-earned wages into sports cards, or old Nintendo games, or Beanie Babies (still a thing—buyer beware), instead of sticking to the basics. Surely the S&P 500 is a sturdier, less volatile choice? Probably! But also, not entirely the point.
Beyond earnings potential, buying into collectibles is fun. “Why not invest in something you love?” asks Wilson. That way, even if the price never goes up, its value to you never goes down.
This article is supported by GEICO.