Financial History Issue 126 (Summer 2018) | Page 34
FROM HOBBY
TO INVESTMENT
The History and Rise of Trading Cards
as a Tradable Asset Class
By Brent Huigens
By now it’s a familiar story. In many
industries, the Internet has become a
democratizing force that has lowered
costs, increased transparency and trans-
ferred more power to individuals—and
investment is no exception. Data and
research tools that were once available
exclusively to brokers are now accessible
online to anyone, while online brokerages,
robo-advisors and equity crowdfunding
platforms provide further opportunity for
individuals to take control of their portfo-
lios, continuing and extending the trend
that began in earnest with the shift from
traditional pensions to self-directed plans
such as 401(k)s.
As individuals become more involved
in managing their investments, they are
taking a closer look at potential ways to
diversify their holdings. One category that
is attracting increasing interest is collect-
ibles. The question of whether collectibles
can be considered a legitimate investment
has been debated at length over the years,
and though the answer has been some-
what inconclusive, the general consensus
is to treat collectibles with a healthy dose
of skepticism.
Of course, the type of object being col-
lected matters (Old Master paintings get
more respect than Beanie Babies), but the
core issue is that most collectibles don’t
have any intrinsic value of their own, nor
do they produce a cash flow; they aren’t
like a house that provides shelter, or stocks
that pay dividends or bonds that pay inter-
est. They are worth only what someone
else is willing to pay for them, and that
willingness is notoriously fickle and sub-
ject to fads.
32 FINANCIAL HISTORY | Summer 2018 | www.MoAF.org
Technology, though, can change the
calculus. The same Internet revolution that
has given individuals more control over
their investments has also transformed the
market for collectibles. In the specific case
of trading cards, improved technology has
reduced costs and friction for both buyers
and sellers, creating a more liquid and less
fragmented marketplace. Technology has
also facilitated the tracking and process-
ing of historical data, creating greater
transparency and allowing for more effec-
tive analysis and more informed valua-
tions. Together, these developments are
enabling the emergence of trading cards
as a valid alternative asset class.
Left to right: 2000 Tom Brady rookie card; 1910
T206 Ty Cobb “Red Portrait”; and 1933 Babe Ruth,
Goudey Gum Company card.