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The History and Rise of Trading Cards as a Tradable Asset Class
By Now it's a familiar story. In many industries, the Internet has become a democratizing force that has lowered costs, increased transparency and transferred 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 portfolios, 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 collectibles. 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 somewhat inconclusive, the general consensus is to treat collectibles with a healthy dose of skepticism.
Of course, the type of object being collected 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 interest. They are worth only what someone else is willing to pay for them, and that willingness is notoriously fickle and subject to fads.
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 processing of historical data, creating greater transparency and allowing for more effective analysis and more informed valuations. Together, these developments are enabling the emergence of trading cards as a valid alternative asset class.
History of Trading Cards as Collectors' Items
Most people collect something at some point in their lives. Psychologists have identified a vast range of motivations behind the...