In spite of the pandemic, the secondary market for trading cards remains robust — it has seen record-breaking numbers since the start of the year.
In August, a T206 card of baseball legend Honus Wagner sold for US$6.06 million ($8.16 million), making it the highest-pricedsold sports card of all time. A few months prior saw the sale of the most expensive basketball card ever when an autographed Upper Deck card of LeBron James was sold for US$5.2 million.
The numbers are not just limited to sports cards — other popular trading cards such as those from the Pokémon series and Magic The Gathering (MTG) also saw all-time high transactions. An unopened box of the first edition Pokémon cards, for example, was sold earlier this year for US$408,000, while the most sought-after MTG card — the Alpha Black Lotus — was sold for US$511,100.
Fariheen Faroukh, founder of Heenja’s Cards, says a few factors contributed to the mania. For one, the trading card “influencers” who share about their investments are definitely more visible today, which in turn helps others with large disposable income to spend more on their own collections.
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“Of course, the scarcity of the item also plays a big part in building fear of missing out, as some of the items might not come up again in the open market. Overall, I do feel that there’s generally a wider acceptance that trading cards are here to stay as an alternative investment,” Fariheen adds.
He is one of the collector-turned-investors in Singapore. He started collecting sports cards casually when he was in his teenage years, as it was a popular hobby among his peers back then.
In 2008, trading card publisher Futera launched Futera World Football Online, which allows players to use printed and virtual cards to play in live tournaments online with players around the world. Playing the online game reignited Fariheen’s hobby of collecting cards, eventually making him a serious trader and investor.
“At the time, I had a pretty nice autographed card of English football player Frank Lampard. Out of curiosity, I checked the value of the card on eBay and found out that I could sell it for a decent US$100. That got me hooked on collecting the cards again, this time with ‘adult’ money, which made a huge difference. Initially, it was just to scratch the collecting itch, but I started seriously trading about two years ago,” says Fariheen.
Acknowledging the booming trading card secondary market, eBay has introduced new tools on its site in July, which allows users to easily track the value of individual cards, list them on the platform and manage their collections.
Today, Fariheen trades cards on eBay full-time. He has more than 1000 cards listed on his eBay shop Heenja’s Cards, with prices ranging from 99 US cents to US$149,999. Most of his initial sales were done on Facebook. While this would be a more liquid alternative as there are numerous Facebook groups facilitating the buy and sell of cards, it is also risky and full of lowballers, says Fariheen.
“After a while, I set up my eBay store and started selling to global collectors. My biggest sale so far is a Topps Chrome Refractor LeBron James Rookie Card, which I sold for about US$40,000 early this year. I bought it for about US$2,000, which means that I made 1,900% returns off of that card alone.
“These cards are what we call blue-chip cards — the ones featuring LeBron James, Kobe Bryant, and Michael Jordan… those who invested in these cards about four to five years ago would have seen significant returns by now,” says Fariheen.
In fact, Fariheen notes that the collector community in Singapore is bigger than most would think. There are a number of under-the-radar trading card investors in Singapore who have million-dollar collections in their possession, he adds.
“I know quite a few people in the local collector community who sold cards at prices up to six digits last year. Some make the sales to fund their lifestyles, but many of us are scared of opportunity risks. So, we would usually allocate some of the returns to buy new cards,” says Fariheen.
Marc Ashley Alexander is one of the collectors who has just started building his collection, aspiring to achieve significant returns in the near future. Similar to Fariheen, Alexander started collecting as a hobby as a teenager – he was 17 when he began collecting graded comic books.
In October 2020, NBA Top Shot — a blockchain-based platform which allows users to buy, sell and trade officially-licensed video highlights as non-fungible token (NFT) digital cards — was open to the public. It caught the attention of many basketball fans and registered over 1.1 million users who have traded more than US$780 million as at Sept 22 this year.
Heavily influenced by the Top Shot craze, Alexander and his friend Alastair started collecting physical cards, chasing the rush of finding gems among the normal cards. Eventually, they started to participate in “breaks” — whereby a person or a business would buy an entire box of cards and sell a selection of cards from the box to individual collectors.
“This excites us, because we know the potential return on investment can be very substantial. At first, we participated in the breaks held in the US. Gradually, we had the idea to start our own version of it in Singapore. This is what we have been doing for the past five months and my collection is now significantly bigger than before,” says Alexander.
What affects the value of cards?
While it can be difficult to track the performance of the trading card industry, there are several tools available for an investor to get a feel of the market. Trading card marketplace PWCC, for example, tracks the performance of the most valuable sports trading cards vs the S&P 500 since 2008.
Last compiled on June 30, the PWCC 500 Index, which tracks the top 500 blue-chip, professionally graded card assets published up to 1999, provided 614% in returns compared to the S&P 500 at 197%.
Outside of the blue-chip cards, investors will need to do their due diligence on the cards that could outperform — similar to investing in the stock market, says Fariheen. Investors will need to identify rising sports stars, with the hopes that these athletes continue to become successful thus affecting the performance of the cards.
“The sports card market can be volatile as sports stars are such visible personas. There are many factors that could affect the performances of the cards, such as their social alignments. This is the most significant difference in investing in sports cards compared to Pokémon or MTG cards — sports cards involve real people. In this sense, Pokémon or MTG cards are more stable, as their value depends on the scarcity and their use in games,” says Fariheen.
Alexander concurs. One of his most valuable cards, the Ultra Fleer Kobe Bryant rookie card, was valued at around US$1,000 when he first acquired it through an online lucky draw. Shortly after, in May 2020, Bryant was officially inducted into the Naismith Memorial Basketball Hall of Fame. Alexander then saw the price of the card rise 50%, followed by a dip.
“Due to the volatility, it is hard to gauge the value of cards and we generally do not have any formal benchmarks. That’s why many of us use platforms such as 130point.com, which provides a breakdown of the prices, alongside other information that would be useful for collectors and investors,” says Alexander.
In the US, collectors tend to have a home bias, says Fariheen. They may be inclined to invest in sports cards of players or teams from their own state of colleges. “Investors like me, on the other hand, would have a more neutral view when it comes to assessing the future performances,” adds Fariheen.
While the secondary markets for trading cards continue to be robust, Fariheen highlights that the higher valued cards are less liquid compared to other alternative investments. “Selling cheap cards is easy — people are even willing to buy in bulk and provide investors with decent returns. But if they are looking to sell professionally-graded cards above a certain threshold, finding the right buyers is tricky. It could also mean having to send the cards to auction houses,” says Fariheen.
Professional grading services are offered by third-party companies such as Certified Guaranty Company, Beckett Grading Services, GMA Grading and SGC Grading. The cost for grading can vary from US$10 to US$1,200 per card, depending on the turnaround time and declared value of the card. Due to the high fees, only cards of more than US$10,000 in perceived value would be sent for grading services.
Professional Sports Authenticator is one of the most popular grading services. However, Alexander points out, the grading service provider has recently hiked up its rates significantly — its currently-suspended economy service, which previously cost US$20 per card, has gone up to US$50 per card. Its express service, which no longer promises a 15-day turnaround, is now priced at US$150 per card compared to the previous US$75.
The catalyst for the price hike was a massive backlogs of cards the company received over the past year. The backlog has forced the company to suspend almost all further card submissions and currently only offer the higher tiered services.
“It is strange to see that prices of the graded cards itself have yet to match the hike in grading prices. I recently managed to buy some Certified Guaranty Company-graded Pokémon cards for under US$20. Perhaps we will see a price increase soon,” says Alexander.
Technology and innovation
Technology has definitely played a part in the popularity of trading cards in recent years. The use of NFTs, for example, has allowed investors to track and verify the ownership of physical items such as trading cards. As a result, there is a growing number of sports card NFTs being sold on platforms such as eBay.
Additionally, there are platforms that allow investors to buy, sell and trade equity shares of trading cards such as Mythic Markets. The platform facilitates flexible investment opportunities for buyers who want to jump into high-end collectibles fractionally, enabling investors to avoid the challenges associated with physically holding the assets while still reaping the financial benefits. The assets that were previously available for investors include MTG’s Alpha Black Lotus card at US$45 per share.
Fariheen welcomes the option, as it would uplift the market and allow greater access to the asset class. “Additionally, if people are willing to pay for a fraction of the card, there is a potential that prices will be pushed up, which is great for investors like me. Personally I have not tried these platforms, but I love how the hobby has stood the test of time and we are able to see companies trying to modernise it.”
While the industry may see some changes over the next few years due in part to technology, Fariheen says trading cards will continue to be a viable asset class for many, although the market may be too heated at the moment.
“I think the market would still see some appreciation, but there are bound to be some crashes in between. Just like any other markets, trading cards will also go through cycles,” says Fariheen.
“That being said, I don’t think that there is a reason for me to be concerned about diminishing interest in the hobby. The cards might be mainly sold through NFTs, their values may also change depending on different factors, but I think trading cards will continue to be something that people will enjoy at least in the next decade or so,” he adds.
