Baseball Cards as Investments

Any conversation about baseball cards that I have with a non-collector inevitably brings the question, “are they worth anything?”  I collect baseball cards for fun and never thought much about making money from the hobby.  I’ve always assumed that the stock market is a much better investment than baseball cards.  In this article, I will explore whether that assumption is correct or not.  Can you make money investing in baseball cards?

How to measure an investment

The standard for determining whether an investment is good or not is to compare it against the S&P 500 index.  The S&P 500 is a collection of the 500 biggest companies on the stock market.  On average throughout its history, the S&P 500 index has gone up about 7% each year.  It has been a reliably good investment throughout its history.

When asked what the best way for a regular person to invest is, Warren Buffett famously said, “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”  Investing in an S&P 500 index is a simple and effective way to invest.  For instance, if you put $100,000 into an S&P 500 index 30 years ago, you would be a millionaire today.  And that’s taking into account the dot-com bust, housing crisis, recessions, and economic scares along the way.

So the question now is, is it possible to do better than the S&P 500 by investing in baseball cards?

Beckett Baseball Card Monthly

Anyone who has collected baseball cards anytime in the past 30 years knows about Beckett Baseball Card Monthly.  It is a monthly publication listing prices of most baseball cards.  Back when baseball card collecting was a favorite hobby, there were sports card shops that sold baseball cards.  The Beckett price guides became the standard for assessing the value of baseball cards when it came to buying and selling at the card shops.

Earliest Beckett price guide I have is from January 1991.  Cecil Fielder is on the cover.  I also have at my disposal a December 1996 copy of Beckett Baseball Card Monthly, featuring Alex Rodriguez on the cover.  The most recent Beckett I have is for April 2016 (featuring Mike Trout on the cover).  We’ll use these guides to find the historical pricing of baseball cards.

Strategy #1:  Investing in complete sets

The easiest way to invest in baseball cards is to buy complete sets of cards and store them until they become old, and in theory, more valuable.

Suppose today is January 4, 1991, and you decide to buy several complete sets of baseball cards as an investment to sell when you retire 25 years in the future in 2016.  Here is what you might have bought:

• 20 complete sets of 1990 Upper Deck at $40 each ($800 total)
• 10 complete sets of 1987 Donruss at $80 (1987 was a good year for baseball cards.  $800 total.)
• 10 complete sets of 1986 Topps Traded at $32 (with its rarer rookie cards.  $320 total)
• 10 complete sets of 1982 Fleer at $50 (Cal Ripken Jr. rookie card.  $500 total)
• 5 complete sets of 1979 Topps at $225 ($1,125 total)
• 3 complete sets of 1963 Fleer at $850 ($2,550 total)
• 1952 Topps at $40,000 (expensive, but iconic set that is sure to get a good return)
• 2 sets of 1948 Bowman at $2850 ($5,700 total)

So here you’ve invested in a diverse mix of complete baseball card sets totaling $51,795.  That amount invested in the S&P 500 back in 1991 would be worth about $270,000 in 2016.

Now let’s see how our baseball card investment back in 1991 fared today, in March 2016:

• 20 complete sets of 1990 Upper Deck—current value: $500 (down $300)
• 10 complete sets of 1987 Donruss—current value: $400 (down $400)
• 10 complete sets of 1986 Topps Traded—current value: $300 (down $20)
• 10 complete sets of 1982 Fleer—current value: $500 (same value)
• 5 complete sets of 1979 Topps—current value: $1000 (down $125)
• 3 complete sets of 1963 Fleer—current value: $6,000 (up $3,450)
• 1952 Topps—current value: $65,000 (up $25,000)
• 2 sets of 1948 Bowman—current value: $11,400 (up $5,700)

The value of your baseball cards in 2016 would be about $85,100, for a 64% return.  Compared to the 500+% return of the S&P 500, that’s a horrible investment!

Okay.  Let’s look at the bright side.  You did get a 64% return on investment over 25 years.  But if you look at each set, you lost money on every set produced after 1963.  If you hadn’t had the funds or the foresight to put big money down for those vintage sets, you would have lost money on your investment.

Even if we had the hindsight to stock up only on the best investment—1963 Fleer—we would have just gotten a 135% return on investment.  That’s only a fraction of what the S&P 500 did in the same period.

Strategy #2: Prospecting players

Now that we’ve seen that investing in complete sets does not work well, what about investing in cards of specific players?

I can think of a couple of scenarios when a player’s baseball card value might go up.  Let’s explore the returns of these scenarios.

A previously unknown player becomes a star

Suppose I bought a selection of hot rookie cards in 1990 and again 1996.  I might have bought these:

• 1990 Bowman #440 Kevin Maas, $2.00
• 1990 Donruss #33 Juan Gonzalez error card, $3.00
• 1990 Fleer #586 Dave Justice, $3.00
• 1990 Fleer Update #U84 Alex Fernandez, $1.75
• 1990 Leaf #237 John Olerud, $4.00
• 1990 Leaf #300 Frank Thomas, $5.00
• 1990 Score #680 Ben McDonald, $1.50
• 1990 Score Traded #100T Eric Lindros, $2.00 (gimmick card)
• 1990 Upper Deck #46 Jose Offerman, $1.50
• 1990 Upper Deck Ext. #746 Delino DeShields, $1.50
• 1996 Bowman #337 Ron Wright, $4.00
• 1996 Donruss #378 Mike Cameron, $0.75
• 1996 Finest #G300 Marty Janzen, $15.00
• 1996 Fleer #138 Mike Sweeney, $0.60
• 1996 Fleer Update #U145 Wilton Guerrero, $0.60
• 1996 Leaf Preferred #120 Rocky Coppinger, $0.60
• 1996 Upper Deck #259 Robert Smith, $0.40
• 1996 Topps Chrome #92 Matt Morris, $1.00
• 1996 Select #174 Livan Hernandez, $0.50
• 1996 Topps #25 Sean Casey, $0.75

All of these players were top prospects at the time.  The grand total for these 20 cards:  $49.45.  Fast-forward to 2016 and here are the values of these cards:

• 1990 Bowman #440 Kevin Maas, $0.10
• 1990 Donruss #33 Juan Gonzalez error card, $2.00
• 1990 Fleer #586 Dave Justice, $0.50
• 1990 Fleer Update #U84 Alex Fernandez, $0.10
• 1990 Leaf #237 John Olerud, $3.00
• 1990 Leaf #300 Frank Thomas, $25.00
• 1990 Score #680 Ben McDonald, $0.10
• 1990 Score Traded #100T Eric Lindros, $1.00
• 1990 Upper Deck #46 Jose Offerman, $0.10
• 1990 Upper Deck Ext. #746 Delino DeShields, $0.10
• 1996 Bowman #337 Ron Wright, $0.50
• 1996 Donruss #378 Mike Cameron, $0.30
• 1996 Finest #G300 Marty Janzen, $5.00
• 1996 Fleer #138 Mike Sweeney, $1.00
• 1996 Fleer Update #U145 Wilton Guerrero, $0.30
• 1996 Leaf Preferred #120 Rocky Coppinger, $0.30
• 1996 Upper Deck #259 Robert Smith, $0.30
• 1996 Topps Chrome #92 Matt Morris, $5.00
• 1996 Select #174 Livan Hernandez, $1.00
• 1996 Topps #25 Sean Casey, $4.00

In 2016, the total value of these cards is $49.70, for a total profit gain of $0.25.  That’s a 0.5% gain over more than 25 years!  So obviously, prospecting, in general, is a losing proposition.

Now, what if you think you’re the greatest prospector ever to walk the aisles of a baseball card shop?  Well, if you happened to buy only the top three cards out of that list of 20, you would have gotten a little bit over 400% return.  But the chances of you choosing only the biggest winners and not picking any losers is minuscule.  Besides, you still don’t beat the S&P like that.

A star player is inducted into the Hall of Fame

Being inducted into the National Baseball Hall of Fame is the highest achievement that any baseball player can hope for.  What if we bought rookie cards for star players who appear to be headed to the Hall of Fame?  Back in 1990, here are the players who I might have picked:

• Nolan Ryan (1968 Topps: $1,200)
• Carlton Fisk (1972 Topps: $150)
• Dave Winfield (1974 Topps: $50)
• George Brett (1975 Topps: $160)
• Gary Carter (1975 Topps: $35)
• Andre Dawson (1977 Topps: $48)
• Ozzie Smith (1979 Topps: $45)
• Rickey Henderson (1980 Topps: $180)
• Cal Ripken Jr. (1982 Topps: $25)
• Ryne Sandberg (1983 Topps: $45)
• Wade Boggs (1983 Topps: $35)
• Don Mattingly (1984 Donruss: $90)
• Kirby Puckett (1984 Fleer Update: $180)
• Roger Clemens (1984 Fleer Update: $150)
• Mark McGwire (1985 Topps: $20)
• Cecil Fielder (1986 Donruss: $17)
• Jose Canseco (1986 Donruss: $115)
• Bo Jackson (1987 Fleer: $20)
• Will Clark (1987 Fleer: $28)
• Ken Griffey Jr. (1989 Upper Deck: $32)

In 1990, you might have paid $2,625 for all of these rookie cards.  26 years later, these are the prices:

• Nolan Ryan (1968 Topps: $500)
• Carlton Fisk (1972 Topps: $50)
• Dave Winfield (1974 Topps: $50)
• George Brett (1975 Topps: $80)
• Gary Carter (1975 Topps: $20)
• Andre Dawson (1977 Topps: $20)
• Ozzie Smith (1979 Topps: $60)
• Rickey Henderson (1980 Topps: $80)
• Cal Ripken Jr. (1982 Topps: $30)
• Ryne Sandberg (1983 Topps: $20)
• Wade Boggs (1983 Topps: $15)
• Don Mattingly (1984 Donruss: $30)
• Kirby Puckett (1984 Fleer Update: $100)
• Roger Clemens (1984 Fleer Update: $120)
• Mark McGwire (1985 Topps: $20)
• Cecil Fielder (1986 Donruss: $2)
• Jose Canseco (1986 Donruss: $15)
• Bo Jackson (1987 Fleer: $8)
• Will Clark (1987 Fleer: $3)
• Ken Griffey Jr. (1989 Upper Deck: $40)

In 2016, your rookie card collection from 1990 would be worth only $1,163.  That’s a 55% loss!  Even if you only look at one of the few winners, Ozzie Smith, you would only see a 33% gain in 26 years.

That means, for individual cards prospecting is the way to go.  When the player is already a star, his card price has already reached its peak.  Nothing can bring the card price up again, except maybe the passage of 100 years and the cards becoming extremely rare.

 Strategy #3: The winning strategy

Is it even possible to beat the S&P with baseball cards?  I think the only way is to look at the extreme cases.  One that comes to mind is Randy Johnson.

In 1990, Randy Johnson was a mediocre pitcher for the small-market teams Montreal and Seattle.  He had a 24-24 win-loss record, a 4.03 ERA, and averaged 7.7 strikeouts per 9 innings.  What nobody could guess though was that he would go on to pitch until he was 45 years old and amass 300 wins while striking out nearly 5,000 batters.  His turning point happened in 1991 when he began striking out more than 10 batters per 9 innings.

Randy Johnson’s 1989 Upper Deck rookie card was worth only 75¢.  In 2016 that same rookie card is worth $8 for a 967% gain.  It is the only instance I can find of beating the S&P.

Strategy #3 is to be able to see the future.  You have to find players that seem to have no chance of becoming stars—the Randy Johnsons, Cecil Fielders, and Jamie Moyers—and buy their valuable cards in bulk before anybody notices their potential.  Then you have to sell their cards at the peak of their popularity (that means selling your Cecil Fielder rookie cards in 1991 before anybody realizes that he was a one-hit wonder).

Another name for Strategy #3 is “Getting Lucky.”  Good luck with that.  I’ll just put my money in the S&P 500 index and get back to work.