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Collectibles are Fun but Risky Investments

A portfolio doesn’t have to be just stocks and bonds. You can add something a little more fun, say your favorite vintage baseball cards.

Photo illustration of stacks of one hundred dollar bills, with a Mickey Mantle baseball card overlaid onto one of them
Photo illustration by Connor Lin / The Daily Upside, Photo by Richard Darko via iStock

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The idea of the perfect portfolio has been shifting for quite some time. The age old 60/40 model is starting to gather dust and many investors are dipping into alternatives like crypto, private equity, and credit. And while passion investments still remain one of the smaller allocations today, investors are beginning to indulge a bit more liberally.

We’re talking about collectibles, which can be as sophisticated as fine art and vintage wine, as geeky as comic books and video games, or as Americana as baseball cards and classic cars. However, as much fun as passion investments can be, especially if you have disposable income, they come with plenty of risks and planning.

The Collector’s Collector

Tom Ruggie is a lifelong collector, getting his first autographed baseball at the age of six during a Phillies-Red Sox spring training game in Clearwater, Florida. “It wasn’t all the Phillies who signed it but at least 10 or 12 of them,” he told The Daily Upside. From there, Ruggie attended countless spring training games, always with cards in hand, ready to get signatures. Now 56 years old, Ruggie has amassed what Professional Sports Authenticator Magazine once described as “One of the most impressive autographed baseball card collections in the hobby.”

Ruggie’s second passion in life complements his enthusiasm for sports memorabilia quite well. He leads Destiny Wealth Partners, a Florida-based advisory that has more than $1 billion in assets under management and contains Destiny Family Office. Part of the reason he got into the family office business was to provide investors with the same types of protections and services he wants for his collection.

“If I got into a car accident and died, not only do my wife and kids not know anything about what I have, its value, and how to monetize it, they just don’t give a $&@# about it,” he said. “So I’ve developed a niche within my family office of working with high-net-worth individuals who have large collections.”

Growing Enthusiasm

As an advisor, Ruggie’s not about to suggest a client who doesn’t collect to go out and buy a 1952 Mickey Mantle card, which set the record for highest sold price at $12.6 million in 2022. However, he does recognize demand for collectibles is growing, especially since the pandemic.

“Covid was the best thing that happened to the collectibles world,” Ruggie said. “If you were someone who collected as a teenager, but now you’re 50 with extra time and money on your hands, Covid gave you the knack again.”

The sports memorabilia and trading card sector is quickly gaining momentum. Researcher Market Decipher forecasts the market size to reach more than $271 billion by 2034, a staggering 707% increase from where it stands today. Other sectors are seeing growth too:

  • The luxury watch market is expected to grow to roughly $135 billion by 2032, up from $54 billion today, according to Fortune Business Insights.
  • Between 2024 and 2028, the luxury handbag market is expected to grow by almost $25 billion, according to Technavio.
  • In a 2024 Bank of America survey, 94% of Millennials and Gen Zers said they were interested in collectibles including cars, sneakers, and wine as part of their portfolios. Overall, younger investors allocate three times more of their portfolios to alternative investments than older generations, suggesting they don’t view stocks and bonds alone as the key to successful investments.

Don’t Believe the Hype

There are multiple sports icons — Michael Jordan, Muhammad Ali, Babe Ruth, Jackie Robinson, etc. — whose memorabilia is always going to be worth a fair amount. Ruggie refers to them as “blue chips.” Everything else, well, those are penny stocks. They could be quite valuable at one point, but then lose almost all their worth over time. “I’ve seen a couple of cases where a card came out and sold for $1 million or $2 million and then when it resold, it went for $200,000,” Ruggie said.

It’s not just sports merch that has transparency and hype risk. If you lived through the 1990s, you might remember two massive bubbles in the collectibles market — comic books and Beanie Babies:

  • In the ‘90s, publishers were printing comics at breakneck speed right at the same time people were selling their rare, decades-old comics for tens of thousands of dollars at auction. This all led to a bubble where amateur collectors thought new comics would be worth fortunes in just a few years or sometimes months. Sure, 1992’s “The Death of Superman” is a cool addition to any collection as it marks a historic event in comic book history, but it also sold more than six million copies. 
  • Beanie Babies were cute, $5 stuffed animals, and very quickly they went from toys to must-have investments. A few skyrocketed in value at the time to be worth thousands of dollars. But Beanie Babies just became too ubiquitous. A USA Weekend Magazine poll from 1998 found that almost two-thirds of American homes owned at least one Beanie Baby. Today, most Beanie Babies from the height of the frenzy are worth less than $20. If someone does buy one for $10,000, it speaks less to the value of the toy and more to what the buyer was willing to pay.

Squeeze Play: Collections can be fun, especially since you get to physically showcase them unlike a stock. But they’re high-risk and are often self-directed investments.

It can be difficult to value items, and theoretically they can sell for as high or as low as people are willing to go, so they’re far from transparent. They’re also not very liquid. You can’t call up your broker, say “sell this baseball card” and convert it to cash right away. By the time it does sell, it may have gone down in value. And finally, they’re highly volatile with swings in the overall economy able to send shockwaves through the market.

“I bought a game-used Babe Ruth bat for an unbelievably low price, and it’s easily worth 10 times what I paid for it in 2008,” Ruggie said. “Whoever put the bat up for auction probably had a need for money. When people have to sell something, it’s often not the best time to sell.”