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What is an alternative asset?
An alternative asset is anything that you can invest in that is not a traditional equity (stock), bond, or real estate. Some examples of alternative assets include precious metals such as silver & gold, wine, cryptocurrencies, art, playing or trading cards (e.g., baseball cards or Pokemon cards), and many more! There has been a recent rise in popularity of alternative assets. Because of this, a number of new investment platforms and vehicles have been developed to help investors gain access to these assets. Some of these platforms even allow for “fractional” investing, which can make it easier for retail traders with less capital to gain exposure to markets they would otherwise be priced out of. We’ll highlight a few of these platforms below and write about a new asset each week in this alternative asset series!
Investing in Sports/Playing Cards
There are multiple sports, each with their own respective cards of players, coaches, teams, mascots, and anything related to the team. Pokemon cards have also recently exploded in popularity and price - famous YouTube star Logan Paul acquired a rare, 1st edition hologram Charizard Pokemon card worth $150,000. So how can you invest in trading cards and what all goes into it? Here are a few things to know about trading cards: the value is largely subjective (meaning the card is only as valuable as the amount someone is willing to pay for it), not all cards are worth the same amount, and there is a grading system to determine the condition of the card.
Determining Worth of Cards
Determining the worth of cards is probably the most difficult aspect for a new investor in the space. There are popular avenues for buying and selling cards, like Twitter and Ebay, where you can search the card you possess or want to purchase and see past sales - this can give you a decent ballpark price estimate. There are also sites where you can buy and purchase “shares” of a card, where the website itself values the card. Unlike traditional assets like real estate and stocks, there is not a determined value which is easily accessible. This takes some practice and is a skill that can be learned if this is something you’d like to get into!
How do you know how valuable your card is?
This requires knowledge of the type of card you are investing in. For example, if you’re investing in baseball cards, it’s helpful to know how good the player on the card was or is projected to be and how rare the card itself is (e.g., how many have been created). In sports cards, generally speaking, the most valuable cards are rookie cards for players who developed into big league superstars. In playing cards like Pokemon, the most valuable cards are those that are rare, original, and in very good condition. The difficult part is determining how good a player will be or how rare a Pokemon card is, etc. This takes a lot of time and research, and I recommend only getting into investing in trading cards if you are truly interested.
What is card rating?
The most popular card rating is known as the PSA rating, which is given by the Professional Sports Authenticator. PSA is the largest third-party trading card authentication and grading company in the world, and they have certified over 40 million cards since their inception in 1991. The ratings are scored from 1 to 10 (with 10 considered mint condition). These grades are by an unbiased third party and are therefore trusted by buyers and sellers when being used to evaluate cards. In order to get cards rated, you need to mail them to PSA and you can find the steps on their website here.
How do I buy, sell, or trade cards?
There are various avenues to sell cards, including Facebook marketplace, Twitter, Ebay, and other related selling sites. There are also places where you can purchase fractions of cards to make large valued cards more accessible to the average person, such as Collectable. Websites like Collectable provide products that are similar to fractional shares of stocks, so you can purchase “shares” of valuable cards for minimal amounts of money. Like every investment, you should always do your own research and this is no different! In order to master this method of investing, it takes an immense amount of knowledge in order to find places where you can profit!
If you’re new to stock investing, check out our introduction to stock investing series:
If you’re new to real estate investing, check out our real estate investing series:
Have a great rest of your week!
Brandon & Dan
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Disclosure: The article was written by Daniel Kuhman and Brandon Keys, and it expresses the author's own opinions. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock, asset, or cryptocurrency. Brandon and Daniel are not financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.