Author: Matt W.
One of the things that I have always found a little bit puzzling about collectors given how much money they spend on cards is how little they seem to understand the basic tenets of microeconomics, i.e. the laws of supply and demand. But then, maybe I shouldn’t be so surprised, given that large sections of the public seem to exhibit little understanding of economics as well.
The biggest mistake I see most collectors make is to assume that scarcity automatically confers value, as if demand does not even enter into the equation. Currently this is manifesting itself primarily in the fetish for 1/1 cards, which although scarce individually, are not overall. For example, there are currently over just under fifty-five hundred different 1/1 cards available for sale on Ebay (yes, that’s not a typo…I said almost 5,500), including 36 different Pujols 1/1’s, 37 different Jeter 1/1’s, 58 different Peyton Manning 1/1’s, 39 different Brett Favre 1/1’s, 77 different Kobe Bryant 1/1’s, 102 different LeBron James 1/1’s, and even 112 different Michael Jordan 1/1’s. So while each individual card may indeed be scarce, it is quite clear that in the aggregate they are not, especially considering that those currently up for sale on Ebay probably represent only a small fraction of those actually in existence.
The question I have for those collectors madly bidding up many of these cards to ridiculous prices is where they think demand for them is going to come from in the future? Those of us who have been collecting for many years have seen many hobby fads both come and go, and know that most cards peak in value immediately after their release and go steadily downhill from there. But what collectors seem to be ignoring is the fact that the overall supply of 1/1 cards, just like any other item that continues to be produced and does not wear out, is only going to increase in the future. This means that the only way that prices can hold steady is if demand continues to keep pace with supply, something that is relatively unlikely to happen. After all, given the impossibility of completing a 1/1 set from a given product, demand isn’t going to come from set collectors. And demand from player collectors is probably also going to weaken over time as they are presented with more and more choices of which 1/1 cards to buy. So the real question becomes one of who is going to want these cards a year or two down the road once new products have been released and demand for the current hot product has waned.
What’s also not surprising is that collectors of some of the other hot items of the day such as memorabilia and signature cards also seem to have failed to realize that the true supply of the items that they believe are scarce and are therefore paying through the nose for is also for the most part unlimited. Consider that virtually any player currently living, be they a scrub or a HOFer, has not only already signed thousands of items, but barring an untimely death, will sign thousands more items in the future. Most living all-time greats such as Willie Mays, Hank Aaron, Joe Namath, Johnny Unitas, Jim Brown, Kareem Abdul-Jabbar, Wilt Chamberlain, Jerry West, Larry Bird, Magic Johnson, Bill Russell, Gordie Howe, Bobby Orr, Wayne Gretzky, and Mario Lemieux have autographs that can easily be found for around $50. Even now deceased all-time greats such as Ted Williams, Mickey Mantle, and Joe DiMaggio signed so many items before their death that their autographs can be easily found for under $100. Kinda makes you wonder what the guys paying hundreds of dollars for “scarce” signature cards of the next hot rookie are thinking, doesn’t it? And last time I checked, there wasn’t too much of a natural limit on the supply of “xxx-worn” jerseys either, even ones with laundry tags, cool patches, and four-color swatches.
The bottom line is this. The supply of just about anything currently being produced is only going to increase over time, be it 1/1 cards, autographs, or other types of memorabilia cards. Demand for these items, on the other hand, is in most cases going to wane over time. So to all those collectors out these spending hundreds of dollars on supposedly “scarce” cards of the latest hot products and players, ask yourself this: In two or three years (or heck, even in six months), who is going to want the card you just paid hundreds of dollars for badly enough to pay you even more for it?
Just remember that supply is only half the equation…prices are a function of both SUPPLY and DEMAND, not just one or the other.