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I find this argument very strange: > But it is, because in the long run, assets without cash flows cannot increase in value more than the economy as a whole. I

I find this argument very strange: > But it is, because in the long run, assets without cash flows cannot increase in value more than the economy as a whole. If something appreciates faster than the whole economy in the long run, it eventually eclipses the whole economy, which is impossible. No one is operating on an infinite time horizon in their investments, so this argument seems moot. You can certainly find collectibles that have grown faster than the economy as a whole over a period of O(decades), which is all any human needs. e.g. a Black Lotus card from magic was about $15 in 1994 and about $11,000 (or more, depending on age and condition) in mid-2021. [0] In that same time period, the S&P 500 has gone up only about 10x. [0]: https://infinite.tcgplayer.com/article/A-History-of-the-Price-of-Black-Lotus/6328d04e-a921-4200-b289-961b1c852ae4/ https://infinite.tcgplayer.com/article/A-History-of-the-Pric...

Waterluvian 5y ago
Tangent: based on my internal perceptions throughout the past decades, I’m positively shocked that a Black Lotus is only worth $11,000.
- ip26 5y ago
  At some point the bidder realizes instead of four lotus, they could buy a late model 911 instead.
- totoglazer 5y ago
  I was as well. Apparently it’s not true though. Here’s a record at half a million. https://www.reddit.com/r/magicTCG/comments/l6lpol/a_black_lotus_just_set_the_record_for_most/ https://www.reddit.com/r/magicTCG/comments/l6lpol/a_black_lo...
  - allturtles 4y ago
    See above, it is (or was) true, for a conservative (not record) price estimate. Most lotuses in existence are not mint alphas.
- allturtles 4y ago
  (a) This is year old data (b) it was for a typical "low-end", unlimited (white border) black lotus (which is why I said "or more, depending on age and condition"). A mint alpha black lotus is a whole different story, but I was trying to be conservative in my return estimates. Most people holding black lotuses in the mid-90s did not have mint alpha copies.
majormajor 5y ago
The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? I think it's also arguing that the particular appreciation you need to capture largely only happens at the "before you heard of it" part of the curve. I don't think it has quite enough specifics there, e.g. would buying a Honus Wagner card in 1990 compared to a bunch of stocks have paid off over the last 30 years? I haven't done that research myself.
- charlieyu1 5y ago
  $1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you wouldn’t mind spending a few bucks on. But back in the day it was quite different for average folks without enough tech knowledge to mine or buy crypto.
  - zenlikethat 5y ago
    Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.
    - inter_netuser 5y ago
      why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
      - TameAntelope 5y ago
Forge36 5y ago
They can out grow the economy in the short term, if it lasts long enough it becomes the economy. Differentiating between fad and valuable, especially with manufactured commodities, is a guessing game. Odds are someone will end up with a large amount of junk along the way.
elil17 5y ago
That relies on you being able to guess. You can retroactively see which collectibles gained value, but you are unlikely to know that ahead of time. If you somehow do know - congrats, you’ve hit the jackpot. Maybe you have a place in the art community that introduces you to rising artists before they hit it big. Maybe you have access to sales data for toys before it gets published. But if you’ve read about it in the newspaper, you’re too late.
- allturtles 5y ago
  Isn't exactly the same thing true of stocks? I always wish I had bought Apple or Tesla at the right time, but I didn't.
  - throwaway09223 5y ago
    Yes, but the important difference is that on the whole, the stock market goes up. On the whole, the collectables market does not.
    - ipaddr 5y ago
      The collectable market keeps growing with new products and new prices everyday. Something historically valuable will generally keep that value and increase over time (like the original Apple computer).
      - lottin 5y ago
        > Something historically valuable will generally keep that value and increase over time (like the original Apple computer). This is absolutely not true. If we pick a random item from the 1980s that was valuable at the time, the chances are it's worthless now.
      - nradov 5y ago
        The market for Hummel figurines was large and growing for many years. Now they've fallen out of fashion and are basically given away in estate sales as the collectors die off.
version_five 5y ago
Yeah your quoted passage seems more like a general argument against non income producing assets like gold or something. With a collectible (but honestly you could mostly say the same about gold), you are betting that it will become more scarce (because people use up or throw out or lose current stock) and / or demand will grow but they won't be made anymore. Both of these things are reasons why a collectible would grow in value faster than the economy. Like any investment, there is a bet being made. But as you say, you could argue that nothing can increase faster than the economy for the rest of time without overwhelming the economy, but that's irrelevant.
blockwriter 5y ago
To my mind, the top echelon of trading card games, really only MtG and Pokémon, have a different economy. The games are actively played and people do make a living by furnishing the card market, as well as the organized playing market. I don’t have a description of the exact mechanism, but I think the greater liquidity caused by changes in the meta game, and therefore which cards are valuable at any given moment, lends confidence to the earlier cards. MtG is further unique, at least insofar as I understand it, that a class of the earliest cards still see play in organized tournaments and are generally very powerful. Pokémon doesn’t seem to enjoy this same phenomenon, but I guess the games perpetuate the nostalgia for certain items in the first edition. This is why I never understood sports cards. The literally have no utility, which is fine in itself, but I cannot see how this does anything other than produce a few highly valuable artifacts of the cultural phenomenon that is sports. I actually think that the major sports league should create an ever green strategy game, to which the collectibles are inextricably linked as game pieces. Then again, they already generate so much revenue, and they would not be good at all at designing a game, so I suppose anything derived from licensing is simply gravy.
- riffraff 5y ago
  I am pretty sure there are now sport card collectibles that are connected to online and offline games, e.g. Panini has produced collectible sport stickers (mainly European football) for decades, but now also produces trading card games using the same sport cards, the "adrenalyn" TCG. The EA FIFA imprint should have something too.
  - blockwriter 5y ago
    That's interesting. I'll have to take a look.
- nradov 5y ago
  And what will happen in a couple decades when almost everyone moves on from trading card games into new forms of entertainment? When there are hardly any more players it will be impossible to sustain the collectibles market.
allturtles 5y ago
Many of the replies to me provide other arguments for why stocks are a better investment than collectibles. I'm not disputing that. I just don't think the fact that collectible returns can't outpace the economy forever is a relevant reason.
boopmaster 5y ago
I wish I had bought more dual lands in the early 00s, when I started getting back into the game. I snagged a few volcanic Islands for $35 each, and Underground Sea was around $50 on eBay at the time. I thought it was "a lot of money" (and to be fair 2 me at the time it was a lot!) What are those now, $700 to $900? But yeah, like the article says: Taking care of things is hard! Which is why I store that kind of thing in a plastic bin so that even if the roof sprung a leak I'm not totally screwed. I don't own enough to warrant a fireproof safe, at least not yet :-P
- dwighttk 5y ago
  You can get a pretty small fireproof safe
TheCoelacanth 5y ago
If you're going to choose a single particularly successful collectible, you should compare that to a single stock. MNST[1] grew by 2,987x since 1996, which easily beats the 733x that the card appreciated. S&P500 would be more analogous to averaging out the growth across a large cross-section of collectibles. [1] https://www.macrotrends.net/stocks/charts/MNST/monster-beverage/stock-price-history https://www.macrotrends.net/stocks/charts/MNST/monster-bever...
hackernewds 5y ago
what is the effective value of investing in Magic cards though? surely <<<1
zhoujianfu 5y ago
I believe collectibles are one of the two forms of investments, and capable of being good investments. A normal, warren buffet-style investment is a good investment if you are better at predicting future cash flows than the average investor. A collectible is a good investment if you are better at predicting future demand than the average collector. I consider a collectible anything that there is a limited supply of… ostensibly more (or not enough more) cannot be created to fulfill future increase of demand. Real estate, professional sports teams, gold, beanie babies, art, old video games, and bitcoin all fall into the category. If you can predict future demand for something of a fixed supply, you can do well.

Waterluvian 5y ago

Tangent: based on my internal perceptions throughout the past decades, I’m positively shocked that a Black Lotus is only worth $11,000.

ip26 5y ago
At some point the bidder realizes instead of four lotus, they could buy a late model 911 instead.
totoglazer 5y ago
I was as well. Apparently it’s not true though. Here’s a record at half a million. https://www.reddit.com/r/magicTCG/comments/l6lpol/a_black_lotus_just_set_the_record_for_most/ https://www.reddit.com/r/magicTCG/comments/l6lpol/a_black_lo...
- allturtles 4y ago
  See above, it is (or was) true, for a conservative (not record) price estimate. Most lotuses in existence are not mint alphas.
allturtles 4y ago
(a) This is year old data (b) it was for a typical "low-end", unlimited (white border) black lotus (which is why I said "or more, depending on age and condition"). A mint alpha black lotus is a whole different story, but I was trying to be conservative in my return estimates. Most people holding black lotuses in the mid-90s did not have mint alpha copies.

majormajor 5y ago

The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? I think it's also arguing that the particular appreciation you need to capture largely only happens at the "before you heard of it" part of the curve. I don't think it has quite enough specifics there, e.g. would buying a Honus Wagner card in 1990 compared to a bunch of stocks have paid off over the last 30 years? I haven't done that research myself.

charlieyu1 5y ago
$1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you wouldn’t mind spending a few bucks on. But back in the day it was quite different for average folks without enough tech knowledge to mine or buy crypto.
- zenlikethat 5y ago
  Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.
  - inter_netuser 5y ago
    why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
    - TameAntelope 5y ago

Forge36 5y ago

They can out grow the economy in the short term, if it lasts long enough it becomes the economy. Differentiating between fad and valuable, especially with manufactured commodities, is a guessing game. Odds are someone will end up with a large amount of junk along the way.

elil17 5y ago

That relies on you being able to guess. You can retroactively see which collectibles gained value, but you are unlikely to know that ahead of time. If you somehow do know - congrats, you’ve hit the jackpot. Maybe you have a place in the art community that introduces you to rising artists before they hit it big. Maybe you have access to sales data for toys before it gets published. But if you’ve read about it in the newspaper, you’re too late.

allturtles 5y ago
Isn't exactly the same thing true of stocks? I always wish I had bought Apple or Tesla at the right time, but I didn't.
- throwaway09223 5y ago
  Yes, but the important difference is that on the whole, the stock market goes up. On the whole, the collectables market does not.
  - ipaddr 5y ago
    The collectable market keeps growing with new products and new prices everyday. Something historically valuable will generally keep that value and increase over time (like the original Apple computer).
    - lottin 5y ago
      > Something historically valuable will generally keep that value and increase over time (like the original Apple computer). This is absolutely not true. If we pick a random item from the 1980s that was valuable at the time, the chances are it's worthless now.
    - nradov 5y ago
      The market for Hummel figurines was large and growing for many years. Now they've fallen out of fashion and are basically given away in estate sales as the collectors die off.

version_five 5y ago

Yeah your quoted passage seems more like a general argument against non income producing assets like gold or something. With a collectible (but honestly you could mostly say the same about gold), you are betting that it will become more scarce (because people use up or throw out or lose current stock) and / or demand will grow but they won't be made anymore. Both of these things are reasons why a collectible would grow in value faster than the economy. Like any investment, there is a bet being made. But as you say, you could argue that nothing can increase faster than the economy for the rest of time without overwhelming the economy, but that's irrelevant.

blockwriter 5y ago

To my mind, the top echelon of trading card games, really only MtG and Pokémon, have a different economy. The games are actively played and people do make a living by furnishing the card market, as well as the organized playing market. I don’t have a description of the exact mechanism, but I think the greater liquidity caused by changes in the meta game, and therefore which cards are valuable at any given moment, lends confidence to the earlier cards. MtG is further unique, at least insofar as I understand it, that a class of the earliest cards still see play in organized tournaments and are generally very powerful. Pokémon doesn’t seem to enjoy this same phenomenon, but I guess the games perpetuate the nostalgia for certain items in the first edition. This is why I never understood sports cards. The literally have no utility, which is fine in itself, but I cannot see how this does anything other than produce a few highly valuable artifacts of the cultural phenomenon that is sports. I actually think that the major sports league should create an ever green strategy game, to which the collectibles are inextricably linked as game pieces. Then again, they already generate so much revenue, and they would not be good at all at designing a game, so I suppose anything derived from licensing is simply gravy.

riffraff 5y ago
I am pretty sure there are now sport card collectibles that are connected to online and offline games, e.g. Panini has produced collectible sport stickers (mainly European football) for decades, but now also produces trading card games using the same sport cards, the "adrenalyn" TCG. The EA FIFA imprint should have something too.
- blockwriter 5y ago
  That's interesting. I'll have to take a look.
nradov 5y ago
And what will happen in a couple decades when almost everyone moves on from trading card games into new forms of entertainment? When there are hardly any more players it will be impossible to sustain the collectibles market.

allturtles 5y ago

Many of the replies to me provide other arguments for why stocks are a better investment than collectibles. I'm not disputing that. I just don't think the fact that collectible returns can't outpace the economy forever is a relevant reason.

boopmaster 5y ago

I wish I had bought more dual lands in the early 00s, when I started getting back into the game. I snagged a few volcanic Islands for $35 each, and Underground Sea was around $50 on eBay at the time. I thought it was "a lot of money" (and to be fair 2 me at the time it was a lot!) What are those now, $700 to $900? But yeah, like the article says: Taking care of things is hard! Which is why I store that kind of thing in a plastic bin so that even if the roof sprung a leak I'm not totally screwed. I don't own enough to warrant a fireproof safe, at least not yet :-P

dwighttk 5y ago
You can get a pretty small fireproof safe

TheCoelacanth 5y ago

If you're going to choose a single particularly successful collectible, you should compare that to a single stock. MNST[1] grew by 2,987x since 1996, which easily beats the 733x that the card appreciated. S&P500 would be more analogous to averaging out the growth across a large cross-section of collectibles. [1] https://www.macrotrends.net/stocks/charts/MNST/monster-beverage/stock-price-history https://www.macrotrends.net/stocks/charts/MNST/monster-bever...

hackernewds 5y ago

what is the effective value of investing in Magic cards though? surely <<<1

zhoujianfu 5y ago

I believe collectibles are one of the two forms of investments, and capable of being good investments. A normal, warren buffet-style investment is a good investment if you are better at predicting future cash flows than the average investor. A collectible is a good investment if you are better at predicting future demand than the average collector. I consider a collectible anything that there is a limited supply of… ostensibly more (or not enough more) cannot be created to fulfill future increase of demand. Real estate, professional sports teams, gold, beanie babies, art, old video games, and bitcoin all fall into the category. If you can predict future demand for something of a fixed supply, you can do well.