Collectibles 101: 5 Rules & Advice for Newcomers to Collectibles

Collectibles 101: 5 Rules & Advice for Newcomers to Collectibles

By Timmytushoes | CasualCrypto | 17 Jun 2021


Small Disclosure: My area of expertise within collectibles is specifically within Pokemon cards, as a kid, I also collected Quarters, Gemstones, Beanie Babies, and Video Games. As such, my writing will heavily reflect knowledge within these spheres of collecting, please keep in mind that I am not an expert on investing in collectibles, and I am not advising you to invest into any collectibles I mention, these are general pieces of advice to help you enter collectibles, wherever it is that you may wish to enter into!

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The factors cycle and exponentially boost the value of a collectible.

Your secret formula to success in any collectible realm is by paying attention to the following factors of a collectible: Its Rarity, its Scarcity, and its Popularity. By collecting something that is within the upper echelon of quality and/or collectability, you are ensuring you have something that is initially very rare, which will ensure that, as time goes by, it continues to become more rare, and is an almost surefire indicator of the next situation, scarcity. By paying attention to scarcity, you know that an object with 1000 copies, and an object with 1,000,000 copies which are both equally rare and equally popular, the object with 1000 copies will hold more value, and grow in value much more than the object with 1,000,000 copies. Likewise, if there were 1,000,000 products initially made, there are probably 10,000 that are still perfect condition, with 1000 copies, there may only be 5. Finally, popularity: By choosing a product which is popular with long-term potential, and by choosing a specific object within that set of products that is long term and collectible, you are indulging in popularity, which will play a factor in initial value, rate of return, and the explosive growth that happens as a product moves from being an 'aged' product to a 'vintage' or 'antique' product. This is a beginner's recipe for entering a collectibles scene. 

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Buy Low, Sell High. 

This is true of most investment practices, but within Collectibles, it is even more important, as hypes in collectibles are often referred to as 'bubbles', and when those bubbles truly pop, there is often never a full market recovery (Beanie Babies!). Even if there is, oftentimes it would have been more profitable to sell at the hype and then reinvest in a dip than to wait and hold. (This is different from Stocks, where many times holding will equal the value of people trying to time the market). You are best off buying products during a period of low popularity, or immediately after a period of intense growth, as this will be when there is the least buyer competition or the most seller competition. Seller competition causes prices to plummet competitively, and low buyer competition has the same effect. This makes the initial descent from a hyped market, and the bottom of a crash to be the best times to purchase. Buying during the descent is best to do if you believe the market will immediately recover. Waiting for the bottom of a crash is best to do if you believe the market will not recover for, I don't know, a year, two, or more.

On the other side of this, you sell at the height of hype, and I don't mean when prices peak, I mean when buyer interest peaks. This is usually a little bit before the prices peak. Many times there will be important factors that show the peak is coming. You will find this out by practicing DYOR, one of the main 5 bits of advice I gave for investing in general.

If you flip products on the short term, sell fast and often when the markets are good, do not enter a market after the hype with an intent to quickly flip. If you are a long term holder, pay close attention to each market hype, as you need to be aware if the 'bubble' is popping. Your collection of Beanie Babies in the 90s was worth millions. Today most of it is worth hundreds. Never just assume a collectible will retain value, you should always DYOR, as said in Investing 101. That being said, there are many collectibles that have a high enough degree of franchise association and popularity that they will probably survive nearly any bubble. Key word is probably.

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Because everybody had a Charizard card as a kid that's now folded in half, or has a bite taken out of it, or something ridiculous

Collectibles are not like Stocks or Crypto or even Cash. A dollar has the value of a dollar as long as it IS a dollar and it's not damaged beyond recognition. There's zero difference between a dollar covered in grime and a pristine new one except the look of disgust on somebody's face when you hand them that crumpled bill. Crypto and Stocks are digital certificates, essentially, they do not have conditions, they do not take up space, etc.

Collectibles require space, they require a controlled environment where they are protected. Scratches, buffs, damaged packaging can reduce your collectible's value by 25% or more. Sometimes, it can make it impossible to resell this collectible in the future. 

Take care of your cards. Take care of your items. Put them in cases, wrap them in boxes, place them in sleeves. Would you shrug if your 100 dollar bill turned into a 50 dollar bill because it got a little dirt on it? No. You would be livid. Consider the costs of caring for these collectibles a quirk of collectibles and commodities. Just like you might consider expense fees on ETFs as a quirk of an ETF, or gas fees are a quirk of Crypto. There are costs to maintaining your investments. You're not losing money by paying for maintenance and protection, you're doing the exact opposite. You're making sure you don't lose any unnecessary money on your investments.

Do this while selling as well. Get the best insurance, do not mess around with your profits. You might think that $5 added cost on your $200 card is hurting your profits until you eat that $200 when that package gets lost or damaged. Of course, you may be a bit more lax with tracking and insurance on lower value cards, but expect to lose one eventually

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Everybody's skeptical of the seller's claims, but a 3rd party opinion will add a lot of weight.

In cards, getting a card graded can be the difference between a $1000 card and a $10,000 card.

Authenticating a signature will eliminate the issues of somebody attempting to claim fraud and steal your collectible when you sell it. Collectors love authenticity and verifications on products, and once you hit a certain value on a collectibles you are under a LOT of scrutiny. Not only does grading, verifying, etc. authenticate your collectible and put many buyer's suspicions at ease, it also creates instant value in your collectible, and generally speaking, offers a higher rate of return each year in terms of growth when compared to its non-graded / verified counterparts. It also many times has the added bonus of protecting and preserving the condition of your collectible. Especially with trading cards which are sealed in plastic containers, like PSA and CGC.

If this is an option you can afford for your particular collectible, you absolutely should. That being said, this is more advice and not really a rule. This is very costly, not very fast, and not really ideal for the small-time investor, the person looking to flip, or for the micro investor.

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If you value it, somebody else does too!

For instance, I do not collect sports cards. I don't know sports well, and I wouldn't have the expertise necessary, the connections, or the ability to make sound collecting and investment decisions within this area.

By choosing a product that you care about, you're naturally going to learn more about it, be up to date on current events, and be aware of shifts in popularity. It ALSO means you're more likely to succeed at #3, Care for your Collectibles, AND you'll be more likely to DYOR.

I play Pokemon, and I enjoy collecting, for myself, and naturally that evolved into collecting with investments in mind as well. I now collect products for myself, which I personally enjoy and wish to own, and I collect products that I speculate will be worth something, or will grow in value down the line. 

One is spending I treat as spending for enjoyment, it does not need to profit and it does not need to be valuable to anyone else but me. The other is more focused on buying opportunities that present themselves that I believe will return on those purchases in the long term.

NOTE: I do not mean scalping either. Please do not scalp as a collector, that should never be your goal. Do not scalp within your own collectibles, and do not scalp outside of them either, it's really just a dick move. Buying an undervalued card and reselling it when it corrects in value is very different from clearing out an entire Target to force everybody to pay higher prices for a product that you horde.

A good rule of thumb is 50/30/20. In other words, more than 50% of what you buy as a collector is for yourself, that you are going to open. 30% is for long term holding, or speculative holding to see if it appreciates in value. 20% is for short term flipping to offset the costs of your own products. 20% is still rather high, but I think this is a good number that many collectors will agree is acceptable, as many collectors DO offset the costs of their hobby by flipping some product, whether that be duplicates they receive from opening their product, or simply buying additional of a product to avoid shipping fees and then recoup those costs later.

For another example, I also collect art supplies, as an artist. These items I purchase at low prices, such as clearance at Michael's. They might not register as traditional investments to many, but for my needs, they serve as a backup supply of products with rapidly appreciate as a luxury or commodity, and they also instantly regain and grow in value, due to that exact reason. Are they the 'best' investment for my money? No. But the added value of my being able to create additional value out of them, as a resource for my work, OR as an item to hold as it becomes more scarce (For instance, cadmium products) makes it a sound set of items for me to collect, as it has both a use case, and appreciates in value. Either way I save or earn money. Ultimately, the other side to good investing is saving in the long run. This one would make me 'more' money if I were flipping short term, for instance, if I buy a clearance Cadmium Red for 9 bucks and then flip it for 30, but then I'm losing out on the use-case for it, which, potentially, is more lucrative overall in the long run.

Ultimately, have a use for, and enjoy seeing your collectibles. If you're collecting solely to make money, honestly you could probably make more money just throwing it into Crypto. (In Pokemon currently over the last year, this is of course, not true, but generally speaking it is)


Thanks for taking the time to read this, I hope you enjoyed it and if you'd like to see more general information about entry points into investing, and specifically, opportunities that I find while navigating the Crypto and NFT space, please tip and/or follow to receive information periodically about the many different games, opportunities, and airdrops that I may discover and share with you!

Want more basic advice for different types of investments? Check out these articles coming soon:

5 Rules & Advice for General Investing

5 Rules & Advice for Cryptocurrency

5 Rules & Advice for Stocks

5 Rules & Advice for Investing in Precious Metals (Coming SOON)

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Timmytushoes
Timmytushoes

I would consider myself a casual crypto and NFT investor, with very limited experiences into each. I am focused on free, or very low capital investments, and finding and creating opportunities for others. I am a contracted graphic designer and artist.


CasualCrypto
CasualCrypto

This is a blog specifically focused on the 'casual' cryptocurrency or nft person, that is, someone who is either new, and rightfully cautious of the area, risk-averse investors, and others who'd simply like to experience NFTs, Cryptocurrency, etc. in a safe way, without having to blow the bank. This blog is for alternative crypto interests, more so for gamers, micro investors, artists, and other aspects of NFTs and Crypto that don't fall under the concept of investing.

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