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5 Fundamental Market Forces Driving TCG Prices - One Piece, Pokemon and More — Transcript

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0:00Hello and welcome to One Piece of
0:01Insight. In today's video, we will be
0:04looking at five fundamental forces that
0:06move markets and set prices in TCGs and
0:10frankly across all their collectibles as
0:12well. As always, this isn't financial
0:14advice, but let's go ahead and jump
0:15right in. Okay, so why should I care
0:18about these fundamental forces? Well,
0:20the answer is if you care at all about
0:21understanding why your cards in your
0:23collection are worth what they are,
0:26these are the forces that shape that.
0:27So, understanding that will help you to
0:29better understand why things are priced
0:31certain ways and help you to find value.
0:33It will also help you to avoid falling
0:34into traps because sometimes these
0:37market conditions create traps that
0:39people who don't know better fall into
0:41and end up losing a lot of money and
0:42having a bad time while collecting.
0:44It also helps you to maximize what you
0:46value, right? So, understanding what
0:47people are really paying for and that
0:50you have a choice not to pay for those
0:51things can help you to maximize your own
0:53collecting journey. And then finally,
0:56we're going to look at a lot of
0:57Bulbasaur cards and everybody loves
0:59Bulbasaur, so you should stay tuned just
1:01for that if no other reason. First,
1:03we're going to talk about scarcity.
1:05What distinguishes collectibles from
1:07basically anything else that you can go
1:08to a store and buy is that they are
1:10fundamentally limited in some
1:12significant sense and that generates
1:14value. So, in order to have this
1:16conversation, we have to start at the
1:17very beginning, which was Beanie Babies.
1:20Now, obviously Beanie Babies were a toy
1:22and there have been plenty of toys
1:23before, so why did these become
1:26collectible shortly after release? And
1:29the people behind Beanie Babies did
1:30something really, really fascinating.
1:32They decided to retire certain Beanie
1:35Babies and say, "We're no longer going
1:37to make these." That then sent a signal
1:39that this is now a scarce product and
1:41that caused people to want to buy them,
1:43it caused them to FOMO, and it caused
1:45prices to go up, right? So, this has
1:47become essentially the blueprint if
1:48you're a printing a TCG for how you
1:51maintain a balance between having enough
1:54scarcity for people to be interested,
1:56but not having a product be so scarce
1:59that you actually can't collect it and
2:01the game just dies because product is
2:03totally unavailable. So, let's compare
2:05these two Yamato cards cuz I think this
2:06is really, really interesting. So, on
2:08the left we have this Yamato card that
2:11is a serialized card to 5,000.
2:13You know, I think this card is
2:14fantastic, but because there is a serial
2:17number on it, that sends a signal that
2:19the card is extremely scarce. Now, if we
2:22compare it to the Yamato gold leader
2:24next to this one, my estimate is that
2:26the Yamato gold leader has significantly
2:28less than 500 cards. So, we're talking
2:30about the Yamato on the left, even
2:32though it's serialized, potentially
2:33having 10 times as many cards
2:36in population as the one on the right,
2:38and yet the one on the left is selling
2:39for like twice as much as the one on the
2:41right. Now, obviously there's some
2:43artistic preferences. I personally like
2:45the art on the left one much better.
2:47It's a prize card that makes it special,
2:49all of those things. But, I do think
2:51that fundamental to the difference in
2:53value between these two cards is that
2:55one has a number on it that says, "Hey,
2:57this is scarce and we're not making any
2:59more." and the other one doesn't. I also
3:01want to talk about what happens when you
3:02don't have scarcity. And this is how a
3:04lot of TCGs end up not doing very well.
3:07So, Lorcana, Star Wars Unlimited, when
3:09they first came out, they were very
3:11popular and there was not enough product
3:13to meet the initial demand, which was
3:15both genuine demand and sort of scalper
3:17based demand, right? So, in both cases
3:19product shot up a ton very quickly. And
3:22so, the companies responded by saying,
3:23"Hey, there's a ton of genuine demand
3:25for our product, so we should just print
3:27a ton of it." Well, what eventually
3:29happened by the time you got to like set
3:31three was it turned out that the demand,
3:33the genuine demand, was not as high as
3:35they thought and now there was more
3:37product than there was demand. So, what
3:39does that do? Well, that causes prices
3:42to go down. That causes stores to cut
3:43prices even further because they need to
3:45get that money back so they can spend it
3:47on other inventory, and that makes the
3:49game look bad, right? That sends a
3:51signal to collectors, "Hey, this isn't
3:54very good. There's not going to be a
3:55sustainable collector market for this,
3:57so I should just not buy into it." Even
3:59though I think that both of these are
4:01good games, and I think that both have
4:03decent prospects long-term, because they
4:05printed too much too early, it sent a
4:06signal to collectors that it wasn't
4:08scarce, and therefore it shouldn't be
4:10valuable.
4:11You know, Pokémon is another interesting
4:12case here, because while Pokémon is
4:14obviously going through the roof right
4:16now, this wasn't always the case in
4:17modern sets. You know, Obsidian Flames
4:20when it first came out, you could get
4:21boxes for like $85. They were
4:24everywhere. And even though there was
4:26still good demand for Pokémon, because
4:28the amount of product exceeded the
4:30amount of genuine demand, there weren't
4:32scalpers. There wasn't an incentive for
4:34people to come in and buy this product
4:36and sell it at a premium. And so prices
4:38sat. But as soon as the switch turned
4:40on, that suddenly it felt like there
4:41wasn't enough product for demand, that
4:44then artificially increased the demand,
4:46causing the prices to spiral upward. And
4:49so understanding how scarcity plays a
4:51role in these prices can help us to
4:53avoid falling into these traps. Obsidian
4:56Flames was the same quality set when it
4:58was $80 as it is now that it's $400. And
5:01I think that's important to understand.
5:03So what are our main takeaways from
5:04this? So the first thing is is that TCGs
5:06are designed to make you FOMO. In the
5:09same way that a bag of potato chips is
5:10designed to make you keep eating as many
5:12chips as you can so that you buy more,
5:14everything about how TCGs are designed
5:17are trying to get you to FOMO into
5:19spending more money. That's their
5:21business model. That's the business
5:22model of everybody who works in the TCG
5:24space.
5:25The next thing is that value is only
5:27real because people agree that value is
5:29real. And this is true of any market,
5:32right? But it is really, really
5:33important to understand for TCGs. When
5:36something is very expensive, the reason
5:38it's very expensive is because people
5:40agree that it's very expensive. If
5:42market conditions ever change and people
5:44suddenly stop agreeing that it's
5:46expensive, then the price will go down a
5:48lot. If suddenly more people agree that
5:51it should be more expensive, then the
5:52price will go up.
5:54The important thing to know about this
5:56though is that when we're talking about
5:57very, very scarce items, a very small
6:00number of people are going to determine
6:02what the price actually is. So, if we
6:04talk about an altar where there are
6:0620,000 of these, you know,
6:08the population of people who are going
6:10to buy those 20,000 cards essentially
6:12get to set the market price. But when
6:14there's only a population of two, the
6:17two or three people that are interested
6:19in those items are going to set the
6:21price, and they have a massive amount of
6:23control over what those prices are going
6:25to be. So, that means that there's
6:26upside, but it also means that if two of
6:29those people decide to go do something
6:31else for a while, those prices could
6:32fall a ton. And so, I think that's
6:34important to understand. That also means
6:36that value can change at any time, both
6:38for the better or for the worse.
6:40And then finally, there's an opportunity
6:41to embrace less scarce options. So, if
6:43you don't actually care about scarcity,
6:46if you don't care about competing in the
6:47rat race of rarity or card quality, then
6:51you can get tremendous value by choosing
6:53to move in the opposite direction and
6:55embrace things that are less scarce,
6:57either cards that are less rare or lower
7:00quality versions of those cards. The
7:02second thing I want to talk about is
7:03hoarding. And hoarding is
7:06really one of the causes of scarcity,
7:08but it's also a result of scarcity, and
7:10I'll explain what I mean. For those who
7:12aren't in the United States, a few years
7:13ago there was a big cyber ransomware
7:15attack on Colonial Pipeline, which
7:18transfers oil up and down the East
7:19Coast. And so, there was a fear that we
7:22were going to run out of gas if the
7:25cyber attack went on too long. So, what
7:27did people do? Based on that fear, they
7:29went and they filled up all their
7:30vehicles, and they bought a whole bunch
7:31of extra gas, and so gas stations ran
7:34out of gas.
7:35Was there actually a restriction of
7:37supply? No, not at all. There was just
7:40an increase in demand because of fear,
7:42right? And fundamentally, that's what
7:44hoarding is. It's saying that I'm afraid
7:46that something is going to become scarce
7:49or therefore more valued, and so I'm
7:51going to try to take as much of it as I
7:53can. And so I want to draw a distinction
7:55between things that are hard to find and
7:58things that are actually rare. So let's
8:00talk about Pokémon. Three of the most
8:02popular sets in recent memory are 151,
8:05Prismatic Evolutions, and Ascended
8:07Heroes. If you have been going to big
8:10box stores or any store really trying to
8:12find them,
8:13chances are you haven't, and if you have
8:15found them, you found them at
8:16significant marked up prices. You know,
8:18people often feel frustrated that the
8:19Pokémon company isn't producing more to
8:21meet this demand. That's actually not
8:24the problem. Pokémon right now is like a
8:26clogged hose. People have figured out
8:29how to intervene earlier in the
8:31distribution chain to pull the majority
8:34of supply out of circulation before it
8:37ever actually gets to the folks who want
8:39to consume it and to rip it. So it's not
8:42that there is genuine scarcity for these
8:44products, it's that in all likelihood
8:47there are people with warehouses of
8:49these sitting on them as investments and
8:52it's never actually making it to
8:53consumers. And so that restriction of
8:55supply, that hoarding, is what's driving
8:58prices up rather than genuine demand.
9:01I understand why people like these sets,
9:04but I will say that I think they are
9:05much higher risk than people give them
9:07credit for because if prices ever do go
9:09down, and those folks decide to try to
9:12release some of that hoard, there will
9:14be a flood of product that enters the
9:17market because I think there is way more
9:18product out there for these boxes than
9:20most people realize. The other thing
9:22I'll say, too, is that sometimes we
9:24hoard things because we don't want to
9:26feel scarce, we want to feel abundant.
9:28The reason that I collect sealed product
9:30is because when I was a kid, I have
9:32these memories of like going to a card
9:34shop and buying like one or two Pokémon
9:36packs, and it being like the most
9:38exciting thing. And so, the idea that I
9:40could have like an entire box just
9:44sealed in my house, that if I ever
9:46decided I could just walk up to it and
9:48open it, it feels like abundance in a
9:51way that's really, really good. And it
9:52makes me feel like I've sort of like
9:54validated that younger version of
9:56myself, and it is some version of
9:58success. And I think that's a large part
10:00of the reason why a lot of people
10:01collect sealed, because they know they
10:02could go open it if they want to, even
10:05if they're not going to actually do
10:06that. So, you know, I'm not saying that
10:08people are only hoarding product and and
10:10keeping it sealed because, you know,
10:12they're scalpers or they're trying to
10:14flip it or, you know, they're long-term
10:16investors or any of that. But, I do
10:18think we need to understand how much
10:20product is being kept sealed uh and how
10:22that is fundamentally affecting market
10:24prices. Although, I will say I think
10:26this is way less of a problem in One
10:27Piece than it is for Pokémon. I think
10:29One Piece genuinely does not have enough
10:31supply for the amount of natural demand
10:33that exists. Pokémon, on the other hand,
10:34I feel much more concerned about.
10:36Another principle of hoarding that I
10:38want you to be aware of is that
10:39sometimes
10:41owners will buy duplicates in order to
10:43keep prices high. So, this happens in a
10:45couple of different ways. I first
10:47learned about this concept through
10:49collecting of art, which is that there
10:51are Warhol fans who own a lot of pieces
10:53of Warhols, who basically will never let
10:56one sell below X price. Because if one
11:01ever sells below a certain price, that
11:03would devalue their collection in such a
11:05significant way that it is less costly
11:08for them to just buy the other one to
11:09maintain the price as it is. So, let's
11:12talk about One Piece cards and an easy
11:13way to see how this works. So, if we
11:15imagine this gold SP Chopper, right?
11:18You know, right now it's probably going
11:19for around $2,000. So, you're a big
11:21collector, you have all 26 of these gold
11:24SPs, and it's a big bet in your
11:26collection that you've made. You see an
11:28auction about to end in 5 minutes for a
11:30gold SP Chopper, and it's at $800. You
11:34already have one. You don't necessarily
11:35need another one. You don't necessarily
11:37want another one. But, you're afraid
11:40that if this suddenly sells for $800,
11:43that doesn't just reduce the value of
11:45your Chopper, that may reduce the value
11:47of all the rest of your gold SPs in a
11:50way that is going to cost you way more
11:52than $800 in value for your set or even
11:56$2,000 in value of your collection. And
11:59so, it may make logical economic sense
12:01for that person to bid that up to $2,000
12:05to buy it rather than to let it sell for
12:07well below its price because that would
12:09devalue their existing collection. So,
12:12this is not a thing that happens when
12:13there's a tremendous supply of product,
12:16right? And this is why I used the gold
12:17leaders as an example. But, when there
12:19is very limited supply, it's relatively
12:21easy for a small number of collectors to
12:23be able to maintain a price floor to
12:26ensure that their collection doesn't
12:28fall below a certain level. And then, of
12:30course, another form of hoarding is the
12:32buyouts that we see all the time in the
12:35One Piece TCG. You know, I have the
12:37Santa Chopper here. Recently, it went
12:38from $70. I just checked today, it's up
12:40to like $300,
12:42which I personally think is bananas. You
12:44know, as I've said before, I think the
12:46difference between the gold SPs and the
12:48gift collection is that there is a good
12:50amount of gift collection out there that
12:51can come in and backfill
12:53if people ever stop putting pressure on
12:55these prices. You know, if they relent
12:58in trying to buy them all up, I do think
13:00we'll eventually see prices come back
13:01down. But, who knows? As I said, people
13:03get to decide what the value of
13:04something is. So, if enough people see
13:06$300 and think, "Yeah, I guess that's
13:08reasonable." Maybe it won't fall down,
13:10right? That's the challenge with all of
13:11this. Okay, so what are our main
13:13takeaways from hoarding? Well, the first
13:14thing is only buy what you actually
13:16want, right? I mean, I think this is
13:17just a generally good rule, but don't
13:20participate in the hoarding problem.
13:22Like, when you are going to buy
13:23something that you already have, think
13:25about whether it's something you
13:26actually want or whether you're engaging
13:28in what is essentially hoarding
13:29behavior. I would also keep in mind that
13:31hard to find does not mean rare, right?
13:33There are a lot of things that a lot of
13:35them have been produced, but for
13:36whatever reason they're not getting to
13:37the end consumer, and so you want to be
13:39mindful of that. You know, I think
13:40collectors often seek a feeling of
13:42abundance. I think that's why we target
13:44things that are scarce,
13:45uh, because having it and having them
13:47not be scarce to us makes us feel
13:49abundant. Same thing with sealed
13:50product. You know, it's much easier to
13:52enforce prices on rare items. So, when
13:54we see buyouts that has large
13:56populations, there's a much better
13:58chance that the price is going to fall
13:59on that than these, you know, scarcer
14:02items where there's less product that's
14:04going to come in to backfill and
14:05undercut at lower prices. And that is
14:07why buyouts rarely stick unless the
14:09product are actually very scarce. So, if
14:12you see a product that has a large
14:13population start to run up, I definitely
14:15recommend waiting for it to come back
14:17down because most of the time it will.
14:19Okay, now we're going to talk about
14:20price discrimination. So, price
14:22discrimination is essentially offering
14:24the same type of product at different
14:27prices so that you can catch a full
14:29spectrum of people's willingness to pay
14:31for a given item. So, let's take the
14:33Bubble Zoro here. It's an amazing card.
14:35There's a lot of demand for Bubble Zoro,
14:36and the people who demand Bubble Zoros
14:39have different price points. You know,
14:41I'm really interested in the Bubble
14:43Zoro, but I wouldn't be willing to pay
14:45more than $750, that's for sure. Whereas
14:48there's other people for whom money is
14:50no object, and Zoro is their favorite
14:52character, and so they are happy to
14:54spend oodles of money to get the card
14:56that they want. And so, coming up with
14:58these conditions to distinguish between
15:01different types of cards, and have them
15:03at different price points, enables folks
15:05with different budgets to be able to
15:07participate in the same card. And so,
15:09this is where grading comes into this,
15:11right? And so, I included here a scale
15:14from PSA 9 to raw to PSA 10 to BGS 10
15:19all the way up to BGS black label. All
15:21of these grading standards are intended
15:24to create subdivisions of scarcity to
15:26appeal to different folks with different
15:28budgets. And so, what you've done is
15:30you've taken a product that actually
15:32isn't that scarce, but by grading it,
15:34you've increased its scarcity by
15:36subdividing it into categories that are
15:38appropriate for different budgets. Now,
15:40obviously, like this is an example of
15:42how it works with one card, but we can
15:44also see it if we look at different
15:46tiers of the same character, but of
15:48different types of cards, right?
15:50So, Bandai deliberately structures its
15:52game this way to maximize price
15:55discrimination, so that the maximum
15:57number of people end up having the
15:58ability to buy into their game. You
16:00know, on the left, you have the lowest
16:02priced alt arts, right? Then you have
16:04leaders, which tend to be a little bit
16:05more expensive. You have SPs, which tend
16:07to be more expensive than that. You have
16:09mangas, which tend to be more expensive
16:11than that. And then you have special
16:12mangas, which tend to be the most
16:13expensive. All of these may appeal to,
16:16you know, many people broadly, but in
16:18terms of the relationship between price
16:21and willingness to pay, they appeal to
16:23different groups. If you're a new
16:24collector, if you don't have a lot of
16:25budget, you know, maybe the Luffy you
16:27want to target is the one on the left.
16:29If you have a massive budget, if you're
16:30obsessed with this, if Luffy is your
16:32favorite character of all time, maybe
16:34you want to target the red manga. And
16:35so, this allows lots of different people
16:38to participate in the game and in the
16:41act of collecting simultaneously without
16:44devaluing the other. Because that's the
16:46challenge. If I ask you to pay $5,000
16:49for something and you pay for it, and
16:51then I turn around and offer it to
16:52somebody else for only $500, because
16:55they were only willing to pay $500, that
16:58fundamentally devalues
17:01what you paid for it. That means that
17:03the item that you paid $5,000 for is no
17:05longer worth 5,000, it's worth 500. So,
17:07that's not a great business model. So,
17:09the idea is to try to figure out how you
17:11can maximize the number of people who
17:13can buy into something without harming
17:15the people who are going to spend a lot
17:16of money on it. And I think Bandai has
17:18done a really good job of doing that
17:19here. And so, I think the takeaways from
17:22this are, number one, you can collect on
17:24any budget, right? The game is designed
17:27to be collected and to be played on any
17:29budget. Now, Bandai doesn't always do an
17:30amazing job of making playable cards
17:32cheap. I think that's something that
17:34they could stand to improve. Like,
17:35there's no reason that like a Kuma
17:37should be $100 just because a lot of
17:39people want to play it. But from a
17:40collectibility perspective, I think they
17:42do a very good job of having different
17:45characters at different price points
17:46with different artistic styles, so that
17:48regardless of your budget, you can find
17:50something that you want.
17:51Another takeaway here is to, again, only
17:53pay for what you care about. Like, the
17:56reason why the manga
17:58is expensive is they gave it an artistic
18:01treatment that people really like, but
18:02they also marketed as the top chase
18:04card. And the reason the red manga is
18:06like seven times more expensive than
18:07that is because they gave it a slightly
18:10different treatment, and because they
18:11marketed it as like the ultimate chase
18:13card. So, if you don't care about those
18:15things, buy an SP, buy a leader, buy an
18:17alt art. You'll still really enjoy them.
18:19And then finally,
18:20I can't underscore this enough. Price
18:22discrimination is critical for market
18:24health. One of the biggest concerns that
18:26I've had about One Piece in terms of its
18:28long-term sustainability from a
18:30collectibility perspective is that it's
18:32not doing an amazing job of targeting
18:35young collectors, new collectors,
18:37collectors with smaller budgets. If you
18:39go to a card show, you see these like
18:41incredibly expensive four, five-figure
18:43slabs, but there's no like $2 binder
18:47that a kid could pick up a card from
18:49their favorite character, right? There's
18:50no like bulk discount slab bin that
18:53someone could rifle through and find a
18:55cool card that they had never seen
18:56before. And so, I do think while One
18:58Piece has the tools to do that, I think
19:00it hasn't quite found that balance yet.
19:01And so, I think we need to do a better
19:03job as a community in enabling this type
19:05of price discrimination, you know,
19:07whether you're a vendor or whether
19:08you're a collector. Um, I think that's
19:10really important for long-term market
19:12health. So, the next concept I want to
19:13share is that of a Veblen good. Now,
19:15you've probably never heard of a Veblen
19:16good, but I do think the concept is
19:18something that you'll be somewhat
19:19familiar with. And it's the idea that
19:21things are desired because they are
19:23expensive. Separate from their quality,
19:26separate from their art, separate from
19:28anything else, the sheer fact that they
19:31are expensive makes them prestigious and
19:33therefore desirable. So, if you've ever
19:35wondered how you see a chart like this
19:38on TCGPlayer where a card goes from
19:40being $400
19:41up to 1,100 or frankly even $1,600 now,
19:46I think as in the case of this first
19:47anniversary Luffy,
19:49the way that happens is
19:52some people start buying it and the
19:53price goes up. And then other people see
19:56that the price has gone up and they
19:58think, "Huh,
20:00this price is going up. I wonder if it's
20:01going to go up further. I've been
20:03thinking about buying this card, maybe I
20:04better buy it now in case I don't get
20:07another chance. Or, hmm, this price
20:09seems to be going up. This seems like
20:11this might be a good investment play.
20:13I'm going to buy this now before it goes
20:14up."
20:15And then the price goes up further. And
20:17then more people get attention because
20:19people like me talk about it and they
20:22say, "Hey, I better get this while I
20:25still can." Or, "This seems like a
20:26really good investment play." Right? And
20:28that's how you get the parabolic nature
20:31of this chart. It's because when
20:33something becomes more expensive, it
20:35sends a signal to us that it has been
20:37undervalued and that it is a valuable
20:40thing that people should want and then
20:41suddenly it becomes more desirable.
20:43Right? The same person that wouldn't
20:45have bought this at $400 is now willing
20:48to pay $1,400 for it because it is more
20:51valuable. This is exactly the same thing
20:53that I was talking about with those
20:54Obsidian Flame boxes.
20:56They were $85 or even $80 in some cases
20:59and yet people didn't want to buy them
21:01because the low price sent a signal that
21:03it wasn't desirable.
21:05But then
21:07when the prices went up, suddenly it
21:09sent a signal that it was desirable and
21:10so more people actually wanted and so
21:13fundamental to the way prices work in
21:15TCGs is that when something is
21:17expensive, it sends a signal to
21:19collectors that it's desirable and that
21:21in turn increases its desirability. I
21:23can't think of a better example of this
21:25than the Logan Paul Illustrator Pikachu.
21:28You know, I think Logan Paul is kind of
21:29a marketing genius. He paid more than
21:32anybody should have justifiably paid for
21:34this when he first bought it. But I
21:36think he recognized that by overpaying
21:38for it and paying the most anyone had
21:40ever paid for a Pokémon card, that made
21:42it famous. And then he leveraged that
21:45fame into making it even more famous and
21:47then he turned around and sold it for
21:48$16 million and made a huge profit,
21:50right? Was the person paying $16 million
21:53for a PSA 10 Illustrator Pikachu? No.
21:57They were paying $16 million for the
21:59famous card that Logan Paul put in a
22:01necklace and wore around his neck a ton.
22:03I think Logan Paul fundamentally
22:04understood the concept of the Veblen
22:06good and that by increasing the prestige
22:09and making it more famous, he was
22:10increasing the value even if he did
22:12nothing to actually change the
22:13fundamental nature of the card. So what
22:15are our takeaways from this? So the
22:16first is that high-end cards are luxury
22:18goods, right? Like just like luxury
22:21shoes or luxury clothes, you know, the
22:24price does not necessarily always
22:25reflect the quality. It tends to reflect
22:27the status and what it signals about you
22:30that you're able to afford it. And so
22:32that means prices can change quickly.
22:34You know, in the same way that like if a
22:36fashion brand falls out of favor and
22:38people don't like it anymore, the
22:40price of their clothes are going to go
22:41down a lot, right? Because there's
22:42nothing fundamental holding those prices
22:44up. You know, if public opinion suddenly
22:47turns on a card or turns on a set,
22:49prices could fall pretty quickly. On the
22:51other hand, if as with the first
22:53anniversary collection, people discover
22:55it, you can see that the price goes up
22:58quickly and that suddenly snowballs into
23:00more demand and then the price has shot
23:01up a ton. That's something that we see
23:03happen all the time in TCGs. So, I think
23:05we have to recognize the volatility
23:07inherent in these things, and I think
23:09anything that has rapidly increased in
23:11price quickly is going to be even more
23:13volatile because of this principle. I
23:15would also keep in mind, too, that even
23:18previous floors that we've seen, while
23:19we tend to think that prices won't go
23:21below those floors, because of this
23:23effect, if something goes down below the
23:25floor, it will send a signal that you
23:28should be very afraid of this card
23:30because there isn't enough demand, and
23:31that will cause people to be more afraid
23:34and to sell the card, right? And so, we
23:35have these snowball effects in both
23:37directions. And then the final thing I
23:38want to talk about are transaction
23:40costs. So, let's just talk through an
23:42example of essentially why our cards and
23:45our collections are not as valuable as
23:47we think they are. Okay. So, many of you
23:49probably heard that there was a
23:51record-breaking sale of OP-01 Blue
23:53Bottoms at Golden recently. Uh it sold
23:56for $73,200,
23:58right? So, if a person were looking in
24:01their Collector app and has a box of
24:03OP-01 Blue Bottoms, they're probably
24:05thinking, "Hey, mine's worth $73,000
24:07now. Isn't that awesome?" But the truth
24:10is is that it really isn't, and I'm
24:11going to walk through why. So,
24:13let's break down that $73,000. Well,
24:15first, the seller needed to buy the
24:16physical good, right? Even if you bought
24:18it when it was new, it still cost you
24:19something. That's fine. You're paying
24:21sales tax, you're paying to store it. If
24:23something's really, really valuable,
24:25chances are you're paying insurance on
24:26it, right? So, that's a cost that you're
24:27not going to get back. But the big thing
24:29I want to talk about here are
24:30consignment fees. So, for those who
24:32don't know how auctions work, the hammer
24:34price, so the amount that the box was
24:37actually bid up to, was $60,000, but the
24:40buyer then needed to pay a premium on
24:43top of that to the auction house. So,
24:45this $73,000 price, for starters,
24:47$13,200
24:49went straight to the auction house in
24:51the form of buyer's premium. So, the
24:52maximum that the person who sold it was
24:55going to get was $60,000.
24:57But then auction houses typically also
24:59charge a seller's premium. The seller's
25:02premium can range from anywhere between
25:040% and 20% depending on the value of the
25:06good and the negotiation. So I have no
25:09idea what the seller's percentage was on
25:11this, but it is possible that this
25:14person, if they paid a 20% seller's
25:16commission, only got $48,000 for this
25:18case. And so the reason I'm sharing this
25:20is that all of these things are really,
25:22really relevant to understanding what
25:23our collections are actually worth. You
25:25know, we are now in an ecosystem that is
25:28designed to tell us that these things
25:30are investments and that our collections
25:33are like stock portfolios, right? But
25:35the truth is is that, you know, assets
25:37aren't as valuable as we think because
25:39of all of these transaction costs.
25:41Unlike a stock where we could just say,
25:42"Hey, my collection hit, you know,
25:45$50,000. That's a lot. I'm just going to
25:47sell it and press a button and liquidate
25:49it." You can't actually do that with
25:50cards, right? If you just tried to do
25:51that, you're probably going to take 60%.
25:53And so that's the harsh reality that the
25:55numbers that we're seeing in our apps
25:58don't actually reflect what we would get
25:59if we tried to sell it. You know, it
26:01also means the cards are at best
26:03moderately liquid. You know, if you
26:04needed cash today, like, you know, 60%
26:08is probably what you're going to get.
26:09Maybe if you have something amazing and
26:11you know some people, maybe you could
26:12get up to 80%, but the faster you need
26:15to sell things, the more of a haircut
26:17you're going to take on prices.
26:19And then finally, everything about the
26:21ecosystem that we play in is designed to
26:23convince us that these are investments
26:25and that these are valuable. So this has
26:28both a positive and a negative effect,
26:29right? As I said earlier, things are
26:31valuable because we're agreed they're
26:33valuable. And so
26:35creating an ecosystem that reinforces
26:37this idea that things are valuable will
26:39help to make them valuable, right? But
26:42on the other hand, I think it sometimes
26:43gives us a mistaken impression of what
26:44our collections are actually worth and
26:46can negatively affect our behavior if we
26:48aren't careful. So I think the main
26:50takeaway here is that we want to be
26:51honest with ourselves about how much our
26:53collections are actually worth and how
26:55hard it is to sell things. And this
26:56brings us back to buy the stuff that you
26:59care the most about, right? Because, you
27:01know, as I talked about in the previous
27:02video, I felt pretty confident that EBO2
27:05was going to go up significantly in
27:06price because it was undervalued, but I
27:08didn't buy any more EBO2. And the main
27:10reason was I didn't want any more of it
27:12in my collection. And even though I was
27:14confident it was going to go up, it's
27:16not easy to sell, right? It was going to
27:18have to go up 20 30%
27:20for me to be even 100% confident that I
27:22was going to break even trying to move
27:24it, right? So, understanding those
27:25transaction costs helps us to make
27:27better decisions about curating our
27:29collection. So, that's all I have for
27:31today. As always, if you found this
27:32helpful, please like, give us a comment,
27:34tell you what you agree with, what you
27:36disagree with. And if you haven't yet,
27:38please subscribe. Also, if you're
27:39looking at picking up any of the cards
27:40in the video or otherwise, we have our
27:43TCGplayer affiliate link and we also
27:45have our eBay storefront where I keep a
27:47curated list of cards that I'm
27:48interested in and cards that I like. Um,
27:51obviously you're under no obligation to
27:52purchase. If you do buy something, we
27:54get a small commission, which is
27:55awesome, but mostly I want people to
27:57have access to sort of what I'm thinking
27:59about even if they choose not to buy
28:00there. So, with that, thank you so much
28:02for your time and I will see you in the
28:04next one.

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