With so much free time at home I decided to enroll into a university class that was being advertised as an opportunity for people to learn and get started on some credits. I immediately jumped on a finance & economics program. Things are going great but today the topic was on ‘‘financial bubbles’’ and I could not stop glancing above my computer at the 3 Charizard’s on the shelf in front of me thinking ‘‘Is it a bubble? Should I sell? Should I kiss goodbye my cards now for these prices?’’. The more I listened to the teacher, the more I stared and thought about it. Until finally the teacher stopped and asked if I was either sleeping or staring up in boredom.
I immediately thought ‘‘fuck it’’ and told him (and of course other zoom callers) that I was looking at pokemon cards because recently some have went up by 800% or more in a very short period of time and how it made me think of the financial market around this nerdy hobby I’m into. I just wanted to be funny although I was being honest, to my surprised the teacher quickly hopped on the subject of a bubble surrounding any financial markets, the why’s-where’s-how’s of it and the impact of such a surge in %'s compared to the amount of time.
In the end he told us to remember that ‘‘A bubble is a speculative mania that drives the prices of an asset up and beyond its fundamental value’’ (something like that).
**Now the question that I’m left with is; was this what the fundamental value had the potential to be and simply needed more exposure to bring more buyers to the market ?
Or has this recent exposure in the likes of social media, youtubers, artists etc created a bubble that will likely ‘‘pop’’ once some of these new collector’s/guru’s get bored of the hobby and dump it?**
Anyways, I need to get out more or become a guru myself if I’m able to turn university classes into pokemon finance 101 sesh.
P.S. don’t forget, 30 k by xmas and wax those shiny bald heads.
@lebleu, I’m sure there’ll be some pump and dump in the short run, but it won’t matter in the long run.
More importantly, its useful to think about how prices are moving when you’re planning out your purchases for your collection, but overthinking it also won’t really change anything. Keep what you like and sell what you don’t!
I actually had a similar experience. My professor began lecturing about market bubbles and explained that they occur when something is being bought by a lot of investors who are only buying because it is EXPECTED that the price will continue to rise (basically what happened in 2007-2008 with mortgages). They are only buying to make money. So when the item hits its fundamental value, it cannot increase any more and the holders are forced to sell (the crash).
Is the Pokemon market as a whole in a bubble? Probably not, but anything is possible. I do not doubt that certain sets or cards are in their own bubble, though. Look at what happened with Base Unlimited Zard.
Logan actually made one good point in his short public advertisement of Pokemon; it is the highest grossing media franchise. Ever. Even if there is a small bubble from massive public interest, there will still be huge numbers of collectors that genuinely love Pokemon and Pokemon cards that will continue to drive prices up.
I don’t believe Pokemon will pop like other assets have any time soon.
When I look at the current sales data for Pokemon TCG, I think bubble is a very easy term to use and is accurate in some circumstances. However that wouldn’t be an accurate representation of Pokemon TCG as a whole, there are sets/grades imo overvalued/“bubbled” due to speculation that really have no correspondence to the data we have.
In correlation to other collectibles I think Pokemon for a very long time was sitting on a lot of potential, I was personally not thinking about these prices we’ve seen for another 10 years. This would be the Early/Late 40s for a large portion of the demographic of collectors. There are defiantly pros and cons to the exposure as there was a lot of “investment” talk yet no one talks about whom/how they have to sell these “investments” right now I see a lot of collector to investor, investor to investor transactions. What I don’t see is a lot of investor to collector transactions as the investors are simply at the surface level of the hobby and aren’t necessarily buying the products collectors are seeking and if they are majority of the time these are frequently traded items. The collectors with the capital right now from what I’ve noticed are eating up all the scarce cards in high grades etc and those wont hit the market again for the most part.
In summary bubble… yeah somethings gonna pop, some already have but imo that’s collectors reaping the benefits of investors lack of knowledge and investors now saying oops let me unload that or those who didn’t have the capital to make the purchase using borrowed money to flip and realizing that they have to eat fees on ebay etc. since their Pokémon network isn’t huge that even on a 20% increase they are only breaking even. (additional factors this time has never been good for collectibles as it’s holiday season, come tax return season a whole different beast)
I’ve spoken a bunch recently about having lived through multiple major bubbles, prospered tremendously, and suffered, and feel like I know them intimately. This is very different than most due to supply mechanics (other bubbles can be shorted, can be competed against, etc.), in this case you can’t short charizards if you think they are over valued (and don’t currently own any) and the circulating supply of them means this could last a long time. Imho greater industry probably in a bubble, scarcest stuff… very tough to tell and may be 100% fine
As someone with a degree in economics, the answer is…its a social science and every instance of a “bubble” is different. While factors may seem similar, each situation is its own study. You can speculate, but no bubble actually exists until it pops.