Looking at last few months, Albert Pujols as an investment..

Over the off-season people always discuss which players are the best investments. Sometimes it is very difficult to look back and determine which investments were actually smart investments. Since it is nearly impossible to predict actual player performance (beyond what can reasonably be expected, and what the scouts are predicting) one can often make money on what was actually a poor investment decision (when something unpredicted happens) and lose money on a smart investment. Over the long run though, the numbers even out and one who picks smart investments will end up making more money than one who doesn't. (This is true both in regard to the player, and the specific card.)

Albert Pujols provides an interesting case study. Over the summer people were discussing who to invest in, and the jury was split on whether Pujols (specifically his RC's and especially RC Auto's) were a good investment.

Since the season has started the prices on Pujols RC Auto's have gone up significantly, with a number of sales on his SPx Auto going for close to double what they were getting in the off-season, when they could be had for $300 or so. (And while all sales have been going for more than the off-season, this includes at least 1-2 raw copies that to me clearly looked trimmed from the scans.)

While the above is true, I am sure that many will look and comment how players like Adrian Gonzalez have seen far greater increases, so what is the significance of the increase in Pujols prices, and why do I make mention?

The answer is that unlike guys like Gonzalez, Miguel Cabrera and others, the increase in prices on Pujols cards have come, despite the fact that his performance has been no better than typical numbers. While Adrian Gonzalez has required a power explosion, and Miggy has had to hit around .375 for the first couple of months to see increases, Pujols has simply been matching his numbers from last season and has seen increases.

Because there is no real way to actually predict whether a player will "break out" or have a worse season than usual, the goal of an investor is to determine which players will maximize the returns with the lowest deviation from the players norm (or projection for younger players.) This allows for maximum returns when the player does break out, and minimal losses if the player underperforms.

Another example of this in the positive light is Jason Bay, who has seen huge increases on his only RC Auto while putting up numbers that are not incredibly out of line from his career numbers, and with almost no risk at the buy in price (even if he had had a poor start, do you think they would have gone much lower than the $20 they were in the offseason for a guy in his prime on the Red Sox? Not likely.)

On the flip side you can also see the idea of limiting risk in the same way. Take a player like BJ Upton who has been awful to this point. Because the buy-in price was so reasonable before the season, the performance has caused only very slight decreases in prices.

Thoughts?

My Pujols Chromes have all jumped over $1200 each since I bought them before the season started. You are correct on his SPx as well (I will be sending PAYPAL over in the AM by the way).

I would also make a case for all his RC AUTOs (minus the Finest) and his very rare Logos and bat barrels....


It ends there however as his other Autographs and Patches have stayed about the same.........

pujolsthomefan33 said:

My Pujols Chromes have all jumped over $1200 each since I bought them before the season started. You are correct on his SPx as well (I will be sending PAYPAL over in the AM by the way).

I would also make a case for all his RC AUTOs (minus the Finest) and his very rare Logos and bat barrels....

It ends there however as his other Autographs and Patches have stayed about the same.........

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I was specifically focusing on his RC's and RC Auto's as there are so many other cards out there, that there's almost no way anyone could create enough excitement to boost prices on so many cards.

What I'm trying to illustrate (and you can tell me if I did) is how Pujols was a prime example of a "smart" investment (whether he's still a great investment is up for debate as his SPx is still only half what it peaked at.) Often actual performance obscures whether a player is a good investment or not but when you see a player going up despite simply maintaining performance, you realize that his cards were undervalued before (something that can be determined with some market knowledge and analysis) and this makes his a prime investment.

And that is why I always like your posts. Couldn't agree more. Most people, when you really get down to it, "prospect" to make money. The issue is that there is a risk. Whereas with someone like Pujols (and yes, I know there is risk with him as well), you can expect him to continue to be a great player. Obviously, there comes a point where prices are too high and you have to consider that

Someone once told me to only buy cards of the best. And that's what I am now doing for the most part.

The best buy in the market right now is Justin Upton, in my opinion. He absolutely dominated in the month of May at the age of 21. If he can just be somewhat consistent, his cards have significant growth potential with minimal risk given his age.

I think you're over thinking. The problem is tbat you're assuming there is a logic to investing, but this is the same as tilting at windmills! This is partially because card prices do not exclusively follow player performance, there are way too many intangibles involved.

With that said, I think you could simply correlate FY/RC card prices to google searches on a particular player. It is more difficult to determine prices on other card types because of set and player collector actions are tougher to determine.

Topnotchsy said:

...Over the long run though, the numbers even out and one who picks smart investments will end up making more money than one who doesn't....

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I'd love to hear why you say this. While I completely agree that card prices are influenced by many more factors than player performance, it is safe to say that performance is a significant factor, and over a given period of time is often one of the only factors. (While a player's team makes a huge impact, most players do not get traded all that often, and therefore the team the player is on plays little role in the quality of the investment unless the player is on the block or approaching free agency because the team he is on has already been incorporated in the current price. Adrian Gonzalez is an easy example of a player who was extremely cheap because of his team, and his performance has boosted prices. The buy-in initially as well as the current price is lower than it might have been if he was in NY, but the increase is not necessarily different percentage-wise.

I think it's pretty reasonable to assume that if when a person invests he does not need to rely on break-out seasons to simply keep the card at his buy-in price he'll do better in the long run. Jason Bay is an example of a player who has seen significant increases due to his performance in a big market this season, despite the fact his numbers are not significantly better than say, Nelson Cruz. A savvy investor picked up on the fact that Bay has only 1 RC autograph, is playing in a huge market, and was still seeing prices that were extremely low (in comparison to his own prices in years past, and in comparison with other players in similar situations.)

uniquebaseballcards said:

I think you're over thinking. The problem is tbat you're assuming there is a logic to investing, but this is the same as tilting at windmills! This is partially because card prices do not exclusively follow player performance, there are way too many intangibles involved.

With that said, I think you could simply correlate FY/RC card prices to google searches on a particular player.

Topnotchsy said:

...Over the long run though, the numbers even out and one who picks smart investments will end up making more money than one who doesn't....

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You could also factor in that Pujols is a much, much less risky of an investment than others that need to "break out" to improve there prices.

If performance were a significant factor, then how does one account for card prices of players who have played less than two years of MLB or are still in the MiLB or even pre-MiLB? Clearly prices here are based purely on potential, not actual performance.

Also basing the whole discussion on FY cards or even RCs may not be entirely appropriate today.

Topnotchsy said:

I'd love to hear why you say this. While I completely agree that card prices are influenced by many more factors than player performance, it is safe to say that performance is a significant factor, and over a given period of time is often one of the only factors. (While a player's team makes a huge impact, most players do not get traded all that often, and therefore the team the player is on plays little role in the quality of the investment unless the player is on the block or approaching free agency because the team he is on has already been incorporated in the current price. Adrian Gonzalez is an easy example of a player who was extremely cheap because of his team, and his performance has boosted prices. The buy-in initially as well as the current price is lower than it might have been if he was in NY, but the increase is not necessarily different percentage-wise.

I think it's pretty reasonable to assume that if when a person invests he does not need to rely on break-out seasons to simply keep the card at his buy-in price he'll do better in the long run. Jason Bay is an example of a player who has seen significant increases due to his performance in a big market this season, despite the fact his numbers are not significantly better than say, Nelson Cruz. A savvy investor picked up on the fact that Bay has only 1 RC autograph, is playing in a huge market, and was still seeing prices that were extremely low (in comparison to his own prices in years past, and in comparison with other players in similar situations.)

uniquebaseballcards said:

I think you're over thinking. The problem is tbat you're assuming there is a logic to investing, but this is the same as tilting at windmills! This is partially because card prices do not exclusively follow player performance, there are way too many intangibles involved.

With that said, I think you could simply correlate FY/RC card prices to google searches on a particular player.

Topnotchsy said:

...Over the long run though, the numbers even out and one who picks smart investments will end up making more money than one who doesn't....

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supply vs demand

Pujols is still the most dominant of the period, so demand will remain.
Once, he is no longer dominant, his prices will go down.
I believe Pujols cards have seen their peak, and would not consider an investment at this time.

Sure, everyone wants his most expensive rookies right now, but as his performance diminishes with age, collectors will want the new kid on the block.

Upton is a risk. a Gamble. money can be made or lost..

Aren't all cards lower during the offseason, making most established stars a solid, though minimal, investment in the short term?
And in the case of Pujols, his cards also dropped in the offseason when many collectors and fans thought he would have surgery and be out for months (or the season).
Pujols then began the season hitting incredilby, as usual, and his cards rose.
As for being an investment, his cards are still cheaper than his peak a couple of years ago, and I don't see them reaching those levels again unless he flirts with .400, hits 60 homers or challenges for the Triple Crown.

Austin said:

Aren't all cards lower during the offseason, making most established stars a solid, though minimal, investment in the short term?
And in the case of Pujols, his cards also dropped in the offseason when many collectors and fans thought he would have surgery and be out for months (or the season).
Pujols then began the season hitting incredilby, as usual, and his cards rose.
As for being an investment, his cards are still cheaper than his peak a couple of years ago, and I don't see them reaching those levels again unless he flirts with .400, hits 60 homers or challenges for the Triple Crown.

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While what you say is true, I do not believe it accounts for the (close to) 100% increase in RC cards like his SPx. The prices were low long after it was known he'd be ready for the start of the season, and they were almost this low when he won the MVP last season. What it comes down to IMO, is that there are times when cards can be legitimately, significantly undervalued, and those who capitalize do well.

hofautos said:

supply vs demand

Pujols is still the most dominant of the period, so demand will remain.
Once, he is no longer dominant, his prices will go down.
I believe Pujols cards have seen their peak, and would not consider an investment at this time.

Sure, everyone wants his most expensive rookies right now, but as his performance diminishes with age, collectors will want the new kid on the block.

Upton is a risk. a Gamble. money can be made or lost..

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People have been saying this for the last couple of years, but the fact is that great players (like Alex Rodriguez or Pujols) often go through cycles where they are the hottest player in the market, and while they may never reach the peaks they were at before, anyone who bought in the summer has to be pleased with the current return, and there is reason to believe that he'll see much higher prices in the future (when he approaches milestones, makes the playoffs, passes big names on the all-time HR list etc.)

flightposite said:

You could also factor in that Pujols is a much, much less risky of an investment than others that need to "break out" to improve there prices.

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While this is true, it has little to do with the significant increase in prices from last season (or the off-season) to this year.

uniquebaseballcards said:

If performance were a significant factor, then how does one account for card prices of players who have played less than two years of MLB or are still in the MiLB or even pre-MiLB? Clearly prices here are based purely on potential, not actual performance.

Also basing the whole discussion on FY cards or even RCs may not be entirely appropriate today.

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The differences in the markets of players in the Minors and those who have been in the Majors for a short period of time has to do with the investment potential, and the fact that there is an entire segment of the market that is only interested in the player while he is still in the Minors, or is a young star in the majors. When the player transitions to the Majors it takes an unusual performance to create a market that can sustain the prices that were seen before. To some degree though, this has shifted over the last couple of years as more people are investing in MLB players, and there are now a fairly high number of guys in the Majors who are seeing impressive prices.

Topnotchsy said:

... and there is reason to believe that he'll see much higher prices in the future (when he approaches milestones, makes the playoffs, passes big names on the all-time HR list etc.)

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What milestones is he reaching that will cause his cards to go up before they go down?

Where his cards may go up from where they are today, I would say there is a better chance they will go down before they go up. Also if they go up, I don't think the upward potential is greater than the downward potential. Right now, I would say hold or sell, but not buy.

hofautos said:

Topnotchsy said:

... and there is reason to believe that he'll see much higher prices in the future (when he approaches milestones, makes the playoffs, passes big names on the all-time HR list etc.)

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What milestones is he reaching that will cause his cards to go up before they go down?

Where his cards may go up from where they are today, I would say there is a better chance they will go down before they go up. Also if they go up, I don't think the upward potential is greater than the downward potential. Right now, I would say hold or sell, but not buy.

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I'm not sure that we disagree as I am unsure what the market has in store for Pujols. If he can hit .340 and approach 50 homeruns I do think there is plenty of room for his stuff to go up, but I think that if he gets closet to .325/40 they might stagnate. I was using Pujols to illustrate an idea about players whose values are low enough that it really limits the risk while offering significant reward. Other players in the same position before the season (in my mind anyway) were Jason Bay, Chad Billingsley, BJ Upton and Elijah Dukes. Players where the reward potential was significant, with little risk. For Bay and Billingsley their performance has led to increases, while for Upton and Dukes, despite injury and slow start, the prices have barely dropped. In my mind, that made these players (above most others) very solid investments.

Yeah I think you hit this on the head. But taking it a bit further, the hobby does indeed operate in cycles - prospecting/interest in MiLBers will drive prices for a while, next established vets about to become HOFers, then set collecting, etc. etc.

In a weird way its like fashion I suppose - somebody trying to make a buck is going to tell us what we should all be interested in buying one season to the next

Topnotchsy said:

uniquebaseballcards said:

If performance were a significant factor, then how does one account for card prices of players who have played less than two years of MLB or are still in the MiLB or even pre-MiLB? Clearly prices here are based purely on potential, not actual performance.

Also basing the whole discussion on FY cards or even RCs may not be entirely appropriate today.

Click to expand...

The differences in the markets of players in the Minors and those who have been in the Majors for a short period of time has to do with the investment potential, and the fact that there is an entire segment of the market that is only interested in the player while he is still in the Minors, or is a young star in the majors. When the player transitions to the Majors it takes an unusual performance to create a market that can sustain the prices that were seen before. To some degree though, this has shifted over the last couple of years as more people are investing in MLB players, and there are now a fairly high number of guys in the Majors who are seeing impressive prices.

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There are definitely big picture cycles. I remember when Topps Heritage came out, and set collecting completely took off in a way I had not seen since I had started collecting, and certainly not for new stuff (vintage set collecting has always been in.)

Within those cycles, there are also other cycles. I felt that amongst those who invest in cardboard, as more people investing in prospects get burned (while some keep making money, the more time that goes on, the more people that are left holding cards of prospects who just don't pan out, and as the market grew and prices increased, the losses became more significant) I felt that people would begin to appreciate how rare it is for an MLBer to go from being a top prospect to a legit star, and people would put more money into those players and cards once they'd already made the Majors. I also felt that some would start to view those as cards with legit investment potential. I believe that this has happened to a certain degree, and could continue going forward.

Then there are player cycles. No matter how good a player is doing, there is only so long that people can keep saying, "wow, player xx is amazing. Because of this players can be out of the spotlight for a while, despite great performance (something that is important to remember when considering when to sell.) When a player keeps putting up huge numbers though, it's pretty much a matter of time before they are once again in the spotlight. Alex Rodriguez is a prime example. Over the last 6-7 years, he has had 3-4 stretches where his cards were hotter than any other player in baseball. The cycle continued and his cards cooled off (albeit possibly at a higher price than before the increases, though that is not always the case as at times the price can even dip lower depending on a wide variety of factors) and then as he continued to hit homeruns at record pace, his cards inevitably got hot again. (It will be interesting to see how the recent steroid issues play a role, but even if the steroids knocks the market down a notch, there will be ups and downs in the new market.)

With players like Pujols and Bay, they were so low that they almost had to go up assuming they maintained performances that were close to what they had done in the past (obviously performance affects the cycle.)

uniquebaseballcards said:

Yeah I think you hit this on the head. But taking it a bit further, the hobby does indeed operate in cycles - prospecting/interest in MiLBers will drive prices for a while, next established vets about to become HOFers, then set collecting, etc. etc.

In a weird way its like fashion I suppose - somebody trying to make a buck is going to tell us what we should all be interested in buying one season to the next

Topnotchsy said:

uniquebaseballcards said:

If performance were a significant factor, then how does one account for card prices of players who have played less than two years of MLB or are still in the MiLB or even pre-MiLB? Clearly prices here are based purely on potential, not actual performance.

Also basing the whole discussion on FY cards or even RCs may not be entirely appropriate today.

Click to expand...

The differences in the markets of players in the Minors and those who have been in the Majors for a short period of time has to do with the investment potential, and the fact that there is an entire segment of the market that is only interested in the player while he is still in the Minors, or is a young star in the majors. When the player transitions to the Majors it takes an unusual performance to create a market that can sustain the prices that were seen before. To some degree though, this has shifted over the last couple of years as more people are investing in MLB players, and there are now a fairly high number of guys in the Majors who are seeing impressive prices.

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^

Here is my take on it...

You can't even bring up prospects here because this is a different kind of investing.Prospects are all based on potential.Always.Nothing more.Anyone who thinks they are not would be hard pressed to prove it.But actual MLB players is a whole different animal investment wise.Basically you need to take stock of what the players are doing currently(of course) and what they have done in the past.Some guys have been all over the board stats wise due to switching teams, leagues, batting order, positions...you name it.But some guys put up the same kind of numbers year in and year out.For the most part anyways barring injury or a really bad year.

So my idea is see what players are doing and invest accordingly.Nothing gets collectors attention for MLB players more than milestones.Sure the really great performance will hike prices but if you know its pretty much a safe bet that a player will reach a certain milestone...you can reasonably bet his prices will climb.The hard part is determining when to buy.Surely the off season seems the best bet.Also when they hit a dry spell or perform poorly.But you have to make sure you buy when the price is as low as you think it can go or, especially, when the price goes lower than it has been in a while.Most of the time(I can't say for sure about ebay because I have never purchased not one Pujols card on ebay ever and do not plan on it either) at shows or shops you can expect to pay between $30 and $60 for a regular Pujols rookie from Upper deck, gallery, topps and whatever else is available at the time.So if they went down to say $15 which I don't think they have been down to in quite a while from what I have seen...that would be a reasonable time to buy.

Pujols will likely reach 500 homers easily.Even with break down and wearing out.And also he is seen as a clean player thus far.So he will be sought after when he starts reaching these milestones because of course he will get attention via the media.Plus...he seems to be on track for 600+ homers so this could really steepen prices.Its always a out of sight out of mind type of thing with these guys.Sure they regularly have decent seasons but as mentioned before...whats so special about the 40 homers one player hits this season as opposed to the 40 he hit last year?The only thing that can really increase it to where it goes above the normal seasonal price spike is a milestone.A lot of collectors seem to buy whoever is hot but it doesn't mean the prices will drive up.There needs to be an increase in demand by a large percentage to steepen prices.Especially if the player is pretty consistent.

My theory is just buy guys who are on pace to reach milestones.Especially "clean" players.Some others of mention are Lance Berkman and Adam Dunn.There cards are pretty cheap as it is and they are definitely on pace to set some higher numbers.Also keep an ey on pitchers who can maybe edge in on 200+ wins because that is another thing that collectors seem to hawk over.I am not sure how many more guys will be getting to 300 anymore so the new 300 may be 250 or less.I'd also keep an eye on strikeouts too.Basically anything that sets the player apart from their normal average season.

predatorkj said:

Here is my take on it...

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How do you understand the increases in Pujols RC Auto's this season? His SPx is up close to 100%, and his Bowman Chrome is up significantly (and I imagine others are as well, though I have not followed them closely.)

Topnotchsy said:

predatorkj said:

Here is my take on it...

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How do you understand the increases in Pujols RC Auto's this season? His SPx is up close to 100%, and his Bowman Chrome is up significantly (and I imagine others are as well, though I have not followed them closely.)

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I really wasn't speaking of the autos since I don't own one of his auto'd RC's and have never seen one outside of ebay for sale.My take on the base rookies was that they will go up significantly with a milestone is reached.But I also think a lot of people are realizing he is going to hit 500+ homers and he doesn't look to slow down for a while.If I remember correctly he just hit number 300 a few days ago?Maybe they are not realizing it as much as they are just sucking it up and going after them.Its not something that's provable no matter what your take is on it.But in my opinion, if you are going after proven players then the best way to invest is with milestones that are attainable in mind.Sure its projection but its not like prospect projection.

You kind of know (or at least you have as good of a handle on it as your going to ever be able to) what to expect from some of these guys.And with the invention of the serial numbered autographed rookie card...who knows what these cards will do.We aren't talking mid 80's-mid 90's rookies here with little if any room to grow.These cards are pretty volatile price wise.The only way we will know for sure on the auto'd rare versions is a handful of years after the hype of the playing career or even hall of fame induction dies down.Will these things drop or will they creep up more and more?Some people may say they will drop but as time marches on...the demand will still be there but the supply will always be limited.Just like a lot of your vintage stuff.

predatorkj said:

Topnotchsy said:

predatorkj said:

Here is my take on it...

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How do you understand the increases in Pujols RC Auto's this season? His SPx is up close to 100%, and his Bowman Chrome is up significantly (and I imagine others are as well, though I have not followed them closely.)

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I really wasn't speaking of the autos since I don't own one of his auto'd RC's and have never seen one outside of ebay for sale.My take on the base rookies was that they will go up significantly with a milestone is reached.But I also think a lot of people are realizing he is going to hit 500+ homers and he doesn't look to slow down for a while.If I remember correctly he just hit number 300 a few days ago?Maybe they are not realizing it as much as they are just sucking it up and going after them.Its not something that's provable no matter what your take is on it. But in my opinion, if you are going after proven players then the best way to invest is with milestones that are attainable in mind.Sure its projection but its not like prospect projection.

You kind of know (or at least you have as good of a handle on it as your going to ever be able to) what to expect from some of these guys.And with the invention of the serial numbered autographed rookie card...who knows what these cards will do.We aren't talking mid 80's-mid 90's rookies here with little if any room to grow.These cards are pretty volatile price wise.The only way we will know for sure on the auto'd rare versions is a handful of years after the hype of the playing career or even hall of fame induction dies down.Will these things drop or will they creep up more and more?Some people may say they will drop but as time marches on...the demand will still be there but the supply will always be limited.Just like a lot of your vintage stuff.

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I don't believe that the increase of close to 100% on Pujols RC Auto's is because all of a sudden people realized he's going to hit 500 one day. I think it has more to do with the ebb and flow of the market as players as the market's focus often shifts to and from players. While the potential increases are no where near the 1000% that one might get on a hot prospect, I believe that for most prospectors, when they compare the actual dollars in profit that they get from the few prospects who really explode, compared to their entire inventory, few are seeing really significant returns. Those who know the players and the sets extremely are definitely rewarded by the volatility that the Minor Leagues has to offer, but I wonder how many are truly profiting from this.