Prospecting/Investing Scenario

All The Hype · Apr 5, 2010

Let me preface this by saying that I already know what I will be doing in this situation, but I am wondering what others would do in the same situation.

Scenario:

-You buy XX number of cards of a prospect for about $15 per, feeling that this price is a steal
-During the off-season, price jumps to about $35 per card, presenting an opportunity for over a 100% ROI flip
-You fully expect this card to increase in value even more, maybe even to hit $80 or $100 sometime within the next year or so, but as always, this is not a sure thing...and it is possible for prices to drop

Assume that buying more is not an option, what would you do?

Do you take the money and be happy with the flip?

Or do you hold out and hope prices continue to rise?

phillyfan0417 · Apr 5, 2010

,y choice would be to move enough to pay for your investment and play with house money...

EricInCT · Apr 5, 2010

ALL_THE_HYPE said:
Let me preface this by saying that I already know what I will be doing in this situation, but I am wondering what others would do in the same situation.

Scenario:

-You buy XX number of cards of a prospect for about $15 per, feeling that this price is a steal
-During the off-season, price jumps to about $35 per card, presenting an opportunity for over a 100% ROI flip
-You fully expect this card to increase in value even more, maybe even to hit $80 or $100 sometime within the next year or so, but as always, this is not a sure thing...and it is possible for prices to drop

Assume that buying more is not an option, what would you do?

Do you take the money and be happy with the flip?

Or do you hold out and hope prices continue to rise?

depends on what the XX number is and depends how much $ I have to invest in new cards.....if it is tying up my resources to buy the guy who hit 3 HRs today who sells for peanuts, then I may sell a few.

EricInCT · Apr 5, 2010

phillyfan0417 said:
,y choice would be to move enough to pay for your investment and play with house money...

say XX is 1.

f2tornado · Apr 5, 2010

phillyfan0417 said:
,y choice would be to move enough to pay for your investment and play with house money...

This, which is not an option in your poll.

bballcardkid · Apr 5, 2010

Hold, but it depends on if you really think you can cash in later on.

All The Hype · Apr 5, 2010

EricInCT said:
phillyfan0417 said:

,y choice would be to move enough to pay for your investment and play with house money...

Click to expand...

say XX is 1.

This definitely would have an impact on the decision.

If XX were 10+, it would be easy to sell at least a few of them to recoup some of the buy-in.

Likewise, if XX were 1, I would be more inclined to hold since I have no reason to believe prices will not continue to rise during this season.

In the particular case that inspired this thread, XX is 4, which makes it a little bit more difficult of a decision.

mredsox89 · Apr 5, 2010

ALL_THE_HYPE said:
EricInCT said:

phillyfan0417 said:

,y choice would be to move enough to pay for your investment and play with house money...

Click to expand...

say XX is 1.

Click to expand...

This definitely would have an impact on the decision.

If XX were 10+, it would be easy to sell at least a few of them to recoup some of the buy-in.

Likewise, if XX were 1, I would be more inclined to hold since I have no reason to believe prices will not continue to rise during this season.

In the particular case that inspired this thread, XX is 4, which makes it a little bit more difficult of a decision.

If I have 2+ qty of the same card, and 100% ROI presents itself, I sell half right now, guaranteeing yourself no loss. So with 4, I would sell 2, and be into the other 2 for nothing. That way if the card booms and it worth 80, you make 160. But if the player falls apart and it becomes 0, you don't lose out.

This is all assuming you take into consideration your buy in cost, which is a sunk cost, and many people would say that it shouldn't even come into your consideration. I think it should, and therefore I would sell half, and be into the rest for 0

bradical · Apr 5, 2010

Hedge your bet.

Sell some now, hold some for later.

Buynhisellnlow · Apr 5, 2010

Something I have never understood is looking at an individual player separate from the rest of your inventory, invested capital and margins.

For those of you advocating selling enough to make his money back so he is even; I don't get it. Why would you single out one portion of your inventory to be "even" on. In order to be "even", you'd need to make back the entire sum that you have invested in all of your cards which have been purchased for investment purposes otherwise you are not "free rolling" as you still have a negative capital margin.

Also, the goal should be to maximize your ROI. So weigh the odds of this card reaching X amount against your tolerance for risk of ruin. The place where that intersects should be the sell point. Of course, there may be various sell points with different quantities associated with them as the total capital invested decreases, the tolerance for ROR may increase.

Again though, I don't get the whole "selling X amount of player 1 so that you are free rolling on that individual". One still must account for their total capital invested and the ultimate goal is to maximize culmative ROI. How can you separate one portion of your inventory and investment from the rest?

G $MONEY$ · Apr 5, 2010

Really depends how bad you need the money and if you are a gambling man. Me personally, if i was as sure as you that the cards would again double within the year, i would probably hold most, sell a few.

mredsox89 · Apr 5, 2010

Buynhisellnlow said:
Something I have never understood is looking at an individual player separate from the rest of your inventory, invested capital and margins.

For those of you advocating selling enough to make his money back so he is even; I don't get it. Why would you single out one portion of your inventory to be "even" on. In order to be "even", you'd need to make back the entire sum that you have invested in all of your cards which have been purchased for investment purposes otherwise you are not "free rolling" as you still have a negative capital margin.

Also, the goal should be to maximize your ROI. So weigh the odds of this card reaching X amount against your tolerance for risk of ruin. The place where that intersects should be the sell point. Of course, there may be various sell points with different quantities associated with them as the total capital invested decreases, the tolerance for ROR may increase.

Again though, I don't get the whole "selling X amount of player 1 so that you are free rolling on that individual". One still must account for their total capital invested and the ultimate goal is to maximize culmative ROI. How can you separate one portion of your inventory and investment from the rest?

It's all psychological. If you don't take into account the sunk cost of the purchase, of course the view you presented is what should be done.

Zithy · Apr 5, 2010

Depends on who it is, and if hitter/pitcher(least to me).

If not Stanton or Heyward kind of a hitter, then I'd probably recommend sell part to recoup initial investment, then hold the rest. That way, no matter what, I'm never at a loss and can still reap an increased percentage.

Pitcher for the Royals? Sell completely. Outfielder for the Mets? Split or save.

But for me, that's easier said than done.

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Prospecting/Investing Scenario

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All The Hype

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