Disclosure: This post was provided as part of a promotional campaign from Mythic Markets.
The author is the CEO and founder of Mythic Markets, an investing platform to buy and sell shares in rare pop culture collectibles.
Jon Saso, CEO of ChannelFireball, is an advisor of Mythic Markets, Inc.
In case you missed it, a BGS 9.5 Alpha Black Lotus recently sold for a whopping $166,100. With that kind of money, you could buy an Andy Warhol or some rental property to diversify your investment portfolio. But times are changing; new opportunities are maturing. Fine art and real estate are extremely expensive to maintain, and have only moderate gains compared to Black Lotus (more on that later). Which begs the question: Isn’t it about time we start taking collectibles like Magic cards more seriously as a viable investment vehicle?
Assuming the rest of your finances are in order, Magic cards can be a legitimate and profitable way to diversify your portfolio. We’ve seen plenty of clues that this is the case. There are already thriving secondary and tertiary markets, indicating high demand and liquidity. Online communities dedicated to speculation and MTG finance are hundreds of thousands strong. There are already tons of resources online if you’re interested in flipping cards for short-term gains.
But we’d like to take things one step further, and make the argument that investment-grade cards are a competitive option next to more traditional investments like gold and real estate. In fact, they can be comparable to (or even exceed) traditional assets in appreciation, stability and liquidity.
Over the last 10 years, the MTG Power Nine have outperformed the S&P 500, U.S. real estate, gold, and other tangible assets.
The numbers speak for themselves. Over the last 10 years:
- U.S. real estate gained 27%
- Gold gained 34% (after peaking and taking a nosedive in 2011)
- S&P 500 gained 75%
Luxury investments generally did a bit better:
- Art gained 64%
- Jewelry gained 125%
- Wine gained 147%
- Coins gained 182%
- Cars gained 289%
And MTG Power Nine? They collectively gained an astounding 417%.
That’s not to say all Magic cards do that well, of course. Certainly you have to be choosy about your investments, like any asset class. We’re specifically looking at blue-chip, investment-grade cards which meet certain criteria for condition, rarity, historical performance, and significance.
MTG investments are particularly intriguing for several reasons:
Collectibles gain their value from nostalgia. In 20 years, today’s kids will be all grown up, with money of their own, and looking to reconnect with their childhood. One way to do that is to buy a piece of it.
But how do you know you have a winner? As an investor, you want collectibles that not only have that emotional and nostalgic appeal, but also stand the test of time. If they have artistic and historical significance, like vintage comics and Magic cards, even better. That’s where relevance comes in.
Over20 million people in 70 countries play Magic today. Wizards of the Coast continues to innovate in its paper and digital products to engage new and existing players. They’re catching fans wherever they are, whether they play at local game stores, online, or at tournaments around the world. It’s one of the few trading card games that can be enjoyed over a lifetime by a wide demographic, sustaining perennial interest–and therefore value–across multiple generations. The growing fanbase comes not only from the U.S. and Europe, but also increasingly from Latin American and Asian markets.
This wide, multi-channel approach coupled with regular releases have resulted in steady annual revenue growth for Magic, turning it into Hasbro’s best-performing brand. Netflix has partnered with Hasbro to produce a show set in the Magic universe, and that could very well lead to prequels, sequels and spinoffs in the footsteps of fantasy epics like Lord of the Rings, Game of Thrones and Harry Potter.
All of this points to a virtuous cycle of continued relevance, healthy revenue and a thriving fanbase that will be around for years to come.
Prices rise when low supply meets high demand. We’ve just discussed continuing demand. Wizards of the Coast’s Reserved List helps take care of the low supply part of the equation. It’s a social contract Wizards has with their customers that the cards on that list won’t be reprinted. (No, it’s not legally binding, but there would be some major backlash if they removed items or abolished the list.) This helps to preserve the value of rare cards, which should become even more rare over time as they’re lost, damaged, or enter permanent collections.
4. Financial resilience
The global appeal of Magic cards reduces risks associated with local economic downturns. And even then, investment-grade cards and other collectibles are fairly recession-proof. To put it simply: When the economy’s not doing so hot, people look for alternative investments. When the economy’s doing well, they buy more of the things they love. Blue chip collectibles have low correlation to the stock market and financial crises, and aren’t influenced by inflation–making them an attractive buy with diversification potential.
Tangible assets have been performing particularly well over the last year. Due to recent volatility and uncertainty in securities, people are looking for new places to park their cash. So, while the S&P declined 5%, alternative markets experienced double-digit growth. There’s also something to be said about the security of owning something physical. Even if the market completely collapses, you’re still left with something of tangible and emotional value.
Toys and pop culture collectibles are relatively accessible if you’re looking to get started in alternative investments–both in subject matter and in price.
Magic fans have probably been familiar with rare cards and their value since childhood. The emotional connection and knowledge are already there. Compare that to luxury investments like wine and fine art, which require knowledge that you don’t even start accumulating until well into adulthood. And they may not perform as well as Magic cards anyway.
You can also buy high-performing cards at lower grades for a few hundred or thousand bucks, and still see significant appreciation. And with new shared ownership platforms sprouting up, you can spend even less to get in on the action by buying just a piece of an asset.
6. Invest in what you love
If you’re here reading this, you’ll probably genuinely enjoy owning that card you’ve had your eye on since forever. At the very least, you can feed your MTG addiction in a way that could make you money. After that, it’s only a matter of time before your significant other stops making fun of you for collecting cards.
Before you invest
Decide whether collectibles fit within your lifestyle and investment strategy. Do your research on the asset and the seller. Think about whether you’re okay with taking on the work and/or fees of buying, selling, storage and maintenance. Depending on the asset’s value, you might look into getting a safe or insurance. Luckily, Magic cards are pretty darn liquid and easy to store compared to other tangible assets.
If you don’t want to deal with the worry of maintenance, don’t have the funds to make a large acquisition outright, or want a more liquid option, you’re also in luck. There are several startups working on fractional ownership in alternative assets, from real estate and tanker ships to fine art and collectibles. Mythic Markets is one that’s specializing in pop culture collectibles, and just launched with an Alpha Black Lotus.
Pop culture collectibles are more than fun and games… they’re an untapped opportunity. What would you invest in if you could?
All content in this article is for informational purposes only, and should not be considered professional financial investment advice. Any action you take upon this information is strictly at your own risk.