Sunday, March 7th, 2021
Pokémon cards as an investment
Only "fools" invest six figures
By Juliane Kipper
Tens of thousands watch influencers and streamers unwrapping Pokémon cards on social media. Six-figure sums are now being paid for particularly rare collector's items. The enormous price increase has long been attracting professional investors.
Last October, US rapper Logic fulfilled a childhood dream and bought the most expensive Pokémon card in the world to date. The extremely rare collector's item changed hands for a record $ 226,000. The self-confessed Pokémon fan secured a legendary card from 1999 with his bid.
After the sometimes very strong price increases, the collector's items have now also come into the focus of private investors. "Some are now ready to pay significant prices for cards and sets," says Michale Grote from Frankfurt School ntv.de. Five and six-digit sums could hardly be explained by the material or utility value of the card, but solely by the desire to own this card. Because in the past it was mainly children who swapped cards in school playgrounds.
In an Instagram post after the auction, rapper Logic explains why a colorful piece of cardboard is so valuable to him. "I loved Pokémon when I was a kid, but I couldn't afford the cards. I even remember trying to swap groceries for Pokémon cards once," Logic writes. As an adult, he now finally has the opportunity to buy back a piece of something that he loved as a child. "It's not about the material. It's about the experience."
Collecting cards is justified as a hobby. "But you should assume that it costs money, like many other hobbies," says Grote. These highly speculative and uncertain investments are not suitable as an instrument for long-term asset accumulation for several reasons. For private investors, for one thing, this market is not profitable because it is not regulated. Investors are not protected by a corresponding capital market or investor protection law. "First of all, it is difficult to check the intrinsic value of the cards. The rising prices will sooner or later lead to very good forgeries," says Grote. As soon as purchases and sales are made internationally, it would also be difficult to enforce claims in court – for example if the cards were not sent after payment.
On the other hand, private investors must also be aware that prices fluctuate significantly. "There is no guarantee that a price once achieved will be achieved again or even exceeded," says Grote. He is much more likely to see the risk of a speculative bubble. In the sense of a self-fulfilling prophecy, newcomers who hope for rapid increases in value can drive up prices. "As soon as these investors lose their interest, the prices fall again. And quickly, because many investors then protect themselves from further price losses by selling their holdings," says Grote.
For Grote, buying Pokémon cards as an investment is pure speculation. In the case of stocks, you become a co-owner of a productive company, and in the case of bonds, you become a lender to a company or state. "With Pokémon cards – similar to postage stamps, which have no function outside of the collectible universe – the return can only come from price increases." According to Grote, an investment follows the so-called "greater fool" theory: I can make a rash purchase, I just have to find a bigger fool to whom I can sell the item again at an even higher price.
Unclear how long this trend will last
If you still don't want to keep your hands off Pokémon cards, you should at least play it safe and find out about PSA from the "Professional Sports Authenticator" before buying a card. The rating company specializes in historical artefacts from the sports sector, but also appreciates the value of modern Pokémon cards and documents which prices were last paid for the respective cards.
Recently, a number of influencers and streamers fueled the Pokémon trend and brought it to Germany. The 26-year-old Twitch star Trymacs is known, among other things, for opening tons of so-called booster packs online, each with ten random cards. A box full of unopened cards costs him around 1700 euros. An expensive hobby. Even if the streamer, who is actually called Maximilian Stemmler, watches tens of thousands of viewers live on Twitch while he searches in vain for a rainbow-colored Pikachu for almost 13 hours, investors should not enter the competition for valuable cards. "It is unclear how long this trend will last – and this is a major threat to investors," says Grote.
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