The Cards Have Arrived

And the PSA graded cards are in. Let's just say I'll probably never be doing this again. How bad my grading forecast was and what my key takeaways are going forward.

Back in late January, I shared the story of my PSA submission. Long story short, I got a bit caught up in the sports card bubble of late 2020 and submitted a couple dozen cards for PSA grading. Card holders who have high grade cards can see the value of those cards multiply by factors of 10 in some cases.

At the time of the January article, it had been almost exactly one year since I mailed in my cards and I still had not received them 3 months ago. Every other childhood fan of sports cards seemingly had the same idea that I did back in Q4-20 which led to a gargantuan flood of grading submissions that dramatically slowed down the grading process for economy tier buyers like myself. Economy means I was able to get the cards graded for the smallest rate possible. But anyone who submitted after me at a higher tier got to move ahead of me in line. Hence, it took over a year to get the cards back and long after the bubble popped.

PSA Submission: One Year Later

I have the cards. And let’s just say I’ll probably never be doing this again. After submitting 23 cards, my haul returned seven 9’s, eleven 8’s, three 7’s, a 5, and a 3. Absolutely zero 10’s. Rats! I’ll actually show you a picture of the 3 and you can tell me if you can figure out why it graded so diabolically low. First though, the Kobe. Yessss, the Kobe. The one that I was convinced was a 10, clearly, was not a 10. That card came back an 8! It’s pictured below (middle). The 8 grade is shown under “NM-MT” on the right side of the slab insert. NM-MT means “near mint to mint” condition.

While I’m very surprised the Kobe card only returned an 8, I’m even more surprised by the 7 that the Paul Pierce Finest rookie returned on the right side of the picture above. Prior to submitting the cards, I built an excel projection sheet that had each card listed with what I believed the cards would grade in a column. I then added columns with average pricing for each card at the projected grade. I projected a 9 for the MJ on the left. I projected 10’s for both the Kobe rookie and the Pierce rookie pictured above.

Clearly, I’m not a trained PSA grader. Truth be told, I missed the mark on 20 of the 23 cards. I hit 3 on the nose. I actually underestimated the return on one of my 9’s. Everything else was overestimated on my part. My total expected value of the cards is currently off by four figures when factoring in both grades and pricing at submission. Ouch.

Biggest Surprise

While I’m surprised my Kobe couldn’t even muster a 9 let alone a 10, the biggest surprise was my Shaq rookie. I expected a 10. I got a 3. One of my highest grades was a Tim Duncan Press Pass that returned a 9. Here are those two cards side by side.

I don’t get it. The corners on the Shaq all look good. There is a clear ding on the bottom left corner of the Duncan. The centering on the Shaq, while not perfect, is absolutely within the PSA’s centering guidelines. There doesn’t appear to be any surface blemish. The image doesn’t appear out of focus. I’m stumped. My best grade and my worst grade side by side and I have no idea what makes the 9 better than the 3. Whatever!

What are these things actually worth at this point?

In the January article, the PSA 10 of my Kobe rookie had collapsed from $1,300 at time of submission to $358 earlier this year. The 10 of that card last sold for $406 in mid march - a 13% increase over the value during my January article. Again, I don’t have a 10. I have an 8. That card last sold for $50 on April 1st. But the general price range of an 8 has been between $30-60 for nearly a year.

The chart above is the price history of my Collector’s Choice Kobe 8. During the bubble they were going for well over $100. The Shaq rookie that graded at a 3 is actually unsellable. It’s literally worth more ungraded because as an ungraded card it always has the prospect that it could grade high. I definitely can’t sell my Shaq or the card that graded at a 5 (a Kevin Garnett Rookie). I’d wager my 7’s probably won’t generate a premium over cost to grade either. That means out of the 23 cards graded, 18 are probably sellable. The total value I could expect if I sold my returned cards would be about $700 at current market prices. That represents about a 75% premium over the all in cost to grade the whole set. Good deal? Not at all.

Here’s why

Back when I sent in my cards for grading, even ungraded cards were selling at ridiculous multiples over current prices. I could have easily sold my Kobe rookie for $50 ungraded back in February of 2021 - if not more. The only difference is I wouldn’t have had the upfront cost of shipping the card to PSA with the others or the $12 per card grade fee. I wouldn’t have had to pay to become a member of PSA just to complete a submission. I have little doubt I could have sold everything I currently have for $700 at minimum ungraded in February of last year. That’s roughly what I could expect now with grades but the majority of the profit from those prospective sales has already been paid to PSA. Simply put, getting the cards graded and choosing the tier that I chose has turned out to be a horrible financial decision.

Moral of the Story

Why am I sharing all of this? Just as I explained in my January piece, there are several lessons here pertaining to principles in investing.

The first is obvious even though it's difficult in the moment; as market participants we have to try really hard to avoid getting sucked into a hype-driven mania.

That’s what I said back in January and it holds up. Another important lesson from this experience is minimizing third party risk. I harp on that one a lot but it’s true. Even with these underwhelming grades I received, I could have sold all of these cards for far more if I had already had them graded and in my possession at the beginning of 2021 when I submitted them.

But the biggest lesson might be to simply invest in what you understand. This is particularly true when investing in “The Culture Trade.” Subjective taste is difficult to price. Just because I had these cards back in February of 2021 when prices peaked didn’t mean I actually understood the market. I had a card get graded a 3 that I projected as a 10. That’s either an incomprehensible bad beat on the grade or a clear indication that my forecasting ability for card grading is not exceptional. Maybe both, but I’m guessing it swings more toward the latter. Point is, I had no edge. Pure and simple. Invest with an edge and you’ll do much better than I did with this PSA grading mess.

Disclosure: I’m not an investment advisor. I merely share what I do and why I do it. You shouldn’t take anything I say as investment advice and always do your own research when making investment decisions. Cryptocurrencies, tokens, STONKs, and digital trinkets could all go to zero. I have no job and I live in my wife’s basement. I’m the last person on the face of the earth who you should listen to for financial advice or life advice. I’m not featured on trustworthy financial news sources like CNBC or Bloomberg and I don’t wear a necktie when I make my trades.