By Guest Blogger Doug Rowat
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What do they say about mullets? Business in the front, party in the back? Zoom meetings during the Covid-19 lockdown have become the mullets of 2020: suit and tie for the camera, anything goes below the waist.
I have to confess to my clients on Zoom, this is what’s most often going on below my waist:
But avert your eyes for a moment from the Cro-Magnon-man legs and notice the Air Jordans. Not only are they damn comfortable, but like almost everything else that I’ve purchased in my 23 years or so on Bay Street, there’s an investment angle.
The shoes are a retro version of Michael Jordan’s iconic “Bred” Air Jordans, which were famously banned (so the legend goes) by the NBA because they were in violation of its team uniform policy. Most things ‘Michael Jordan’ are good long-term investments anyways, but I was fortunate to own them just prior to the release of Netflix’s epic Chicago Bulls documentary “The Last Dance”. Below is their appreciation on StockX, a benchmark for the US$2 billion sneaker reseller market (possibly on its way to US$6 billion. Guess when the documentary was released?
Air Jordan Retro 1 High OG “Bred”
Source: StockX; chart reflects price movement since 2016 release date (US dollars)
Alas, if only I’d invested in Jordan’s 1986 Fleer rookie cards, which were going for US$40k-$50k prior to the documentary, but now routinely sell for US$75k-$85k in top condition (check out the ‘completed items’ on eBay and see for yourself). Given his enormous and enduring popularity, I doubt that their value’s peaked.
The coronavirus lockdown combined with the insanely popular Jordan documentary may have marked a tipping point for the entire sports card market and I continue to think that, if approached carefully, sports cards make an excellent alternative investment.
Gary Vaynerchuk is a fascinating American entrepreneur. Fascinating not only because he’s successful, having grown his net worth to more than US$150 million, but also because he makes an enormous effort to engage and educate the public through books and social media, and does it without a hint of elitism (sound familiar?). He’s famously said that he gets as excited by a one-dollar garage sale find that he can turn into eight dollars on eBay as he does from a large business deal. He makes the case for sports cards perfectly in this short interview.
What the video doesn’t show is Vaynerchuk’s further recommendation that you spend at least 80 hours thoroughly researching the market before you make even a single purchase. He also notes that concentration risk is a critical consideration—recognize the risks and don’t buy in a quantity that will derail your financial future. Understand also how the risks vary from one type of alternative investment to the next. Vaynerchuk has suggested that comic books, for instance, are lower risk than sports cards—Iron Man will never break a leg, but an athlete might. However, risks aside, an alternative investment should, above all, be fun.
I’ve covered all these points in my previous blog posts:
There’s nothing wrong with having a small allocation (perhaps 2–3%) of your overall portfolio held in something non-traditional.
Perhaps you collect wine, scotch, antiques, vintage cars or motorcycles, artwork, coins or stamps, vinyl records, classic movie posters, sports memorabilia or Star Wars collectibles (check out the Netflix show The Toys that Made Us—a rare Boba Fett action figure can put your kids through university). What’s important is 1) it’s enjoyable and remains so, and 2) you constantly educate yourself and purchase carefully, thus increasing the odds that your collection actually appreciates.
You also need to be fully aware of the risks of your investment. For instance, I know that sports card companies can easily disrupt the market by producing too much product. This is what happened in the mid-1990s when the sports card market was on life support due to oversupply. I’m also fully aware that fraud and counterfeiting are ongoing problems. But this is true of most other investments as well, including art and wine. Witness the collapse of the legendary New York art gallery Knoedler in 2011 or the uncovering of prolific wine fraudster Rudy Kurniawan in 2012.
So, what do I personally collect? Connor McDavid rookie cards…. He’s clearly lived up to the hype. We’ll see if my investment appreciates in 10 years, but it’ll be a lot more fun than investing in, say, a bond ETF. Don’t misinterpret: bond ETFs are crucial long-term investments, but they certainly don’t get the pulse racing.
Investing can be an anxiety-inducing emotional rollercoaster. But the smaller, non-traditional sleeves of your portfolio shouldn’t be this. They should simply be enjoyable.
Just look at that picture with my Air Jordans, my swim trunks and my hairy legs. Do you think I’m not having a great time?
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.