Insider Trading : Card Sharks Capitalizing on Frenzy for Huge Profits
You’re 65 and thinking about retirement next year. You have acquired a small and traditional investment portfolio, including stocks, bonds, precious metals, a savings account, and, barring catastrophic illness, are counting on getting by for the rest of your life in a double-wide mobile home close to the beach in Oxnard.
So how, you wonder, did your neighbor retire two years ago at the age of 45 with enough money to spend the rest of his life ordering one frosty chi-chi after another on a white-sand beach in Tahiti while having suntan oil rubbed on his back by blond triplets named Gina, Sheena and Dina?
Well, silly, while you were busy collecting Compaq Computer stock, gold certificates and earning single-digit percentage points on a savings account, your buddy Lou across the hedge was gobbling up every Mickey Mantle baseball card he could get his hands on. And Sandy Koufax cards. And Willie Mays cards.
Now, those investments have ballooned 500% and he’s lining up those little colored umbrellas in the warm sand as the South Pacific laps at his toes. Meanwhile, you’re worried about living to be 85 and facing serious financial trouble.
This, at least, is the picture painted by Will Hertzberg of Studio City, who says he chucked all of his stocks and bonds years ago and invested every penny he had in baseball cards and now sits atop an empire of the little pictures and batting averages. He says he may have as many as one million cards, many worth $500, $600 and $700 each.
“Baseball cards have outperformed every other investment vehicle in the country for the last four years,” Hertzberg said. “Yet the inner workings of the industry remain a mystery to most investors. While many people are content with earning 9% in a certificate of deposit, our investors in baseball card portfolios have been realizing annualized gains of about 30%.”
Before we go any further, it should be confirmed here that we are talking about regular baseball cards. The ones you gathered as a kid and spent long hours flinging against a wall with your buddies. The ones that became leaners. The same cards you fastened to your bike sprocket with a clothespin to hit the spokes and make that roar that so impressed the 9-year-old redheaded girl up the street.
It probably won’t do much for your spirits, but some of those cards that you so defaced, the cards that were stashed in shoe boxes and eventually tossed into the garbage by your mother as you grew older, would be worth a really big chunk of cash today.
A Roger Maris rookie card is worth $100. Mickey Mantle’s rookie card will bring a cool $175. A Nolan Ryan rookie card can bring as much as $750. A Sandy Koufax rookie card will bring offers of as much as $1,000.
And just wait until these guys go to that big diamond in the sky!
“Dead Hall of Famers bring really top money,” Hertzberg said.
And as if Hertzberg hasn’t accumulated enough wealth simply by buying nearly a million cards and watching their value skyrocket during the card-collecting frenzy that began perhaps five years ago, he also is cashing in through his company, Hertzberg and Associates, in which he uses his expertise to put together card-investment portfolios for clients. And, he also conducts seminars on the passion of collecting cards.
During a recent stop at Learning Tree University in Chatsworth, Hertzberg held an audience of 13 people--at $75 each--spellbound for nearly six hours. Only one of the 13 was a person just getting started in collecting. The other 12 long ago had become confirmed card-gathering loons.
Too harsh a word?
Perhaps not.
Meet, for example, Craig Holtz. Attorney at Law. Know what kind of money lawyers earn? Well, not enough, apparently. He once took out a loan from a bank to buy baseball cards.
Or the man sitting next to him at the seminar, Gary But Don’t Use My Last Name Or Someone Will Break Into My House And Steal All My Baseball Cards. Well, that’s how he pronounced his last name. This gentleman, let’s just call him Mr. Cards, said that he spends upward of $50,000 a year on baseball cards and has never sold one.
“It’s an obsession, no doubt about it,” said Mr. Cards. “I spend at least three hours every day with the cards, and about six hours each day of the weekend. I’m 32 years old now, and I want to be able to retire, based on my income from baseball cards, in three years.”
Retire? Oh, don’t you just wonder what he’d possibly do with all that free time?
“It happens to a lot of people,” Hertzberg said. “Baseball cards can take over your life.”
You need not have saved baseball cards since the 1950s and 60s to join this fanatic following, either. Recently issued cards have skyrocketed in value too. A full set of 1984 cards in their wax boxes manufactured by the Donruss Company of Memphis sold new for $240. Today, the same cards are valued at $4,000, according to the most recent baseball card collector magazines. And a full set of 1989 cards made by the Upper Deck Company of Yorba Linda, which cost $800 off the shelf, are worth $1,600 today.
Many collectors, Hertzberg said, have become amazingly wealthy by investing in the right cards. But people do make mistakes.
“A friend here in the Valley watched Don Mattingly early in his rookie season in 1984 and thought he might become a real good one,” Hertzberg said. “Mattingly cards at the time could be bought for 15 cents each. So this guy bought 1,600 of them. Two years ago, he watched those cards go up to $3.50 each, and he was overjoyed. He unloaded every one of them.
“Today, though, a Don Mattingly rookie card is worth about $25. This friend kicks himself about once each day.”
The wave has hit the country hard. Hertzberg estimates that there are two million hard-core card collectors in the nation. At a recent card show in San Francisco, more than 40,000 people paid admission.
Not all collectors become rich. Like investors in any speculative market, some become poor.
“A lot of people bought heavily into Pete Incaviglia cards during his rookie season, when he was hot,” Hertzberg said. “They cost $1.50 back then. Today, those cards are worth about 15 cents each.”
And, this might help the Dodgers save a bit of money in their ongoing negotiations with Fernando Valenzuela: His card peaked two years ago at $4.
But even the losers come back to collecting, Hertzberg said. The draw is overpowering for some, which explains this bumper sticker that the hardest-hit collectors proudly paste to their cars:
My wife says if I buy one more baseball card, she’s going to leave me. And boy, am I going to miss her.
