Pokémon card values are soaring because grown adults discovered they can assign numerical importance to pieces of cardboard from their childhood. The market now hinges on four factors: grading, scarcity, recent sales, and counterfeits. Notice how three of those four exist solely because collectors created them.
Grading means you mail your Charizard to a company that seals it in plastic and writes a number on it. This costs money. The number determines whether your card is worth $50 or $5,000. You cannot touch the card anymore. You own trapped cardboard. Congratulations.
Scarcity works differently here than in actual markets. A first-edition holographic card from 1999 is rare because kids rode bikes over them and spilled Mountain Dew on them during recess. Surviving cards are worth a fortune. The investment thesis is that ten-year-olds in 1999 were careless.
Recent sales matter because Pokémon cards have no cash flows, no dividends, and no earnings reports. Price discovery happens when someone overpays at auction and every other collector immediately believes their collection quintupled in value. This is called comparable analysis in real estate and delusion in every other context.
Counterfeits flood the market because printing fake Pokémon cards is easier than printing fake money and carries a lighter sentence. Collectors now need magnifying glasses and UV lights to verify their purchases. They are doing forensic analysis on Pikachu.
The article suggests collectors should "know before buying or selling" but the only thing worth knowing is that speculating on children's trading cards is not an asset class. It is a hobby that got a Bloomberg terminal.
Technical analysis cannot help here. There is no chart pattern that predicts when adults will stop paying mortgage-level money for holographic Blastoise. The bid-ask spread is just nostalgia versus rent.
Photo by Erik Mclean on Unsplash
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