How Pokémon Cards Became One of the Best Performing Assets
Move aside Bitcoin, we have a new contender for high risk high return investment.
“Should I sell my Charizard?”
My colleague asked me yesterday, the same day a Pokémon card was auctioned off at $260,000 US dollars. It was a Charizard of certified grade 10.
He knew that I talked much about finance and investing — I once raved about the Tesla rally that I concluded was too risky for my taste — and he wished to hear my take on this new niche market. If he were to liquidate the innocuous piece of cardboard right there and then, he would have earned himself a handsome one-year salary.
“Keep it,” I told him eventually, after two days of careful consideration with his goals and financial condition in mind.
Trading card game
Pokémon, also known as Pocket Monsters in Japan, is a household name for children of the 90s. It’s card game is making an incredible comeback since its hay days in 1999.
What used to be a plaything of the 90s has within months turned into a live streaming sensation that is turning not just the heads of the collectors, but also those of serious investors who otherwise have nothing to do with a children’s card game.
This phenomenon is not only restricted to the Japanese media franchise founded by Nintendo.
Sport cards trading is not only a fun hobby but also a form of alternative investment that is increasingly speculated to beat the stock market. Sub-culture collectables the likes of classic cars, vintage comics, and rare trainers joins the ranks of such alternative speculative investment and trading.
While they may seem all fun and games, selling and trading cards are nonetheless attracting a spike of serious retail interest in recent years.
Boomers who used to be derisive about these sub-cultures are now doing a double take.
As the kid who used to collect these Pokémon English base cards, I can understand the appeal. When the children of the 90s era come of age, a perfect storm was created.
The increased buying power of the consumer demographic coupled with a stagnant market supply that can only deteriorate with age provided the perfect conditions for the meteoritic rise of trading cards. The market size of these cards may never increase, but the prices have nonetheless gone through the roof, as evidently seen in the recent marketing gimmick by Logan Paul.
It helps that Pokémon was a global phenomenon that proved to be a tremendous force in the current generation. Some say that their trading cards are the new “art”.
The popular franchise debuted its widely successful trading card game that exploded in America. The rest is history.
Nintendo continues to make billions of dollars from new releases of Pokémon games and media. The franchise outcompetes most others of its kind in the same period, notwithstanding YuGiOh!, Duel Masters, and Digimon.
Men and women alike grew up with the indelible image of Pikachu and company, the iconic imaginary monster from Pokémon, that captured the collective hearts of more innocent days. In one fell swoop, the shared reminisce of a single brand had brought together an entire generation and melted boundaries.
With the pandemic forcing people home for prolong periods of time, it is no wonder nostalgia for the card is driven to an unprecedentedly heightened level.
The most obvious factor of the rising price is in the limited supply.
First released in 1999, the first set of Pokémon cards were regarded by the anglosphere as the most recognizable edition. This is also known as the Base Set 1st Edition.
Historically, the Base Set 1st edition has been the most sought after and scrutinized set of cards by traders.
They are judged by a third party, such as PSA, based on the following criterias:
- special supply
Ultimately it boils down to rarity and scarcity, and speculation of the cards’ value. With the price climb in recent months reaching more than $600K, Pokémon cards investing is becoming hard to ignore.
It is interesting to note that the scarcity and supply-demand element of card trading is similar to fine art collecting market and the Bitcoin narrative, which makes for a great long term investment that could see increase in value.
As a disclaimer, this is not a financial advise — “Investing is and always will be one’s responsibility.” Anyone from opportunistic investors to diehard collector to gamblers to, of course, children can have a skin in the game if they can afford it. Perhaps even you may want to diversify a small portion of your investments to this high-risk speculative pop culture collectible market.
Would you like a Charizard in your portfolio?
Trading cards are a smart investment. In 2020 alone, a first edition 1999 Charizard card sold for a whopping $$220,574.40 USD at Iconic Auctions.
That is a staggering average yearly increase of nearly $10,000 from its initial value of $3.40 per ten cards, which is the equivalent of 32,352% APY.
The following chart shows the rough total value of the set over time, based on past and present sales data.
By gathering the net annual gains of each entities — some of the largest companies, assets, and some persons by market cap, I compared the performance of each asset, illustrated in a following chart.
NIO : + 1296 %
Tesla : + 723 %
Base Set 1st Edition : + 496%
Zoom : + 435 %
Bitcoin : + 301 %
Apple : + 78.4 %
Amazon : + 70.1 %
Microsoft : + 36.0 %
Facebook : + 35.0 %
Google : + 32.3 %
Gold : + 31.1 %
Elon Musk : + 277 %
Jeff Bezos : + 79.8 %
In 2020, Pokémon trading cards, particularly those of the base set 1st edition, outperformed most major tech companies and assets in terms of percentage annual gain, beating Bitcoin and falling behind only Tesla and Nio, both of which are companies from the supercharged EV industry.
Live streamer sensation
Still think Pokémon is not a thing? Check out these high profile collectors.
CNBC Make It Coverage
The niche market of nostalgia
At this point, you readers must be either be rummaging through your old stores for that binder of Pokémon cards or beating yourself up for throwing away the deck. My condolences to those in the latter case. If it is any consolation, I was woefully short-sighted and did not keep my cards safe from the many years of housekeeping.
If there is one thing that I must takeaway from this craze (that is not money), it is understanding that the sense of nostalgia is a powerful emotion.
Nostalgia has, in the modern times of social media and ever more immersive devices, become a starved commodity. So much so the rich are willing to pay the hundreds of thousand dollar price tag to feel it.
Combine that with the power of shared childhood experience, one gets a potent mix of a highly sought after collectible.
“It is interesting to note that […] card trading is similar to fine art collecting market and the Bitcoin narrative, ”
These niche collectible market shouldn’t be ignored, both from the monetary value standpoint, and the sentimental value standpoint.
If anything, listen to Japanese house decluttering sensation Marie Kondo: “Does this spark joy?” If it does, keep it.
Who knows, it may turn into the next lucrative investment.