You might think of investing in stocks or mutual funds to save for a big expense, such as a wedding or a house, but what if you just have to turn to a childhood favourite game? 27-year-old Lucas Shaw did not invest in big tech stocks or even crypto to buy a custom engagement ring with three diamonds totalling 3.5 carats on an 18-karat gold band. Instead, he opted for Pokémon cards to afford this luxury.
Meanwhile, 32-year-old Justin Wilson estimates that his collection of 500 Pokémon cards and 100 sealed items is valued at around $100,000, according to a report by The Wall Street Journal.
The charming fictional characters were launched in 1996, when Nintendo introduced Pokémon as a video game. The franchise has since become a worldwide phenomenon with a range of TV shows, films, and games. Currently, prices for the franchise’s trading cards are soaring, triggering a wave of risky speculation and even a crime spree in Japan.
How do Pokémon cards work as an investment?
Every few months, the company brings out new cards, selling them directly on its website and through retailers like Walmart and Target. However, the real excitement lies in the resale market, where traders buy and sell cards, sealed packs, and boxes on social media, eBay, and online trading card marketplace TCGplayer, as well as at physical events like card show expos.
The performance of Pokémon cards depends on many factors such as rarity, the perceived quality of artwork and ratings by third-party authenticators.
Securing a virtually perfect PSA 10 grade from Professional Sports Authenticator, the most widely trusted authenticator, can skyrocket the card’s value. However, even a minor crease or scratch on the surface can cause its price to plummet, the report said.
Pokémon enthusiasts recognise that the value is partly rooted in sentimentality, a major sin for Wall Street’s traditionalists who warn against making investment choices based on feelings rather than facts. They are investing heavily in cards featuring their favourite Pokémon, including Pikachu and Charizard.
“A lot of us are chasing pieces of our childhood,” Matthew Griffin told WSJ.
For Justin Wilson, an advertising manager in Oklahoma City, collecting Pokémon cards was a childhood hobby in the 1990s. He took it up again in 2019, after realising he had “adult money” to spare, and shows no signs of stopping.
“You’ve gotta catch ’em all,” Wilson told WSJ, echoing the franchise’s famous catchphrase.
Meanwhile, a 43-year-old enterprise architect in Arkansas is building up Pokémon card collections, which he compares to investment portfolios for his five children, aged between 9 to 20. The cards are organised in binders and stored in a climate-controlled safe room, alongside other Pokémon merchandise, family treasures, and his watch collection.
He intends to give the binders to his children when they achieve personal milestones, such as getting married or buying a home.
How have Pokémon cards performed?
Pokémon cards do not pay dividends and are not subject to financial regulation. Since 2004, these cards have generated nearly 3,821% in monthly cumulative return, according to the report, citing data from analytics firm Card Ladder, which tracks trading-card values up to August. This outperforms the S&P 500’s 483% rise over the same period. Meta Platforms, one of the Magnificent Seven, has increased by around 1,844% since its initial public offering in 2012.
A platform for investment diversification?
Charlie Pryds, a 28-year-old Danish man, started investing in Pokémon cards this summer. He stumbled upon his childhood collection while on paternity leave with his 6-month-old daughter and is now trying to complete his set.
“I like diversifying my investments. So I’ve got some stocks, I’ve got some crypto, and then, I figured I’d try starting a bit of Pokémon investing as well,” Pryds told WSJ. “If you like risk in your portfolio, I think it’s a good way to go,” he added.
Concerns with Pokémon cards
Critics argue that Pokémon card prices are erratic and subjective. There is no fixed price for the cards, and the number in circulation is uncertain. The market’s recent surge in value has also sparked concerns about a potential bubble, similar to the crash in baseball card prices after mass production in the late 1980s.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
