The Grading Death Spiral Has Begun

[mc1]

Originally Posted by f2tornado

Feels like the market has stabilized over the past few months. Prices seem more consistent from week to week now. Sure, some UM continues to fade but that's gonna happen with cheaper grading and abundant supply. It all about quality and what people are buying. Registry folks are out in full force buying up what they can get their hands on.

Only UM is fading? Disagree. Modern going back to the 80s also keeps dropping.

[f2tornado]

Originally Posted by rwperu34

Which sport to you follow most closely?

I ask because baseball is down another 20% over your time frame. Some of that would be expected even in a flat market, but this is already the biggest July--->November dip since I started tracking in late 2017.

I think it's possible that football, basketball, and hockey have "stabilized", but that is just the seasonal upswing turning flat instead. If so, that does not portend well for those sports as we head into the new year.

I do more football than any other sport. Most of the baseball I tinker with is 90s to early 00s. I have not noticed any recent drop off on that stuff, at least in the segment I mostly deal with (non prospect PSA 10 slabs that typically fetch under $200). 90s Griffey are selling as well as ever. I also do a lot of Pokémon and there's still some mild price slipping there albeit absolute sales remain strong and highly profitable. Pokémon is goofy insofar as some of the sets like Vivid Voltage and Shining Fates got reprinted to death resulting is slab saturation. I'm kind of shocked the market is still absorbing some of those cards at profitable prices.

I don't deal much with baseball prospects and potential future stars. I've certainly noticed the market for ultra modern rookies of marginal or semi-stars get clobbered in the past year but this happens to some extent all the time. The speculators swoop in, the player doesn't live up to expectations, and poof to the value. Alex Gordon (2006), anyone? The difference between now and 2006 is the massive number of speculative slabs for players like Bo Bichette. He led the league in hits but hasn't captured the imagination with power or even a robust average. There's nowhere to go near term but down.

Originally Posted by mc1

Only UM is fading? Disagree. Modern going back to the 80s also keeps dropping.

Sure, some other stuff is slipping a little but it's really UM that is taking the biggest beating. It's akin to the Dow Jones down whatever percent but a particular sector really weighing down the average. There's going to be a lot of PSA 9 Cavan Biggio cards sitting in dollar boxes.

[BlowoutBuzz]

Not everything here would be bad news in my book. I think grading company landscape could shift dramatically in next year or two.

[ThoseBackPages]

its all very interesting from a collectors point of view

"UM IS DYING!"

well, for must of us, we already have (pre-2021 players name here) Rookie Card, so we've moved on to someone else, or another sport all together

im having more fun now collecting in the NHL realm, then i have in some time

collect long enough, you touch all the bases, and you keep moving

[BlowoutBuzz]

Originally Posted by NotSportsCards

I mostly collect semi vintage stuff 70s and 80s. Im worried that the grading companies will be forced into getting more liberal with giving 10s to encourage submission. Ive seen a little of this already.

Gut feeling says that was happening hard not that long ago. Probably a reason I slowed hard on at least one company -- and wouldn't buy some of the newcomer companies for that exact reason to start.

[BlowoutBuzz]

Originally Posted by f2tornado

The difference between now and 2006 is the massive number of speculative slabs for players like Bo Bichette. He led the league in hits but hasn't captured the imagination with power or even a robust average. There's nowhere to go near term but down.

More than 30,000 PSA slabs of his flagship Topps Rookie Card alone -- and about half are 10s. I'd be a buyer but common sense says that's too many -- and it's 100% more about the slab volume than anything the player does.

[f2tornado]

Originally Posted by ThoseBackPages

"UM IS DYING!"

UM was all most folks were asking about at the last card show I was at while I was scooping up 90s Jordan and Griffey cards for grading from dollar boxes. Prices may be down on the new stuff but people are still clamoring for it. I will confess, that reminds me a lot of the early 90s when everyone was hunting for the latest shiny object while vintage and 80s stuff largely collected dust. We know what happened to the hobby shortly thereafter... But at least for now, the hobby is very strong.

[jjcan]

This is a great time for a collector for all the UM stuff. Prices are going down like it was 2018 single prices.

As the population went up for all the 2021, 2022 singles, The single non graded cards getting much Cheaper to buy prizm, optic, Select BASE rcs and even parallels.

This new stuff is actually affordable outside of the 25%+ mark up of sealed wax MSRP prices.

I hope Single prices drop even more as collectors may need to liquidate for the holidays.

Which hopefully will help in getting nicer cards submissions into PSA that are Non Base bulk rcs.

[49erRCCollector]

I won't pretend to know where the graded market (or market in general) is headed - but I think the OP's general observations are on point. What I have noticed:

- Blue Chip cards still OK, for now.

- Pop's of graded base UM "speculation" cards are ridiculous. You'd think it was in the bank that these players were the next Jordan, Mantle, Brady. Most if not all of them? Not. So that's just a whole lot of nothing. I don't know why'd you overpay now.

- People are pricing graded cards as if it we're mid-Pandemic and the cards just sit there, and will sit there forever. My eBay sales (mostly non-cards) went from me selling 5-10 things a week to almost nothing and I think others are seeing the same, yet the listings keep coming. Lots more auction-style listing right now.

- That post-pandemic "investor" is not long for this world, 99% of them. When they are gone, watch out.

-Thankfully for my PC (I collect, not invest) I zigged when others zagged the last 3 years and got lots of graded vintage for relatively cheap before those prices skyrocketed as well.

- I could be wrong but I suspect the TPGs (and Fanatics, others) really leaned in to a phantom market in terms of sustainability. The short term money was there - the long term money? I'm just not sure.

[NotSportsCards]

Originally Posted by rwperu34

You think it's just beginning? Where have you been for the last 18 months? Here's a post I made in January. Every segment that I follow even casually is down 50% or more from peak (April, 2021). The only exception is unopened. I expect that to follow suit in fairly short order.

One thing I disagree with is the rate of the fire sales increasing. I don't see that, and in fact see it slowing somewhat in the medium term simply because there will be less cards submitted for grading. Or at the very least less cards submitted with the intention of flipping for a profit.

I think the biggest factor for both the short term and the long term is the macroeconomy.

There are two things at play here. 1) Prices 2) Volume.
I have noticed a lack of quality cards being listed. People dont like these prices so they just aren't selling. The fire sales right now are for the UM and Modern PSA 9s. Mainly the stuff that was heavy flipping.

Prices have stabilized somewhat, but volume is still plunging. Also the price leveling out is somewhat deceiving as we are looking at the price decreases relative to their top not vs what you could get 3 months ago.

Obviously the card market is not a monolith. Some things are performing better than others. My assertion is that this contagion will spread to every sector and continue a negative loop for as long as we have too much graded card supply.

[NotSportsCards]

Originally Posted by BlowoutBuzz

Not everything here would be bad news in my book. I think grading company landscape could shift dramatically in next year or two.

This is another concern. Grading will likely be reinvented with technology in the next few years. This effects vintage more than anything. Say you are sitting on a rare PSA 10 and suddenly software is able to grade cards more accurately. Your PSA 10 is now an XYZ 94. You could lose tons of value through no fault of your own. This specifically worries me for a few big cards I own that I dont want to part with, but their value is so wrapped up in being a super low pop Vintage card.

[49erRCCollector]

Originally Posted by NotSportsCards

This is another concern. Grading will likely be reinvented with technology in the next few years. This effects vintage more than anything. Say you are sitting on a rare PSA 10 and suddenly software is able to grade cards more accurately. Your PSA 10 is now an XYZ 94. You could lose tons of value through no fault of your own. This specifically worries me for a few big cards I own that I dont want to part with, but their value is so wrapped up in being a super low pop Vintage card.

I could be wrong, I just don't see technology taking over. Maybe to detect size issues but there's so many variables, so many different coatings, designs, card thicknesses, etc that I just see it causing more problems than it creates.

Let's be honest: if you are buying a PSA 10, SGC 10, BGS 9.5 (or 10) you are buying the slab and label more than the card. That won't change. Some people (and I fall prey to this) want the "best".

If you want your collection to be foolproof just buy raw, low numbered-stuff of superstars. That likely won't go out of style unless the entire hobby goes under.

[imbluestreak23]

I am not worried

[imbluestreak23]

Most people are really bad at this

That's why you see slabs sitting with high price tags. Shame

[49erRCCollector]

Originally Posted by imbluestreak23

Most people are really bad at this

That's why you see slabs sitting with high price tags. Shame

Agree. I know you do this well, many do not.

[ArmyDC]

Originally Posted by NotSportsCards

This is another concern. Grading will likely be reinvented with technology in the next few years. This effects vintage more than anything. Say you are sitting on a rare PSA 10 and suddenly software is able to grade cards more accurately. Your PSA 10 is now an XYZ 94. You could lose tons of value through no fault of your own. This specifically worries me for a few big cards I own that I dont want to part with, but their value is so wrapped up in being a super low pop Vintage card.

I would not be surprised to see one of the grading companies take on restoration like with Comic Book graders..

[ThoseBackPages]

Originally Posted by imbluestreak23

I am not worried

my man!

[49erRCCollector]

Originally Posted by ArmyDC

I would not be surprised to see one of the grading companies take on restoration like with Comic Book graders..

That would be tricky, considering the culture difference in that area between comics and cards.

I'd lean towards no... but I've been wrong before.

[f2tornado]

Originally Posted by imbluestreak23

Most people are really bad at this

That's why you see slabs sitting with high price tags. Shame

Yep. It's not late 2020 anymore. Cards are still selling well for those with realistic expectations. The GOATS are still fetching good money. Popular Pokémon characters and sets are strong. Hot players are fetching good hammers. It's the folks who graded 100 Luis Robert Topps rookies with a 50% gem rate that are getting the hurt right now. This is nothing new for prospects that fizzle to some extent. The main difference today versus 10 years ago is the massive quantity of these cards getting slabbed, and at much higher prices.

Sure, the market has softened a little on the blue chip cards like a 1989 Upper Deck Griffey that was averaging about $2200 for a PSA 10 at this time last year and is now about $1800 today. About a 20% drop year over year, but pretty steady over the last five to six months. The bubble has deflated, particularly on UM prospects, but there is no collapse in the overall fundamentals right now.

[k13]

If you want to play with high pop base go to hockey otherwise numbered cards are the same price as base were.

[NotSportsCards]

Originally Posted by imbluestreak23

Most people are really bad at this

That's why you see slabs sitting with high price tags. Shame

The speed of money in the ecosystem is a huge problem. As people sit on inventory they aren't buying new stuff. This is part of the death spiral. Collectors cannot absorb all of the new stuff.

What starts with fringe stuff will contaminate all graded cards. If theory holds true.

[f2tornado]

Originally Posted by NotSportsCards

The speed of money in the ecosystem is a huge problem.

I do think the PSA shutdown really slowed down the rate of churn in the marketplace. That should be improving as they pump out new subs. We shall see.

[NotSportsCards]

Originally Posted by f2tornado

Yep. It's not late 2020 anymore. Cards are still selling well for those with realistic expectations. The GOATS are still fetching good money. Popular Pokémon characters and sets are strong. Hot players are fetching good hammers. It's the folks who graded 100 Luis Robert Topps rookies with a 50% gem rate that are getting the hurt right now. This is nothing new for prospects that fizzle to some extent. The main difference today versus 10 years ago is the massive quantity of these cards getting slabbed, and at much higher prices.

Sure, the market has softened a little on the blue chip cards like a 1989 Upper Deck Griffey that was averaging about $2200 for a PSA 10 at this time last year and is now about $1800 today. About a 20% drop year over year, but pretty steady over the last five to six months. The bubble has deflated, particularly on UM prospects, but there is no collapse in the overall fundamentals right now.

Price isnt the only way to view contagion. Many are trapped not wanting to sell at a loss. I have seen a big shift from auctions starting at .99 to people using min bid price as a "reserve price".

Looking at purely Iconic cards in their highest grade is probably the last place the death spiral hits.

Theory is that cards that are below the mean average grade is where it starts and then spreads. UM is the easiest to see as you have a mean avg grade of over 9.

[NotSportsCards]

Originally Posted by f2tornado

I do think the PSA shutdown really slowed down the rate of churn in the marketplace. That should be improving as they pump out new subs. We shall see.

You need fresh $$$ to keep the ecosystem humming. A lot of what we have seen this year is money migrating from one part of the hobby to another. All along the way we shed money to ebay and grading fees. If ebay dropped fees by 5% that would be a much bigger deal than any other change.

[edogg]

There is no "death spiral", just market fluctuations. TPGs know everything you guys know and much more. I also don't think the macroeconomic forces (inflation, etc) really matter that much. It will impact things somewhat but you guys are overthinking a bit imho. The big 3 will be fine. I know I have a #@#@#@#@ ton of cards ready to be graded for the right price, there is more slack in the system and money to be had. Imho the biggest issues are PSA mishandling things and inconsistent grades, BGS customer service and PSA and BGS long TAT. Other than that, it's just something that has to naturally run its course.