The Grading Death Spiral Has Begun

[NotSportsCards]

Ive been contemplating this concept for a long time. And I had hope it does not turn out to be true, but it is more and more likely each day.


Pandemic Made Grading Scarce which fueled the boom

• Macroeconomics change causing market slow down
• Grading companies increased capacity
• Market is getting flooded with graded cards as demand decreases
• Flippers disappearing means that collectors need to absorb more of the inventory fresh form grading
• The amount of inventory keeps growing but the amount collectors can absorb is shrinking

Collectors $ are shrinking because of macroeconomic changes

• Inflation
• Equity markets
• Real estate

Hybrid Collector/Flippers are shrinking the most as they used to use money made from cards to buy new ones.

• Now they are losing money and stuck with cards that they would have to fire sale
• This makes cards that are borderline worth grading nosedive in value. Example are PSA 9s for modern era.
• Remember what is ultra modern soon shifts into modern and then vintage.

Grading price decreases

• Cards have an inherent value relative to the cost of grading and amount of time required to performs task
• The grading companies need to continue to lower cost to encourage people to continue to submit.
• If people arent creating a profit from grading this means more money is being pulled out of the hobby into the pockets of grading companies.

The whole process repeats.

I see no way of avoiding this. For the most part we are seeing a lot of this happen already, but the speed of the fire sales will increase. What started as "base is over saturated" will extend to every part of the hobby.

I love my cards and the collector in me wont sell. The businessman in me thinks selling all graded cards I can live without is the best move.

Welcome other points of view.

[jtclockwork]

Personally, I am waiting for grading prices to crater before sending anything else in. I don't see the economy getting much better in the short term, but I don't think the bad times will last forever either. There will be another boom at some point in time. Luckily, this is my hobby, not my business, so I don't need to sell unless it makes sense to do so.

[NotSportsCards]

Originally Posted by jtclockwork

Personally, I am waiting for grading prices to crater before sending anything else in. I don't see the economy getting much better in the short term, but I don't think the bad times will last forever either. There will be another boom at some point in time. Luckily, this is my hobby, not my business, so I don't need to sell unless it makes sense to do so.

I think is the right approach. Right now this mostly effects graded cards where there is an over supply.

If you are in it for the long haul there will be plenty of opportunities.

[DetroitTN]

Originally Posted by jtclockwork

Personally, I am waiting for grading prices to crater before sending anything else in. I don't see the economy getting much better in the short term, but I don't think the bad times will last forever either. There will be another boom at some point in time. Luckily, this is my hobby, not my business, so I don't need to sell unless it makes sense to do so.

I agree with this. I wasn't collecting when prices were low and COVID didn't exist (aside from my older cards I never got rid of and occasional ebay impulse buys, but low "value" stuff), so I want to collect and grade for myself. I can wait for the prices to crater, and I hope they do. Some people on here only buy expensive stuff to wave in everyone's faces. I'm not that level of collector, and the prices need to lower to my level for me to be involved with grading

[jjcan]

I was at the Del Mar Union Marketplace show this weekend, and there were NO LINES at all for both sites. Maybe 5-6 people waiting at a time at most. Very different from the Burbank show.

Drop off lines for PSA were non existent and the computers banks were not that busy, No Lines at all.

Beckett had RCR and that line was not even that long, and the booth had their low pricing in place the whole weekend.

TAG was also set up, and it was not that busy. They had a huge display thought with like 10 people manning it.

You could buy a card and walk over to the PSA/Beckett booth and drop if off for grading in under 10 minutes.

The longest line at the show was for the people waiting for their food from the lunch trucks....

[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.

[NotSportsCards]

Originally Posted by DetroitTN

I agree with this. I wasn't collecting when prices were low and COVID didn't exist (aside from my older cards I never got rid of and occasional ebay impulse buys, but low "value" stuff), so I want to collect and grade for myself. I can wait for the prices to crater, and I hope they do. Some people on here only buy expensive stuff to wave in everyone's faces. I'm not that level of collector, and the prices need to lower to my level for me to be involved with grading

Im same as. Kind of getting back into the hobby during covid. Grading was foreign to me. At first all I wanted was to collect the card and didnt care much about the grade as long as it had eye appeal. I got sucked in as I started to buy and sell to augment my hobby purchases.

Now I may just give up on grading as it some what taints the purity of collecting. Very conflicted.

[clocsta2323]

Originally Posted by NotSportsCards

Ive been contemplating this concept for a long time. And I had hope it does not turn out to be true, but it is more and more likely each day.


Pandemic Made Grading Scarce which fueled the boom

• Macroeconomics change causing market slow down
• Grading companies increased capacity
• Market is getting flooded with graded cards as demand decreases
• Flippers disappearing means that collectors need to absorb more of the inventory fresh form grading
• The amount of inventory keeps growing but the amount collectors can absorb is shrinking

Collectors $ are shrinking because of macroeconomic changes

• Inflation
• Equity markets
• Real estate

Hybrid Collector/Flippers are shrinking the most as they used to use money made from cards to buy new ones.

• Now they are losing money and stuck with cards that they would have to fire sale
• This makes cards that are borderline worth grading nosedive in value. Example are PSA 9s for modern era.
• Remember what is ultra modern soon shifts into modern and then vintage.

Grading price decreases

• Cards have an inherent value relative to the cost of grading and amount of time required to performs task
• The grading companies need to continue to lower cost to encourage people to continue to submit.
• If people arent creating a profit from grading this means more money is being pulled out of the hobby into the pockets of grading companies.

The whole process repeats.

I see no way of avoiding this. For the most part we are seeing a lot of this happen already, but the speed of the fire sales will increase. What started as "base is over saturated" will extend to every part of the hobby.

I love my cards and the collector in me wont sell. The businessman in me thinks selling all graded cards I can live without is the best move.

Welcome other points of view.

Your presentation is the cleanest I've seen from the other 1000 posts/threads saying exactly what you have.

[nabzy28]

Unless someone has other info., as far as I've heard, the grading companies have already laid people off. Probably why a bunch of PSA orders have just died in QA for the last 6+ weeks.

[NotSportsCards]

Thanks, I appreciate it. Going to put a youtube video out on it. Its been bugging me for a while. Its a complex topic that can easily be shrugged off, but its important for me personally to understand so I can enjoy the hobby and avoid losing money.

[NotSportsCards]

Originally Posted by nabzy28

Unless someone has other info., as far as I've heard, the grading companies have already laid people off. Probably why a bunch of PSA orders have just died in QA for the last 6+ weeks.

This makes sense, Im not on the inside so I have not heard this. Wonder how long this takes to impact supply as the gemrate data is looking like over a million cards from PSA again this month.

[mc1]

Originally Posted by nabzy28

Unless someone has other info., as far as I've heard, the grading companies have already laid people off. Probably why a bunch of PSA orders have just died in QA for the last 6+ weeks.

Orders are held up at QA because cards are being reviewed, bumped down and cracked out. Incredibly stupid but it happens.

[CheapThief]

Originally Posted by mc1

Orders are held up at QA because cards are being reviewed, bumped down and cracked out. Incredibly stupid but it happens.

That, and it wouldn't surprise me if they don't pull some orders in QA to do some pilot testing with their machine learning grading software.

It would make sense that all that was happening were manual grade reviews if the QA delays were a week long or so, but we're seeing some that are 2+ months, which suggests there's more going on.

[mc1]

Originally Posted by CheapThief

That, and it wouldn't surprise me if they don't pull some orders in QA to do some pilot testing with their machine learning grading software.

It would make sense that all that was happening were manual grade reviews if the QA delays were a week long or so, but we're seeing some that are 2+ months, which suggests there's more going on.

2 months plus? Then they either lost your cards or damaged some of them. Or maybe theyre shipping back and forth to NJ.

[nabzy28]

Originally Posted by mc1

2 months plus? Then they either lost your cards or damaged some of them. Or maybe theyre shipping back and forth to NJ.

Yep. Got 2 that have just stalled out in QA1. One has been there since 8/29 and the other since 8/31.

[anusinha]

Originally Posted by clocsta2323

Your presentation is the cleanest I've seen from the other 1000 posts/threads saying exactly what you have.

Agree, this has been stated 100 times in the last year but this is the nicest formatting out of all of them.

I dont think the economy gets too much worse from here (depending on what happens in early November), but we probably trudge around the bottom for a bit before things pick up. UM cards are pretty dead, you can barely give them away. Even formerly in demand things like prizm wax which people used to shoot each other over, just sits on the shelf now. As such, grading prices have a way to fall.

[larry25]

Originally Posted by mc1

Orders are held up at QA because cards are being reviewed, bumped down and cracked out. Incredibly stupid but it happens.

I have no doubt that this is happening. I have had several valuable vintage 1970s Panini soccer and F1 cards that looked like 8s or 9s or possibly even 10s to me that were returned inside the stupid plastic insert they've been using, as if the cards were already graded and slabbed, and then they were cracked out last minute and returned because, why?... because eff this guy, we're not going to make his $1,000 Pele or Nicki Lauda sticker worth $10,000 simply by doing our job. It's beyond aggravating. You can look at the corners and edges of 1970s Panini stickers and clearly, obviously see natural edges. A five year old could tell the difference between one that's natural or one that's been cut. They didn't even say exactly what the alteration is. My feeling is the cards just looked too nice, so off to SGC they go, and I'm sure they will grade. PSA just takes my $200 and gives me no information. It's such a fraud it's unreal.

[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.

[discodanman45]

I am not worried about the majority of my cards. If I have a $200 card and it is still worth over $100 cracked out of the slab, those cards will retain their value. I would be worried if I have a $200 graded card that is worth $5 when cracked out of the slab. I also collect mainly baseball, which does not have as much volatility compared to other sports. Everyone kept on pumping soccer, basketball, Formula 1, etc... that are more popular sports than baseball. However, popularity of a sport doesn't make people collect cardboard. Baseball is king for collectors and if you don't go prospect hunting, it is the safest sport to collect.

Right now, for probably 70% of people that submit cards to grading companies, their order is a negative ROI. Unless you really know how to grade and what to submit, grading is feeding money away from the hobby into the pockets of PSA/SGC/CSG/BGS and all the other "AI" companies. 30% of veteran hobbyists and graders can still make money from PSA, but the average collector thinks pack fresh is gem mint.

If I ever buy a graded card these days, I always ask myself how much the card would be worth if I cracked it out? If the number is not 50% plus of its graded value, I pass on the card.

[coltsfan23]

The value proposition for grading is still really poor on the low end side of the market. Not only does price need to come back down to $10 levels for bulk, but turnaround times are still atrocious for every level of service. I would send in plenty more cards at $20/card or even $50/card if I had any assurance I would get them back reasonably quickly. But in an environment where market values continue to decline and there is no guarantee what grade you'll end up with, it's not really worth the risk or headache a lot of the time.

[BoKnowsCards]

The prices of graded cards have been artificially high since the Great Boom of early 2021 due to several reasons:
1) The Federal Reserve printing trillions of dollars
2) COVID stimulus money being given out like candy
3) The 2021 Great Boom that caused PSA to basically shut down all of services that were affordable for 1.5 years. This meant less supply, so if you had graded PSA cards in 2021 and early 2022, you had plastic gold.

Fast forward to late 2022. The economy has tanked (higher interest rates, stock market tanking, inflation at 40 year highs, global economic meltdowns), so people have less money to spend. PSA has the capacity to grade 1 million cards a month and prices are at $18 - this means an insane amount of more supply on the market. Simple Economics 101 of supply and demand.

I do notice times of the year when I make the most money. Tax refund season - people piss away their tax refunds on cards. Corporate bonus money after the end of the calendar year - same as tax refunds. So I'm curious to see what January 2023 to April 2023 can do for sales and the value of graded cards. Cards are like the stock market, the values go up and down. It tends to be based on the economy and season.

Overall, I've still made money on every single batch of cards submitted to PSA, so I'm going to continue until that trend stops. Choosing what you submit is important to making profit. When I want a good laugh, I go on Ebay to see the absolute garbage people are getting graded.

[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.

[rwperu34]

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.

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.

[alphaomegas]

Psa died when they started pop controlling cards. Then was buried when they don’t give out 10’s anymore even though card is perfect. Or give cards likes Brady psa 2 etc. grading companies entire scam fraud. Should be class action lawsuit

Btw market has a ways to go to continue to fall we be back to pre covid prices unless you hit lottery card .00001%. Only ones who wins is manufactures monopoly that siphons money from hobby. Let’s see should I spend 1k on a box and get 50$ in return value or buy 1k worth of cards. This is how the hobby dies.

Another pro tip. 33% or more Americans live paycheck to paycheck. Only people buying cards now are people in debt with credit cards or those 0% interest for so many months.
I made a killin off that. Flipping nation treasures etc back in 2020-2021. Glad sold out now buying up undervalue cards.

[miscus555]

I haven’t gotten a card graded since January 2020. That was with PSA. I really wanted to send some more selected cards in but

1-couldn’t decide who was best to grade with as there was too many topics arising of pop control tactics, player bias, etc
2-pandemic came and so did the extremely long backlog. I wasn’t going to spend money for cards that I wouldn’t see for 2 years.
3-I wasn’t desperate because I only own or collect proven or players who’s careers have already finished. I also haven’t put a single dime into the ultra modern hobby since 2019.

So my ready to grade cards still sit until grading costs and the player bias goes down.

I appreciate everything that happened in the last 2 years in the hobby because even with all the ripple effects that collectors, businesses, and grading companies had to deal with, it all figured itself out and it will continue to figure itself out. I see everything as a positive because the last 2 years brought tons of people into the hobby. It’s changed the hobby for the better once the negative areas were themselves out. Because after everything is level again, their will be more value in certain cards than there was and much more collectors than there was in 2019.

Yeah some people bought into all this and got burnt extremely bad. Some might even be in debt. But some people who got themselves in that position maybe didn’t think things through while going all in. You can never go all in and you gotta maintain your normal job and employment. You might make tons on money at on point but you have to be reasonable with things that nothing is a sure thing. Some got blinded by greed and thought the train would keep riding for years. I think we all wish it did but it wasn’t designed to do so. The train needs to stop once in awhile. Even the grading companies who ramped up employment 5-10 times their former size will soon probably lay off a bunch of employees. It’s an up and down market and if some people are swimming in cards right now because instead of working, instead of saving money that the government gave you for unemployment, you decided to camp out all day at retail stores and fight over deliveries…..it’s a live and learn lesson in life and you always gotta have a plan b and even a c.