Survey: Sports Cards are one of Ideal Stores of Value in Challenging Economic Times

A study from 2022 held by “Money Made” indicates that sports cards could serve as an exceptional store of value due to their consistent prices during recessions and periods of inflation.

Investors have legitimate concerns about the diminishing value of their assets amidst falling markets and high inflation. Whether funds remain in the stock market or are deposited in bank accounts, they are likely to experience a significant loss in purchasing power this year. Consequently, investors are actively seeking reliable assets that can preserve their value during these economically challenging times.

While cash is the most commonly used store of value, it fails to retain its worth adequately in high inflation environments. In April 2022, the US inflation rate soared to an astonishing 8.3%. At this rate, cash would lose half its value in just nine years. In other words, if you currently have $10,000 in a savings account, assuming the inflation rate remains constant, it would be worth only $5,000 by 2029.
What Sports Cards To Buy with $500

Simultaneously, the stock market has already declined by over 20% year-to-date, further exacerbating the loss of value for invested funds due to high inflation.

Apart from cash, investors often turn to bonds as a safe haven. However, recent data suggests that collectibles such as art, wine, and sports cards might present a more lucrative option. Collectibles have long been utilized by the wealthy as investment vehicles and stores of value. In recent times, these assets have become accessible to everyday investors. Nevertheless, most investors lack knowledge about their role within an investment portfolio.

This knowledge gap exists because it has been challenging to gauge the performance of collectibles like cards against more conventional investment vehicles such as stocks and bonds due to the absence of centralized data. Thanks to PWCC, the largest trading card marketplace globally, we can now examine the precise performance of sports cards as an investment vehicle.

PWCC has developed various indices that track the performance of high-quality sports cards over the past fifteen years. By utilizing the PWCC 500, we explored how sports cards have functioned as a store of value during market crashes and inflationary periods in recent years. Here’s what we discovered:

Performance of cards during stock market crashes Preserving wealth becomes one of the greatest challenges for investors when the stock market experiences a downturn. Finding a reliable store of value during a recession is difficult, and it becomes even more challenging when coupled with other economic hardships.

As observed during the COVID-19 recession in 2020, the global pandemic negatively impacted most major industries, causing assets that typically perform well during market downturns to lose significant value. This trend has continued during the stock market crash in 2022, with nearly every major asset class suffering losses due to market dips and high inflation.

In contrast, cards have consistently maintained their value during both market crashes. In fact, our study on the top-performing assets during three recent market crashes revealed that sports cards emerged as one of the best stores of value, surpassing traditional safe havens like bonds and cash. We examined the stock market crash at the end of 2018, the COVID-19 recession, and the current market decline during the first half of 2022. Throughout the periods when the S&P 500 experienced declines, sports cards retained their value despite stock market declines as severe as 20%.

When averaged across all three recent market crashes, sports cards yielded a return of 0.03%. In comparison, bonds returned an average of -0.15%.

While the difference may seem small, it is worth noting that sports cards remained stable during all three crashes, whereas bonds exhibited significant volatility. Bonds experienced a gain of just over 6% during the COVID-19 recession but incurred a loss of nearly 10% during the initial five months of 2022. A reliable store of value should offer a stable and predictable value when needed, and sports cards have performed better than bonds in recent years.

Zooming out to examine the performance of cards over more extended periods of economic instability, their performance becomes even more impressive.

For instance, while the stock market eventually recovered in 2020, the entire year proved financially challenging for most Americans. The stock market achieved overall gains of 15%, an impressive feat. However, sports cards outperformed the S&P 500, delivering a return of 61% throughout 2020. Gold, often considered a popular store of value, yielded just over 16%, while bonds returned 4.4%.

In other words, sports cards not only provide a stable store of value during market crashes but also possess the potential for accelerated growth once the market begins to recover. Over extended periods of time, sports cards have generated substantial returns in recent years, surpassing other store of value assets and even the S&P 500. With a total return of 218% over the past five years, sports cards have outperformed most alternative asset classes, except for cryptocurrency, which carries significantly higher volatility than sports cards.

In high inflation environments, sports cards have generally maintained or increased in value. They have outperformed cash during all four inflationary periods and surpassed bonds during the two most recent inflationary periods. Sports cards even outperformed the stock market during two out of the four inflationary periods since 2008.

It is worth noting that cards have become increasingly accessible as an investment option in recent years, which may explain their exceptional performance in 2021 and 2022.

When averaged across all four inflationary periods, cards significantly outperform both stocks and bonds. While cash lost an average of 5% of its value during these periods, cards experienced a gain of 24%.

Sports cards during periods of inflation

Year	Inflation rate	Sports cards	S&P 500	Bonds
2008	3.8%	1%	-37%	18%
2011	3.2%	0%	2.11%	16%
2021	4.7%	95%	22%	-5%
2022 (Jan.-May)	8.2%	0%	-13.5%	-10%
Average	5%	24%	-6.6%	4.75%

This data suggests that sports cards could serve as an excellent hedge against inflation. In late 2021, the US dollar was reported to be losing 1% of its value every 30 days, and the inflation rate reached 40-year record highs by 2022, surpassing 8%. Coupled with the S&P 500’s decline, even assets offering a stable price, or 0% growth, hold immense value in the current climate.

Given their physical nature and the emotional value associated with them, sports cards prove to be a reliable store of value during periods of economic uncertainty. While investors may readily sell off stocks and cryptocurrencies at the first sign of market distress, they are unlikely to quickly liquidate their sports card collections. Investors form attachments to cards that extend beyond market performance, which likely contributes to their impressive price stability.