[Part 2 of 3] The collectible card game that quietly outperforms stocks and real estate
Part 2: Where fun & games meet profit
Pop culture collectibles are more than fun and games; they’re an untapped opportunity. As we saw in Part 1 of this series, investing in trading cards is a thing! Cards like the Power Nine (the nine most powerful cards in Magic: The Gathering) have outperformed the S&P 500, U.S real estate, gold, and other tangible assets.
MTG investments are particularly intriguing for several reasons:
Collectibles gain their value from nostalgia. In 20 years, today’s kids will be all grown up, with money of their own, and looking to reconnect with their childhood. One way to do that is to buy a piece of it.
But how do you know you have a winner? As an investor, you want collectibles that not only have that emotional and nostalgic appeal, but also stand the test of time. If they have artistic and historical significance, like vintage comics and Magic cards, even better. That’s where relevance comes in.
Over 20 million people in 70 countries play Magic today. Wizards of the Coast continues to innovate in its paper and digital products to engage new and existing players. They’re catching fans wherever they are, whether they play at local game stores, online, or at tournaments around the world.
It’s one of the few trading card games that can be enjoyed over a lifetime by a wide demographic, sustaining perennial interest -- and therefore value -- across multiple generations. The growing fanbase comes not only from the U.S. and Europe, but also increasingly from Latin American and Asian markets.
This wide, multi-channel approach coupled with regular releases have resulted in steady annual revenue growth for Magic, turning it into Hasbro’s best-performing brand. Fox also acquired rights to produce an MTG movie franchise, which could very well lead to prequels, sequels and spinoffs in the footsteps of fantasy epics like Lord of the Rings, Game of Thrones, and Harry Potter.
All of this points to a virtuous cycle of continued relevance, healthy revenue and a thriving fanbase that will be around for years to come.
Prices rise when low supply meets high demand. We’ve just discussed continuing demand. Wizards of the Coast’s Reserved List helps take care of the low supply part of the equation. It’s a social contract Wizards has with their customers that the cards on that list won’t be reprinted. (No, it’s not legally binding, but there would be some major backlash if they removed items or abolished the list.) This helps to preserve the value of rare cards, which should become even more rare over time as they’re lost, damaged, or enter permanent collections.
4. Financial resilience
The global appeal of Magic cards reduces risks associated with local economic downturns. And even then, investment-grade cards and other collectibles are fairly recession-proof. To put it simply: When the economy’s not doing so hot, people look for alternative investments. When the economy’s doing well, they buy more of the things they love. Blue chip collectibles have low correlation to the stock market and financial crises, and aren’t influenced by inflation -- making them an attractive buy with diversification potential.
Tangible assets have been performing particularly well over the last year. Due to recent volatility and uncertainty in securities, people are looking for new places to park their cash. So, while the S&P declined 5%, alternative markets experienced double-digit growth.
There’s also something to be said about the security of owning something physical. Even if the market completely collapses, you’re still left with something of tangible and emotional value.
Toys and pop culture collectibles are relatively accessible if you’re looking to get started in alternative investments -- both in subject matter and in price.
Magic fans have probably been familiar with mythic cards and their value since childhood. The emotional connection and knowledge are already there. Compare that to luxury investments like wine and fine art, which require knowledge that you don’t even start accumulating until well into adulthood. And they may not perform as well as Magic cards anyway.
You can also buy high-performing cards at lower grades for a few hundred or thousand bucks, and still see significant appreciation. And with new shared ownership platforms like Mythic Markets sprouting up, you can spend even less to get in on the action by buying just a piece of an asset.
Think investing in Magic might be in the cards for you? In Part 3 of this series, we discuss the things you should consider before you invest in an expensive asset.