Investing in big hitters (and pitchers)
TRAVERSE CITY – Jeff Mugerian had a decision to make. Should he sink $5,000 into a mutual fund or put his money where his heart is: Baseball cards?
Mugerian, a local Traverse City business owner, took a hard look at the nearly perfect 1934 Goudey baseball card of Hall of Fame pitcher Dizzy Dean. It was graded 8 by a professional grading service on a scale of 1 to 10, with 10 being gem mint.
"I know there aren't many of these cards in this condition, especially of players like Dizzy Dean," said Mugerian. "I have bought, sold and traded baseball cards for years, so I know more about these values than I do about mutual funds."
So Mugerian made the purchase and put the card away as an investment.
Traverse City broker Larry Avery, who works for Edward Jones, thinks so.
"Over time, a diversified portfolio will outperform the portfolio overweighed in one area," he said. "The most successful mutual fund companies have the best global research. In other words, they do their homework on the companies they invest in. Knowing the market for baseball cards or other memorabilia isn't any different. Whether it is a stock, a bond or a mutual fund, a quality investment is just that."
The key is doing your homework, just as you would in any other investment, according to a man who makes his living buying and selling sports memorabilia.
"I think investing in old sports memorabilia has its place in a portfolio," said Traverse City's Chris Porter, who works for Mastro Auctions, Inc. near Chicago. "But it's not as simple as just putting down your money. You have to invest some energy and time into what you're doing."
The 42-year-old Porter got his accounting degree from Michigan State, worked in that business for 10 years, then decided to get out and pursue his hobby as a business. He moved to Traverse City with Superior Sportscards, then worked for Leland's out of New York and now Mastro's the last three years, all while remaining in Traverse City with his family.
"My job is to acquire cards and memorabilia for our Mastro auctions," he said. "So I see a lot of great items and big money change hands.
"For those people thinking about investing in baseball cards, the one thing I absolutely believe in is the use of grading services," he said. "Don't buy an ungraded card for investment purposes. I think a high-grade card, especially of stars from the Depression Era, are a great investment right now. They are underpriced."
He is referring to cards like Mugerian purchased from the 1930s, a Goudey gum card. During the 1930s and '40s, other companies like Diamond Star, Play Ball and DeLongs produced cards. Before that, tobacco cards were produced at the turn of the century and into the 1920s.
Bowman baseball began producing cards in 1948 and then Topps, which still produces cards today, began production in 1952 and knocked Bowman out of business after 1955.
"There are still people alive who collected cards in the 1930s and '40s," said Porter. "To them, the players from that era were tough, good guys – not the spoiled brats they read about today. There are still collections of those cards out there."
Porter's job is to uncover them and bring them to the open market.
"Baseball cards can go through price fluctuations like anything else," he said. "Some values will hit a plateau, go flat, then spike up again. But star cards that have high professional grades have never had an extended period of loss of value."
Mugerian likes the idea of investing in quality baseball cards and sports memorabilia.
"I think investing in anything that is in demand, vintage and in great condition is a wise idea," he said. "With the stock market, it's always possible in this economy that your money will erode or disappear. With sports memorabilia, there are fewer collectors in a bad economy, but the collectors will never simply vanish and you will always still be physically holding your investments in hand."
Mugerian believes his return on investment is well worth the risk.
"Not only do I see high-end stuff hold its value, but the rate of return can be astronomical," he said. "I remember sitting in a hotel ballroom in New York City during a Leland's auction. A particular baseball was up for sale and the auction house was estimating a $5,000 to $10,000 price. What Leland's didn't know was that two heavy hitters were planning on owning this baseball, including actor Charlie Sheen. After many minutes of spirited bidding, the ball sold for $105,000. With quality vintage items, the sky can be the limit."
But Mugerian, who started collecting cards in 1975, echoes Porter's assessment that people who do their homework have the best shot at making money with their baseball card investments.
"That's not to say that someone who doesn't follow the hobby can't make a buck," he said. "But when you are enjoying what you are learning about, I think you are more astute. The key is to educate yourself." BN