Beware Mainstream Media: The Final Wave of the Collectibles Cycle

The Wall Street Journal has published an article sharing what everyone reading this already knew: Pokémon cards have been one hell of an investment.

And, along the way, they have committed one of the cardinal sins in the eyes of many Pokémon collectors: they’ve compared the returns of Pokémon cards to that of the S&P 500 index. Gasp.

The Wall Street Journal reports that Pokémon cards have “returned a roughly 3,821% monthly cumulative return since 2004” compared to “the S&P 500’s 483% jump over the same period.” Although the Pokémon community hates anyone making this comparison, the Wall Street Journal had no problem reporting on the facts.

If you have a WSJ subscription, you can read it all here: The Hot Investment With a 3,000% Return? Pokémon Cards.

This is kind of a big deal… Although the article doesn’t suggest that Pokémon cards are a serious investment asset, the fact that Pokémon cards got the attention of an international investing media powerhouse like WSJ still communicates that idea to the public.

Given this new exposure, you might expect to see a new surge in Pokémon card prices, fuelled by new investors motivated by the news of these massive returns.

And, in the short term, I think it’s possible.

The WSJ reaches a massive audience, and many of them probably never considered Pokémon cards an investment. This is new exposure that could bring a number of new investors into the hobby, helping drive up demand (and prices) even further.

The mainstream media attention is already growing: just 2 days after the WSJ article was published, another Pokémon investing article popped up on CBS News. Grabbing even more eyeballs and supporting even more growth in the hobby.

But this growing exposure carries a growing risk: the types of investors who are likely to enter the market because of this article, are unlikely to be in it for the long term. Instead, they’re chasing the returns they read about online, and are far more likely to sell quickly if the returns don’t meet their expectations.

So even if the article is a catalyst for yet another surge in prices, it may be short-lived. And the fallout triggered by short-term investors entering the market in this late stage of the current Boom Phase could instead be the catalyst that brings about the Correction Phase, and a sharp decline in the market.

The sentiment on the subreddit r/PokeInvesting appears to agree:

For me: if you’ve been following my content you’ll know that I’ve personally been selling a considerable part of my collection. I’ve been happy to sell into the hype of the current market.

But, despite parting with nearly $25,000 of my personal collection, have no fear: my remaining portfolio remains many times that figure.

If the market does continue to surge, I may consider selling off even more of my position. But, if these article really do predict the end of the Boom Phase, I’m happy to keep my collection and wait for the next selling opportunity some time in the future.

I’m in this for the long-term.

I believe Pokémon is in the best place it’s ever been, and has a long and successful future ahead of it. And if the products continue to perform like this, there will inevitably be even more mainstream media attention to come.

So, I’m choosing to celebrate these articles. It brings legitimacy to our passion, and will hopefully encourage more people from across the world to participate in this hobby we love so much.

But it’s just a small start, and it may indicate the market is likely to turn sometime soon. Fortunately: the Collectibles Cycle will continue, and the legacy of the past performance of Pokémon cards will only help drive us towards the next Boom Phase, whenever it comes.

And that’s something to look forward to.

As usual…

Thank you so much for reading the TCG Buyers Club newsletter. My name’s Grey, I buy cardboard, and I’m on a mission to make collecting and investing in Pokémon simple.

Cheers 🍻

P.S. This week’s newsletter went out a day later than usual because I was travelling last week. You can expect the usual Tuesday morning delivery going forward. Thanks!