Commerce and Margins: Your Marginal Approach to Investing

There are two approaches to flipping, one for the short term and the other for

the long term. With the short-term flips, position yourself as a flipper, where system is unfair,

and you may become more receptive to the community at large – make sure they know who

you are and let other collectors know what you want form your end of the bargain.

For the long-term flip, one needs to take into consideration the ever-evolving nature of the

game we all love… the players, the organizations and the ever-so-fickle fans. The long-term

flip relies on the volatile marketplace, entailing player performances, their successes &

failures and finally the fluctuating of their cards – market volatility. One needs to look ahead

and have foresight surrounding this mode of investments had.

Art Vs Commerce

Again, as is mentioned in issue one of our free monthly newsletter, retailers are the ones who

are going to earn big, all while leaving the smaller players in the dust, as the next couple of

years take shape. This is mostly because a lot of older stars are on the tail end of their careers and investments surrounding their playing days will leave their cards stagnant – fixed price values are sure to take effect. The other reason for this happening is that there are new stars awaiting to emerge and rise form the ashes of the residual left-over of the NBA brand of basketball.

The question here is how are we going to play the investment game while this is happening – the market will remain stagnant and flip short or long term will prove our efforts to be futile.

The art of investing (short or long term) is in fact and art and if one can ride their skills and

talents through this rough terrain, then well done and all the best to them. However, just like

the retailers, who will be intent on making extra money with box breaks and covering

marginal deficits with their inventory sales, we as investors will be looking to do one of two

things. Keeping the flip an art-form is one method and an exercise in gambling for our bread

or think to commerce where margins and cashflow will, in our eyes, become the more stable

of the two approaches. You know why? Because we just can’t get enough of the hobby and

spending more and more money on these luxury items, we call sports cards.

The final note surrounding taking on a different stance when it comes down to staying in the

game for the next couple of years is the proper use of commerce.

The Golden Trinity of Investments

The first thing to note is that when playing the retail game, one needs to take into account the three means of making money with investments… a slight variation from retail but for the

sake of argument we shall it that just the same.

We have to make sure that our margins need to be higher than the cost of operation. Costs are minimal when thinking of this game as a hobby. All you need is a laptop, a stable internet connection and a spreadsheet. But before we venture further let’s consider the three types of investments surrounding sports cards investing; Equity Financing; Unit Trust; and Capital Gains.

Once familiar one may assume that all three are facets of the same thing. When an industry

leader decides to drop stocks surrounding a player and his assets, like the time when JA

Morant had hurt his ankle and was out for the rest of the season, perhaps the best thing to do is to pick them all up for cheap or hold. Once he got back on his feet the prices on comps began to stabilize and slowly but surely began to climb again. There are a number of ways why a player’s stock could drop, such as Jayson Tatum and the Boston Celtics losing to theMiami Heat in the Conference Finals in 7 games, where Tatum, due to fatigue,

underperformed. But this is capital gains. Large quantities of stock being traded at once.

Again, capital is a good way to keep on top of fluctuating prices based on a player and his

team’s performance.

Trade Positioning: Pick Your Style of Trade

Personally, I use 3 accounts to moderate the money I invest in the hobby. Account 1 is used

for expenditures and cost of operation; Account 2 is used for my marginal profits and in

essence needs to be replenished more often than my expenditures in Account 1. Account 3 is used for my net profits and based on a 15% marginal profit approach to investments, I tend to, at least try to put the money I invest back into account 2 for further investment into new inventory.

For example, I begin the month with MYR800.00 in my expenditures account and roughly

MYR400.00 in account two after my net profits have been forfeited to Account 3. And there

it is my money for the rest of the month. Account 3 remains untouched and for the most part

my wages from my two jobs remains in account 3 for general use, so as not to confuse the

situation, I tend not to spend on very much, outside of the hypothetical MYR400.00 in my

investment account… account 2.

If you are considering doing the same? Good for you, if the tedium of having to open extra

accounts takes you to a place leaving you a little uncomfortable surrounding how serious you

take this hobby, then `fret not, this is only a solution and an example as to how to survive the

onslaught of a stagnant marketplace.

Let’s put it this way, getting organized is a good thing and one tends not to overspend of

inventory when one is trading. The key however to success is to make sure your cashflow is

up and your margins can otherwise replenish your inventory for further investment. As is

said, to make a sizable profit one must keep his marginal returns higher than cost. That way

further investment is always possible.

Money does always need to be put in and cashflow is the key to success to this scenario, so

fret not, as has been stipulated in #1 money begets more money. It is good for everyone

involved in the hobby, which brings me to my last point.

Equity Financing, make sure that MYR800/month is going into your expenditures so that one

can invest further into the hobby. This way you have MYR1,200.00 at your disposal for most

of what you need to keep going.

Also, as a side note, for the sake of commerce and margins, a unit trust (much like an

insurance policy), so long as the industry is stimulated by all and other patrons and money is

constantly going into the business, your money is as safe as a “Unit Trust,” all facets of the

same thing, don’t expect to “make money,” unless dealing with higher end assets.

A “Unit Trust” allows you to invest slowly (card by card) for the sake of seeing returns in the

long or short term by means of cashing out when you notice a peak in the industry.