Does the Silicon Valley Bank collapse affect the card market?

[oplum29]

we've heard about the doom and gloom story about the collapse of the card market now for i think two years. Vegas Dave called it, and so did several other people.

the same influencers that were singing in the rain two years ago, have gone into hidding it seems (like GaryV).

it doesn't take a genius to know that the prices during the pandemic, were an anomaly in the matrix, and eventually we would get a market correction, which i think we're seeing right now in the prices of ultra-modern cards across the board.

prices are down on nearly everything, in some cases well over 50% (with the exception of vintage )

but the prices on boxes and cases is still insanely stupid high, and when you couple that with (poor rookie class, the economy, and inflation), there's no possible way these prices can sustain right? like Prizm hobby boxes for $750 a box.

at some point, you've got to believe there's going to be a massive market correction, and a lot of shop holders with a ton of wax available at prices they can't sell on, which is going to lead to heavy discounts, and a loss in profit for them. that trickle down should eventually balance off the boxes right?

or am i just being crazy?

when i see the news about the Silicon Valley Bank collapse, you really start thinking. i'm a history teacher, and so i'm always looking for parallels in history, links to the past, so we can learn and not make the same mistake. and seeing that bank collapse really starts to invoke memories of the 2008 crash.

idk how or really remember if it affected card prices back then, i don't know it it will now.

how do you all feel about this? i'd love to hear it.

[ATLOTP]

it's hard to say what the catalyst will be for prices falling but something will push it over the edge. I don't know what that something will be, but banks collapsing might be the first domino. really all of this stuff should be dirt cheap; it seems like a few things are propping up prices:

breakers have to break to keep their business moving, they absorb a ton of product, and the product is short due to various factors

people are unwilling to accept losses or still have hope on their rookies of guys who haven't won a damn thing

people have price memory of psa 10 burrow prizms (for example) and "buy the dip" when they go down, prolonging the true fall

consumers don't seem to have realized that every new product is actually bad and even if you hit you don't make your money back

[imbluestreak23]

Probably need unemployment to hit 7%+

[nabzy28]

Most of these boxes could be dropped 50-75% in price and these places would still be making money.

Yes, '08 affected the market. I remember the National. It took from Spring until Fall of that year for the mess to fully develop and start really causing financial pain. (Realistically, it started about 2 years earlier.) So, this very well may just be the very beginning of the worst.

Watching breaks is, well, disappointing in a few ways. Watching people throw away thousands on this stuff and get nothing or very little, yet they keep coming back for more, etc. Especially at these prices. Baseball box prices seem somewhat reasonable to me. I'd imagine that's because of the ownership change. Football products are 75%+ above what they're worth, easily. They're selling people complete garbage. Sticker autos, jerseys worn by players that don't even match the player on the actual card, stupid amounts of parallels no one will even care about in a few years, impossible odds to hit HOFer type/successful QB autos. The list goes on.

Now, I'm not saying in any way that people should be getting a 100% return on boxes. With how much product there is, now, 35-45% return should be more than reasonable to expect as a "bad break". Maybe you don't hit a good auto or mem, but you've got cards you like and don't feel like you just got ripped off and lost a house payment.

I'm interested to see where it goes over the next couple years. Maybe football collectors will finally stop throwing ungodly amounts of money at these QB's every year, when the vast majority of them will ever even be much more than mediocre in the long term.

Doesn't it always come back to 'collect what you like', that way you don't have to worry about it too much. I'd imagine the perspectives of this are vastly different when the question is posed to those of us who have been here for decades vs. those who dropped in during the last 3 years.

[rj.cataldo]

It’s amazing to me how the collapse of a bank that 85% of the country had no idea existed 5 days ago is suddenly the catalyst for everything falling apart.

The collapse of SVB is certainly stunning and there are several lessons that can be learned, but it’s a product of a lot of factors (poor asset /liability management, lack of diversification in client, awful public relations, and market hysteria).

The card market isn’t different today than it was yesterday - at least not materially so due to anything with SVB.


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[oplum29]

Originally Posted by rj.cataldo

It’s amazing to me how the collapse of a bank that 85% of the country had no idea existed 5 days ago is suddenly the catalyst for everything falling apart.

The collapse of SVB is certainly stunning and there are several lessons that can be learned, but it’s a product of a lot of factors (poor asset /liability management, lack of diversification in client, awful public relations, and market hysteria).

The card market isn’t different today than it was yesterday - at least not materially so due to anything with SVB.

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"it ain't what you don't know that gets you into trouble, it's what you know for sure that just ain't so".

people have been talking about a bubble and market collapse, recession for a while now, and hearing about a major bank collapsing that the government had to rescue, whether people knew about it or not, is a big deal.

[Jbead61]

You may not have known SVB but you for sure knew their customers. Some of the biggest tech names used them from DocuSign to Doordash etc. This is beyond not good and I have noticed sports card trading has massively slowed down. The big ticket cards aren’t moving as fast if at all.

[packman80]

Card market won't reflect a bank that was piss poor run by people who were more concerned with polices they wanted than making sure they were making sure their investments paid off. Only way this would have a effect on card market is if the govt finds a way to screw the economy up more and drive the economy into a recession.

[rj.cataldo]

Originally Posted by oplum29

"it ain't what you don't know that gets you into trouble, it's what you know for sure that just ain't so".

people have been talking about a bubble and market collapse, recession for a while now, and hearing about a major bank collapsing that the government had to rescue, whether people knew about it or not, is a big deal.

Snappy quotes aside - no one is saying it isn't a big deal. It's one of the most stunning story in banking that I can recall since the crisis.

That said. even within the banking sector there is strong reason to believe this is an idiosyncratic event.

SVB has essentially increased their assets by 5x since 2017, much of which came via deposits from VC/PE funds that were cash rich during the pandemic. That is a stunning rate of growth for any bank. Their customer base is not well diversified nor is it very large - intentionally so. SVB went all in on this sector, it was part of their brand, but it carries higher risk. They were highly invested in the tech space which has been under intense pressure and many of those firms have had to utilize that cash as financing is drying up.

SVB loaded up on government securities during times of incredibly low rates as their balance sheet grew. They clearly didn't effectively manage their liquidity and they botched the messaging which only fueled the hysteria.

So yeah, its a big deal, but extrapolating it to the card market is quite a reach.

[SleeperCards]

Privatize the Mahomes profits, socialize the Rosen losses.

[rman112]

Originally Posted by SleeperCards

Privatize the Mahomes profits, socialize the Rosen losses.

You're more ahead of your time than I thought!

[Jbead61]

SVB is just one of many financial issues. Most of people’s 401k’s are shot and investment accounts are beat up which lowers people’s disposable income to burn on trading cards. The rate of people dropping money on cards 3k and above has slowed down. Inflation data comes this morning which if comes in hotter than expected, the market will tank even more. Let’s just say we need a new president and I can’t wait for 2025.

[sethc1020]

I believe we are already starting to see the wax downfall. People (when I say people I don't mean breakers) are finally not buying at these prices anymore. You can see it if you look on Panini's website, a few years ago every single drop sold out in minutes at release. Now things don't sell out at all and you can buy boxes/cases on the website at any given time for most products. Even then they sit because people are not buying at these prices, at least the way they were and I believe its only going to accelerate if prices don't come back to Earth soon.

[Frankp2311]

$3-5 standard envelope sales are steady. Market is all good where I am sitting.

[KhalDrogo]

Originally Posted by rj.cataldo

Snappy quotes aside - no one is saying it isn't a big deal. It's one of the most stunning story in banking that I can recall since the crisis.

That said. even within the banking sector there is strong reason to believe this is an idiosyncratic event.

SVB has essentially increased their assets by 5x since 2017, much of which came via deposits from VC/PE funds that were cash rich during the pandemic. That is a stunning rate of growth for any bank. Their customer base is not well diversified nor is it very large - intentionally so. SVB went all in on this sector, it was part of their brand, but it carries higher risk. They were highly invested in the tech space which has been under intense pressure and many of those firms have had to utilize that cash as financing is drying up.

SVB loaded up on government securities during times of incredibly low rates as their balance sheet grew. They clearly didn't effectively manage their liquidity and they botched the messaging which only fueled the hysteria.

So yeah, its a big deal, but extrapolating it to the card market is quite a reach.

SVB was a unique bank. Combine their customer base with their profound mismanagement of their bond portfolio, and you get what happened last week. The government staved off immediate contagion, but that doesn’t mean we don’t see a terrible ripple effect through the financial sector as investors finally come to the realization of how damaged these regional banks’ HTM portfolios are.

So even with the government backstopping all these deposits, it doesn’t eliminate the risk of money running away from regional banks to the JPMs of the world. The more banks that fall, the greater the risk of utter chaos.

Long story short, sell any rip higher. This is going to be a brutal year.

[jplarson]

Originally Posted by Jbead61

SVB is just one of many financial issues. Most of people’s 401k’s are shot and investment accounts are beat up which lowers people’s disposable income to burn on trading cards. The rate of people dropping money on cards 3k and above has slowed down. Inflation data comes this morning which if comes in hotter than expected, the market will tank even more.

Paper losses. When I see my 401k down, I know that my contributions at the moment are buying the dip. Anyone who is actively retired and drawing from a 401k should consider switching from stocks to something with less risk.

Originally Posted by Jbead61

Let’s just say we need a new president and I can’t wait for 2025.

[BonVoyage]

Originally Posted by Jbead61

SVB is just one of many financial issues. Most of people’s 401k’s are shot and investment accounts are beat up which lowers people’s disposable income to burn on trading cards. The rate of people dropping money on cards 3k and above has slowed down. Inflation data comes this morning which if comes in hotter than expected, the market will tank even more. Let’s just say we need a new president and I can’t wait for 2025.

Please explain how my 401k is shot.

[solt0131]

Originally Posted by Jbead61

You may not have known SVB but you for sure knew their customers. Some of the biggest tech names used them from DocuSign to Doordash etc. This is beyond not good and I have noticed sports card trading has massively slowed down. The big ticket cards aren’t moving as fast if at all.

Sports card trading has massively slowed down where???? You may want to check out a few of the bigger card shows and reflect on that statement.

[KhalDrogo]

Originally Posted by solt0131

Sports card trading has massively slowed down where???? You may want to check out a few of the bigger card shows and reflect on that statement.

The only measuring stick you ever use is show attendance. Quite naive.

[Brobocop]

Originally Posted by KhalDrogo

The only measuring stick you ever use is show attendance. Quite naive.

I agree 100%. Attendance is such a poor metric to use to measure card show success. I went to a rather large one in the Cleveland area and saw a ton of people but next to no buying and dozens of tables all selling the same cards or retail products. A few unique cards I saw, the person was asking for peak prices like a Punisher PMG Red for over $1k.

[solt0131]

Originally Posted by KhalDrogo

The only measuring stick you ever use is show attendance. Quite naive.

Every dealer I spoke with at The Philly Show said their sales numbers were higher than expected and beat their expectations. A few dealers that I also know that always buy a lot both said they spend over 25k on other dealer inventory.

On my .50 cent tables, I converted sales on all but a total of 3 customers on Friday and Saturday that looked. I did not set up Sunday because I moved my inventory at the end of the show Saturday.

The other 3 guys in my area all beat their expectations. The vintage dealers I spoke with all said it was one of the best shows they have ever had.

It's not rocket science, price your cards to sell and give people good deals and friendly service and they will buy and come back to see you in the future.

[Grid]

Originally Posted by packman80

Card market won't reflect a bank that was piss poor run by people who were more concerned with polices they wanted than making sure they were making sure their investments paid off. Only way this would have a effect on card market is if the govt finds a way to screw the economy up more and drive the economy into a recession.

I agree, just one bank that grew too fast, and held a piss poor portfolio, going under on its own wont do anything.

But sadly that isn't the case. SVB just exposed the dangers that other banks may be under now.

Every time a bank/investor buys treasury bonds or Mortgage Securities, those two assets are worth less each time the Feds raise rates. Big banks can/do take on more of both, to level their portfolio. So they lose on the old ones that were bought high, but hedge on the new ones to average out the dip.

For sure is was a number of things that brought SVB down, they grew too fast as the tech market heated up during the pandemic, and they bought these bonds not knowing the Feds would dick with rates later.

But now that people are reminded how fast these banks can fall, and what the rate hikes have done to investments, that now brought down the stock values of these banks themselves, as well as other Investment companies that do the same things (Buy bonds and securities)

And that is the ripple effect. Charles Schwab stock values just fell 30%. PacWest Bancorp fell 70%. Western Alliance Bancrop 73% ETC

The Feds keep raising rates, like you sneaking out a fart. Small, and wait to see if anyone smells it. Now with what happened here, I bet they don't push things any further for awhile. As those hikes are directly responsible for why SVB had to sell their holdings at a loss, VS a gain, to bring cash back into the bank.

[KhalDrogo]

Originally Posted by solt0131

Every dealer I spoke with at The Philly Show said their sales numbers were higher than expected and beat their expectations. A few dealers that I also know that always buy a lot both said they spend over 25k on other dealer inventory.

On my .50 cent tables, I converted sales on all but a total of 3 customers on Friday and Saturday that looked. I did not set up Sunday because I moved my inventory at the end of the show Saturday.

The other 3 guys in my area all beat their expectations. The vintage dealers I spoke with all said it was one of the best shows they have ever had.

It's not rocket science, price your cards to sell and give people good deals and friendly service and they will buy and come back to see you in the future.

One show. One weekend. You always have an incredibly narrow scope on this topic.

[Grid]

Originally Posted by solt0131

Every dealer I spoke with at The Philly Show said their sales numbers were higher than expected and beat their expectations. A few dealers that I also know that always buy a lot both said they spend over 25k on other dealer inventory.

On my .50 cent tables, I converted sales on all but a total of 3 customers on Friday and Saturday that looked. I did not set up Sunday because I moved my inventory at the end of the show Saturday.

The other 3 guys in my area all beat their expectations. The vintage dealers I spoke with all said it was one of the best shows they have ever had.

It's not rocket science, price your cards to sell and give people good deals and friendly service and they will buy and come back to see you in the future.

Either you were lucky, or you just had the type of inventory that sells well.

The dealers at the major shows here in Chicago, have already seen the flip. The days of setting up with showcases filled with high grade ultra modern, and walking away with $50K at the end of the weekend, are pretty much over.

For the dealers that have always dealt in the dollar value bin stuff. Or just generic signed balls and jerseys, not much has ever changed. But the pelican case crew that used to clean up at these shows, are flat on their asses right now.

[rj.cataldo]

Originally Posted by KhalDrogo

SVB was a unique bank. Combine their customer base with their profound mismanagement of their bond portfolio, and you get what happened last week. The government staved off immediate contagion, but that doesn’t mean we don’t see a terrible ripple effect through the financial sector as investors finally come to the realization of how damaged these regional banks’ HTM portfolios are.

So even with the government backstopping all these deposits, it doesn’t eliminate the risk of money running away from regional banks to the JPMs of the world. The more banks that fall, the greater the risk of utter chaos.

Long story short, sell any rip higher. This is going to be a brutal year.

There certainly is a non-zero chance that happens, but I would still bet it’s highly unlikely.

There was such incredible mismanagement in this specific case coupled with hysteria among SVBs client base which is small, connected, and concentrated.


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