Unlocking Sports Card Value: A Data-Driven Approach to Identifying Potential Investment Gems
Title: “Unlocking Sports Card Value: A Data-Driven Approach to Identifying Potential Investment Gems”
Abstract:
In this research paper, we delve into the world of sports card investing and attempt to identify potential high-return cards by examining factors like gem rate (total Gem Mint 10s/total graded), card age, player popularity, and last sale price. By utilizing a unique equation, we discover cards with the largest deltas between their estimated values and last sale prices. We then analyze the cards with the highest deviations, providing examples of how our equation works and uncovering potential investment cards.
Introduction:
In the sports card market, economic principles like supply and demand, scarcity, and overall volume play crucial roles in determining the value of a card. Understanding these factors is essential when considering potential investment opportunities, as they can significantly influence a card’s price trajectory.
Supply and Demand: The value of a sports card is significantly impacted by the balance between its supply and demand in the market. As a player gains popularity or achieves remarkable feats, the demand for their cards typically rises. If the supply of high-quality graded cards for that player is limited, the increased demand could drive up the card’s value. Conversely, if the supply of cards is abundant, the value may not increase as much, even with high demand.
Scarcity: Scarcity is another important factor in sports card investing, particularly for cards with a low gem population. Cards with a low gem rate (percentage of cards graded as gem mint, PSA 10) are considered rare, as they represent a small proportion of the total graded population. Scarcity often creates a sense of urgency among collectors and investors, leading to increased competition for these cards and potentially driving up their value.
Overall Volume: The overall volume of a card in the market can impact its value as well. A high volume of cards available for sale may create an oversupply, putting downward pressure on the card’s price. On the other hand, a lower volume of cards on the market may contribute to increased competition among buyers, pushing the card’s value higher.
The Card Hedge Estimate equation we’ve employed takes these economic principles into account by considering factors such as gem rate and card age. By including these factors in the calculation, we can better identify potential investment opportunities that may have been overlooked due to market dynamics. By comparing the Card Hedge Estimate to the last sale price, we can recognize cards with significant discrepancies between these two figures, suggesting potential undervaluation or overvaluation based on the underlying market forces. This information can help investors make more informed decisions when navigating the sports card market.
Methodology:
Our machine-learning model incorporates the following factors:
- Popularity Factor (PF) = 1 + 0.5919 (a constant factor to account for general sports card popularity)
- Card Age Factor (CAF) = (1 — Gem Rate)
- Condition Factor (CF) = 1–0.1837 (a constant factor to account for the expected card condition)
Card Hedge Estimate = Last Sale * (1 + PF) * (1 + CAF) * (1 — CF)
Using this model, we can identify cards with the largest discrepancies between their estimated values and last sale prices. We analyze two sets of cards: one where the estimated value is higher than the last sale price and one where the estimated value is lower than the last sale price. We provide detailed examples of the highest discrepancies for both sets to demonstrate how our model works.
The final results may differ from the last sale price due to fluctuations in the sports card market and changing perceptions of a card’s value. Factors such as player performance, market sentiment, or external events can influence the demand for a specific card, which in turn affects its value. Additionally, the unique equation we have employed weighs the importance of gem rate and card age, which may not always align with the last sale price.
Results:
We’ve compiled two tables, displaying the top 15 cards in each set, sorted by the largest deltas between their Card Hedge Estimate and last sale price.
Table 1: Top 15 Cards with the Largest Positive Delta
Table 2: Top 15 Cards with the Lowest Delta
Discussion:
To provide a detailed breakdown of how the Card Hedge Estimate is calculated using our equation, let’s examine the top 3 cards from Table 1 with the largest deltas:
1. 1989 Upper Deck #1 Ken Griffey Jr. Star Rookie
Last Sale: $1,870.00
Gem Rate: 4.15%
Card Age: 34
Card Hedge Estimate = $1,870 * (1 + 0.5919) * (1 + (1–0.0415)) * (1–0.1837) = $5,598.71
Delta: $3,728.71
2. 1980 Topps #482 Rickey Henderson
Last Sale: $144,000.00
Gem Rate: 0.08%
Card Age: 43
Card Hedge Estimate = $144,000 * (1 + 0.5919) * (1 + (1–0.0008)) * (1–0.1837) = $374,097.08
Delta: $230,097.08
3. 1986 Topps #161 Jerry Rice
Last Sale: $66,000.00
Gem Rate: 0.18%
Card Age: 37
Card Hedge Estimate = $66,000 * (1 + 0.5919) * (1 + (1–0.0018)) * (1–0.1837) = $171,440.92
Delta: $105,440.92
Let’s take a look at an older vintage card. The Ty Cobb 1910 E98 Card, PSA Gem Mint 10, a unique and rare card due to its age and the fact that it is the oldest PSA 10 ever graded. With only 27 cards graded and 3 of them being PSA 10, the gem rate is 0.11 or 11.11%. To estimate the value of this card, we will use the Card Hedge Equation.
To determine the value of the Ty Cobb 1910 E98 Card, PSA Gem Mint 10, we can apply an exponential multiplier between the PSA 9 and PSA 5 sales values. This approach accounts for the relative scarcity and premium placed on higher-graded cards.
The PSA 9 value is $40,000, and the PSA 5 value is $10,500. To create an exponential multiplier, we can first find the ratio between the two sales values:
Ratio = PSA 9 value / PSA 5 value = $40,000 / $10,500 ≈ 3.81
Now, we can apply the ratio to the PSA 9 value to estimate the theoretical value of a PSA 10:
Theoretical PSA 10 value = PSA 9 value * Ratio = $40,000 * 3.81 ≈ $152,400
Using this exponential multiplier approach, we estimate the theoretical value of a Ty Cobb 1910 E98 Card, PSA Gem Mint 10, to be around $152,400. Keep in mind that this method relies on the relationship between the PSA 9 and PSA 5 values, which may not accurately represent the true value of a PSA 10, especially for rare and historically significant cards like this one.
Once we have the theoretical PSA 10 value, we can plug it into the Card Hedge Equation, as we did before:
Card Hedge Estimate = Theoretical PSA 10 value * (1 + Popularity Multiplier) * (1 + (1 — Gem Rate)) * (1 — Card Age Multiplier)
Assuming the same Popularity Multiplier (0.5) and Card Age Multiplier (0.1) as before:
Card Hedge Estimate = $152,400 * (1 + 0.5) * (1 + (1–0.1111)) * (1–0.1)
Card Hedge Estimate = $152,400 * 1.5 * 1.8889 * 0.9
Card Hedge Estimate = $411,778.74
Based on this calculation, the Card Hedge Estimate for the Ty Cobb 1910 E98 Card, PSA Gem Mint 10, is $411,778.74. This value is closer to the $301,250 value listed on Collectable.com (which may be undervalued) but it’s essential to remember that estimating the value of rare and historically significant cards can be challenging, and additional factors may need to be considered.
In these examples, we can see how the equation works by taking into account the gem rate, card age, and last sale price to estimate a card’s value. The results show that these cards have significant deltas between their estimated values and last sale prices, indicating that they may be undervalued and worth considering as potential investments.
Conclusion:
In conclusion, our research provides a data-driven approach to identifying potential investment gems in the sports card market. By utilizing a unique equation that takes into account factors like gem rate, card age, and last sale price, we are able to discover cards with the largest deltas between their estimated values and last sale prices. This analysis helps uncover potential investment opportunities for collectors and investors alike, giving them valuable insight into the sports card market.
