When Paying $35k for Something That's Free Is Good Value
People are buying and selling “digital art” for tens of thousands of dollars.
When I was little, I had baseball cards.
Today, you can still buy and sell physical cards… but one new trend is “digital cards”.
I read a story this week by a guy who spent $35,000 on a video clip of a hot new NBA rookie doing a dunk. You can also watch the clip online for free.
I’d say it’s crazy… but things — any thing — are only worth what someone is willing to pay for it.
Bitcoin was crazy ten years ago. Maybe it still is.
But the profits and losses are real, in whatever denomination you prefer.
If you can sell a piece of digital art for more than you bought it, then it’s real.
I wonder if a photo of the Gamestop chart is digital art?
A Collector’s — and Bizarro — Universe
One of my acquaintances in the industry co-founded Collector’s Universe (NASDAQ: CLCT). It’s a company that grades coins and the kind of baseball cards you can hold in your hand.
The company was founded in 1986, long before you could buy a “digital card” of a video of a slam dunk that you could also see for free on a late-night re-run of Sportscenter.
At any rate, the guy who bought this digital card posits that:
Trading cards might very well become a stock market for athletes. What was once play—kids trading physical sports cards with friends—could transform into something completely different.
When you start to go down this rabbit hole, you inevitably end up asking “Why does this thing need to exist in the physical world at all to have value?”
From provable ownership, authenticity, and scarcity to immediate liquidity, I believe digital trading cards are superior to physical in nearly every way.
This is similar to the “bitcoin is superior to dollars in nearly every way” line of thinking.
And that’s just fine.
You can’t argue with results. The digital card trader says his:
...average return has been somewhere around 50% with an average turnaround of about 2.5 days.
Time will reveal the sustainability of his return. But it’s real enough in the short-term. He points to recent comments from billionaire start-up investor Chamath Palihapitiya, answering his own question of what will replace bonds given their current historically low yield:
I am a bitcoin owner and supporter.
But I also own physical gold.
I think they’ll both have incredible value over the longer-term cycle.
What about Collector’s Universe, the grader of athletes’ faces imprinted on paper instead of on the blockchain?
It is being bought out for nearly $1 billion by an investor group led by billionaire — and Knicks owner — Steve Cohen at $92 per share.
As a financial publisher, I’ve pointed people to Collectors Universe since it was below $15 per share.
Mr. Palihapitiya is correct on the alternative asset idea. But he isn’t being cutting edge.
The need to move assets out of bonds and dollars and into other things that preserve wealth instead of erode it away has been apparent to serious market students for years.
And there are multiple ways to get paid from it over multiple time frames — tokenized baseball cards in days or Collectors Universe over years.
All of it is welcome. And all of it is made possible by the bigger cycles that drive things.
There are all sorts of market and profit cycles — involving currencies, bonds, stocks, real estate, commodities and, in the example today, digital sports cards — across all sorts of durations.
Tying them together and acting on them via well-researched and well-timed is critical to higher investment returns.
We’ll be unpacking those profit cycles for you here, daily.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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