Just toys for big boys? Investing in the geek economy

Published February 27, 2021, 4:25 AM

by Pao Vergara

An in-depth look at the market for collectible scale models, toys, and cards: Is it an investment or gambit?

1990S MAGIC CARDS While it takes just a few US cents to manufacture each card, the value of a single card may depend on the following factors: Art (1990s hand-painted art vs. 2000s digital art), whether the card is banned or not in tournaments, and whether the card is printed in a matte or shiny finish

In many beginning investor’s seminars, participants are told to start young. Graphs and charts are thrown up, showing that the same amount of money seeded in one’s 20s is often larger by the time someone reaches retirement age, compared to the same amount’s return after investing at a later life stage.

I’m well into my 20s, and many people my age (myself included) started collecting trading cards, scale models, and pop culture merchandise years before it crossed our minds to open a stock portfolio. Now, gathered around brunch, we laugh at our Tito/a-ness while discussing the finer points of eating healthy, sleeping early, and (laugh if you must) saving serious money.
Some have started investing in the financial market—stocks, bonds, and mutual funds. Others have begun picking up luxury collectibles (arguably a “traditional” investment, too) such as high-end watches, jewelry, fountain pens, and fine art.

Suddenly, long removed from school and well into our chosen fields, there’s a huge pile of die-cast airplanes, ’90s Magic cards, and anime figurines competing for space and time against things more practical. There’s also a curious level of objective detachment.

Is it possible that these, too, are investments?

FERRARI F50 X SHELL This special collection is sold for as low as ₱200 in the late 90s. Today, resellers and auctioneers sell them for up to ₱4,500

The oldest Magic: The Gathering trading card players are now approaching their 50s, and the game is (thankfully) being passed to younger generations. Meanwhile, those who as children collected the first Tomica die-cast cars are themselves parents, driving real cars.

In these communities, there have been cards purchased for ₱2 in 1995 that today, adjusted for inflation, are 2,000 times the price. The same could apply to matchbox Ferrari models purchased at the local gas station two decades ago and to a first printing of Stan Lee’s Spiderman.

Is it really worth it, seeing your hobbies as investments? Or is it better to just enjoy the geekery without worrying about the Ninoys? Will first press KPop albums overtake the NAVPU? Will that DC Universe vinyl figurine line beat Philippine inflation? Will those vintage Air Jordans send the PSEi running?

RED OCTOBER Kanye West, who also goes by Yeezy, has a line with major Nike rival Adidas, so a product like this has a rarity that makes it sell higher even if used compared to new, unused sneakers

Scarcity with a capital S

In comparing traditional and non-traditional investments, and the factors that determine monetary worth, Investopedia words it best in their March 2020 article about collectibles: “For metals, this value is based on rarity. If you melt it, burn it, or bend it, you still have the same atomic substance in the end. For stocks, the value is produced by the underlying brick-and-mortar company that the share represents—a company that generates earnings to justify the prices you pay for its stock.

What makes collectibles different is that even a little damage can erase all of a collectible’s value. This is because a collectible’s value is based on nostalgia and other emotional factors—which can be as erratic as they are powerful.”

THANKS SHOP Web view of Chuuriah’s online shop. “Preferred” sellers get preferential treatment based on buyer reviews

It’s more or less the same story on the ground, as the following insights were revealed after I interviewed long-time sneaker head Eugen, media researcher Louie (who started with die-cast models before settling on real bikes and motorcycles), business consultant Don* (a pop culture aficionado with a growing collection of Funko figurines across fandoms), and Preferred Shopee seller and middle manager-by-day Chuuriah, who focuses on K-Pop merchandise. The geek economy consists of the primary, retail market, and the secondary, resell market. Licensed companies with the means for economies-of-scale manufacture collectibles by the ton. These hit the shelves at primary retail outlets.

It’s in the secondary market where the action happens. Companies often release special collectible lines with varying degrees of rarity, often at the same real-value production cost as their more mass-produced lines (that ₱2 card worth ₱4,000 now still costs ₱1 to produce). The most common of these limited editions are mass-produced lines with slight variations in product design. Next come very specific, niche lines, followed by lines made exclusively for events, such as paid conventions and commemorations of anniversaries.

PAIR OF KICKS Air Jordan x Paris St. Germain commemorative collections, like this one between Nike and a football club often fetch higher prices, especially at the secondary market, shares Eugen

Examples of the three include Funko Pop!, Marvel-line figurines with different hair colors or poses, Jordan sneakers co-designed with high-end fashion houses, and die-cast cars sold only at gas stations marking the anniversaries of specific auto manufactures, distributed randomly among shipments of more mass-produced models. Geography is also a factor, as some products sold in Japan or Europe, for example, will rarely be carried by major Philippine retailers.

If you want to grow money, the consensus seems, either stick with traditional or luxury collectibles, or if you’re really up to it, study the market and focus on specific lines and models, do your homework, treat it like an actual job.

Once these are released, long lines (in quarantine, e-commerce site lags) form and dissipate with the suddenness of summer thunderstorms. A few weeks later, they might pop up in resell websites and forums rolling anywhere for twice to 10 times the price. There’s often minimal regulation, and final rates are a matter of buyer-and-seller negotiation.

Counting chickens-in-eggs

How stable is a geeky investment compared to more traditional investments?

Romer Capurcos is a government employee in his late 20s who’s been playing Magic: The Gathering since his grade school days. He’s also been speculating on the Philippine Stock Exchange since 2016, starting with an initial portfolio worth ₱5,000 whose worth has now reached almost a million.

LOUIE’S COLLECTION The appraisal of this part of Louie’s collection goes as follows: (From left) Hot Wheels golden arrow from 2002, made in Malaysia; Tomica Toyota 86 from 2012, made in China, Hot Wheels for McDonald’s from 2006, made in China

He shares that the stock market isn’t as passive as many make it out to be, estimating that one needs to give “30 percent of your time to study, follow, and analyze data and news relating to your chosen stocks. In short, you’re not idle. You have to do your homework.” In a scale of investments measuring stability and volatility, with property as the most stable and stocks as the most volatile, Romer ranks Magic card collecting as even more volatile than stocks.

Magic cards are not simply collectibles, but part of an actual game whose rules change almost every year since the first batches came out in the early 1990s. As such, the prices of cards may change overnight, for better or worse.

It’s the same with most collectibles, shares Mathew Falcotelo, a financial analyst and MSc graduate of London Business School who’s worked with international and local companies. He cites the illiquidity risk of non-luxury collectibles, a term that summarizes the emotional and nostalgic factors above.

It’s not unusual for the few buyers who are willing to take your rare item to haggle so much that you end up selling it at a loss. If you’re in it for the money, choose your fandom wisely, as he likens illiquid collections to rural backwater lots being overlooked in favor of commercial lots by large developers, and the cases where it’s easier to sell stocks of top companies than real estate in gated subdivisions.

For the love of the game

Ultimately, the game to play isn’t that of speculative investment, but simply, the game your cards or toys are meant to play. Open the album, listen to the music. Display the figurine, build your own poses, recreate movie scenes. Louie also collected Magic cards, even purchasing rare cards worth hundreds of pesos apiece, but his primary purpose then was to beat his neighbors (such as Romer) who also played the game. Later on, Louie sold his cards for less than the price he purchased them.

3K ‘90s MAGIC The first cards in this listing cost 3k Pesos apiece

“Deep down inside, alam kong hindi ako kikita dito (I knew I wouldn’t earn from this),” he confides. Don estimates that profit only comes in one of 50 purchases. “Do it for the love of what it stands for,” he says. That is, your fandom.

If you want to grow money, the consensus seems, either stick with traditional or luxury collectibles or, if you’re really up to it, as Romer mentions, study the market and focus on specific lines and models, do your homework, treat it like an actual job. You might be doing the same amount of legwork after all as a hobby shop in Greenhills.

A fan-tastic reality

My partner knows (and doesn’t mind) that I have an entire folder in my phone dedicated to pictures of women who aren’t her. They’re Korean idols and actresses. My bookshelves bear physical photobooks of Olivia Hye, Jo Haseul, and Kim Dahyun while their photocards serve as traditional bookmarks.Why then do people collect?It’s mainly aspirational, because you can’t have the actual thing. It’s like the fantasy of owning a Lambo, marrying a Korean idol, or fighting in the Battle of Helm’s Deep. You want a physical presence. As the Funko Pop statement goes, “Our aim is to provide consumers tangible ways to take their fandom offline.”

KPOP ALBUMS Selections from the author’s collection, a first-press, “version B” album (left), and a 2020 reissue of a different album

“The idea to collect to sell is far-fetched for me,” Louie reveals. Chuuriah knows the demand for first-press albums, and so tracks down unsealed ones during visits to Korea, but makes sure to get a personal copy first.

Ultimately, who truly profits are the primary sellers and, to an extent, dedicated small-to-medium resellers who diligently study trends and capital to maintain small shops.

And that’s why the companies keep churning out more models, cards, and whatnot, because they know collecting never ends. A genius business model indeed!

*name changed to protect privacy

 
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