The Michael Jordan Rookie Card - A Worthy Investment? Or an Illusion?

I met with some friends last night for dinner and during our conversation, the topic of investments briefly came up. My friend, Jon and I can talk for hours about business, investments, the markets, et al but this particular investment conversation focused around the usual things but then transitioned into something else:

the Fleer 1986-87 Michael Jordan Rookie Card.

Look. At. It.

Jordan rising above the competition, arm stretched, tongue out - it is the rookie card that measures all other rookie cards. I don't think anyone has such a perfect rookie card (ok, maybe Joe Montana has a good one). The irony is that Jordan was already two years into his NBA career yet, the Fleer Michael Jordan RC is the standard.

But from an investor's point of view, I want to know that I'm going to receive a return. Sure, there's sentimental value of buying this card but what I think its worth may not be what another person thinks it's worth.

Therein lays the problem. There's no real way to perform valuation on a Michael Jordan rookie card. It doesn't pay derivatives, it doesn't have returns, you can’t reasonably forecast what the card will be worth in 5,10 or 20 years. I can’t track the price of the card over the past 20 years to even estimate what type of return it would bring. Another problem is; I don't know where to start. This isn't like stocks which I can compare to an index, review financial statements, perform value investing algorithms.

This is something different.

My mind started to think about this (insert Wayne's World Dream sequence here)...

• We’ve reached the peak of Jordan's rookie card value - he's already in the hall of fame. He has his championships, endorsements, shoes, brand, etc.
• I won’t be able to sell it (I would have to list it on ebay, Craigslist or attend Card Collector Conventions and although all of these markets are relatively easy to enter, the most important factors in markets is buyers and sellers and in tough economic times, the card will NOT sell)
• It’s a bubble

To cater my assumptions, I hit-up a local card shop on South Wacker during my work-break (that’s how dedicated I am). This small, 15 foot by 15 foot room was tucked away in Jeweler’s Row. The nice man hovers over his collection case mixed with coins, autographs, magazines and cards. He’s wearing a black sport coat and is wearing a gold rolex (which I noticed immediately). As I talked to the nice man about the Jordan RC, he distinctly tells me three things:

1. The Jordan RC is overpriced. So much so that he does not even carry one (yes, I asked). And even if he did, he wouldn’t be able to sell it (see; Financial Crisis of 2007-2010).
2. Jordan’s card peaked a couple years ago and it has nowhere else to go but down.
3. Because of the lack of demand, the stringent authentication process, the declining value, the flooded market of fakes, the Jordan RC is worth essentially…nothing.

(I was quite surprised by the man’s forthright honesty. I mean, he didn’t have to tell me anything. After all, I bought nothing. He didn’t have to answer my questions but yet he did…this says a lot about a person’s character)

Like all assets, there MUST be buyers and sellers. And when there’s no buyers, your asset sits and depreciates…to nothing. The Jordan rookie card is no different. Even in Chi-City, Jordan can’t outplay the recession.

Do I think Jordan’s RC is worth $1500? After this excursion, absolutely not. But it’s still priced around that range. That leads me to believe that people’s sentimental and emotional attachment of the greatest player of all time could be having an effect on the price.

The lesson in all of this is to leave your emotional and sentimental feelings at the door.

This is money.

Real dollars.

But sometimes it’s hard to walk away. Hell, even MJ thought so.