Pokémon Investing: Modern vs Vintage

As the great SMPRATTE once said:

Older > Rarer > Minter = Better

This simple formula can be applied to all collectibles, not just for Pokémon. During COVID-19, most people locked indoors struggled to find something to enjoy. Some chose to dig through their attics or basements to relive past memories or to uncover forgotten treasures from years ago. Some of these treasures ended up being collectibles long forgotten. These became a major source of entertainment and escapism that people were desperate for. In combination of additional funding from the government (United States specifically), some were fortunate enough to have this be “fun money”. As a result, those who became nostalgic with their collectibles began adding to their collection. In addition, grading services like PSA quickly became household names that added an extra layer of collectability. At this time, PSA was only charging $10/card for their bulk service. Going back to the additional government funding, people found themselves submitting their old cards at such a low cost to “see what happens”. This mentality became even more widespread by the promotion of influencers on popular platforms such as Twitch and YouTube.

With all of these factors in play, this created one of the biggest Pokémon demands since Pokémon GO. Newsfeeds were littered with posts discussing how a PSA 10 1st Edition Charizard hit a new high or how scalpers were brandishing firearms at Target to get their hands on new Pokémon product.

With this foundation established, lets fast forward to 2022…

Now that everyone has had a chance to see what happened in the COVID-19 Pokémon bubble, most people are now collecting sealed product and holding long term. This is in response to a perceived degree of FOMO (fear of missing out). However, there is a problem with doing this for all modern products. Here are three reasons why:

1. Modern’s Role in Pokémon

As the great SMPRATTE said recently in a similar discussion (I will be quoting him a lot):

“Modern is meant to serve a role and isn’t meant to be an investment. For modern, it will always be popularity over all in respect to investment.”

Looking back 25 years ago, what made Pokémon popular in the first place? After all, Pokémon back then was considered modern.

Pokémon was introduced to kids in a variety of ways:

1. Pokémon was released on the Game Boy and Game Boy Color which were very popular game consoles.

2. Pokémon was released as an anime on popular TV networks during times where kids would be watching (mornings and weekends).

3. Pokémon released trading cards during an era where trinkets and collecting were very popular (i.e. Pogs, Yo-Yos, Tamagotchi, etc.)

All of these different factors allowed Pokémon to explode in popularity amongst 90’s kids. Everyone loved showing off their collections to their friends, keeping their favorite Pokémon card in their pocket at all times and trying to "catch them all”. These moments will last forever in the minds of 90’s kids. During this time, Pokémon was new without a care in the world of condition or sealed product. These experiences created an incredibly strong foundation to set up Pokémon to be the top grossing franchise of all time.

25 years later, those 90’s kids now have access to more disposable income. They no longer have to beg their parents to buy that Charizard that they’ve always wanted.

Now lets look at kids now. Over the last few years, kids were exposed to scalpers making department stores limit and/or remove Pokémon products from its shelves. What kind of memories does this give kids who we rely on to keep the franchise going? Are they going to remember Pokémon as being the thing that was never seen in stores or the thing that adults fought over? When that kid grows up, why would they care about Pokémon?

Modern’s role is to encourage kids to keep the franchise moving forward for years to come. The more we remove the joy that Pokémon can provide by eliminating availability the more we remove Pokémon from the minds of future generations.

2. Everyone is Doing It

Let’s do a quick mental exercise and consider the following. Let’s say that 1,000,000 collectors decided to all purchase an “Evolving Skies” sealed booster box with the intention of selling it in 5 years to turn a profit. 5 years later, 1,000 collectors time it right, and sell their boxes for a profit (for argument sake, let’s say that it’s enough for collectors to notice). Thinking back to the COVID-19 Pokémon bubble, this may trigger a huge sell off from the remaining 999,000 collectors looking to turn a profit. After all, this could be the big score and FOMO is starting to kick in.

The market is now injected with a huge wave of supply which will create a buyer’s market. Now, buyers can be more picky when selecting a good price. In turn, this creates a decrease in demand. If collectors can no longer hold onto the loss that they’ve been sitting on for 5 years, then they may be more willing to reduce the price to make a sale. As a result, a 5 year hold on a modern investment won’t really return a sustainable profit. Investors may need to hold for 10+ years before they see any significant movement in their investment.

3. Grading Hurdles

It’s no secret that grading will increase a card’s value. However, that value comes from a card receiving the highest grade possible. This can only be done by having perfection in the following categories:

1. Centering: How well the card is centered in relation to its borders

2. Edges: How little damage there is on the edges of the card

3. Corners: How little damage there is on the corners of the card

4. Surface: How little damage there is on the surface of the card and its overall eye appeal

With modern product, manufacturing standards have drastically improved from 25 years ago. As a result, cards printed today have all four categories coming out in excellent or pristine condition. Let’s take a look at the very popular “Umbreon VMAX Alt Art Secret” card from “Evolving Skies”. At the time of this post, there are 1,102 graded copies of this card. Out of these, there are 911 PSA 10s. That is 82% of grades being a PSA 10. That doesn’t make getting a PSA 10 very hard.

Now lets go back 25 years…

25 years ago, kids didn’t care about the condition of their cards. Kids wrapped their cards in rubber bands or kept them in their pockets ready to be bent and scratched. There was no concept of keeping cards in pristine condition because that meant not being able to show them off or appreciate them. Furthermore, printing technology struggled to keep up with demand during these times. Printing cutters were flying through sheets and becoming very dull. At the time, Wizards of the Coast couldn’t afford to invest in quality control. The demand was so high, that a nick on a card here and there didn’t matter. With these factors, hitting excellent or pristine marks on the four grading categories becomes much harder. Let’s now take a look on one of most popular Pokémon cards: 1st Edition Charizard from Base Set. At the time of this post, there are 3,587 graded copies of this card. Out of these, there are only 121 PSA 10s. That is 3% of grades being a PSA 10. This makes getting a PSA 10 very hard (almost impossible).

To make getting a 1st Edition Charizard as a PSA 10 even harder, 1st Edition Base Set booster boxes have been out of print for the past 25 years. For most people, pulling a 1st Edition Base Set Charizard is out of the question. Therefore, interested buyers now have to pay a premium due to supply only being 121. On top of that, most of these probably won’t become available for sale. Good luck…

What Now?

With all of this being said, the question still remains: what does modern investing look like? Unfortunately for most, everyone is aware of how much money there is in Pokémon. However, modern product has had over 25 years to improve it’s production volume and quality to meet demand. Furthermore, people now are much more likely to take better care of their cards to keep them in pristine condition. As a result, when these cards get graded, they’re commonly coming back as PSA 10s. In turn, this doesn’t make getting a PSA 10 very hard in comparison to it’s vintage counter part.

At the end of the day, investing in modern should always start with what’s popular. Anything else should be what YOU want to collect. If you truly want to invest in Pokémon outside of modern, start saving for vintage cards that somehow escaped the rubber band in the kid’s pocket from 25 years ago. Those are what’s going to fit the “Older > Rarer > Minter = Better” model that will always come out on top.