The Capitalist Investor - Episode 28

Do you remember your first investing experience? Do you remember the lessons you learned from that experience? In this episode of The Capitalist Investor, Derek and I talk about our investing experiences and how it shaped our worldview. We talk about baseball cards, Mr. Coffee, and how they each impacted our views on investing. Don’t miss this fun episode!

Outline of This Episode

  • [1:25] Derek’s 1st experience with investing
  • [5:19] How collecting baseball cards shaped us
  • [7:32] The lessons learned from Mr. Coffee
  • [11:34] Learning about stocks and mutual funds
  • [13:18] Baseball cards and the stock market
  • [20:13] The law of supply and demand
  • [21:00] What trading cards with friends taught us
  • [22:18] Too many baseball card brands on the market
  • [23:47] The bottom line: baseball cards aren’t worth much

How Mr. Coffee made an impression on Derek

Derek’s first investing experience happened when he was young and his dad was hired to work at Mr. Coffee as part of the management team tasked to turn the company around. So part of Derek’s childhood revolved around Mr. Coffee after it’s IPO. His family followed the stock religiously and he got a strong grasp of how new developments in a company affect the stock price.

They tested different products in their home and discussed product launches. Watching the development of new products was an invaluable life lesson. He had backstage access to the “story” behind a brand. It’s ultimately what got Derek interested in business and investing. It was also his first real taste of how the real world worked.

How Baseball cards introduced us to investing

Both Derek and I were obsessed with baseball cards. As kids were duped into thinking they would grow in value—as were most kids. We’d get the monthly Beckett magazine subscription, which was akin to the New York Stock Exchange. Beckett told us what the cards we had were worth. It was like the Bible. We expected transparency from them. We expected to be able to liquidate our cards whenever necessary.

Unfortunately, baseball cards are completely illiquid. Years later when I attempted to sell some rookie cards that I thought were worth big bucks, I was consistently turned away. Turns out they’re not really worth as much as we were told they were. The market was overrun with numerous brands, too many options, and no buyers.

How baseball cards mimic the stock market

Baseball cards can be compared to trading penny stocks. Penny stocks aren’t typically traded with a lot of volume. There simply aren’t a lot of buyers, and they aren’t typically a good long-term investment. Like penny stocks, baseball cards are more of a hobby than an investment.

Memorabilia in general teaches you about the law of supply and demand. The recent documentary featuring Michael Jordan skyrocketed the demand for his memorabilia—which means the price skyrocketed as well. If there’s a small supply of something—or it’s rare—the demand and price typically rise.

Our investing experience: Life lessons learned from baseball cards

Anyone who collected baseball cards knows that it’s all about always trying to get the best cards. Sometimes, to get the most sought-after cards, we’d haggle with our friends and offer a few B-list cards for one of their A-listers. We enjoyed snagging a great deal (in hindsight, we were likely slighting our friends…).

What we didn’t realize is that we were gaining valuable investing experience. We were learning the fine art of negotiation. We were learning about supply and demand, scarcity of resources, and how to get things done. We learned a lot from our first investment experiences. Especially this fact: Unless you own a Honus Wagner Rookie card, your collection is likely worthless.

Resources & People Mentioned

Connect with Derek Gabrielsen

Connect With Mark Tepper

Send your questions and comments to us at info@SWPConnect.com

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Keep Listening to The Capitalist Investor:
Episode 30:
The “New Normal” Investing Playbook, Ep #30
Episode 2:
Is the Stock Market Overvalued?
Episode 3:
Impact of a Bernie Sanders Presidency
Episode 4:
Coronavirus, Pandemics, and Your Money
Episode 5:
What We Consider A Smart Investment Strategy, Ep #5
Episode 6:
Why Investing In IPOs Is Not A Good Idea, Ep #6
Episode 7:
How a Joe Biden Presidency Will Impact Your Portfolio, Ep #7
Episode 8:
Special – Coronavirus and the Economic Shutdown, Ep #8