While everyone else was concerned about steroids and the “death of baseball” after the release of the Mitchell Report, the first thing that popped into my head was, “I wonder what this will do to the value of the baseball cards of those included in the report?”

Specifically, that of Roger Clemens. He is, without a doubt, among the most famous pitchers in baseball over the last 20 years. Along with Barry Bonds, his rookie baseball card used to be worth big money in the early 1990s- before the bursting of the baseball card bubble and before the sting of steroids.

What was his rookie season? 1985.

But now that Clemens has been specifically fingered, will it bring down the price of his card? Barry Bonds’ rookie card suffered for years even as he was breaking one of the most sacred records in baseball. His card just doesn’t go up in value.

Apparently, I’m not the only one asking such questions. From WECT TV6 in Wilmington:

Jim Smith, the owner of the sports card store says that some of Barry Bonds’ memorabilia has decreased in value, and some rookie cards of other players listed in the Mitchell Report may go down in price as well.

However, Smith notes that at times like this, some collectors are dying to get their hands on some memorabilia.

“Sometimes stuff like this actually caught, makes the stuff sell better. A good example will be O.J. Simpson. For about two months there, you could sell anything you could get your hands on with O.J. Simpson, and then that went away. People get caught up in a hype,” explained Smith.

There is no doubt that steroid allegations are hurting the memorabilia market for some of baseball’s biggest stars. This includes the all-important rookie card of these players.

From the Rocky Mountain News:

There was a time when sports collectors were willing to spend $200 for Mark McGwire’s rookie baseball card.

Bill’s Sports Collectibles now sells the card for $30.

Whatever inventory Bill’s Sports Collectibles has of McGwire and Barry Bonds in his South Broadway store isn’t worth very much today.

The players’ appeal has fallen considerably for baseball fans since allegations began surfacing in recent years they used steroids or other performance-enhancing drugs to bash home runs, Bill Vizas, the store’s owner, said Thursday.

“We don’t actively pursue Mark McGwire or Barry Bonds,” Vizas said.

Rookie cards at Bill’s Sports Collectibles for Bonds and seven-time Cy Young Award winner Roger Clemens also are going for about $30. Select Topps baseball cards might go for substantially higher online, Vizas said.

Brutal price reductions send the message.

No one wants you. The kiss of death in collecting.

Might these cards be “value” investments right now? Maybe in 10 years they will regain their luster.

Bonds’ card has been down on its luck for years, though. It seems unlikely that he will be able to turn around his image anytime soon. Baseballs signed by Clemens sell for as much as $350. It’s likely that value will drop now. By how much? That’s anyone’s guess. Same thing will happen with the rookie cards. The Mitchell Report is leaving a bad taste in fans’ mouths, that’s for sure.

All I know is- owning the rookie card of one of the guys in the report seems pretty risky as an investment. I’ll stick to my Cal Ripken and Greg Maddux instead. Thanks.

Collectibles, like art, are hot. Prices are skyrocketing for even the non-rare collectibles. And after suffering through a severe bear market, the elite baseball card market appears poised to run even higher.

The “Mona Lisa” of baseball cards recently was sold for the fourth time in the last 16 years.

The 1909 Honus Wagner card, with Honus in a Pittsburgh Pirates uniform, is the most prized card in all of baseball card collecting. There are thought to be only 60 still in existence today but some are in better shape than others.

The “Mona Lisa” is thought to be THE card. It was made famous in 1991 when Wayne Gretzky and Bruce McNall, the former owner of the Los Angeles Kings, bought it for $451,000 which, at that time, was an enormous amount to pay for a baseball card (even as the baseball card bubble was at full throttle.) After 1991, it became known as the “Wayne Gretzky card” in baseball card circles.

The Wayne Gretzky card was in amazing condition, mainly from being kept in plastic for decades. From ESPN:

“This particular one was preserved in spectacular condition,” said Joe Orlando, president of Professional Sports Authenticator of Newport Beach — the company that certified the authenticity of the card. “It’s the Holy Grail of baseball cards.”

But there is such reverence for ANY of the 60 Wagner cards, that even one that was in hardly recognizable condition would probably still sell for a ton of money:

The others “you could stick in the middle of the street and let cars drive over it through the day, take it in your hand and crumple it up, and it still would be a $100,000 card,” said Seigel, CEO of Emerald Capital LLC, an asset management company, who lives in Las Vegas.

In recent years, the Wayne Gretzky card has become increasingly more valuable:

Wayne Gretzky bought it for $451,000 in 1991

Brian Siegel bought it for $1,265,000 in 2000

An unknown Southern California collector bought it for $2,350,000 in February 2007 (then a record price)

Another collector who wishes to be anonymous, for now, bought it for $2,800,000 in September 2007

Yes, the third owner made $450,000 in six months.

Did the card really appreciate that much in six months time or is irrational exuberance taking over in the baseball card market?

This was yet another “record” price.

That’s a lot of money for a piece of cardboard with otherwise no intrinsic value. But, like paint on canvas, its “worth” is in the eye of the beholder and what someone else is willing to pay for it on the open market.

Here, the market is speaking. That cardboard is “worth” a lot of cash.

Collectibles are hot. Hey, maybe I should find that old Beanie Baby collection in the basement? Where are my Star Wars toys?

Be careful. Don’t get burned.

Remember Beanie Babies?

You may laugh about them now but not even ten years ago they were considered a great “investment.” They ranked right up there with stocks. People believed they could send their kids to college with profits from the toys.

What were we thinking?

1996-1999 was when the Beanie Baby mania seemed to peak (at the same time as the Nasdaq). Thousands of people were collecting them. This article, published in 1997, captures the mania. FromMississippi State University:

Produced by Ty Inc., Beanie Babies are a line of small, colorful, loosely stuffed animals. Priced about $5 so kids can buy them, the toys have become a hot commodity in adult circles where some Beanie Babies now sport price tags in the thousands along with their heart-shaped hang tag and poem.

Helen Thomas of Starkville helps her husband Jack collect Beanie Babies as a hobby. He got started when a sister-in-law and neighbor began to talk to him about how much fun it was collecting and asked him to look for certain ones they wanted. Now he collects for his two granddaughters.

Why did we think these little stuffed animals would hold their value? Where did the sense that these were an “investment” come from?

Even by 1998, some collectibles experts were sounding the warning that the end was near:

“A general feeling has developed that prices have reached the ridiculous level. Many Beanie Babies advertised in the hundreds of dollars are going unsold . . . The market is flooded with Beanie Baby price guides . . . A few years from now, their only value will be the ability to look nostalgically back on the craze and think `If only I had sold then.’ ”

Rinker is president of Rinker Enterprises, an information service for dealers and collectors. He’s written several books about collectibles including dinnerware, tableware and silverware.

“I’m not so much a collector as an accumulator,” he said, “but I do have a sense of what’s happening with collectibles. And I can assure you that, within a year, there will be weeping and gnashing of teeth among the Beanie Baby collectors.”

The Beanie Obsession

People used to wait in line for hours at the local Hallmark for the new shipments to come in.

We all would like to think we would never do such a thing. But Beanies became a huge obsession and hence, a big business (and not just for Ty, the company that made them.) Collectors started their own side businesses to provide information about the mania. From the LA Times:

In February 1997, Peggy Gallagher self-published “The Beanie Baby Phenomenon,” a 52-page paperback priced at $24. It sold 77,000 copies.

“I made over $200,000 in a few short months,” said Gallagher.

A Chicago publisher approached her in 1997, and suddenly Sobolewski was editor-in-chief of Mary Beth’s Beanie World magazine (later renamed Mary Beth’s Bean Bag World after some legal prodding from Ty).

At its 1998 peak, the magazine was thicker than Glamour or Fortune and was selling 650,000 copies a month at a newsstand price of $5.99. It contained ads from dealers and articles about collectors, but the heart of the magazine was the price survey.

Sobolewski’s survey filled the same need for Beanie Babies as “pink sheet” price listings do for obscure over-the-counter stocks: It helped keep the market orderly by giving buyers and sellers at least a reference point for negotiations.

But like all good things, as soon as Ty announced in late 1999 that they would cease production of ALL beanies, everyone began to sell and the market dropped out. Even though Ty eventually began producing again, the mania was over.

What is the market for them now?

If you own beanie babies today, you probably know that there isn’t much of a market for them. Like any collectible, the items that were rare or scarce, have held their value the best. Everything else is basically worthless. On Craigslist, you can find pretty desperate owners who say things like, “please take them off my hands” or “just trying to clear out kids room.”

In another listing, a seller with about 50 original beanies from the early years is selling them for $100 or “best offer.” There is a group of sad little pictures of them in the ad.

If you go on ebay it’s even more depressing. There are over 12,000 listings for beanie babies. If you add on the words “rare” or “limited edition” you get fewer- but even the “rare” aren’t worth much. A quick scroll through the listings doesn’t show any of them going for more than $15.

Yes, $15.

Yet at one time, some of them were going for thousands of dollars.

The Lessons from the Beanie Baby Bubble

1. Following the herd doesn’t always work. Thousands of regular Americans became, literally, obsessed with Beanie Babies. It was a warning sign to get out.

2. If it seems too good to be true, it is. Why would anyone think a stuffed animal should sell for $1000? But then, there are baseball cards, which are simply cardboard, selling for far more than that. With collectibles, you have to be smart and know the market. The more of the product that is made, obviously, the less your item will be worth.

Conclusion: Someone is always holding the bad end of the stick in a bubble. Those without a chair when the music stops get burned. These are “investors” who were late to the game or couldn’t get out in time when the game ended. We are, unfortunately, seeing this all too clearly again with the housing bubble.

Don’t follow the herd!

And buy an investment that actually makes you money. Buy stocks that pay dividends. As a shareholder, you are an owner of a business that (hopefully) is productive and makes money. As an owner, you reap the benefits of the business.