1583 - Push Backs 2.0

Foreign. Doctor James Beckett Sports Card Insights Another pushback episode 2.0 had one before I went to the Toronto show. I'm a faithful listener. Jeremy Lee's Sports Card Live and he was going to be hosting me up there and I thought I would suggest some conversation starters so we'd have something to talk about. But we have plenty to talk about. When I listen to his show, I'm kind of making notes and realizing I think there's more to the story. It's not so much things said that are incorrect, but there's more to the story. I have something to add, especially in cases where I've had personal experience in the hobbies. Thanks Sponsors Topps Panini, Upper Deck Heritage Auctions, Hugs and Scott Auctions Mike Stadium Sports Cards, Burbank sports cards, compse.com and Beckett Media Beckett Grading Beckett Authentication okay, so I've got five or six gentle pushbacks I think, but we are not on the same page about the state of grading and grading companies and how they do things. He's had some inside looks and he's got a lot of experience, but I co founded a grading company. I know how we did it and some of the things represented there. It's not the way we did it, not the way I wanted it, and I've been gone for a while, but I know the caliber of the pretty much all guys I hired at the time who had a lot of experience with cards. And then we developed a system and that system came up with the subgrades and was more sophisticated than psa. Although PSA has triumphed in the secondary market sales situation, which is not necessarily winner take all, but they have really dominated even though I think our grading was just as good. My point is not to rehash that that ship has sailed. PSA or collectors has acquired BGS as well as SGC and they're doing great in terms of volume. In fact, they've got so much volume they've had to put it on hold and BGS has had to put on hold. But Jeremy went on a riff and he's great at that. But talking about how the graders don't kind of know the difference between a 9 or a 10. It might be a 9, it might be a 10 and they really can't tell. Let me approach that from a couple of ways. I'm going to push back on the PSA thing in the sense that with psa, truly there can be a situation where something is not a 10 and not a 9. BTS would give it a half grade well, PSA doesn't do a half grade. So admittedly there could be some close calls of whether something is a 10. And a 10 for PSA is not unimprovable. It just means gem mint and a nine means mint. And we had Mr. Mint. He wasn't Mr. gem mint. In fact, many of my conversations with Alan Rosen were about the fact that if it came out of a pack, it was mint. He really didn't even believe in gem mint. It just was mint pack fresh. And so if it's slightly off centered, it was still mint to him one-of-one Be that as it may, PSA has to make the calls. They ultimately can't tell. They don't send it back and say we're not sure. They get another pair of eyes or a senior grader. And I guess in some case it could be closer to a 10 than it is to a 9. That there is a very micro defect that does not keep it from being a 10. But in the eyes of some graders, they might say if that knocks it down to a 9. Again with the BGS, you could look at the subgrades and you could see that one of the subgrades is a 9 and some of the others are tens or 9.5s. The point for me though is that it's not that graders can't tell whether whether it's a 9 or a 10. It's the scrutiny in the way I think our guys start out doing is it starts out if it's a brand new card at arm's length, it looks like a 10. It looks perfect, it looks unimprovable. As you get closer to it, you have micro mini and major defects that knock it down. So it's not like you start at zero and work your way up. You start at 10 and work your way down. If you have a modern card and have it in hand under magnified light and black light and all these other things they have, even computer assisted stuff, which I think they're all doing now, it's a 10 until it's not. Now, with BGS, a 10 would mean pristine would be unimprovable for each of the subgrades. That makes it black label. It's 10, 10, 10, 9.5. That means the surface is just barely not perfect, still gem mint, but not pristine, not unimprovable. You don't say, hey, I think it's a 9, I think it's 10. If one grader thinks it's a 9 and the other thinks it's a 10, it's a 9, because the one grader saw something that was wrong that kept it from being gem mint. And you could bring in a third grader. But the best graders are best at seeing the defects. And so if it's a junior grader, they should be getting a second opinion from a senior grader if they've been properly trained. And people talk about how many seconds they're looking at a card, they're looking at it enough that they, and especially with BGs, they're looking at all four subgrade dimensions to see each one of them. And so they're taking not necessarily minutes, but it's not a split second either. So these are the times I hope I'm on there, because when it's talked about grading and grading philosophy, I think it's represented too much as being haphazard and it certainly was not the rigor that we tried to bring to it. And you're very familiar with tag, speaking to Jeremy Tag and any. All of these technology assisted grading things are really trying to systematically identify deductions. And like I said, I think TAG starts with a thousand points hypothetically and works their way down. Okay, pushback number two, the grading standards and how they've evolved. And I think my pushback is it doesn't go back far enough. In the early 70s, there were several individuals or publications that had slightly different grading systems. And Denny Eckers and I put together those, synthesized them to some degree and got a lot of collector and dealer feedback and published what I think then became the de facto standard. And it was in words, it was not in numbers. Now, my conversation a while back with Nat Turner was about how the hobby really loves numbers. I'm a numbers guy. I love numbers too. But the importance of the original words, if this is near mint, that needs to mean near mint. Regardless of what the number is, the words also should have meaning. If it's gem mint or if it's pristine or it's near mint, plus whatever, whatever the words need to make sense. And I think those really haven't changed that much, the words. But the interpretation in terms of the numbers has taken on its own life, the way grading has evolved. It's not that graders got more strict perhaps as much as collectors and the series collectors got more strict and required greater scrutiny. But again, I think it's to be true to the original wording, which was from more than 50 years ago now. And this is how it involves Mookie Chilson, who's a frequent commenter and visited with him at the national this last year. And he's famous for being the pinhole guy. And I had a substantive conversation with him, not just him commenting, which he's got these clever comments when he's listening in on the episodes. And the pinhole thing, I realized that I. I don't know that I've explicitly said this, but the idea of the words of grading were more punitive toward collector created damage as opposed to manufacturer quality control. In other words, if something was slightly off center, that's maybe a little bit of a production defect, but it's really shouldn't be bounced out. It's just slightly off center. On the other hand, a pinhole or. Or what was more frequent in those days, thumbtacks or hole punches in cards. The word system from the early 70s that Denny and I synthesized was punitive toward collector created damage like that. And it was rarely just the tiny pinhole that you could barely see. It was like a thumbtack hole. And thumbtacks and cork boards were a thing in those days. And the hole punches, that's why you get this huge disparity in the technical grade and the perceived Yu-Gi-Oh appeal of something with a tiny pinhole. And the words have been interpreted more and more strictly that even a pinhole is major damage. I one-of-one say they're micro damage, but to me they're not major damage. But that's been a reinterpretation of the original words. PSA's qualifier system. A bunch of them have to do with collectors doing stupid things to cards like the MK or mark. Getting back to the words, I think is a good thing and realizing that the grading companies, they don't all have to go by the same playbook, but for the most part, they're looking back at those original definitions and reinterpreting them with the eyes of what they think collectors are looking for. The grading companies didn't invent these definitions. They're trying to work them out. Third pushback was the whole idea of manipulating cards or giving cards a bath. There's always this conversation that gets very negative, which I'm negative too, about cards that are either doctored or messed with. And can you put saliva on a card? Can you put distilled water on a card? Can you rub off a wax stain on the front or the back? Can you smooth out a corner? And there are levels of wrong in those things. If you have a card and you just drop it on the Fleer and you pick it up and you just think, oh, what happened to that corner? And you just. Number one, a good grader can see that the corner's been tweaked. If it bounced on the concrete and you then smoothed it out, whether you use a spoon or not, the good grader can see that corner is no longer pristine. You're going to get downgraded from that because they can see. So even light manipulation can sometimes be detected. Now, if it can't be detected, then it can't be detected. But the thing I haven't heard talked about is that when a card has a stain or something, and if you dip it in, give it a bath to try to dissolve glue or sugar or dirt or whatever it is, and then just dried out, I think that's wrong. But what's really wrong is the dunking, the bathing of the card in order to squeeze it, flatten it, stretch it, elongate it. So then you can make it oversized. Now it one-of-one be as thick. The card thickness will be detectable. And again, I hope the grading companies are detecting this. But that's the more heinous thing. Not that you're trying to get rid of a stain that is easily dissolved out. It's this attempt to enlarge the card and then using a laser cutter, cut it. Like I said, I hope they catch the bad guys, because to me, that's the worst thing. Any restoration should be recognized. But like I said, some are worse than others. And I just like to see the labels be on and they don't do that. Again, for being a grading company person, once you put something on that label, you have to stand behind it. And so if you could say evidence of trimming or trimming, if you say it was trimmed, then you have to be able to back it up. I'm not saying it's okay. I'm just saying that back in the day, if you had a gum stain on there, you wiped it off. And if you had a mud stain on there, you took a little saliva. And you didn't necessarily use a spoon, although you could use a spoon because the spoon is rounded using the back of the spoon, and if you push too hard, you see an indentation there. Restoration not in favor of it, except as truth in packaging. If you restore a card and you submit it for grading as a restored card and it gets that on the label, I have no problem with that. Pushback number four is that there's a lot of new money coming in the hobby. And my pushback is that new collectors are not the same as veteran collectors. The new money coming into the hobby, into the industry, is not the Same, I think. I don't know if I can prove this empirically, but it seems like the new people coming in have more money than the people that have been there a long time, other than the value of their collections. And they are more financially sophisticated, but so much less hobby sophisticated that it gives them a false sense of security that they've done well in other alternative investments. I just, I don't know if there need to be a mentoring situation, but if a new big buyer comes in, they ought to make friends with somebody that's been in the hobby for a long time and just run some of their theories by. Because some of the things that make sense in other industries or other financial markets do not make sense. But all the information that is out there is information, ostensibly facts, but they have to be taken into context. And from back in the days of the old Beckett price guides, that was foundational for me. Those were very high market share, very high level of trust, they were expertly prepared. And yet we had to do it over again every month because every month there was new information card ladders updating even more frequently. There are others out there, but that's just information that has to be put into context and the context is due with the timing and just the type of sale. Perhaps appeal is calling into question. I think some of the new money people are able to pick up on that, that the old fashioned way of the number grade only they're actually being smart about that. Whereas some of the more veteran collectors are interpreting grading standards in a more technical way. The whole idea of having good judgment and understanding what's going on in the hobby in the industry, data is good, but data is just one thing. And it's not just gut feeling, it's not just data. To me, it's all the above. To really have wisdom, to be able to process the facts, turn it into knowledge and make wise decisions. And I think a lot of that can involve hearing from both sides of hey, this is too expensive or hey, this is such a bargain. Too often the new money comes in and says, Yu-Gi-Oh this is, this looks like a bargain. It may not be a bargain based on what may be otherwise readily available. One of the places where the new money gets in trouble, and I hear David Chase, whom I'm enjoying getting to know and met and visited with him at the national too, is that he's frequently quoting the low pops on some of these obscure cards that have low pops because they were never worth grading. If he would ask me about some of these things, I would say Yu-Gi-Oh I used to have a lot of those. I got rid of them because nobody wanted them, admittedly 50 years ago. But it's not that they're scarce, it's just that they were underappreciated and just not esteemed back in the day. So hardly anybody would think about grading them. And so if they're not graded, they're going to have low pops. I agree in many cases they weren't well taken care of because they weren't esteemed back in the day. And a five could be a great grade for a lot of 30s cards, regardless of whether sports or not. The low pop is just how many cards have been graded. And the pop of some of those cards in the early days would have been zero. No one would have gotten them graded. You're mainly going to grade something because it's more valuable or it's higher condition in an unexpected way. If something's not gradable or perceived in the old days not being gradable, it's going to have a low pop. What David needs to be thinking about. And again, he's an inquisitor. Fascinating to hear his machinations. But what's the future pop going to be, especially when he's touting these conic characters? I think he's onto something. I just don't want to see him rely too much on low pops for cards that were never worth grading until now. And now nobody can grade other than high levels. Then pushback number five. David Novak was on there maybe a couple months ago now, and he was kind of criticized by the chat because he was taking money out of his 401k, a small amount, but he was borrowing it out, which is usually a no, no. Usually it's really bad news. It shows that somebody really has their priorities out of whack. But the rest of David's story, I wish I'd been on right there. Because this David Novak had amazing financial discipline in his personal life in terms of his spending restraint and budgeting and credit card discipline and all these things he had gone through. But the one thing that people Beckett up on is the exact discipline he had of taking out 50 bucks a month or whatever it to buy cards. The wisdom that comes from the knowledge you have to take into context the facts that, like I said, I just think he could do a seminar on being financially responsible. And it may be that his one thing that's unusual is something that, that just is demonstrating to him that I. That I'm controlling this. It's not controlling me. He's Very intentional. The people who get in trouble financially are people that are not intentional, that are not disciplined and go debt. That is a different kind of debt. When you're borrowing from yourself, you're not paying the bank, you're, you're, you're paying back your thing. And then pushback number six is just the whole idea and this doesn't come up very much on that show or other shows, but that prices are too high and production is too high. And to that I say yes. And yes, I think prices are too high. I think the production of modern cars is too high. But that's, that's just my opinion. I have no control over those things. But historically speaking, production seems too high and prices seem too high. That doesn't mean I'm calling for a, for a correction. But it wouldn't be a shock and it wouldn't be a shock to many of you that there would be some correction in terms of the prices of product and the quantity of product that's being produced and even the prices of the Apex cards within that product. When you, when you put out a product and there's a million dollar card in that product, of course the box price is going to be high. Of course production is going to be high. I don't think that's going to change anytime soon unless there's again some kind of a correction. Thank you, Jeremy. The sports car live ecosystem is so much fun for me. I'm not trying to disagree as much as add another voice and add some additional comments that I want to be dispassionate. Sometimes I get a little not carried away, but I just think, Yu-Gi-Oh I lived through some of these things and those were discussed in detail in those days and now these things sometimes come back around and it's just more the story. I just think the hobby is so great because you can think you know it all or you've seen it all and then something comes up that you haven't seen that you think, Yu-Gi-Oh that's cool too. Thanks everybody. Be back again in a couple days. Another episode.