5 Tips to INVEST in Baseball Prospects Without Losing Your Shirt - Watch Before Your Next Buy
February 11, 20227 min read
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So today's topic is going to be around five tips when investing in baseball prospects. Before we get to the whole topic today, I just kind of want to do a little quick little setup for you here on why I wanted to talk about this. In early February 2022, Goldin Auctions sold the most sought after Jasson Dominguez card. It was a 2020 First Bowman Super Refractor Auto card, which is a one of one. It's an on card auto, which is what everybody wants. No sticker auto, I hate sticker autos. I won't buy them. Of course it was graded at a PSA 10. Could this card really be graded at anything else, but a PSA 10? I mean, did they even look at the card, like, "oh, just put in a PSA 10 holder, it'll sell for a whole bunch more," but I don't know the card looks good, but he is the Yankees number one prospect right now. He's definitely one of the top baseball prospects. So this card, which was pulled out of a $20 pack sold with the buyer's premium for $474,000.
Think about that. $474K, pretty risky purchase for a guy who hasn't even made the big leagues yet. I'm not sure who bought it. Maybe it was one of those fractional share companies, but if you happen to know who did comment below, let us know who did. Again, just a crazy buy here. The guy hit .252 in low A ball last year in the minors. Now, stats are kind of a little messed up because of everything that's been shut down the seasons didn't go on. So it's kind of a weird stat to go off of, but .252 in low A ball last year. What are the chances this guy turns into Mike Trout? Okay, not great. 99% of prospects fail to live up to expectations.
Remember Brian Taylor, Todd van Poppel. I mean, we can go on and on and on. So I think we can agree $474,000 is a lot of money. So before we get to today's topic, I just want to touch on two things you could actually buy instead of Jasson Dominguez's card. So in the Bronx, New York, where hopefully he plays his career, you could buy a $490,000 house right now for a three bedroom house with a one and a half bath and 1300 square foot in the Bronx right now.
If you're 30 years old and you had this amount of cash sitting around, you could actually put it in some mutual funds, get an 8% rate of return. Over 30 years, you'd have approximately about $4.7 million. So that seems like a bit more safer bet to me. But again, these people that are buying cards, like this have way more money than me and they have some good ideas on what they want to do with this card. So obviously most of us aren't spending $474,000 on anything that doesn't have a mortgages attached to it.
So what can we learn from this purchase about investing in baseball prospects? They tend to be some of the more riskier ones versus like the NFL or the NBA, just because there's so many of them and there's so many different positions. They've got to go through the minor league. A lot of them are international players. We haven't really seen a lot, so there's just a big risk with baseball prospecting. Lots can happen during those years when they're playing in the minors, injuries and all that kind of stuff.
So let's talk about five tips today when investing in baseball prospects. First off, you know, I'm all about fun. Investing in collecting should always be fun. So my first tip is to invest in hometown guys. We're based here in Kansas city and Bobby Witt Jr. is a popular guy to buy around here. One of the Royals top prospects. So investing in a guy that you're going to watch potentially play in your hometown is way more fun than investing in anybody else outside of your hometown team. So I definitely encourage you to start with your hometown guys. They can definitely be, you know, cheap and fun to watch grow up. It's a fun thing to do with your kids too, because they're going to watch these guys play. So my first tip is to start investing with your hometown guys first, definitely way more fun and interesting than doing guys outside of your hometown.
Second tip is if you are investing in those guys that are outside of your hometown, there are a couple things to keep in mind. Generally speaking hitters are always better investments than pitchers, buy those hitters. Jacob Degrom I think we could probably agree he's definitely one of the top five pitchers, if not one of the best pitchers in the game. He doesn't sell anywhere near as much as guys like Mike Trout, Otani, Akuna. Obviously pitchers are only playing roughly once every five days. So the hitters are the guys that sell, always buy hitters.
Prospects from big time cities or organizations can also pay off a bit easier than the smaller town ones. Take Jasson Dominguez, for example. If he was playing for, let's say the Seattle Mariners or our Kansas City Royals, probably wouldn't sell nearly as much, but since he plays for the Yankees, they've got a huge fan base, tons of collectors, their stuff is going to sell for a premium more so than a Royals or a Seattle Mariners.
My third tip is research, research, research. The better you understand what kind of players you are investing in the better you will feel about that investment. You got to watch the player play the game. When you talk about football players, right, you can look at their stats all the time, but once you get the pads on that's when you know who can play the game, what do they look like on the field?
It's the same thing with baseball? What does these players look like? You can't just look at stats. They are a small part of that percentage, but if you look at guys like Mike Trout, watching him going through the minors, that guy played with a passion, he could do everything. So the stats only tell one part of the story.
Now, if you're investing a dollar or $2 in cards or some other cheap stuff for guys, obviously you don't need to know every intimate detail about these guys. That's not what I'm saying, but if you're going to be getting gung ho about it guy, and you want to spend $500, $1,000, $2,000 investing in some sort of player, you better know what type of player he is. Spend a few hours, maybe a day or so watching some film, talking, reading some other things, talking to other collectors and investors, figure out what kind of player this guy is. You're going to feel way better about buying or not buying a guy based off of your own research. Even then it's still not enough. Guys still bomb out, guys still suck when you thought they were going to be good, but doing some good solid research will kind of weed out some of those players.
Number four, spend what you are willing to lose. Same principles apply here when you go gambling or you go buy your crypto. Spend what you can comfortably afford to throw away. If the prospect turns into a big time hero, hey, basically you're winning with the house's money right now. Guy goes to crap, which again is most likely to happen. 99% of prospects fail. Hey, you've lost money that isn't life-changing to you. You know, you're not sweating every single night.
I mean, imagine the guys that are heavily invested, guys that have money they don't have, and they get injured. Like imagine what you would feel like every night, like, "oh my God, is this guy going to get better? He's gonna get it. But I got $10,000 tied up in him." Okay? Spend what you are willing and can't afford to lose.
Lastly, number five, buy items that sell no matter what team they're on. Guys get traded. They maybe come up with one organization and then they become a star with another organization. So you want to get items that sell, but also can transfer with a player should they get traded. Signed baseballs, rookie cards, bats, stuff like that is what sells for prospects, particularly the baseballs, because if you can get in guys on them cheap, let's say their $10 autographs to start off with you're into the baseballs for $15 or $20 and that's a really affordable way to pick up some baseballs on a guy. Rookie cards you can usually get those fairly cheap and get some of those signed at the stadium.
So those are the types of items that you want to be getting. I wouldn't do jerseys. They typically don't have jerseys for prospects anyway, because they don't know what their number is going to be like in the big leagues. So you can kind of stay away from those, but I would stay away from those anyway, I wouldn't do any minor league jerseys. Those don't sell. Stick to the baseballs, the rookie cards, and also the bats, that way you protect yourself, should a guy get traded.
So hopefully these five tips help you in investing in baseball prospects and just know that you're not going to win them all. You're going to lose some, it's okay. It's not a big deal. Just as long as you are spending money that you can afford to lose and also having some fun with it by investing in some hometown guys, I think you will have a blast investing in baseball prospects.
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