Player Archetypes and Valuation

 What makes a card valuable—not expensive, but valuable? Matt shares the questions driving his research: Can sets tell us a player's lowest common denominator? Which archetypes have the most seasonal volatility? How do sports card markets mature as alternate assets? From GOAT multipliers to post-hype sleepers, generational prospects to position-specific volatility bands—the frameworks being built behind the scenes at Slabnomics. No deep dives this week, just the questions that will define future episodes. 

Weekly Newsletter Signup: Slabnomics.com
🎥Youtube
📸Instagram

Transcript

0:12

Welcome to Slabnomics. is episode 40. So this is my midlife crisis episode, y'all. I'm coming to you today on Slabnomics, of course, to talk to you about what I can do to help you make better sports card decisions, But also what I want to do this episode is share with you a little bit about what my vision is, the questions that I'm working on. and where you guys can give me feedback so that I can help you get more where you need to go specifically. It's gonna be a great episode, maybe a little bit different than what you're used to. I'm not gonna do a lot of deep dives into concepts, but we will touch on what I've really been stewing on these past few weeks. So that being said, I really wanna urge you guys, if there's anything in this episode that really speaks to you and says, hey, name, this is something that you should really pay attention to or something that grips you, pause the episode, go to Slabnomics Instagram, get into my DMs and let me know what that thing was because that's going to help me understand where all you guys are coming from. and where I can best give you the resources that you need Sound fair? Cool. So the reason that I'm structuring this episode this way in a little bit different of a format is because I've been spending a lot of time building things in the background for you guys. Now I'm really, really excited about bringing those things to light, but we're not quite there yet. So. Instead of giving you a half ass podcast I want to speak more about a little bit about what I'm doing, but also figuring out if we're going down the right path because I'm building this with you and for you. So the biggest thing that I've really been considering is how sports card markets mature. See, I'm from the stock market world. I've read the Intelligent Investor, all of Buffett's letters to his shareholders, one up on Wall Street, a random walk down Wall Street, pretty much any financial book that you can name. I've read it. And at the same time, I was in the trenches writing about equity markets from the years of 2014 till about 2018. I was writing on seeking alpha investopedia, a little bit of Forbes motley fool. And during that time, I was familiarizing myself with the concepts around valuation investing, as well as technical investing. Those were the two big schools of thought at the time. So when I come into the sports card markets, I'm looking at these things as alternate assets, which means I want to find metrics, indicators, data, data intelligence that we can apply to these markets in order to understand them and in order to meet our investing goals. because if you're looking at sports cards as alternate investments, that's why you're here listening to Slapnomics. If you're just looking to do it for the fun of it and you don't care what any valuations ever are, this really isn't the podcast for you. But if you're looking to answer the same question that people try and answer with their equity portfolios, how can I beat the market? How can I have an edge? How can I seek alpha? Then this is the kind of podcast that's going to help you do it. So in that vein, I'm trying to understand these markets that I'm playing within more and more and boil them down so that we can find patterns within the data. Really all we have for data is sales data and population data. Those are the two main pieces that we have. equities have really the same thing. What if things sold for what were events, what were technical indicators that led to these going up or going down of the stock prices. So that's my question. How do sports cards mature? That's my overarching umbrella question. Because if we understand how they mature as assets and we understand the different catalysts that are going to move those markets into maturity, then we're going to understand where we are when we're in it. Sometimes it can be really hard to have that perspective. It's like having perspective about how far you have to swim when you're in the middle of a lake. You just don't have any landmarks around you. You're in unfamiliar, uncharted waters. Hard to know where you're going. You're just focusing on keeping alive. It can feel that way in sports cards where you don't know if you should be excited about the next few months, if you should be worried that it's all going to end. Is it the end of a bull market? Is it the beginning of a bear market? Do those terms even apply here? So there's just not a lot of data. And the data we do have, we think it tells us certain things. but we don't really know if it does. For instance, what makes a card or player behind that card valuable? Not expensive, which is just a term that means over some kind of baseline is it more or less than we should expect, But valuable, I don't think systematically we know why the 1986 Fleer Jordan is valuable. And sometimes it was more valuable than others. Maybe it was 2x more valuable. In 2021 and then by the end of 2022 it all of a sudden was worth half of what it was before. But there are some things that we know when we compare from one thing to another. For instance, Michael Jordan's cards are generally more valuable than Karl Malone's cards. That's something that's pretty intuitive. We know that Tom Brady cards are more valuable than Rex Grossman cards. We also know that Tom Brady's cards are more valuable than Calvin Johnson's cards, but that's something else entirely. But when we make these comparisons, why do we know these things and how much are these values different? It's like have millions of data points and we just don't really know how to connect them except in the patterns that our mind can coherently take in. So I'm working on something around that. It's almost like being able to build a neural map so that we can see why we value things the way that we value things and so that we can understand how to value things more quickly when we're looking at forecasting or prospecting. And I think that's gonna be incredibly valuable for you guys. But while I'm working on that in the background, I'm still building out frameworks of how we're going to answer the questions that I have. So even if you're not in the trenches running the analysis of this spreadsheet connected to that player spreadsheet, comparing this set to that set, I want to give you the questions that I've been thinking about along these lines so that they can inform you when you're looking at your purchases over the next few weeks while I'm getting everything else ready. So here's my first working theory. The human brain likes to make analogies and comparisons. When it comes to sports cards, when we look at players and we try and value them, there are certain archetypes that emerge out of the shadows of unvalued territory into valued territory. For instance, if you see a rookie QB who has a fantastic year, you come to the end of that year and you kind of know what your expectations are for those cards going forward. Depending on where the expectations were for that quarterback being drafted, you know that now going forward, you probably have a range of expectations around him after that really great season he had as a rookie. If he didn't have a lot of expectations coming out, you know that expectations going into the second year are going to be pretty muted. But if he was pretty ballyhooed and he was highly drafted and he did well the first year, then you're going to get compounding expectations and they're going to be even higher. So if you just look at those two lanes, what do we always see happen? sophomore slump, right? The second year, the guy that did really, really well and was drafted high, second year defenses adjust, doesn't have a great year, his card market goes down. I would say that is not the exception, that's the rule. On the other hand, when the guy that wasn't really highly drafted had a fantastic rookie year, that usually tells us a lot more about what that player's career is going to be like. Because that archetype, He came out and wasn't being frothed over by scouts and coaches. He was just someone that put in the work and he earned his spot immediately. That's usually a chip on the shoulder first guy in the gym kind of guy and the leader of men. If he was able to get those guys behind him without the benefit of draft capital So you might think to yourself, where are you going with this? What I'm saying here is those are data points that have built these models that exist within our brain that we're probably not able to communicate very clearly. I can't really tell you what that archetype is of the player that was drafted low and then ends up outperforming and winning his job and how that relationship exists for his first year going into the second year for a quarterback. versus how is that different for running back, so positionally different, versus what the draft expectations were when you don't live up to them and what your percentage is for being able to succeed after that. Who can usually do that is fancy football analysts because they have enough data where they can go and they can look at all those things and they've thought about him and they've tried to plug them into their teams for 20 years. So they already kind of have those built-in frameworks of understanding the common paths that these guys go down, these archetypes. So we have terms like post type sleepers, where someone had a lot of pedigree coming out, didn't really perform well in their freshman year, but then going into sophomore year, they usually do really well because they still had all the tools and They just had to get their mental game together. the point of all this is that these archetypes are built off of these data points that we see as their picture becomes more more clear. But by the time the picture is fully formed, everything's really baked in. But what if we are able to see those dots before we drew the lines in between them? That's what I really want to do. And that's what's going to inform a lot of these valuation metrics that I want to build for you guys these frameworks that are going to get built under slapnomix's umbrella. But here's the problem. When we talk about frameworks, framework is really just a set of guiding principles that lets us understand what is encapsulated within. So my second question, specifically around frameworks, is can sets tell us the lowest common denominator of a player? And I find this really intriguing. So let's say I wanted to find what Messi's true value was in the card market. It's almost impossible because the cards tell us what the valuations are. But those cards are within different sets, which are valued in different ways. But what if I was able to look at all the sets and build out coefficients from all of those? So if I looked at 2014 Prism Messi and I was able to take his base value there compared against the 2018 Topps Chrome base value and compared that against the Dunrus Optic 2018 base, and I just took all of them and I was able to pull out and compare against all the different sets that they have. We should be able to find base coefficients that then get multiplied out by the sets. Now that was a lot of words. So hopefully I didn't lose you on that. But basically what we're saying is if you think about back in your algebraic days with math, you want to find the lowest common denominator, right? 4 over 200 is really the same at the end of the day as 1 over 50. I think that sets can give us a little bit of that same kind of information. Now it's gonna be really tricky and this is probably gonna be one of the most challenging projects that I embark upon. But the cool thing is the sets are the framework of the valuation for all the players that are encompassed within that set. So it gives us a lot of data points that can kind of work with each other a little bit. Now what's really challenging is there's a lot of variables that go into making those cards more or less valuable within those sets. especially when you look at something like soccer, where the kit is really important. But the more we can compare against these things, the more that we can get to our lowest common denominator, the more this all becomes math. And if you followed Slavnomics for a while, you know, I want you to show me the math. And I want to show you the math. So the lowest common denominator idea within sets is going to be something that I'm going to flush out and you're going to see a lot more of as I touch upon it and probably fail a lot, but also get to the truth at the end of the day. To really sum it up, if you're a Slabnomics follower, you know I do market, legacy, and design as my valuation peers. Design is the last part of that. Sets are really the design portion. So if you strip that out, you really just have market and legacy, which are the player-specific variables for valuation. And the design is something that we can isolate within the set. So a little bit more wordy on that one. I promise the rest of this won't be as wordy as that. Bad radio here, there's your math stuff. Now, after all of that, you might be thinking to yourself, that's all well and good, but I have no earthly idea how that's gonna help me make more profit in sports cards. And because I've sat here and probably already ranted for 2000 words, you're probably right. So I'm going to give you something a little bit more practical, which is going to help you make better financial decisions. Ready? What I really want to do is find out what archetypes or type of players are going to get more of a seasonal bump in and out. Because once we figure out what makes these players tick within the card markets, we're going to be able to see which ones are going to catch fire more and get more hype going into the off season and which ones are more of a better bet to not really get any of that hype juice. Because I know I said that the valuation of a card is based off of market legacy and design, and that is the fundamental valuation in how I see it. but that is shrouded or imbued, you will, with hype, which is the NOS of demand. So that's my third question. What archetypes are going to have the most volatility to get me the highest ceilings when I'm looking at taking bets based off of seasonal demand? For instance, do second year QBs usually get the most bump going into the off season? Maybe it's third year running backs. Maybe it's wide receivers going into their first new contract here. If we let the data speak to us, the data will always give us some crazy stuff we never would have told it to say back to us. Alright, so now that I've shared some of the questions that I've been thinking of and the overall umbrella of what I'm trying to accomplish a little bit with you guys, I want to go over some of my early hypotheses. And these are the kind of things I'm going to give you four or five of them. Let me know what of these really jumps out to you as really interesting. Alright, so that's where you hit me up at Slabnomics on Instagram and Just give me a little one word DM that says goat or whatever it is. So the first hypothesis that I have, I believe that the goat archetype, which is your MJ, your messy, I think it can only be one. I think they trade by different rules and at different multiples that far outstrip any other player archetype. We're talking like 15X, 25X, and if you go into the high end, it's going to be mostly made up of these goats. Second hypothesis, believe that the generational prospect archetype is going to be the one that makes the most money in the short term because they have the most volatility. The generational prospect, when they're first going out, go up the most and then they come down the most. Stands to reason, but I want the data to tell me if that's true and also what it looks like after that runs and how long that cycle takes. Hypothesis number three, it's my favorite hypothesis. And it is that post-hype sleepers are the best medium term investment. Post-hype sleepers means these are the guys that maybe weren't the number one pick, but they were like the number two to number four picks. They had good expectations, but there was someone else that soaked up most of the expectations, got most of the limelight and most of the investment dollars. These guys came out, they had a good season, maybe showed some flashes but didn't really like the world on fire and people kind of forgot about him because out of sight out of mind what have you done for me lately kind of stuff and a lot of times these are the guys that were putting in the hard work they were showing the incremental progress And these are the guys that show up in year two and year three and just blow the doors off everything because they sat there and they worked while everyone else was just trying to chase clout. Alright, last hypothesis. I believe that position tiers are going to have different volatility bands. That means you're probably going to have higher ceilings and lower floors on quarterbacks, but you're going to have narrower bands within wide receivers running backs. I don't even know. The NFL card market is crazy. But I think this goes across all sports. think position specific archetypes are going to be really important to look at to know where a player's ceiling and floor really is when you're at investing in that player. I look forward to seeing if that bears fruit or not in the data. So I got a couple things more to say, then I'm gonna get you out of here nice and short for you guys, just letting you hear the sultry sound of my voice Remember to go ahead and vote on my brackets that I have going on in Instagram as well. Really excited to see how those go out. And then my newsletter, Comped which you can find at Slabnomics.com. Sign up for free on that. There's going to be so much that's going to come out of that, I promise you. So make sure you're signed up to that newsletter now. Here's some immediate applications for you before I send you on your way. Number one, start thinking about archetypes. I know you guys already do this with goats because we're trained to do that. And I've seen that a lot on the bracket voting, which is great. But let's go deeper. Let's think about who's a post-hype sleeper and what that can mean. Let's think about what the expectations are for a young player and how that can impact what happens if they fall short. Let's think about if that player is just a role player because whether they're good or they're great, their card market isn't really going to reflect that. And application number three, where is the volatility? Where have you seen it? Where have you seen things popping off? Where are the patterns emerging for you? Think about that as you go along. And I promise you guys, once I have the data, I'm going to be sharing this with you So be excited for that And as we close, guys, I know that I mentioned that I'm trying to think of all these archetype things and how they really build into this picture that I'm painting. But this player valuation exercise is part of something bigger as well. Yes, figuring out this alternate asset market. But also, how does that compare to things not even like equities? How does it compare to antique cars in that market? How does it maybe compare to Rolexes? And what can we learn from that? So Slepnomics is going to be about how we can build in all this data intelligence and how we can make it the most robust that we can so that our decisions are incrementally better and better and better if you're using this information available. Because I really think that the stuff is connected, guys. I really do. Like, if you can understand the 125-year baseball card history and the different waves and fluctuations and the maturing process of that and apply that, lay it on top of other markets that are a little bit newer and see how they kind of compare and contrast, that will tell us a lot. Something like looking at how vintage, modern, and ultra-modern cards play with each other. What does well in bull markets? What does well in bear markets? This is all stuff that I really want to explore. because it's all connected and I want the data to tell us the truth. So that's where my head is guys. I don't have all the answers yet. I do believe sometimes asking the right questions though can be more important than getting rushed answers. So as always, thanks a lot for being along for this Labonomics ride. I appreciate having you here. Thank you so much for all of the engagement on all the platforms, especially on Instagram. Now over 1.1 million views on that PSA9 is dead post, just incredible stuff. So thank you guys so much for your support. As always, keep building and I will talk to you later.