Investment Portfolio Diversification
Speed Wins
Principle #1
Speed Wins. This means moving in and out of cards quickly, and being first to the market.
If you're looking for a discussion on GOATS, HEROES, FLIERS and an ideal breakdown within your portfolio to diversify it across these kinds of investments, the reality is that none of that really matters.
While in theory it makes sense to buy a guy like Messi over Endrick, or a guy like Michael Jordan over SGA, or Mike Trout over Dylan Crews, the reality is that holding a sports card to try to beat inflation is way riskier than simply moving in and out of the market at the right time.
That's why when it comes to portfolio diversification, it's more important to properly diversify across quick flips (within 3-4 weeks), intermediate plays (1-3 months), and longer term holds (4-12 months).
For example, a GOAT like Jordan, could still be a quick flip, while a FLIER like Scoot Henderson, could still be a longer term hold.
For cash flow purposes, it's more important to have a plan for the card, rather than let the card dictate the plan. If you have too many long term holds, you'll inevitably be short on cash in the short term, with no way to profit. If you have too many quick flips, you may massively limit your upside due to not having enough cards at true selling markers.
It's also important to diversify between your Raw To Grade plays and your Already Graded plays.
For example, when grading cards, you have a plan for the card. The plan is to buy raw, grade and sell ASAP, based on our Raw To Grade Formula Based Rankings.
You will not win each individual transaction, but you will win overall, because you're limited your downside while giving yourself a shot at PSA 10 upside with every card. The numbers always work out in the end, we just can't say whether your margin will be 10% or 100%+
When you buy an already graded card, you're fully dependent on a selling marker. You have to be aware that a sell by date will be the last chance to sell, but that markers may occur earlier to maximize profits.
If you put all your eggs in the Already Graded basket, you're limiting your upside and relying on hype and performance spikes.
If you put all your eggs in the Raw To Grade basket, you're risking not getting enough PSA 10s in the process to truly win big, this is why buying the right card for the right player at the right time, but diversifying between Raw To Grade and Already Graded is important.
To really be a high roller, you have to be moving all the time. And fast. Don't stand still, and in order to move fast, you need the proper diversification described above.