Alternative assets, Tutankhamun & entropy
Two things I enjoy in this world are investments and Magic: The Gathering, and believe it or not they do intersect. Despite this, I’ve never been particularly interested in venturing into the centre of the Venn diagram, predominantly because I enjoy Magic for its intellectual challenges as a game and you can achieve that with some very cheap cardboard. The other reason is entropy.
I’m probably going to butcher the science here, but in basic terms entropy dictates that the universe tends towards disorder. Entropy is always increasing. A sand castle has very low entropy, where the grains of sand have a finite number of arrangements for it to still look like a sand castle. Compared to a beach, where no matter how much the sand is blown around, it still looks like a beach. And for whatever reason, the universe prefers beaches over sand castles.
This becomes a problem for me with many alternative asset classes. A Monet is under constant bombardment from this atomic battle, and left to the hands of time, will eventually crumble. Imagine you spent several million dollars on that Monet and it is only objectively worth several million dollars as long as it still looks like the Monet you purchased. Granted this decay happens on a long time frame but it’s a fight against natural order and it has me nervous about this stuff.
In conjunction with that there are many other dangers a Monet could face which would diminish its value. If you display it in your home, the sun could bleach it, a flood could warp it, a fire would turn it to ash. Or if the natural world doesn’t render it worthless, the human world might. It could be stolen, slashed or otherwise defaced. There is no greater example of this to me than the treasures Howard Carter discovered when he unearthed the tomb of King Tutankhamun. Artifacts almost 4000 years old, displaying craftsmanship and knowledge from a civilisation that may have well been on another planet, they seem so distant. All of which now reside in museums around the world which have to try and protect them from earthquakes and world wars. One unforeseen event could evaporate relics that are beyond priceless.
The whole thing just feels fraught with danger to me!
So it was a surprise to me when recently, I picked up a few Magic card investments. Now it is a tentative step into the alternative asset class world, and it’s more about the emotional aspects of owning something with value, as opposed to any future ROI. The cards I purchased have negligible value in real world terms, but for pieces of cardboard, have what I would consider ‘enough value to be valuable’. Enough value to where I feel as much a custodian of a piece of gaming history as I do an investor.
It has been incredibly thought provoking so far, and something i’ll likely continue to deliberate. The returns seem to have more built in downside pressure, but just like buying an investment watch, I can get enjoyment from using my cards…If i’m feeling brave.
For right now though, they are sleeved, in top loaders, tucked in a folder inside my safe. Every once in a while, when there are no fires or earthquakes, I pull them out and have a quick look.
/Si
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