At some point in time investors and collectors alike will fall in love with a certain player's card and overpay for it. This happens when you get caught up in an auction bidding war, you are one of the first to buy a card after its release date, or you simply do not understand how to calculate/comp a cards market value. Hopefully, "TheFootballCardFormula" prevents the latter. But in any of these instances, there is still a way back to profitability! It's called dollar-cost averaging or "DCA" for short.
The theory behind DCA is that if you over pay for an item (a football card in our case) and you find another one at a significantly lower price, then you can buy the second item which makes the average of the two lower than your initial purchase. Before we dive into an example, it is important to note that you should only use DCA on cards that you truly believe will become valuable. Whether it is a belief in the player's ability or an upcoming player/team event (like your rookie WR getting a top 10 QB next season), you only want to use DCA for cards you strongly believe in. Now let's dive into an example!
You bought a raw rookie Garrett Wilson Mosaic Gold Auto #2/10 in 2022 while the Jets were struggling at the QB position. You bought the card on eBay for $250 and it was the first card to get posted after the Mosaic release. A week later the same pops up (#3/10) on eBay but the auction is currently only at $100 so you decide to use DCA. You enter the auction and win at a price of $150 ($100 lower than your original purchase). Now let's break this example down.
You used DCA in the above example because you truly believed in a rookie WR who played well in his first year with a struggling QB. The player/team event that provided upside for next season is a top-10 QB joining the team. The rookie card(s) you bought were from a popular card set (Mosaic), super-short printed (numbered to 10), and autographed. All boxes from "The Football Card Formula" for determining value were checked. As such, after a few weeks, the card has now last sold on eBay for $250 (your original purchase price on the first card). Let's look at the results!
If you had not used DCA in this example, you could have sold your original purchase for the same price that you bought it for a profit of $0. But since you used the DCA model, the average cost of each card you purchased is $200. Therefore, you can now sell one of your cards for a profit of $50 or both for a profit of $100. Another option would be for you to hold your second card (which is now valued $50 over your cost) and see if it continues to go up in value long-term. That is the power of DCA! Use it wisely.
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