Note: Collectibles — like startups — are alternative investments. If done right, collectibles investing can help pad your portfolio nicely. That doesn’t mean that any old junk in the attic is worth millions. But if you do your research, you can track down some valuable items. 

Take sports memorabilia for example. Some of the world’s priciest items include Babe Ruth’s jersey, Muhammad Ali’s boxing gloves and Bill Tilden’s 1920 Wimbledon trophy. 

As with any investment, it’s important to have a strategy when considering a collectibles investment. Our friends at Early Investing cover exactly that in today’s piece. Vin Narayanan, vice president of strategy over at Early Investing, is a big sports fan. But he understands the dangers of investing in sports memorabilia from “retired” athletes. Read his article below to learn how to avoid striking out in the collectibles market.

Normally, it’s not big investment news when a Super Bowl-winning quarterback retires or unretires. But then, not every Super Bowl-winning quarterback is Tom Brady.

Brady is widely considered to be the greatest quarterback of all time (as a Michigan State alum, I found that sentence painful to write). His 10 Super Bowl appearances and seven Super Bowl victories are unmatched in NFL history. No NFL franchise has won as many Super Bowls as Brady has.

Brady memorabilia and collectibles typically trade at a premium. And when Tom Brady retired on February 1, 2022 — with no threat of additional touchdown balls, game-worn jerseys, helmets and other types of memorabilia coming on the market — the value of much of his existing memorabilia went up.

On Saturday, a private collector paid $518,628 for the ball that was used for what everyone believed was Brady’s last touchdown pass. The very next day, Brady decided to unretire. Oops.

Overnight, the value of the “last touchdown ball” plummeted. And when Brady throws his next touchdown pass, it will be worth a fraction of what this collector paid for it.

Brady’s retirement lasted 40 days. If he had decided to “unretire” one day earlier, he would have saved this collector a lot of money.

That’s why all collectibles investors have to be wary when they buy sports memorabilia related to athletes who “just retired.” Because “just retired” athletes make a habit of coming out of retirement.

NBA icon and Chicago Bull great Michael Jordan retired (for the first time) in 1993. He came back in 1995 and retired again in 1998. He came back one more time in 2001 (for an unremarkable stint with the Washington Wizards). And he retired for good in 2003.

Hockey Hall of Famer Mario Lemieux retired in 1997 because of Hodgkin’s lymphoma. He returned to action in 2000.

Boxers Joe Louis, Muhammad Ali, Sugar Ray Leonard, George Foreman and Floyd Mayweather all retired more than once. As did Olympic swimmer Michael Phelps and tennis players Bjorn Borg, Martina Hingis, Kim Clijsters and Justine Henin.

You just can’t count on a player staying retired. And you have to factor that into any investment decision you make.

Collectibles can be fun to invest in. If you’re new to collectibles, the best strategy is to make sure you’re getting something that you’d really like to own. That way you can enjoy ownership while you hope the price goes up. I know I would love to own an original pair of Air Jordans or a 1991 New York Giants Super Bowl ring (sorry, Buffalo fans).  

If you want to buy something that is only valuable if a player is retired, then make sure that player is going to stay retired. Because the last thing you want is to end up like the person who bought the “last Tom Brady touchdown pass.” Even if you can afford it, spending more than $500,000 on a ball that loses almost all of its value the next day has to be painful.