Asset Trip with Ezra Levine: From Collector to Investor, Merging Passion and Profit

And did you personally get into collectibles by way of investing, or did you get into investing by way of collectibles? What did that career path look like?

That is a loaded question in the world of collectibles because people really are both. They're collectors and they're investors. There's definitely the old guard who kind of boos at any mention of investing. But when you look at the data, it is very clear that this has been a really profitable place to invest historically. 

Now what you're seeing is, as the prices continue to rise, people are looking at this as an investment vehicle. So I always say what's cool about the collectibles industry is it marries passion and profits. It's an area where you can deploy money and have fun doing it, and it's a real passion-led niche. But it's also a place where you can make a lot of money. I think a lot of collectors are also investors just by nature. And a lot of the people who get into it just purely from an investment mindset actually become collectors, because they wind up loving the subject matter as well.

Now that fractional investing is open to people, and so many more people can invest in collectibles, how do you see this asset class fitting into your everyday investor's portfolio?

I see it exploding. Obviously, when people think of their traditional portfolio allocation, you think of stocks and bonds and real estate and commodities. My personal view of the next three to five years is you're gonna hear about collectibles, and obviously you're already hearing about crypto, as part of that portfolio allocation. I firmly believe that collectibles will really become mainstream in terms of allocating some percentage of your portfolio to [the asset class]. 

How much is a function of your risk tolerance and your conviction and all those things, but I firmly believe that collectibles are an unbelievable thing to invest in. Again, I wouldn't go full turkey into it, just like I wouldn't go full turkey into anything, but I definitely think that it'll become pretty mainstream for people to have some allocation of collectibles in their portfolio.

What do you see there in terms of investing strategy, what does adding collectibles to a portfolio do for an investor?

I would say it's not any collectible, right? It has to check some boxes. It's gotta be rare. It's gotta be scarce. It's gotta be in good shape. It can't be junky and ripped and poor. It's gotta be culturally and historically relevant. 

If you check off those boxes, I think historically collectibles have been a great store of value. In a lot of cases, [collectibles] provided higher returns over long periods of time than the traditional stock market. I also think they've been terrific inflation hedges. So it checks the box of being a diversified investment that has a low degree of correlation with the broader markets. Oftentimes, it's been items that people actually hold onto during periods of economic stress because of that passion factor.

I'm curious, do you get many investors who get into collectibles just purely based on financials or is there always kind of that hobby and passion aspect involved?

It's a great question. We're certainly seeing a lot of people come in purely for profit-making potential. But the cool thing about collectibles in general is when people understand it and they educate themselves on it, they tend to love it. Something will connect to everyone, right? Whether that's things you grew up with or your parents loved or athletes or moments. I mean, there's all types of stuff that people don't necessarily think will connect with them emotionally, but they often find something that does and that kind of opens up the world [of collecting] to them. The mentality of a collector is a very specific breed, but they're really passionate.

Do you have any advice for more traditional investors who are maybe intrigued by collectibles? They're looking at them wondering, do I invest in sports cards? Do I invest in sneakers? How do they get started?

It all comes down to education. You should definitely do your homework and your due diligence on it. You should figure out where your comfort lies and where your interest lies. I mean, there's definitely correlation between interest and sort of willingness to spend and to hold onto something. What's cool about sports is that sports tend to be the most populist out of all these collectible categories. Not a lot of people have had exposure to high-end art, except when they go to museums, but a lot of people grew up liking sports, playing sports. So people tend to get into sports sooner than some of the other collectible categories.

But it really just comes down to education and spending the time to get to know what has historically moved markets and what items historically have done better than others. The most common wisdom or learnings people would give is to focus on the best of the best, the most iconic athletes. The Babes and the Jordans and the Gretzkys, names that almost transcend sports. They're just part of culture. Those tend to be the best areas to look at. From there it's really a matter of just educating yourself and kind of diving a little deeper into it.

Can you talk a little bit about your personal investments, your investing strategy goals and how you allocate your assets according to that?

So within sports collectibles, I tend to follow that similar script of focusing on the best of the best. My rule of thumb is I like to invest in people who have a day named after them. So for instance, Jackie Robinson Day. I collect a lot of Jackie Robinson because every year there's one day in the baseball calendar where everyone is talking about what an amazing legacy Jackie Robinson had. Historically, that's actually been one of the best predictors of value. It's kind of free marketing for your own collectible. I also look at athletes and figures and items that transcend just sports, things that have cultural relevance also.

So in terms of how I allocate, I'm obviously heavily exposed to collectibles, you know, just by sheer virtue of the company that we're operating. I personally have an allocation of 5% to 10% of my portfolio within collectibles, and that tends to be what a lot of people say—anywhere between 2% to 10% of your portfolio should be allocated to collectibles.

How did you first get into collectibles? Have you just been collecting sports cards since you were a kid or...

I give my dad all the credit. He's been a collector for a long time. So I just grew up with it, you know. He loved to collect, and he would always bring my siblings and I into the room and show us what he bought and explain why he bought it. And he built friendships within the industry and the hobby. He definitely turned me onto it, but it is one of those things where when you delve deep and you get to know it, you do tend to stick around. Because it's really fun.

Speaking of fun asset classes, are there any other asset classes that you don't currently invest in but you've been curious about?

I mean, I tend to allocate a little bit to everything. Honestly, I think in order to learn about anything, you have to have a little skin in the game. So sometimes when there are new verticals that pop up, (I did this with crypto), I just put a little money into it. So I mean, you know, I have stocks, I don't actually think I have any bonds anymore. I think I got rid of all my bonds. But stocks, real estate, collectibles, a little bit of crypto, not much. And other collectible categories too. I've actually been getting into historical stuff, so historical documents, stuff of old presidents. One interesting thing is that presidential collectibles and presidential memorabilia, in my opinion, are deeply undervalued. So I've been collecting stuff of Teddy Roosevelt and George Washington. You'd be surprised how some of these old historical items are just not that expensive.

That's pretty cool. Do you happen to remember what your very first investment was? Not necessarily within collectibles, but just the first investment ever.

I actually do remember. I mean, I don't know if this is technically my investment, but I remember I was in a stock market class when I was in third grade. We did a school project. You had to pick like three stocks to invest and you had to have your parents invest, whether that was one share or whatever. So I think the first stock that I ever bought was Pfizer.

Well, I bought two stocks. I'll never forget this. I bought Pepsi and I bought Pfizer, and I bought them mostly because my dad told me to buy them. But I have a younger sister, and when my younger sister was born, I was in the hospital room with my uncle, and my uncle saw this soda vending machine. He said, I own Pepsi. And I'm like, what? And he goes, yeah, I'm an owner of Pepsi. And I thought he was like the wealthiest man of all time. I'm like you own Pepsi. What do you mean you own Pepsi? And then it came to light that he owned like 10 shares of Pepsi stock. But from that experience, I bought a couple of shares of Pepsi in my third grade account. And we also bought Pfizer. Both actually would've been good buys at the time if we held onto them.

If you could go back to your 18-year-old self and give yourself one piece of investing advice, what would it be?

Hmm. I would say, the same theory I applied to collectibles—buy the best of the best. Oftentimes I think people have this misnomer that taking more risk equals the potential for more returns. And actually, I don't think that's accurate. Sometimes the least amount of risk actually leads to the best returns in a lot of cases, because there's always sort of a flight to quality. So I would say buy the best of the best in whatever increments you can afford to do so. It's all about time in the market, right? The amount of time that you're invested to allow compound interest in markets to play out is more important than trying to time the market.

For our last question, I'm gonna put you on the spot a little bit. Can you name your biggest investing win and biggest investing loss?

I remember I bought a speculative biotech stock. It was called Enthera Pharmaceuticals. I gotta see if it's still even a thing. <Laugh> It trades on the pink sheet at 0 dollars and 0 cents. So this makes a lot of sense. It was one of these things where it was like one of these stock tips from someone, I can't even remember who it was. Someone's like buy this company, the stock sprung way up. And I did no research and I put some money into it. And it was a speculative pharmaceutical company that was seeking to get FDA approval for one of their drugs and went to zero. So I remember that as sort of my first lesson. First of all, I have no freaking idea about anything to do with biotech. I have no edge there. I have no understanding of it. I just blindly followed someone's advice. So that was definitely my biggest loss on a percentage basis, not on a dollar basis.

My biggest win...I mean, I haven't sold a lot of my biggest winners quite honestly. I tend to try to hold on for a long time. I still have some Amazon, some Google, some Facebook. Those have obviously been wins, but, you know, in general, I think it goes back to the quality factor. You buy the best of the best and hold on for a long time, and it tends historically to do pretty well.

Take your own Asset Trip

If you're interested in investing like Ezra, you can check out these platforms:

• Collectable: Invest in the world’s most iconic sports cards and memorabilia. Own real shares of sports history.
• Otis: The stock market for culture. Buy and sell shares of collectibles, sneakers, and art.