Step Back, But Don't Fade Away: Luka Doncic Asset Prices
WeThe Hobby
Luka Doncic has more All-NBA 1st Team selections than Steph Curry, Dirk Nowitzki, or Kevin Garnett - as a 25-year old!
In just his 7th year in the league, the young Slovenian phenom nicknamed "Luka Magic" is already establishing himself as one of the premier basketball players across the globe.
As his performance on the court continues to exceed expectations, his asset prices continue to follow suit.
📈💰If you had invested $1,000 in 2018 into a Luka Doncic Trading Card ETF...
📈💰Less than 6 years later in May 2024, that $1,000 𝙬𝙤𝙪𝙡𝙙 𝙗𝙚 𝙬𝙤𝙧𝙩𝙝 ~$4,500 𝙩𝙤𝙙𝙖𝙮!
Even after including an approximate ~58% drop in Luka's asset prices over the last two years, Luka's player index is still significantly outperforming benchmark indices like the S&P Global's S&P500 or the Nasdaq Composite.
And as the Dallas Mavericks look to lock up the Oscar Robertson NBA Western Conference Finals Trophy - WeTheHobby's analytical team decided to delve into the data to determine the answer to one simple office water cooler question:
"Are Luka Doncic collectibles a smart investment?"
“Playing With Principal” - The Profitability Dilemma
We have all been there. Timing the market is tough. We all want to believe in our bets, and believe that asset price appreciation is a foregone conclusion.
Whether through stop-loss orders, sophisticated call-option leverage, or just the "NO MÁS" Roberto Durán-style of caving in to your friends' relentless beer-fueled peer pressure to double down on your favorite team in the 2nd half --> knowing when to hold 'em, and when to fold 'em is essential for any savvy #investor.
Especially for 2018 Prizm's with a total market cap in excess of $20 million, what do the buy / sell / hold forecasts say about the tradeoff of realizing recent gains (i.e. selling collectibles on market to liquidate position) vs. holding the asset in hopes of increased future-short term gains?
As the longest of investor of all on Luka, the analytics team over at WeTheHobby is now a believer on this question - and Mark Cuban's quote rings truer now more than ever with the #Mavs on the precipice...
"In business, to be a success, you only have to be right once." - Mark Cuban
How To Lever Recent Luka Doncic Performance Gains Into Short-Term Market Arbitrage Opportunity
Warren Buffet famously said, "𝘛𝘩𝘦 𝘴𝘪𝘯𝘨𝘭𝘦-𝘮𝘰𝘴𝘵 𝘪𝘮𝘱𝘰𝘳𝘵𝘢𝘯𝘵 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯 𝘪𝘯 𝘦𝘷𝘢𝘭𝘶𝘢𝘵𝘪𝘯𝘨 𝘢 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 𝘪𝘴 𝘱𝘳𝘪𝘤𝘪𝘯𝘨 𝘱𝘰𝘸𝘦𝘳".
With low, fixed-supply consumer markets (such as art collecting, or sport trading card investing) --> pricing power ultimately rests with the #consumer. It is the consumer elasticities of demand that dictate auction and market pricing. If many consumers want a given item, and that item is in low-supply, generally that results in a low elasticity of demand (changing prices has a lower relative impact on changing demand)...meaning you can net more profit.
With Luka's dominance and (as of May 27th) his rising Vegas probabilities according to ESPN of winning his first NBA Finals MVP award...
...it is possible to take advantage of the differences in time-horizons between short-term sports betting player future markets, and the long-term collector's market to either hedge/parlay different Doncic asset class investments into an arbitrage opportunity.
Co-Variance With His Co-Star
With a covariance score of ~.78 over the last year, Kyrie Irving's asset prices have moved in concert with his teammates. And, as you can see with an ~11% ROI in the last month alone, as Dallas creeps closer to the the NBA Finals, we'd expect a signature Kyrie Finals performance akin to his Cleveland Cavaliers title run to generate at minimum 8% lift in asset prices in the 3 months following a (hypothetical) Mavericks Championship.
Putting It All Together
Whether Luka cinches his first title this June or not - he has proven a smart investment for collectors. With the Boston Celtics still standing in the way of a Mavericks NBA Title, betting on Doncic is no guarantee for short-term financial gains.
But with the way his market is looking and the steadily improving championship odds of the Doncic-led Mavericks...
...bet against "Luka Magic" at your own risk.