Stock Market Anomalies and Baseball Cards

Stock Market Anomalies and Baseball Cards

June 27, 2016 Momentum Investing Research
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(Last Updated On: January 18, 2017)

I still have a Ken Griffey Jr. Rookie Card. To be honest, I don’t even know where the thing is, but I hope it is it worth a ton of money at this point (although I doubt it). So disclaimer up front: I dabbled in baseball card trading back in the day. And for all of you out there who used to trade baseball cards, you’ll enjoy this recent research paper from Joey Engelberg, Linh Le, and Jared Williams. h.t. Quantpedia

Stock Market Anomalies and Baseball Cards

We show that the market for baseball cards exhibits anomalies that are analogous to those that have been documented in financial markets, namely, momentum, price drift in the direction of past fundamental performance, and IPO under performance. Momentum profits are higher among active players than retired players, and among newer sets than older sets. Regarding IPO under performance, we find that newly issued rookie cards under perform newly issued cards of veteran players, and that newly issued sets under perform older sets. Our evidence is consistent with the predictions of Hong and Stein (1999) and Miller (1977).

Here are some key charts:

First, Rookie cards are like IPOs–start out great…and eventual fizzle out. (see Jay Ritter paper for background on IPO underperformance)

ipo and rookie cards

Second, momentum portfolios trading in baseball cards act a lot like momentum portfolios trading in stocks — but the momentum effect is way stronger!

momentum table and baseball cards

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Definitions of common statistics used in our analysis are available here (towards the bottom)

About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes,, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.