July 14, 2022
At ALT, we’re on a mission to transform investing by unlocking the value of alternative assets. The key word being value. By providing as accurate a value as possible for the assets in your portfolio, and any cards available on the ALT Exchange, we’re helping to build trust with collectors, inspiring more people to get involved with the alternative investing space, opening up their world to new investing opportunities.
The way a sports card's value is calculated involves finding the most relevant comparable transactions (”comps”) and then making adjustments. The way ALT Value is calculated is no different. And in our continuous effort to provide the best possible experience for card investors, we’re constantly fine-tuning our valuation model based on recent market trends, and providing this update as our most recent change may have an affect on the overall value of your portfolio. Ultimately this new data will offer a more accurate assessment of the value of sports cards as a whole, and will have a positive effect on the cards you currently own, and any you’ll be investing in down the line.
At ALT we combine a machine learning model with the knowledge of our card pricing experts to improve upon the traditional pricing process, and provide an accurate value for all BGS, PSA and SGC cards that have been vaulted with us. Our machine learning model uses adjustments in order to compensate for the differences between a card being valued, and each available comp. This helps provide an apples-to-apples comparison with cards we’re trying to price.
A couple of Standard Adjustments we use to find an asset’s ALT Value are:
Market Trend Adjustments
ALT Value adjusts for any market trends in comps that are a few weeks, or even months old. For example, Joe Burrow’s market trend valuation was up over 50% in the two months leading up to the 2022 Super Bowl, which had a positive effect on the value of his cards.
ALT Value adjusts relevant comps against different grades and grading companies, since those can have wildly different values. For instance, a PSA 10 graded card will be worth a considerable amount more than the same card in a BGS 8.
A more complex adjustment used to find ALT Value is a triangulation adjustment. This is because it is not enough to simply look at historical transactions when pricing rare cards. We need to expand our search for comps that include relevant transactions that might not exactly match the card being priced. After we have selected relevant comps, we make these triangulation adjustments in order to make the comps apples-to-apples.
For example: To price a 2014 Panini Prizm Player A Black Prizm, the most relevant comps might be a 2014 Panini Prizm Player B Black Prizm and a 2013 Panini Prizm Player A Gold Prizm. In order to triangulate these values we need to calculate the Player A vs Player B and 2014 Black Prizm vs 2013 Gold Prizm triangulation ratios.
Update to recent market trend adjustment algorithm
The update to ALT Value is based around recent market trends. Our new calculation shows, on average, individual player trends have been down 10% - 30% since the beginning of 2022. What this means is that you should expect to see reflected changes in your portfolio value if you have items that have not seen a registered transaction in the past 30 days.
What goes into creating the market trend adjustment algorithm:
- Universe selection: The cards selected to represent a specified market or player.
- Weighting schema: How to aggregate the selected cards’ performance.
- Individual card performance calculation: How to calculate an individual card’s daily change given a lack of transactions.
Drawbacks of the previous market trend algorithm:
- The universe selection was dominated by frequently traded cards, which are usually low value, non-serial numbered cards.
- Weighting schema was based on transaction count.
- It was factoring the same trends for cards that had manufacturer specified print runs vs. those that did not.
How the new release uses better data for more accurate pricing:
- The universe selection criteria was updated to remove low value cards that were adding a lot of noise to the calculation.
- The weighting schema has been changed to a market cap-based formula that has a good balance between fewer big sales and lots of low value transactions. For example, if we have two recent card sales of the same player, and one is down from $100k to $50k and the other is increased from $1k to $1.5k. Using the previous transaction count weighted algorithm, it would calculate a 0% trend as one card is 50% down and one card is 50% up. Using the current schema the average return will become -16% to emphasize the larger sale.
- We separate limited print-run card trends from the unlimited print-run card trends. This is important for individual card valuations, but won’t show up in general market trends.
This update is our most recent way to improve the model that determines ALT Value. We’re working to improve our overall accuracy every day, to help ensure that no matter how much the card market ebbs and flows, you can be confident in the value of your ALT portfolio, and any cards you’re considering adding to your collection.