This Weird Economic Concept Explains So Much About Pokémon Cards (Flow to Stock Ratio)

As an asset, sealed Pokémon card products benefit from a critical feature that is extremely rare in the world.

This is a feature almost all Pokémon card collectors are familiar with, and yet, until I understood this economic tool, I never appreciated just how special it is.

This features is known as the Flow to Stock Ratio, and it is typically used to evaluate assets like oil, gold, and currencies, because the lower the Flow to Stock ratio, the better a long-term store of value the asset is.

It’s pretty simple:

1. The Flow is the size of the production of new assets over a given year,

2. Which is divided by the total outstanding total supply of the asset.

The US Dollar, for example, is said to have an average Flow to Stock Ratio of about 3-7%, meaning that the supply of US Dollars increases about 3-7% per year relative to the total supply.

Gold, meanwhile, is considered so valuable by many because of its comparatively low Flow to Stock ratio of less than 2%! Many people believe this makes Gold a great store of value because it’s supply grows so slowly, especially when compared to currencies like the US Dollar.

So:

The lower the Flow to Stock Ratio… the better the long-term store of value.

And that brings us to sealed Pokémon products…

Sealed Pokémon’s Remarkable Flow to Stock Ratio

Eventually, Pokémon products go out of print, and no more of it is produced.

And, when that happens:

1. The Flow of product drops to 0, and

2. The Stock is capped at whatever was printed.

And so, the Flow to Stock ratio of sealed Pokémon is a truly remarkable: ZERO!

Now, look, I know that gold and currencies, which are actual monetized finacial instruments used as both a store of value and medium of exchange across the world, are completely different than Pokémon cards. But, understanding the significance of the Flow to Stock ratio for other assets has helped shine a new light on why, with the persistent demand for Pokémon cards, we see such predictable price patterns.

It helps explain two common phenomena:

1. When large reprints hit, we suddenly see a massive spike in the Flow relative to the outstanding Stock, creating a dramatic impact on how the market values the product over the short term, and

2. When products have been out of print long enough, and the market is forced to revalue the product based on Flow to Stock ratio now being zero, causing the price shoot up.

The Flow to Stock Ratio of Pokémon Chase Cards

This ratio also helps provide an explanation for the price patterns for popular chase cards. Especially those that large populations that maintain high market values, like the Evolving Skies Moonbreon.

At release, the outstanding Stock of these cards is low, and the Flow is relatively high, since many people are ripping packs of the latest set. This creates massive volatility in the prices.

Over time, the Stock of the card keeps going up, but as the sealed product becomes more and more scarce, the Flow starts to decrease: not only are the number of new cards being added to the Stock going down, but the PERCENTAGE those new cards represent of the total Stock is also going down!

As a result, even with a massive Stock, we end up with a low Flow to Stock ratio, which helps reinforce the high prices.

In Conclusion

Learning about the Flow to Stock ratio provided me a new lens with which to view the Pokémon market: there are some insights to be gained from understanding this metric, and how it influences to the prices we see for all kinds of Pokémon card products.

But, it’s also important to remember that, although the Flow to Stock ratio is an interesting metric for Pokémon cards, we need to remember that this economic concept cannot be taken too seriously in this context.

At the end of the day, Pokémon cards are a consumer product and not a true monetary asset. But that doesn’t mean this understanding can’t be useful.

Feel free to reply and let me now if you enjoyed this concept, or have any questions about it.

And as always,

Thank you so much for reading the TCG Buyers Club newsletter. My name’s Grey, I buy cardboard, and I’m on a mission to make Pokémon collecting and investing simple.

Cheers 🍻