Trades and Trends: Volatility Throughout 2022

We have compiled the last year of weekly Trades and Trends data in order to analyze the price volatility week to week of fractional assets. First, we can start off with a broad look at the numbers across every platform—including Rally, Public (formerly Otis), and Collectable. Although Collectable only contributes to the Sports Card and Sports Memorabilia categories, the weekly ups and downs in prices are still worth examining.

Although prices can and do swing significantly from week to week, it seems that on balance the returns find their way closer to zero more often than not. NFTs pulling the average up is a surprise, but there were several weeks of upward swings that pulled the weekly price movement up to around 2.00%. Year to date, NFT prices are down significantly, so we can surmise that a few high flying weeks skewed the average week in the other direction.

The median tells a similar story in terms of the bottom 3 assets by weekly price action. Video games, card games, and cars all regularly drop around 1% week to week. Tracking quite closely with 2 of the top 3 worst performing categories in fractional. Behind only NFTs—video games and card games have fallen by -61.38% and -56.19% year to date, respectively. NFTs could fool the average with consistently wacky price action, but medians never lie.

We can see below exactly how NFTs outsmarted the "average" function on excel. In the first week we tracked, the category exploded upwards for a 197% increase in one week. Say what you will about NFTs, but boy howdy are they volatile. Honestly, the fact that the category only found itself with an average of slightly above 2.00% is a shock with this significant of an outlier.

Volatility to the downside was noticeably less explosive. The average high clocks in at +44.69% where as the average low was -17.11%. With these levels of volatility it only makes sense that the high of the highs outstrips the low of the lows; an asset can only fall to -100%, but it can rise ad infinitum. Price movements within fractional week to week generally don't hit those extremes, but understanding this factor in volatility is important.

Now lets take a look at the platform we cover with the largest and widest array of assets, Rally.

Our findings from above consists of a significant amount of Rally data, but as the largest platform in fractional collectibles, it is worth a look by itself to identify any trends on the platform itself.

We can see our old friend Mr. 197%-in-one-week, but instead of the average being tamped down by a larger set of data-points it is being pulled up by relatively less of them.

Two categories with a strange trend are memorabilia and comic books. The overall averages seem to be pulled down by other platforms for both—as Rally has an average movement of +1.29% in comic books compared to the overall average of +0.329%. Only explainable by the poor performance of comic books on Public/Otis. The similar difference in memorabilia assets can likely be linked to the same explanation.

Wild price swings in video games and TCG on the platform make sense as these two are among the worst performers in fractional, as mentioned earlier. On Rally this seems to be easily explained by the wealth of TCG assets on their platform that trade at quite low market caps. Currently eleven out of the seventeen TCG assets on platform trade below $25,000. The average TCG asset has a value of $52,824—these lower end ones are far more likely to trade quite thinly.

One would think price per share would have an effect on highs and lows of price movements throughout the week; and for the most part, one would be right! Although NFTs have by far the lowest average price per share at $3.58. The next two lowest are TCG and memorabilia having average share prices of $6.77 and $7.90 respectively. The reason why these shares trade much more sporadically is the same as why penny stocks trade in a similar fashion. Low share prices and overall market capitalizations lead to extreme ups and downs since large percentages of the asset can change hands in an instant.

Now we are going to do a quick comparison between Public and Rally since the Otis assets made the transition to their new home.

Card games dragging down the broader fractional market seems to be a trend across platforms. In the case of Public it is driven entirely by the one Pokémon card they decided to keep, 1999 Charizard. Interestingly the price of the card has only increased since the start of trading to now, from $0.76 to $0.84 today. So it is rather surprising to see the weekly average come to -6.47%, but again the weekly swings in this category are very unpredictable.

Interestingly, Rally shares similar categories on the high and low end here. Card games for one, but books seem to be keeping both platforms afloat. For Public, this can be attributed to their sole book, an original printing of Harry Potter and the Philosopher's Stone. This book has had a trajectory similar to the Charizard mentioned above. It began trading in September at a price of $1.14 per share, but trades at $1.18 currently. Obviously single assets are going to be more volatile than broad sets, but the 17 card games on Rally also having by far the worst average certainly has something to say about the asset class.

Lets take a look at a category on the low end with a few assets being tracked, as opposed to just the single card or book on Public.

There are three video games on Public's site Super Mario Bros., Nintendo World Championship, and Mike Tyson's Punch-out. All of them are priced below where they began trading. The video game market has had quite a terrible year, especially so in fractional; you would think though, that categories with single assets (books and TCG) would have more aberrant medians. Yet video games found a median of a whopping -8.15%.

TCG seems to be following the same trends outlined above. One promising pattern for fractional is that wine, behind art one of the more standard investable alts, has shown itself to be quite resilient. Not only is it the best performing fractional index, falling only -0.55% YTD; it is far less volatile than the other categories. Across all platforms it experienced a single week price change of +12.49% at the high end and -6.61% at the low. That falls well below the averages of +44.69% and -17.11%. An impressive feat both in stability and overall performance during the year.

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It has been quite the year in fractional—and not in a good way. Things have gone from bad to worse and values have plummeted since 2022 began. The wild volatility offers the chance for significant alpha to investors out there who are keeping their eyes open. Who knows how fractional will treat 2023, but volatility-wise things don't seem to be changing any time soon.

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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.