Everything investors should know about 'tokenization' and investing based on 'vibes'

The other day I saw a startup selling fractional ownership in a pair of Air Jordans. Not the kind you lace up and wear. No, these are sealed in a vault somewhere in Delaware, probably sitting between a Picasso and a VHS copy of Jumanji.

For the low price of $212, you too could own 2.3% of the sneakers.

Congratulations. You and Michael Jordan are now business partners.

Welcome to the new frontier: tokenized collectibles. Sneakers, baseball cards, vinyl records, even watches. If it can be locked in a glass case, somebody is figuring out how to slice it into shares and sell it like stock.

The pitch is the same every time: We’re democratizing access to alternative assets.

To be fair, the apps look slick. The process feels fun. You can sit on your couch and say, “Hey, I own part of a Jordan 1.”

It’s convenient. It’s novel. And if you’ve ever wished you hadn’t jammed your Ken Griffey Jr. rookie card in the spokes of your Huffy, this scratches that itch.

But here’s the catch: most of these assets don’t actually do anything.

A pair of sneakers sitting in a vault doesn’t pay rent. A Beanie Baby doesn’t throw off dividends. A VHS tape doesn’t generate revenue.

The only way your slice of a tokenized sneaker goes up in value is if somebody else wants it more tomorrow than you do today. That’s not ownership, it’s speculation.

It’s investing based on vibes.

Now, compare that to a share of Coca-Cola. When you buy Coke, you’re buying into the cash flows of a company that sells two billion drinks a day. Revenue. Profits. Dividends. A real operating business.

You don’t have to hope someone comes along and bails you out at a higher price. You can simply hold the stock and collect the income.

That’s the difference between fun collectibles and what I’d call “foundational” investments:

· Stocks are ownership in companies producing goods and services every single day.

· Private businesses – maybe a dental practice or a landscaping company – bring in revenue from customers and pay owners a return.

· Real estate generates rent, pays down mortgages, and appreciates over time.

All of these not only can grow in value, they actually produce income along the way. Growth and yield.

Now, I don’t want to sound like the cranky neighbor yelling at kids to get off his lawn. Tokenization is an interesting technology. My investment team can even show you ways to participate in the business side of tokenization – companies building the infrastructure, potentially making money from it.

That’s a different story than buying a share of a sneaker.

And here’s a question few people ask: who’s paying for the vaults? Where’s the insurance if a hurricane floods the warehouse? Surely there are fees to protect these things from theft, mold, or just plain accidents.

Remember when that sinkhole opened up under the National Corvette Museum in Kentucky and swallowed a bunch of classic Corvettes? If that can happen, what’s stopping your fractionalized Air Jordans from meeting a similar fate?

Look, I get it. Buying 1/72 of a Ken Griffey Jr. rookie card might be fun. Telling your buddies you’re a co-owner of a sneaker is a great party trick.

But novelty isn’t stability. And fun isn’t financial independence.

A vault full of sneakers may sound cool. But it won’t pay for college. It won’t cover retirement. And it certainly won’t help when you need regular income to live on.

That’s why, call me old-fashioned, I’d rather own boring things that make money. Dividend checks from Coca-Cola. Rental income from a duplex. Cash flow from a business with real customers.

Because when the novelty fades, and it always does, the productive assets keep delivering.

So sure, if you want to dabble in tokenized sneakers, have some fun. But don’t forget: the real game is still owning things that generate real value.

And if you really want to tokenize something? Start with a business that earns. Aksala can provide a list of best ideas near the technology of the day if you would like to consider more deeply.

Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or eguido@aksalawealth.com. Read more of his insights at heraldtribune.com/business. Securities offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, insurance services offered through an Avantax-affiliated insurance agency. 6260 Lake Osprey Drive, Lakewood Ranch, FL 34240.

This article originally appeared on Sarasota Herald-Tribune: EVAN GUIDO: If only you had tokenized that Ken Griffey Jr. card