You're Not As Diversified As You Think | Dan Pascone with Rob Petrozzo | Ep #19

Rob Petrozzo is the co-founder and Chief Product Officer of Rally, which he describes as "essentially a stock market for collectibles." By his account, the company started with classic cars about 7 years before the recording and now offers more than 400 assets, including watches, wine, whiskey, sports memorabilia, game-worn jerseys, dinosaur fossils and even domain names. He says hundreds of thousands of investors use the app, with minimums as low as $10, and that some investors put tens of thousands of dollars into a single asset. [VERIFY: guest claims about his own company]

We're discussing the platform for educational purposes only. We aren't recommending it, and we have no view on any specific offering.

Rob explains that each asset is set up as its own limited liability company (LLC) that owns that single asset. Shares are then offered to investors through an SEC exemption known as Regulation A, which came out of the JOBS Act. He compares the raise to a Kickstarter-style campaign, with a price range and a set number of shares filed with the SEC. Investors go through identity checks (KYC and AML) handled by a third-party broker, and Rob says the company then follows ongoing accounting and SEC reporting requirements.

After the offering, shares can trade on a secondary market within the app. Rob says the physical items are kept in a secured facility in Delaware under 24-hour security and shown at events when possible. He's clear that investors own shares, not the object itself, and that the company doesn't treat the assets like a timeshare. Rob uses the term "securitized through the SEC" in conversation. Regulation A offerings are qualified by the SEC under an exemption, and that isn't an endorsement of the investment. [VERIFY: wording]

According to Rob, valuation starts with comparable auction sales and insurance values, then adds a 24-point checklist that covers rarity, provenance, comparable sales and insurance-adjusted values. On top of that he layers what he calls a relevance score, which asks whether an asset is part of a liquid conversation and whether its category has held up through different economic conditions.

He gives a Stegosaurus skeleton as an example. A $44 million sale at Sotheby's set a benchmark, but his team treated it as an outlier, much as an analyst might discard an unusual comparable when pricing an IPO. The result is a range, informed by formulas and by judgment. For one-of-one items, any such range is a judgment call, and a price that someone is willing to pay may differ from the price you can later sell at.

Rob says it took 2–3 years of relationship-building with collectors, auction houses and brokers before the company could source assets in a new category. He says some sellers now come to Rally to avoid a roughly 20% auction premium and a long consignment, and can keep 20%, 30% or 40% of the equity after selling part of an asset.

His main example is a Honus Wagner baseball card. Rob says Rally bought 50% in a deal valued at $600,000 about 4–5 years before the recording, while the owner kept the other 50%. He says the card now trades near $2 million, with about 600 owners holding positions from $100 to $30,000 or more, and that cards like it have historically never sold for less than their purchase price. That's past performance on a single asset, it's the guest's claim and it doesn't predict anything about future prices. [VERIFY: figures and claims]

Rob's core idea is that emotion can be a tool: if you've followed an asset for years and understand it deeply, he argues, you may see value that a spreadsheet misses. He notes that equities, REITs and crypto were each once considered too risky for a portfolio, and says alternatives allocations that used to be 1–2% are now discussed at 5% or more by some managers. He calls collectibles "the alternatives to the alternatives," and says finite supply and tangibility make them akin to hard assets. He also believes that, as a basket, they have outpaced funds and indexes over 10, 20 and 30 years. That's his claim, we haven't verified it, and past results don't guarantee future ones. [VERIFY: guest performance claim]

On how to start, Rob gave a caveat that his lawyers would say this isn't financial advice. He suggests that investors with patience lean toward blue-chip examples, such as first versions and true one-of-ones, rather than chasing trends, and contrasts that with younger investors who he says often prefer high-variance bets. The pull of passion is real, and we explored a similar tension in our post on heart vs. head when buying a vacation home or investment property.

• Coffee or tea: Coffee, which he says has gotten darker with age until it's black cold brew.
• Meal for the rest of your life: Pasta. A cavatelli dish from a favorite Brooklyn restaurant is his pick.
• Technology he can't live without: Analog cameras, plus newer digital Leicas. He says he's more connected to them now than in the past 2–3 years.
• Favorite quote: A line from Eric Hoffer: learners inherit the earth, while the learned find themselves equipped for a world that no longer exists.
• Favorite book: The Fred Factor, which he calls finance-adjacent. His lesson: talk to different people and avoid echo chambers.
• Personal hack: A mental countdown, like at a gym, to start any task. He says he uses it so often that he's trying to do it less.
• Current milestone: Making weekends actually weekends after years of hustle culture.
• Bucket list item accomplished: Connecting with people he'd long admired and having them invest in him and his company.
• Advice to his younger self: Don't take anything too seriously, and do things you care about, because the money tends to follow.
• How to connect: He says he's open to messages on social media.

• Owning a share isn't owning the object: You hold a security in an entity that owns the asset. You can't take it home, and your rights are set out in the offering documents, so read them.

• A resale market isn't a guarantee of liquidity: Rob describes a secondary market, but buyers may not appear at your price when you want to sell. Collectibles also pay no income, so your result depends on resale price after fees. Offerings under Regulation A generally involve scaled-down disclosure compared with a registered IPO.

• Taxes and concentration still apply: Under current U.S. rules, long-term gains on collectibles can be taxed at a higher maximum federal rate than other long-term gains, and treatment of fractional shares can be complex. A CPA should weigh in before you invest.

This hypothetical is for illustration only. All figures are assumed, aren't projections or recommendations, and ignore fees, taxes and expected returns.

Assume an executive in her late 40s with $5,000,000 in investable assets. Her plan caps all alternatives at 5%, or $250,000, and she limits collectibles to 20% of that bucket, or $50,000 (1% of her investable assets). She splits it into 5 positions of $10,000 each and treats the money as not needed for at least 10 years.

• If every position fell 50%: the loss would be $25,000, or 0.5% of her investable assets.
• If every position went to zero: the loss would be $50,000, or 1% of her investable assets.
• What she's not counting on: income, a fast exit at a specific price or a particular return.

Setting the cap first, before choosing assets, keeps enthusiasm from setting the size of the bet. A CPA can address the tax questions.

We use Life-Driven Planning, a 6-phase plan covering Cash Flow, Retirement & Hybrid Retirement, Risk, Expense & Goal, Tax and Legacy. Interest in collectibles usually shows up in the Risk and Expense & Goal phases, alongside what the money is for and how much you can afford to lose.

Life Driven Investing (LDI) builds a portfolio backward from your life using the Four Liquidity Bands: 0–2 years, 3–5 years, 6–10 years and 10+ years. Illiquid, hard-to-value holdings belong, if at all, in the 10+ year band, so money you need sooner isn't tied up in them. Our video on where gold actually fits in a real wealth plan takes a similar look at a hard asset. Under our Quarterly Strategy Rhythm (ongoing plan updates, decision reviews and rebalancing), we review how much concentration you hold. For executives with RSUs, options or an ESPP, our Equity Compensation Playbook, a set of structured rules for those awards, matters here too, because a large company-stock position already adds concentrated risk. This episode is educational and isn't an endorsement of Rally or any asset, platform or product discussed.

This episode is for corporate executives and senior professionals in their 40s and 50s with $500k+ in household income and complex compensation who are curious about alternative assets and want to understand the risks and trade-offs before they act. If you already have a diversified core portfolio and are weighing a small satellite position, this conversation can help you frame the right questions.

If you're a high-earning executive weighing alternative assets against the rest of your plan, we'd be glad to talk it through. Book a free Wealth Strategy Call with us, and we'll look at your situation together.