posted on October 28, 2004 10:13:36 AM
Below is from a financial newsletter I receive.
European stocks are well above their 2002-2003 lows, yet the deep declines of those years were too much to handle for some investors. Many of those who now see stocks as "devalued" have turned to real estate. Others, with perhaps a keener eye, have turned to collectibles. In Britain, one item in particular has been getting lots of attention lately: Rare toys from the 1960s, reports the Financial Times.
Sentimental childhood memories aside, some British toy aficionados fully count on their collections to help them retire in comfort. "It's going to be a hell of a lot better than the other pensions I've got," says one baby boomer who's been collecting rare toy sets for the past decade.
He's not alone. The number of people who see "toys as a sound investment" has been growing. And why not? Certain toys that forty years ago sold for less than 50 today go for over 1,000. What's interesting is that the biggest customers at some toy auctions are... investment bankers. Clearly, this fad is more than just a sudden outbreak of Peter Pan complex among British "gentlemen aged between about 45 and 70."
Collectibles have been hot in the U.S., too. This year, Picasso's "Boy with a Pipe" brought the highest price for a painting ever: $104.2 million. Works by other artists, such as Jackson Pollack, have also set new records recently. Does it mean that collectibles is a safe place to invest in these days?
Weve been observing the public's obsessions with art and other collectibles for as long as weve been analyzing financial markets -- for over 25 years. Here's a summary of our conclusions:
"What we are witnessing is one mania, an investment mania, with various outlets, art being one of them. Art prices appear to save their boldest moves for the aftermath of big [stock] advances. The [current] obsession with paintings and other collectibles is an extension of the panic for stuff, which is a curtain call for the mania's post-peak echo. It is a twin to the high of May 1990, which was also accompanied by a spike in commodity prices and a brief burst in consumer prices. As disinflation re-asserted itself, however, a debacle referred to in art circles as the 'nightmare of 1991' ensued. When manias end, items considered priceless at one time can become little more than curios. Aside from the greatest works of art and special historical items such as an original copy of the Declaration of Independence, most things that people deem collectibles today will be worth little to nothing in coming years as the urge to speculate that characterized the 1990s fades away."
Like any investor, art collectors must put many hours into studying their venture in order to succeed. But most art investors, just like most stock investors, don't. Instead, they buy what's "hot," which is often a sure recipe to get burned.
posted on October 28, 2004 02:13:03 PM
Readmon, toys, cars and militaria are good investments IF you are willing to stay on top of the market at all times. These are "generational" investments.
The problem with these markets is that they "boom" (prices go up) when the generation that affectionately remember these items from personal life events has the disposable income to collect them.
These item then go "bust" as that generation dies off.
For the average collector, the best money is to be made is if you can buy early in the cycle. You want to buy the best names or rarest examples to keep for long term holdings. These are the ones that will retain their value after the collecting craze ends.
I'm not a toy collector, but I have followed the car market for sometime. When Dad was collecting, you could get good money for 1955 Chevy in any condition. Still can , but not compared to a 1960's muscle car such as a Dodge Challenger with the right serial numbers. The model T collectors are dying off and you can hardly get your rebuilding money back from them.
Too late to make this long story short, but to put it simply, a $10 investment that is worth $40 in 20 years is not worth it. You need to find the $10 investment that will be worth $1000 in $20 years. It is not easy to do unless you just get really luckily or invest a lot of time studying your market.
Best investment advise ever... Buy what you know, like what you buy. In the end, if if does not make you money, you've had the chance to enjoy it.
posted on October 28, 2004 05:27:09 PMBuy what you know, like what you buy. In the end, if if does not make you money, you've had the chance to enjoy it.
That's good advice for the hobby collector, but I think calling collectables an "investment" is an invatation for disappointment no matter how saavy you are.
posted on October 28, 2004 06:06:09 PM
If you purchase collectibles with the intention of gaining some return on your investment. One should buy only pristine condition items or the best condition their dollar can buy. When the market hits a slump and many sell off collections of lesser condition items, demand for mint or new condition items will continue.
posted on October 28, 2004 07:12:58 PM
"When the market hits a slump and many sell off collections of lesser condition items, demand for mint or new condition items will continue."
Tell that to the collectors of Avon and Jim Beam from the 1960's - 1970's.
Cr*p is cr*p, no matter what you call it. How about those Beanie Babies that sold for hundreds or the Cabbage Patch Dolls. Even respectable collectibles such as coins and stamps rise and fall in cycles. 1950 D nickels sold for more in 1962 than they sell for now. There will always be more uncirculated 50D nickels than there are circulated ones.
posted on October 29, 2004 12:27:26 AM
Oh yes, the Jim Beam bottles. I know a guy with a house full of them, at least there is still whiskey in them, he can say pretty drunk for several years. How about those Longabarger(sp?) baskets, plates, and everything else ?
