I receive periodic emails from a number of personal finance and self help web sites. Some of these linkups don’t last very long. Some have been around for a while. Recently, I received an article from Dave Ramsey ridiculing collectibles as an investment. It was pretty funny. The thought that anything sold on the Home Shopping Network is going to make you rich someday is laughable. The only people likely to make any money are the vendors who buy it from your grandmother’s estate sale and sell it at a flea market somewhere.
They aren’t getting rich either.
My answer is don’t be that last person holding that collectible. One of my friends has made good money buying and selling baseball memorabilia. Even though he knows what he is doing sometimes he is that last man holding, like an autographed Barry Bonds bat he bought before the steroid scandal broke. I think he paid something like $500 for that one. Now it is pretty much worthless.
My favorite collectible story concerns a coworker who collected Beanie Babies. She only paid the $5.00 or $6.00 retail price when they were first issued, so she didn’t lose very much money. She also thoroughly enjoys her Beanie Babies, the only sensible reason for collecting anything. Once she had a very rare beanie Baby. One of these things actually sold for $1,200! Of course I strongly recommended that she sell hers right away. She didn’t. Today it might be worth $1.20 on a good day.
If you have ever watched collectible “reality” (hah) shows like Pawn Stars or American Pickers, you already know the secret to making money as a collectible dealer. You absolutely need to know the spread between bid and ask. Bid is the price a buyer is willing to pay for an item. Ask is the minimum price the vendor is willing to receive for the item. The size of the spread is a measure of liquidity. On items like shares of Exxon that can be bought and sold in a fraction of a second the spread is measured in one hundredths of a penny, a diminishingly small percentage of the item’s value. On items that can be sold at auction or at estate sales, the auction house typically takes a third of the sale price for creating a market. On that Black Velvet Elvis hanging in your bother-in-law’s trailer, if anyone buys it they are unlikely to pay even half of what they think they might be able to sell it for someday at the Jockey Lot in Pickens.
People who actually make money buying and selling collectibles know what they are doing. They are not emotionally involved in their transactions. It’s only business. I expect when an American Picker buys a collection of rusty Burma Shave signs, he already has a particular buyer in mind.
Like all homes, ours is decorated with arts and crafts of various sorts. My wife collects plush animals. It started innocently enough as a few of these creatures took up residence on our bedroom chair, but watch out. They multiply. We have some paintings and framed prints that hang on our wall. They have brought us great pleasure over the years, but only one of them is ever likely to make anybody any money. I doubt I will ever sell it because it is my favorite. In 1970 I bought a painting from a street artist in Gatlinburg for $20.00. A couple of years ago I decided to see if I could learn anything about the artist on the Internet. It turned out she is now known as the Grandma Moses of the Smoky Mountains. After talking with a gallery owner who sells her paintings, I learned my painting is worth in the neighborhood of $1,000. The gallery owner counseled me to hang on to it. The artist is in her eighties. He expects the value of her paintings will jump once she is dead.
Like I said, “This isn’t personal. It’s just business.”
If some shiny little thing gives you pleasure, buy it for the memories and the joy of owning something beautiful, but don’t expect to ever make any money from your “investment.”
Ultimately, every “collectible” we own has another value, that of the story it tells us every time we view it. My wife personally knows many of the artists and craftspeople whose work decorates our home. She can tell the story of where she bought the item; who made it; our relationship with the artist and what the item means in the tapestry of our life.
As the French say, “l’art pour l’art.”
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