The fallout from the collapse of Silicon Valley Bank continues to dominate the news. Everyone seems to have something to say on the matter, an angle, or a drum to beat. The value of cryptocurrency is unstable, they say. Most NFTs are now worthless, claim others. Collectible investments are once again being touted as a stock market alternative.
Opinions are rampant. Some assert that sports cards are your best bet. Others cite memorabilia. More traditional investors suggest classic cars or fine art. In my opinion, many of these suggestions miss the mark. Investing in collectibles isn’t about buying and holding the latest “hot item.” It’s about curating a group of items within a theme. How should one build a collection when investment is a primary concern?
Don’t See the Trees, See the Forest
A few collectibles have indeed done well lately. But does that success make them suitable collectible investments? Consider sports memorabilia, for example. A 1952 Mickey Mantle baseball card sold for $12.6 million, setting a new world record; a pair of Michael Jordan’s 1985 game-worn shoes sold for $500,000. But these results are one-offs. Most baseball cards and athletic shoes have little or no individual value. But even where little individual value exists, items in a well-curated collection have a symbiotic effect, making the collection worth more than the sum of its parts.
Before considering collectible investments, you should know that the entire industry revolves around passions and hobbies. In other words, it is as much about emotional appeal as investment. Still, investing in collectibles has the unique advantage of combining one’s passions with the potential for financial gain.
What Makes a Great Collection?
We live in a collecting society. Our collections fill the closets and dens of estates worldwide, ranging from bottle caps to artwork to old newspapers. But not everything can be deemed a collection. Don’t confuse a collection with an accumulation. And don’t consider your accumulations to be collectible investments.
A group of objects must have a unifying theme to have value as a collection. So, while an antique toolbox full of antique tools is a collection, a toolbox full of hand tools is just an accumulation of individual items.
What Is Meant By “Unifying Theme?”
Think about the phrase “unifying theme.” Almost anything can influence a collector’s perception of a collection of objects. However, the unifying theme of a collection must be evident to the general public. For instance, a collector might take great pleasure in his collection of vacation souvenirs. Still, someone who has never been to the locations depicted would likely consider the items in the group to be mere trinkets. The bowl of matches on the table symbolizes memories and adventures to a matchbook collector, but it is just a bowl of matches for valuation purposes. For a collector, an emotional connection is primary. For an investor, financial consideration is primary.
Each piece in a carefully curated collection works in harmony with the others. In a great collection, the whole is more valuable than the sum of its parts. Having all the pertinent items in a set (i.e., a complete collection) raises the value of collectible investments. For instance, a full set of baseball cards from the 1980 Philadelphia Phillies is worth more than the cost of the individual cards. The set is even more valuable because the Phillies won that year’s World Series. A collection of artworks devoted to a single artist, school, or style is worth more as a whole than as individual works of art.
A stylistic era (Victoriana, art deco, etc.), a historical era (colonial America), a technological era (early railroads, autos, etc.), or any number of different consumer goods (beers from the 1960s, lunch boxes, fountain pens, you name it) can all serve as the basis for a unifying theme.
Investors may come across collections within collections when a unifying theme is present on various levels. Guitars, banjos, mandolins, and other instruments are frequently divided into smaller groups, or “micro collections,” by musical instrument collectors. Militaria collectors may have small collections of items from the Civil War, the First World War, Nazi Germany, and medals. Investors may want to consider that, in cases where subsets exist, the value of the micro collections may be higher than the value of the macro collection as a whole.
How Should Collectible Investments Be Valued?
This leads me to the following crucial idea: assessing whether a collection might be valuable. Of course, the easiest way to do this is to call an appraiser. But personal property appraisers can be expensive. Don’t call an appraiser unless you’re reasonably sure that the appraisal cost doesn’t exceed the value of your items.
Price history is vital. Values fluctuate because interest in a particular category of collectible waxes and wanes. A direct correlation exists between interest (demand), supply, and an item’s price.
As with all antiques, collectibles, and works of art, provenance documentation increases the value of your collectible investments. Any documentation should remain with the collection.
Collectible investments can be a great way to diversify one’s portfolio and even turn a profit. When it comes to collecting, though, it’s essential to understand what makes a collection valuable and invest with caution. The market for collectibles is constantly changing, so do your research before investing in any collectibles. With the proper knowledge and careful consideration, you may find that collecting becomes an enjoyable hobby as well as an investment opportunity.
Will Seippel is the CEO and founder of WorthPoint®, the world’s largest provider of information about art, antiques, and collectibles. An Inc. 500 Company, WorthPoint is used by individuals and organizations seeking credible valuations on everything from cameras to coins. WorthPoint counts the Salvation Army, Habitat for Humanity, and the IRS among its clients.