Are collectibles a good/bad investment?

[kolleamm]

What do you guys think?
I know there's certain trading cards and comics books that drastically go up in value over time. Is it really worth the investment though?
Any collecitble in general not just those.

 

[Janus]

The problem with collectibles is there is no way to know ahead of time what will go up or down in value. Not only that, you never know when when the bottom might drop out of even an item that has increased in value. If interest in that particular item wanes, so will its value.

 

[Mark44]

Beany babies were pretty hot in the late '90s and early '00s.
Not so much, now ...

 

[Vanadium 50]

Are collectibles a good/bad investment?
Yes. Both.

 

[Klystron]

Consider also that while collecting can be an interesting hobby, there are associated costs beyond initial investment. Most collections require dedicated space and storage capacity. Some collectibles that may represent reasonable investments such as fine art and wines also require special storage conditions to maintain integrity.

 

[jtbell]

Also, there are transactional costs when you sell. When you sell something to a dealer, you're going to get less than what the dealer would sell the item for. How much less, depends on how quickly the dealer expects to be able to sell it.

When you sell at auction, you're going to pay a commission fee either directly or indirectly. That is, either the buyer pays the entire commission, or the buyer and seller split it, and the buyer adjusts his bid accordingly.

 

[russ_watters]

What do you guys think?
I know there's certain trading cards and comics books that drastically go up in value over time. Is it really worth the investment though?
Any collecitble in general not just those.

As said, in general they are highly unpredictable because their value is 100% subjective.

To me, that's bad.

 

[BWV]

All value is 100% subjective, depending on the wants and needs of consumers

But there is a range here. One could have a higher confidence that the demand for an original Van Gogh will outlast the demand for comic books which might be just of value to a certain generation

 

[russ_watters]

All value is 100% subjective, depending on the wants and needs of consumers

Untrue.

But there is a range here. One could have a higher confidence that the demand for an original Van Gogh will outlast the demand for comic books which might be just of value to a certain generation

Doesn't that contradict the first statement? If value is 100% subjective, there should be exactly zero difference in ability to predict the future price of a Van Gogh vs another painting...vs a share of Apple...vs a bitcoin...vs a beanie baby.

 

[BWV]

Is the appraisal of Van Gogh being a better artist than Thomas Kincade not subjective? Do not some subjective preferences have a longer history than other making them more likely to persist within the culture?

value = price in a free market as prices reflect the relative preferences of consumers - this is the marginal theory of value developed by Walras, Menger and Jevons in the late 19th century and unless you are a Marxist, is uncontroversial textbook economics

and what is more likely to hold its value over, say 100 years - a Van Gogh painting or a comparable amount of Apple stock?

 

[russ_watters]

Is the appraisal of Van Gogh being a better artist than Thomas Kincade not subjective?

Yes. You're the one who said you have a higher confidence in the demand for a Van Gogh, not me. Why?

and what is more likely to hold its value over, say 100 years - a Van Gogh painting or a comparable amount of Apple stock?

I don't know -- again, you're the one who said value is 100% subjective. Doesn't that mean they are equally unpredictable on all time scales?

You're not being clear about what you mean when you say "all value is 100% subjective". What can I do with that statement? Does it not mean that I have precisely zero ability to predict the future price of an item? Because that's what I mean when I say it.

value = price in a free market as price reflect the relative preferences of consumers, this is the marginal theory of value developed by Walras, Menger and Jevons in the late 19th century and unless you are a Marxist, is uncontroversial textbook economics.

In my opinion, you are describing it too literally/absolutely...but also contradictory.

 

[BWV]

We assess the long-term financial returns from high-quality collectible real assets, and review the unique risks that are associated with such investments. Over the period 1900-2012, art, stamps, and musical instruments (violins) have appreciated at an average annual rate of 6.4%-6.9% in nominal terms, or 2.4%-2.8% in real terms. Despite the similarity in long-term returns, short-term trends can vary substantially across these different types of emotional assets. Collectibles have enjoyed higher average returns than government bonds, bills, and gold. However, it is important to recognize the quantitative importance of transaction costs in collectibles markets. In addition, price volatility is larger than is suggested by conventional measures of risk, and these assets are also exposed to fluctuating tastes and potential frauds. Yet, despite the large costs and many pitfalls, investment in emotional assets can pay off, because of the non-financial yield they provide.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2319338by comparison US stock returns over the same period are about 6.5% annualized and bond returns about 2% - so 2.4-2.8% is not a particularly great return

 

[russ_watters]

...

I see no relevance to the discussion at all in that reference and you didn't say anything to connect it to the discussion.

Worse, you're not being responsive to my questions. We can't have a discussion if one person is answering the other's questions, but the other isn't answering the first person's questions.

The irony here is that I don't think you actually disagree with me, you just don't like the word "subjective". But if you won't define your terms, we can't ensure we're speaking the same language.

 

[BWV]

I see no relevance to the discussion at all in that reference and you didn't say anything to connect it to the discussion.

Worse, you're not being responsive to my questions. We can't have a discussion if one person is answering the other's questions, but the other isn't answering the first person's questions.

The irony here is that I don't think you actually disagree with me, you just don't like the word "subjective". But if you won't define your terms, we can't ensure we're speaking the same language.

the last post was just a direct response to the OP

yes, i don't find objective / subjective meaningful terms. I do object to the idea that items either do or do not have intrinsic value. objectively - meaning it a verifiable fact - our culture subjectively values Van Gogh more than Thomas Kincade and I think very few people would want to bet that this would change in 50 or 100 years. Objectively, many once valuable companies have gone bankrupt but I am pressed to think of an example where the works of a once highly valued artist are now worth nothing. Apple stock’s value is based upon the market consensus of subjective opinions about its future cash flows and an appropriate discount rate. Is ’investing’ in beanie babies more rational than buying stock in the company that produces them? I am sure there are examples where the collectibles held value but the company that made them went bankrupt

 

[Stephen Tashi]

Is it really worth the investment though?

Would you consider it a good investment if you accumulated a valuable collection and then died, leaving it to your heirs?

The collectors I have known were fond of their collections and did not cash them in while they were alive. So if the goal of an investment is to profit from it while you are alive, collecting has a risk due to the psychology involved. If you become fond of collecting things, you don't want to sell them. I think people who accumulate precious metals have the same problem. The reasons they see for keeping their holdings never go away.

 

[gmax137]

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2319338

"Yet, despite the large costs and many pitfalls, investment in emotional assets can pay off, because of the non-financial yield they provide. "

This is a key point, I think. The collector can "get something out" of the investment other than money: you enjoy looking at the painting, you like riding the antique motorcycle, you fondle the Leica... Or you can show off to the fellow collectors "look what I found in a barn..."

 

[Rive]

I know there's certain trading cards and comics books that drastically go up in value over time. Is it really worth the investment though?

Depends on whether if you want to store up some - or you want to actually produce the thing

 

[Klystron]

What do you guys think?
I know there's certain trading cards and comics books that drastically go up in value over time. Is it really worth the investment though?
Any collectible in general not just those.

An old saying among comic book and trading card collectors and traders:

You can always read your books or play games with your cards.

Investment remains an important aspect but 'dyed-in-the-wool' collectors often choose items they enjoy to look at and, depending on the collection, handle. Items that spend most of the time locked safely away -- jewelry, firearms, stamps, coins, signed sports balls, etc. -- see the light of day when the enthusiastic collector reveals their latest.

[Edit: corrected typo.]

 

[Mark44]

'died-in-the-wool' collectors

That would be dyed-in-the-wool collectors, unless you're talking about the demise of someone who collects sheep, perhaps.

 

[russ_watters]

"Yet, despite the large costs and many pitfalls, investment in emotional assets can pay off, because of the non-financial yield they provide. "

This is a key point, I think. The collector can "get something out" of the investment other than money: you enjoy looking at the painting, you like riding the antique motorcycle, you fondle the Leica... Or you can show off to the fellow collectors "look what I found in a barn..."

This is true of most peoples' real estate investments as well (though it is also about functionality, not just sentiment).