How to Make Money in Collectibles

A search of this site shows that in what is fast approaching 300 posts I have never discussed collectibles. Although it is true that there is relatively little bad money advice out there on this topic, just about everybody who mentions it, even in passing, says it is a poor place to invest, it is an area in which people often make money mistakes. So not writing at least one post on it is an oversight that needs correcting.

In particular, I want to talk about a scheme to make money that has, at the very least, occurred to all of us at one time or another. It is the buying, or merely not disposing of, the near-valueless non-collectible in the hope that it will one day become a valuable collectible.

The reason this has occurred to us all at some point is that the collecting world is full of examples of easy-money-in-hindsight. Just spend time on eBay. A quick scan this morning tells me that the first issue of Cigar Aficionado magazine (Autumn 1992) goes for $250. It was $3.95 on the newsstand. That’s an annualized gain of nearly 26% for 18 years. If only I’d thought to buy a thousand copies.

And then there are baseball cards. If you are about my age or older you remember that in the 1980’s they became a hot collectible, with prices for older cards rising to the point that many of us began to feel quite foolish for having thrown out our precious collection in our teens.

Funny thing about baseball cards, though. Although not the craze they once were, old ones are still a serious collectible. But while a complete 1977 set (which, BTW I owned in 1977) will set you back $350, a complete 1987 set, printed about the time we all realized that baseball cards were a sound investment, is listed on eBay for $50 with the note “Make us an offer we just might take it!”

Of course, the fact that pre-1980s cards are valuable and post-1980s cards are not has everything to do with the fact that before the 1980s nobody thought to save them, because they were assumed to be worthless. (The story of the baseball card craze is detailed in the new book Mint Condition: How Baseball Cards Became an American Obsession. I haven’t read it, but I did like the excerpt on Slate.)

There is a good lesson on investing here. To really cash in as a value investor you need to be contrarian, buying what others scorn. (And, it is worth adding, others need to eventually see things your way.) If everybody else thinks the thing you are buying is, or will someday be, valuable, then you are unlikely to make any money at all.

The value of a collectible, like everything else, is determined by supply and demand. The demand for collectibles, baseball cards, cigar magazines, fine wine, political memorabilia, and so on, waxes and wanes over the years. But what really drives prices, what makes one kind of item more expensive than another, is supply. And for the once commonplace objects that induce nostalgia in us old folks and have us slapping our foreheads when we wander eBay, what matters more than anything else is whether or not people were in the habit of saving the thing back when it was common.

By way of illustration, imagine you built a time machine that materialized a 1927 Packard in your driveway for only a minute or two, long enough for you to loot one part of it to sell on eBay. What would you take? Just about the last thing you would want would be the license plates. People save those. 1927 plates are on eBay for as little as a $1. In contrast, a single headlamp lens goes for $100. If you were really lucky the glove compartment might hold an owner’s manual at $125 or better yet a sales brochure at $175.

You would have to be a total mutant to save a sales brochure in the hopes that it would be worth something 83 years later. Which is exactly my point.

The reason that the missed opportunity of buying a pre-collectible and getting rich years later is a mirage is that, unless you are truly eccentric, anything you thought to buy and save would likely be bought and saved by others. So it would not turn out to be worth much.

This is why no “limited edition” figurine, plate, or any other example of manufactured collectible will ever be valuable. It is not that the edition is not truly limited, it is that the people buying it are (mostly) going to carefully save the damn things. And this is why no Statehood Quarter will ever be worth much more than 25 cents.

At the risk of stating the mundanely obvious, collectibles are for entertainment purposes only. You are not a fool for having trashed those baseball cards when you lost interest in them. But buying some new ones today in the hopes of making a killing in ten or twenty years? That would be foolish. (Then again, if everybody thinks it is foolish….)

Investing | Frank Curmudgeon | April 5, 2010 11:59 am

18 Comments

By Dasha, April 5, 2010 @ 12:37 pm

I’m from the USSR. My paternal grandfather collected Lenin memorabilia – stamps and pins. This was a less common hobby than you would think. By the late 80s, when he hightailed it to Israel, his collection was worth a ton. When my father wanted to emigrate, he offered the collection to my mother in lieu of child support. Since he never paid it anyway, she took it. She wanted to sell it right away, but my grandmother insisted that it would be worth even more down the road, so they held off.

Fast forward to the early 90s. After the collapse of the USSR, the price of the collection (which was complete!) skyrocketed for about a minute. Then the government released stockpiles of thousands of similar Lenin memorabilia from god knows where (my mom jokes they had saved it for this exact reason). Suddenly it was worthless.

Side note: They should have sold it when the price was good, right? Wrong. All the money my family had at that time from the sale of the family home in the old village (70k rubles split three ways) was worthless by 1996 (I think?), when the rubble denominations were changed – from 6,000 rubles to a dollar to 6 rubles to a dollar. I love inflation.

Moral of the story: collecting can be a great investment if you time the market right. And we know how easy that is.
By wm tanksley, April 5, 2010 @ 1:54 pm

Just one other statement about collectibles… The value of a collectible depends very much on its condition. Keeping a collectible in top condition is a serious ‘investment’, in the sense of ‘expensive undertaking’.
By ctreit, April 5, 2010 @ 2:16 pm

A friend of mine has also made a bit of money on collectibles, but he did not design it that way. As a kid he used to buy 45 records which are in demand right now. His records are in good enough shape that he gets over $1000 for some of them. He also has a collection of art books, which he bought since he was an art teacher. Some of these books are also worth over $1000 now.

As I said, he “collected” all these things because he liked owning them. In his mind he was spending money when he bought them. It was a windfall later on that these purchases turned into an investment and an asset.
By Lance, April 5, 2010 @ 2:40 pm

It seems like memorabilia related to fringe presidential candidates would be a decent choice– they literally give the stuff away, so all it costs is the time it takes to fill out a form online or make a call, and it’s relatively easy to store. Your Charles Jay bumper sticker might not be worth anything today, but who knows? I bet anybody who had Ron Paul swag from his earlier campaigns could have cashed out pretty handsomely in early 2008, for instance.
By Hibryd, April 5, 2010 @ 2:46 pm

I actually know a guy who basically supports himself by buying and selling collectibles – mostly toys, video games, comics, records, and other pop culture artifacts. His method is not to buy and hold in the hopes that it becomes valuable, but to hit up flea markets, storage shed liquidations, garage sales and basically buy stuff that other people don’t know is valuable. (I’ve talked to an art re-seller who had the same technique: buy stuff from people who don’t know the value and sell it to people who do.)

Funny enough, the last time I went over to the guy’s house, he had a stack of license plates. Turns out the plates aren’t worth anything, but the vintage registration stickers on them can be worth a lot.
By Boston Steve, April 5, 2010 @ 3:55 pm

I’ve been buying and selling “collectables” and “junk” for many years. Here’s a few observations on trends I’ve seen lately.

Ctreit – There are very few 45′s worth $ 1,000 Most are worth pennies to a $ 1.00, although quite a few are worth $ 1 – $ 100.

Lately standard LP have been gaining in value, not the pile of classical and compilation ones from the 50′s and 60′s, that everyone has – think Christmas albums and Andy Williams. Obscure rockabilly and jazz are especially hot right now.

Older video game systems are also hot right now, especially RPG cartridge games. Atari, Snes, Nes (but not the run of the mill titles)
Last year people started scooping up PS1 games, we’ll see if that continues. Gamecube has died again. XBOX one games are generally worthless. And of course almost all sports games for any system are worthless.

Music cds have mostly dived in value, but 8 tracks have come back big time this last year, after being practically worthless for years.

Matchbox cars have slowed after being a hot item last year.

The jury’s out on Silver jewelery which was red not last year…..
By Evan, April 5, 2010 @ 4:53 pm

Well since no one seems to want the THOUSANDS of glass coke bottles I have collected over the years, in about 38 years I should be a really wealthy guy! Sweet.
By Boston Steve, April 6, 2010 @ 11:22 am

People do collect coke bottles and basically everything coke that is older. You want the old glass bottles that have state names on the bottom….The new ones are worth $.05 here in Massachusetts and $ .10 if you want to drive to Maine…..
By Kosmo @ The Casual Observer, April 7, 2010 @ 12:00 pm

I wrote about baseball cards a while back -> http://www.observingcasually.com/house-of-cards-can-competition-harm-consumers/

I picked up a T206 card a while ago for $15. I rather enjoy having it in my collection. The newer stuff is of less interest.

Last summer, the Ertl riding tractor I had as a kid was sold to a collector. Despite the fact that that condition was not close to mint (I used it a lot) it sold for quite a bit more than my parents paid for it new.

Of course, this area is the epicenter of farm toy collecting, which certainly helped.
By joe miller, April 16, 2010 @ 12:01 pm

i have brooks roninson and carl yaz rookie cards psa 5 psa4 i have a 1958 cover in great shape from sports illustrated of the hall of famers on the cover of the 58 all star game players on the cover are mays musial banks crandall malzone jensen triandos and m mantle i am 74 and never had a scanner i have had this a long time and it is in very good shape the pictures are big and clear cover is well protected by red hard card board around the edges this is the cover only buy in very good shape i am getting cards for grandson i will trade for cards of mantle koufax clemente of the late 50s joe
By Michael Covington, July 31, 2010 @ 6:46 pm

There is a book about stamp collecting called _Nassau Street_ that contains some good insights. One of them is, “Cheap stamps never become rare.” That is, things that are common may become less common, but not rare. You obtain rarities by obtaining things that are rare even in their own time.
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By Collector Steve, September 17, 2013 @ 12:52 pm

I found your site when looking up my own… http://www.makingakillingwithcollectibles.com . While I agree that it’s awfully difficult to predict what tomorrows collectibles will be, there are “tendencys” that you could probably follow. Like maybe Ipods will someday be valuable because teens wanted them so badly and some day they’ll be obsolete and junked. But, I can’t agree with your assertion that collectibles are for collecting purposes only. You neglected to consider the possibility of buying an established collectible. For example, in your article you cite the suprising value of the 1st issue of cigar afficienado magazine. But what if you bought it 10 years ago as an investment after it climbed to $30 in value? Then you would have done very well. My point is that there are established collectibles that have a growing number of collectors that should do really well in the future because they are already rare, interesting, and have good demographics behind them. Some of those can outperform mutual funds if well selected.
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