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moneysense.ca, 4/08/09
Investing in Stamps, Coins, Comic Books, Baseball Cards and more…
I find the topic of exotic investments endlessly fascinating — I think the investment merits of some of these are embellished simply to justify a pricey hobby to the significant other. In an earlier post (See Exotic Invesments), I wrote about investment opportunities in diamonds, fine violins, wine, fine art and soccer players. Here are some columns that appeared recently on investing in stamps, coins, comic books, baseball cards, postcards, movie posters and fine whiskeys:
The best index for investment-grade stamps is the GB30 Rarities Index, tracking 30 of the rarest Great Britain stamps, Mr. Anandappa says. This index has averaged 9.9% per annum (compounded) for over 50 years and in that time, it has never fallen in value.
The nebulous nature of numismatics
Do coins outperform stocks? Dealers can trot out statistics showing how an investment in coins has consistently outperformed stock markets, but stamp shop owners can tweak the numbers to show the same thing, as can those who sell art. The fact is, an investment in pocket lint would have outperformed stocks over the past year, so determining the relative advantage of anything over equities is tricky.
Holy Investment Opportunity, Batman
The comic book collector market is still thriving and profitable, and has done especially well since stock markets plunged last fall, says David Tosh, a comic book and comic art collectibles specialist at Dallas, Texas-based Heritage Auction Galleries (ha.com).
“It’s pretty evident that people are looking for alternate ways to invest their money these days, and rare comics books, especially those that have been certified, encapsulated and graded, have turned out to be very good investments,” Mr. Tosh says.
How to play the trading card field
The most expensive card sold at auction was the American Tobacco Company’s 1910 T206 baseball card depicting Honus Wagner, who may have been the best baseball player ever. According to Wikipedia, a California collector paid US$40.2-million for it in 2007, but the figure seems inflated, since the card had been bought for US$2.35-million just six months earlier.
moneysense.ca, 4/08/09
The problem with “alternate investments” is that you almost never see book value if you decide to cash in and the value of many things is more theoretical than actual.
Sure, you have your rare instances of Honus Wagner baseball cards or Action Comics #1 but just try and get book value for something relatively modern.
Hmmm…I think we should start a “Canadian blog ETF” where investors can get a piece of some hot blogs….
I saw an article recently on movie posters…I just rolled my eyes.
I’d love to collect beer. Although the stuff in my fridge depreciates rapidly once I empty the contents. I never seem to get more than 10 cents a bottle…
Most of the articles regarding collectibles as investments seem to concern themselves only with the most rare and expensive examples. The first issue of Captain America may be steadily increasing in value, but the other 500 issues are probably worthless. Especially now, with the appearance of EBay, where virtually any common comic book can be found: Starting bid, ¢99; Buy it now price, $2.
The key to collectibles, as you say, is really that it is a hobby. It is something personal, that you have a passion for and definitely know a lot about! I have a number of friends (mostly of the female persuasion) who are into antiques – but they all know and love what they’re doing. To an untrained eye (ie. mine), they look like 100 yr old junk.
That said, a good friend of mine has a collection of about 14 or 15 special limited edition or celebrity autographed guitars in his basement. It is like going to a museum whenever I get to go visit his basement. That being said, it is next to impossible to put a price on his collection – you can’t mark to market his collection on every given trading day. What is a Jimmy Buffett or James Taylor autographed guitar worth? Heck if I know, but it would probably be worth a lot more after they pass away… What is the value of a rare limited edition 1960-something Gibson Les Paul hollow-body guitar? Heck if I know, but I’m told there were fewer than 100 of them originally hand-built and we don’t know how many are left in existence today that are still in original condition.
@Phil: The June issue of Globe Investor magazine had a column on collecting classical instruments. Unfortunately, it is hidden behind subscriber access:
http://www.theglobeandmail.com/globe-investor/e-zines/globe-investor-magazine/the-sweet-sound-of-an-investment/article1202270/
@Chris: Yes, whether it is coins or stamps or comic books or baseball cards, the investment aspect is applicable only to rare items. However, I wonder about some of the claims made in the columns. For instance, many auctioneers charge commissions to buy and sell in the 20% range, which doesn’t seem to be included in constructing the price index. To be fair, stock indexes don’t include trading commissions either but stocks can be bought or sold for a very small fee. Not so with coins or stamps.
@Steve: Exactly. Auction houses typically charge fees in the 20% range, which would drag down returns quite a bit.
Beer collection just doesn’t seem practical for two reasons:
1. It doesn’t improve with age, and
2. If you have it, why would you let it sit there and not be drunk?
Then again, apparently there is a market for very, very old wine which is probably not drinkable… so who knows!
Like Phil S said, liquidity is a major concern in exotic investments.
In illiquid investments, there may be a previous transaction suggesting the price of the investment. However, you may find that there is no additional buyer when you want to sell your investment especially at the previous transaction price.
Oh yeah! Don’t forget that if you are a collector of rare whatevers – cars, boats, musical instruments, jewelry, art, coins, comic books… You need to make sure that you INSURE your hard assets!!! Content insurance for your home and make sure you give your insurance agent the appraised value!!! If your collectibles hit some astronomical figure, your insurance may be rather high, but make sure it’s insured!
Okay, so we’ll tally up the costs:
*) Significant commissions to buy and sell.
*) Insurance. Typically 1% of the appraised value per year.
*) Maintenance. You don’t want to put your elbow through a Picasso like this: http://www.newyorker.com/archive/2006/10/23/061023ta_talk_paumgarten
I sent a few bottles of the Innis and Gunn Canada Day beer (only released over here in Canada, I think, despite it being Scottish beer) back with a family member to Ireland recently to sell and made a fair bit of money. And it was pretty repellant stuff. A note for you guys for next year!
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