Editor’s Note: Antiques-and-collectibles expert Harry Rinker shares his thoughts and insights about investing in “tangibles” when the economy is bad.
Individuals fleeing the stock market are building large cash reserves. Growth potential in savings accounts and certificates of deposit (CDs) is minimal. The buzzword on the street is tangibles, solid objects that can be seen and held. Antiques and collectibles are tangibles. Some surplus cash already is flowing into the antiques-and-collectibles marketplace.
And article by Jeanine Poggi on Forbes.com last month pointed out that the auction sector of the antiques-and-collectibles marketplace has and remains impervious to economic trends. Auctions are a winner when times are good as well as tough. In good times, buyers compete to pay top dollar. In bad times, there are those who have to sell no matter what. There are more than enough buyers willing to take advantage of the resulting bargain prices.
Investing in antiques and collectibles is a tricky business. It requires skill and years of expertise. The wallet-whippers—those individuals who think they can just whip out their wallet and start buying—will quickly find they are in over their heads. Further, investing in antiques and collectibles is an intermediate and/or long-term proposition. Short-term investing does not work. Market movement takes years, not months.
Lest there be any confusion, this column is about financial investment, i.e., buying antiques and collectibles as commodities to be bought and sold as market fluctuations dictate. It is not about love or any of the many other “investments” that make antiques and collectibles fun to own.
When buying antiques and collectibles as commodities, it is critical to identify those objects that bring the highest dollar, not necessarily those which are the most desirable. Thanks to Internet sites such as Artfact.com and GoAntiques.com, data is available to make these determinations.
Number of collectibles-and-antiques categories mushrooms
Throughout much of the 20th century, there were “blue chip” antiques-and-collectibles categories that experienced a steady rise in value over time. “Blue chip” categories vanished as the 20th century ended. Today’s market is trendy. Many previously favored categories, such as cut glass, have fallen on very hard times. The market also has become more sophisticated. Where it once consisted of approximately 1,000 identifiable collecting categories, the count now exceeds 30,000.
Investing in antiques and collectibles today requires an expertise that includes an awareness of past market trends, current market values, factors that might influence the market and future prospects. Unbiased experts are few and far between. Far too many potential investors rely upon advice from individuals with a vested interest in the object or collecting category, usually from the sales point of view.
Foreign buyers view the market differently
Much of the new money flowing into the American antiques-and-collectibles marketplace is going to come from abroad. These investors think globally, a much broader perspective than usually encountered by players in the American marketplace. They are not likely to see the same investment potential in a period Goddard and Townsend Chippendale secretary bookcase as an American investor. However, they understand the investment potential in a photograph with authenticated signatures of all four Beatles. The trade has reached a point where investment-grade material divides into global and national investment-quality pieces, mirroring a similar trend for low- and middle-grade material on auction Web sites.
What, if anything, does this have to do with the average collector or investor? The answer is very little. High-end investing now requires the ability to spend $50,000 to $100,000 or more per unit. This is a key point. Bluntly put, if you only have between $5,000 and $25,000 to invest, find another investment vehicle.
Finally, expect to be bombarded over the next several years with media stories about record prices being paid for items. James D. Julia recently sold a Colt .44-caliber revolver for $800,000 plus buyer’s premium. This is the start. Many more will follow.
Look for buying opportunities
Remember, it is a mistake to judge the strength of any collecting category by its high-end sales. A collecting category’s strength rests on the sales of it low- and middle-end material. When viewed from this perspective, a good market is one in which prices are stable. Continually falling prices are a sign of a bad market. The current economic situation is going to test every collecting category. While caution may appear to be the order of the day, opportunities abound. It is a great time to buy, provided you know what and why you are doing it. If you do not, buy/hire the expertise you need.
Rinker Enterprises and Harry L. Rinker
are on the Internet. Check out his Web site
You can listen and participate in “WHATCHA GOT?,” Harry’s antiques-and-collectibles radio call-in show on Sunday mornings between 8 a.m. and 10 a.m. Eastern Time. If you cannot find it on a station in your area, WHATCHA GOT?” streams live and is archived on the Internet.
“SELL, KEEP OR TOSS? HOW TO DOWNSIZE A HOME, SETTLE AN ESTATE, AND APPRAISE PERSONAL PROPERTY” (House of Collectibles, an imprint of the Random House Information Group), Harry’s latest book, is available at your favorite bookstore and via Harry’s Web Site.
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