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Collectibles are terrible investments

fullstackeconomics.com

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Re: Collectibles are terrible investments

#31

Post by zenlikethat »

So funny enough, there _are_ some people looking at ways of generating cash flows with NFTs. For instance, some projects have offered a chunk of their fees from resales to users, or offer a token reward for staking the NFT. Or in Bored Ape Yacht Club's case, they just 'airdropped' a bunch of a new token over to holders, giving them free money essentially.

Yes, just about everything out there still feels pyramid-schemey due to its emphasis on increasing price, so I don't disagree with anything written in the article... _but_ it's not impossible that NFTs could generate some cash flow through a smart contract piece.

Dealing with regulation is tricky -- since an NFT that can generate cash flow is basically a security. The SEC is likely to shut that down hard, and it's safest to avoid as a builder. But anyway, unlike a beanie baby it's feasible that NFTs could generate cash flow (staking, lending as an item in an in-game economy... etc).

Re: Collectibles are terrible investments

#32

Post by majormajor »

grapeskin wrote: post #23
elil17 wrote: post #13

Earlier quoted context omitted.

That relies on you being able to guess. You can retroactively see which collectibles gained value, but you are unlikely to know that ahead of time. If you somehow do know - congrats, you’ve hit the jackpot. Maybe you have a place in the art community that introduces you to rising artists before they hit it big. Maybe you have access to sales data for toys before it gets published. But if you’ve read about it in the n…

No different from buying random small name stocks. Sometimes you luck out and your stock grows 20x in five years. Sometimes it doesn’t. On the other hand, buying, say, Apple stock, is not much different from buying a first edition Charizard card or an unopened copy of Super Metroid. It’ll probably steadily grow in value over years and has been. But both could end up collapsing tomorrow for unknown reasons.

This is covered in the article in the cash flow aspect. Outside of a total economic collapse that took out "real" investments and collectibles both, the reasons the value of an Apple share would fall, or the price of land would fall, would be much more tangible and understandable.

The relationship for land is more obvious and immediate that business investment (you can charge rent!) but someone in 2010 who said "this iPhone thing seems to be generating a lot of cash flow for Apple, I think this is a good time to invest" is doing it not solely because they think the number of people interested in buying stocks is going to increase, but because they think Apple in particular is going to continue to do well financially because Apple is producing something people want to use.

Re: Collectibles are terrible investments

#35

Post by Waterluvian »

allturtles wrote: post #7

I find this argument very strange: > But it is, because in the long run, assets without cash flows cannot increase in value more than the economy as a whole. If something appreciates faster than the whole economy in the long run, it eventually eclipses the whole economy, which is impossible. No one is operating on an infinite time horizon in their investments, so this argument seems moot. You can certainly find colle…

Tangent: based on my internal perceptions throughout the past decades, I’m positively shocked that a Black Lotus is only worth $11,000.

Re: Collectibles are terrible investments

#39

Post by pixl97 »

allturtles wrote: post #22
elil17 wrote: post #13

Earlier quoted context omitted.

That relies on you being able to guess. You can retroactively see which collectibles gained value, but you are unlikely to know that ahead of time. If you somehow do know - congrats, you’ve hit the jackpot. Maybe you have a place in the art community that introduces you to rising artists before they hit it big. Maybe you have access to sales data for toys before it gets published. But if you’ve read about it in the n…

Isn't exactly the same thing true of stocks? I always wish I had bought Apple or Tesla at the right time, but I didn't.

I mean with stocks someone tends to keep historical data so you can measure risk.

With collectables this risk is much harder to quantify as it generally professionally recorded.

This inability to correctly measure risk, especially in markets with low liquidity dupes people into believing they have a much larger chance of 'winning' than actually exists.

Re: Collectibles are terrible investments

#40

Post by ayngg »

The concept of the Masterworks thing that they are talking about was tried previously with other collectables, notably Mythic Markets with Magic: the Gathering cards. You can do a quick google search to see how that turned out and the controversy that surrounded it.
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