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Collectibles are terrible investments

fullstackeconomics.com

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Re: Collectibles are terrible investments

#61

Post by Gigachad »

buildbot wrote: post #49

In general I completely agree with this article, unless the collectible generates value in itself and is limited. For example film cameras and more rare medium format digital cameras are appreciating now quite a bit, above original MSRP

It's extremely difficult to work out which things will be valuable and after the effort and time spent holding the item, you didn't really do that well. Incidental profits from reselling stuff you happened to hold that gained in value.

Most stuff never goes up in value. Most technology, even the famous/popular stuff has only gone down in value. With a few exceptions of things which were later seen as iconic but rare. Stuff like the original Nintento gameboy can be bought now for less real value than they were new. Almost certainly because there are so many around. So you have to be a fortune teller to work out what item will be more popular in the future than it is now.

Re: Collectibles are terrible investments

#64

Post by Gigachad »

petarb wrote: post #25

What about collectibles like Magic the Gathering? Some cards have had serious appreciation. Eg Alpha black lotus going for $500k

It's almost impossible to predict which trading cards will be worth more in the future. Unlike investing in an index or Apple where there is a very good chance they will be bigger and more successful in the future than they are now.

Re: Collectibles are terrible investments

#65

Post by majormajor »

grapeskin wrote: post #45
majormajor wrote: post #32

Earlier quoted context omitted.

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…

People will also keep buying pristine copies of old games so long as that series has some popularity. People aren’t going to lose interest in Nintendo series any time soon. Even if Nintendo made some awful business decisions, went bankrupt, and the developers and executives were all revealed to be violent criminals, people would still love those games and want to own them. There’s a non zero possibility Apple could b…

There's also a non-zero possibility this person would take a huge bath if they tried to sell in the near future: https://www.theverge.com/2021/8/7/22614450/unopened-copy-sup...

Just a few years ago that would've gone for a massively lower price. How certain are you that that rate will continue in the next five years? Would you seriously recommend that as a wise place to park two million bucks?

"Mario is going to remain popular" is a weak reason to expect massive returns on a $2M copy of a video game in a market that saw an extreme recent rise.

https://www.cnet.com/personal-finance/crypto/jack-dorseys-2-... - twitter is still popular, what's the problem, right?

Re: Collectibles are terrible investments

#66

Post by version_five »

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…

Yeah your quoted passage seems more like a general argument against non income producing assets like gold or something. With a collectible (but honestly you could mostly say the same about gold), you are betting that it will become more scarce (because people use up or throw out or lose current stock) and / or demand will grow but they won't be made anymore. Both of these things are reasons why a collectible would grow in value faster than the economy. Like any investment, there is a bet being made. But as you say, you could argue that nothing can increase faster than the economy for the rest of time without overwhelming the economy, but that's irrelevant.

Re: Collectibles are terrible investments

#68

Post by WalterBright »

linkjuice4all wrote: post #55
majormajor wrote: post #8

Earlier quoted context omitted.

The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? I think it's also arguing that the particular appreciation you need to capture largely on…

There’s some predictability in terms of people trying to buy all the things they wanted as a kid when they finally have the adult income to afford it. Some examples include muscle cars, BMX bikes, LEGO sets, and other things that a large population of children were aware of and wanted. If you just stock-pile the big sellers or scoop up the used stuff when it bottoms out in value then you might be able to profit. The…

> I’d be cashing in right now

Are you sure? I investigated once the Mercedes 300SL Gullwing. Despite the high price it fetches, it's still a lousy investment, if you consider inflation, compare it to S&P 500 returns, and account for all the storage costs, insurance costs, and costs to keep it in running condition.

Cars decay even in a climate controlled garage. I've had some problems with my '72 Dodge with plastic parts becoming very brittle, and some things just disintegrating when they're touched. Not that I mind, I didn't buy it as an investment.

Re: Collectibles are terrible investments

#70

Post by ipaddr »

throwaway09223 wrote: post #24
allturtles wrote: post #22

Earlier quoted context omitted.

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.

Yes, but the important difference is that on the whole, the stock market goes up. On the whole, the collectables market does not.

The collectable market keeps growing with new products and new prices everyday. Something historically valuable will generally keep that value and increase over time (like the original Apple computer).
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