Coxsackie Antique Center

Where Yesterday Meets Tomorrow

Handicapping Modern Collectibles

We are all barraged with a constant stream of offers for every imaginable kind of collectible - from Marilyn Monroe Postage Stamps to Star Wars Collector plates to Elvis Presley porcelain dolls. People often ask us which ones are good investments. The short answer is simple - none of them! If it's labeled a collector edition and marketed as a Collectible, DON'T buy it! (If you really like it, wait until next year and buy it at a garage sale for $2.00.)

You have to consider the fundamental principle of economics - the law of Supply and Demand. If supply exceeds demand, the price will be low. If demand exceeds supply, the price will be high.

First consider supply. Most "Collector" items are produced in runs of hundreds of thousands or even millions. This is true even for most of the so called "Limited Edition" items. The "limitation" is not some predetermined finite number - it is the number that can be sold through intensive marketing. The marketeers are often very clever in their advertising. They will, for example, claim that production of a "Limited Edition" collectors plate will be limited to "150 firing days." But they don't tell you how many plates will be produced each day. The answer is "as many as they can sell!" Other times, they will pledge that "Americans will have the opportunity to purchase only 10,000 of these beautiful dolls." - But Canadians can also buy 10,000, as can the Ukrainians, the Germans, the Slovakians, etc. So the true limit is many hundreds of thousands. And if they happen to reach their American limit, "I'm sure we can get you one of the Ukrainian dolls that's still left!"

These items are issued with very heavy advertising campaigns and the promoters keep pushing the item until they can't sell any more. So you start with a saturated market. Everyone who wants one and is willing to pay the initial offering price has one. Once they stop promoting the item, the only significant pool of people who still want the item are those who weren't willing to pay the price. They will only begin to buy as the price drops!

The promoters will say that once they stop producing the item, the supply will drop almost to zero because the people who bought them wanted them and will keep them rather than offering them for sale. That would be true if they were promoting the item only as a nice thing to have and to hold. But instead, they are touting it as an investment intended to be resold at a profit. People will immediate begin offering the plates for sale.

The occassional exception to this rule is when a series of items is issued over time. If the series proves popular, many more copies of later issues in the series will be created than of the early issues. Some of the later collectors will want earlier issues. But to ply that circumstance into profits is even more complex. You have to buy the initial item now and wait to see if it is successful enough to produce the promised follow-up items and to see if the issue numbers grows dramatically from item to item.

The fact is, there are almost always far more examples of "Collector Editions" available than there are collectors for the item. Therefore, the price almost never climb above a nominal value of a few dollars. Rarely has the resale value even approached the initial purchase price.

There are some true limited editions. If production is limited to 2000 plates or 10,000 sets of cards or whatever without a lot of weasel words, then you know what you're dealing with. You can ask yourself whether, in the future, will there be a larger number of people who want the item than there will be copies of the item.

There are two other problems on the supply side. First, how do you know how much it's worth and how do you sell it. The initial promoters and some major aftermarket dealers go to a lot of trouble to create the appearance of demand and price rises. They issue "price guides" and sponsor shows. They buy and sell amongst themselves at inflated prices to create the illusion of demand and price increases. In fact the true market value of the items is far less - perhaps 50% - of the price quide quotes. Second, can you find a collector willing to pay a high retail price? Not easily. So you may have to sell it to a dealer. The dealer can NOT pay "book value." They can only pay a small fraction of the true retail value and then they have to hold it in inventory until they can find a retail buyer.

Now consider the demand side. Will the Marilyn Monroe and Elvis Presley crazes continue? Probably... at least for a while ... but who knows for how long!?! How many people today are seriously collecting Maud Adams and Rudolph Valentino? The Dionne Quints were the sensation of a whole generation. The number of serious Dionne Collectors today is probably a few hundred.

For prices to rise, demand must exceed supply. Where will the demand come from? Who are the Elvis and Marilyn Collectors? They are the people who lived with them as major parts of their lives. Will today's teenagers, steeped in punk rock and rap music be as fanatic in their devotion to Elvis as are their mothers? Will today's teenager boys fall in love with Marilyn when they grew up exposed to Madonna? Probably not. If there is not a steady inflow of new collectors, then demand dwindles and prices fall.

Not every collectible goes through this boom and bust cycle. Millions of people have loved roses for many hundreds of years. It is hard to imagine that they won't continue to love them for hundreds more. A Rose Society collectors plate limited to 8,000 pieces has a finite supply and at least a potential demand far exceeding that. Likewise, a collector plate featuring an attractively done cat and limited to 2000 copies will likely have an ample group of potential buyers in the future.

Another factor to consider in evaluating a collectible is timing. When should you buy; when should you sell? If you buy the initial issue, you'd better plan on allowing plenty of time. First, the price will drop substantially. In a year or two you'll be able to buy the piece at garage sale prices. Then it will have to work it's way back up if it can.

If you're lucky and your item happens to become a hot collectible - as Elvis and Marilyn certainly are right now - then you have to decide how long the fad will last. For that you have to pay close attention to the public pulse. How many articles appear in the popular press? Elvis is everywhere - on every tabloid and even on the news magazines. His legend lives. He's still hot. Marilyn? She's on a US postage stamp. There are still hit songs about her on the radio. She had a big spread in Playboy magazine (again) a few months ago. She's still hot too.

There is great debate over whether the media creats or follows the popular culture. For our purposes it matters not. They are our antennae. When the coverage start falling off, the shrinking demand won't be far behind. The collecting fad had peaked. It's time to sell out at the top. (And hope the top is high enough to recover your intital investment.)

Better than expensive collectibles are items that are not targeting the collectibles market. Look for items with strong graphic design and color. Look for items that are not intended to be permanent. Advertising, packaging, bottles, catalogs, are all good prospects - especially since the price (and therefore the risk) is minimal. The price is the cost of storing them for twenty or thirty or more years on the gamble that they'll become desireable and valuable. We have a box of junk mail catalogs in my attic label "Open in 2042 A.D." We figure those are our kids inheritance - (along with the 100's of box lots we never got unpacked and sorted.)

The trick is to catch the wave early, and catch a swelling wave. Look for items that people remember from their youth. Collectors have the most disposable income in their 40s. That means the recollections of their youth are from the 40s, 50s, and 60s. Try to find items with some intrinsic value and logic. Avoid collector plates or avon bottles or baseball cards. Avoid items that everyone says will become the next collecting rage. Everyone is saving Joe Camel items and McDonald's toys (including us). They will always be common and inexpensive. Avoid items that are being manipulated to create the illusion of demand - lunch boxes and cereal boxes, for example. Avoid items that have vast potential untapped supplies.

Of course if we really knew how to do any of this we'd be out buying up warehouses full of the next great collecting rage instead of sitting around writing articles about it.


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