Collecting Dust

There is a story that is often told about the collectibles market. The story is anecdotal so there's no way to tell if it's true, but as myth it is true enough to illustrate a common 21st Century idea.

There are several versions of the story, the most common version runs roughly like this: A guy walked into a toy store and discovered that the store had three (sometimes four) models of a specific early Matchbox Volkswagen. The guy knew that Matchbox only made four (sometimes five) of this model and as a result they were very valuable. In the course of a conversation with the owner, the guy discovered that the store was up for sale, and he bought it on the spot, never worrying about financing the operation. He didn't have to worry, because he knew he could get the value of the store and then some just by selling one of the Matchbox Volkswagens.

It's a good story, and it has a reasonable possibility of being true. Unlike so many urban legends, there is a certain amount of hard peripheral evidence for the story's main theme: the high value of middle-class collectables. Recently very rare Matchbox Volkswagens have brought home sums in the $60,000+ range at auction.

The prices of collectables and memorabilia have skyrocketed in the last few years as Baby Boomers have begun to push old age with a very short stick. Nostalgia is a potent market force. The Fender Stratocaster played by Jimi Hendrix at Woodstock--an instrument that enjoys no particular distinction besides its dead famous owner--went for a cool $338,580. On a more "affordable" level, Boomer toys, records and other effluvia regularly bring fantastic sums on Ebay and other marketplaces.

Recently a Schwinn Stingray "Crate" bicycle from late in the Baby Boom era was priced at $600--the first bid was placed at $300.

A record by the Beatles with a notorious cover went for $450, despite the fact that the cover was damaged. The same cover in undamaged condition should sell for nearer the $2000 range. The record itself is considered "valueless."

A Topper Secret Sam "spy" attachй case went for $450.

The pricing on very desirable Barbies will run from $300 to $6,000, with the really rare ones selling for even more.

It would be a pleasure to tell you how much a Mickey Mantle rookie year baseball card is currently worth, but the prices were unavailable on Ebay as this article was being written: the deals on the cards had all been closed, presumably all for more than the original $1000-$1,500 starting bids (note: "book value" for the card is around $10,000- $12,000).

The trouble with the "old junk" market is that Hendrix didn't play that many guitars and not very many toys, records and gum cards survived Boomer childhoods. Worse, the pricing on these Boomer collectables puts them out of most unafflicted people's price ranges.

It is interesting that so many Americans now define themselves by their stuff...either that or many people choose their stuff based on some self-definition. In terms of economic decisions it boils down to the same thing: you are what you buy. But there's not enough old junk for everyone to use in their self-definition so, to fill this howling void in the market, companies like Easton Press and Franklin Mint exist to create collectables ready made.

The value of collectables is determined by esthetic value and nothing else. Assuming you can stand the clutter, there is nothing wrong with having a ton or two of great stuff around the house. Where collectables become an investment problem is when the collector confuses the value he or she has for the items with their value in the bigger world. In short, collectables and memorabilia are not investment instruments and are generally poor investment choices.

Most of the time when this argument blows up, a collector will get an exasperated look on their face and petulantly attempt to explain that the items in their collection have held value for x years at y price, that price typically increased in value at a rate of z. Which may be true, but if all the collectors in America emptied their collections today and placed everything in their collections at auction with no reserve price, the stuff would find its natural value, and a lot of bubble gum cards would be as indigestible as the gum with which they originally came.

This is not a condemnation of the memorabilia market, but it is a call to recognize collectables for what they are: collectables. Sure, all that old stuff is fun, but unless you happen to be the guy in the Matchbox Volkswagen story and immediately go into sales of the collectable you happen to like,