Diversify with collectibles | Barrons


Anyone who buys should hold them for more than a decade and not expect to profit from them in the short term. —David Savir

Artwork by Rose Wong

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The collectibles market is booming. During the pandemic, people with old collections dug them up, new collectors entered the market, and business activity and prices in all categories, from sports memorabilia to fine wines, soared.

“I can’t even count the number of people who contacted us during the pandemic who hadn’t touched their collections in over 10 years,” says Scott English, executive director of the American Philatelic Society in Bellefonte, in Pennsylvania, which received attention on stamps when four 1918 Inverted Jenny stamps – so called because they were printed with an airplane upside down – fetched a record $4.9 million at Sotheby’s the last year.

Global sales of collectibles are expected to grow from $412 billion to $692 billion over the next 10 years, according to Market Decipher, a Canadian market research firm.

For investors, a long-term view is advised, says David Savir, CEO of Element Pointe Advisors, a wealth management firm in Miami. “Many collectibles have values ​​that may not be sustainable for the next two to three years,” he says. “Anyone who buys should hold onto them for more than a decade and not expect to profit from them in the short term.”

The highest level of business activity is in sports collectibles, boosted by the inflow of non-fungible sports-related tokens, or NFTs, which exploded to $1 billion in sales last year – more than the entire 2020 NFT market – and are expected to reach $2 billion this year, according to London-based consultancy Deloitte.

The overall NFT market jumped to $24.9 billion last year, including digital creations ranging from high-end fine art to collectibles. Sales of popular collectible series have not declined: in March, sales for Bored Ape Yacht Club and CryptoPunks reached $257 million and $81 million, respectively, according to CryptoSlam, an NFT data aggregator.

Tangible sports memorabilia is not giving way to NFTs: sales in the traditional realm of $4 billion have broken records. Last year, a Dallas Mavericks star Luka Doncic NBA rookie trading card sold for $4.6 million – the most expensive for a basketball card – and a 1952 Mickey Mantle card hit a record for baseball cards, at $5.2 million.

For classic cars, the first quarter of each year is when three of the biggest car auctions take place, says Juan Calle, co-founder and CEO of Classic.com, a site that tracks automotive market data. This year’s quarter ended with total sales volume of $1.3 billion, double the same period last year, Calle said.

While other categories have less practical value, they can be attractive diversifiers for investment portfolios.

Consider the low correlation between fine wine and the S&P 500: just 0.3, which is lower than gold, real estate or any traditional portfolio-balancing asset class, says Anthony Zhang, co -founder and CEO of Vinovest, which manages a portfolio of 500,000 collectibles. bottles of wine stored in custom-built warehouses around the world. “We’ve seen a huge increase in interest from people who aren’t traditionally considered wine lovers,” he says.

The wine market tends to ignore the factors that cause stocks to falter, but has other sensitivities, such as tariffs and even gift policies in authoritarian countries. When China banned gifts to government employees in 2011, popular values ​​of Bordeaux wine plummeted, says Robbie Stevens, Americas territory manager for Liv-ex, a London-based global marketplace for fine wines. .

The broad Liv-ex 1000 index rose 19% in 2021, driven mainly by the popularity of Champagne and Burgundy. In the 12 months to March, the Liv-ex index for Champagne rose by 47.8% and for Burgundy by 36.8%.

But no category is immune to major economic trends, says financial adviser Savir. “Collectibles are more vulnerable to price declines during a recession than other assets, given the non-essential nature of many of them.”

This article originally appeared in the June 2022 issue of penta magazine.


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