With the right conditions, collectibles can make the Dow Jones look dusty.
With the right conditions, collectibles can make the Dow Jones look dusty.
For investors weary of stocks and bonds, unconventional thinking may lead them to buy something more tangible and artistic-perhaps the glitter of gold, the tone of a finely crafted vintage guitar or the hefty feel of a rare book that changed the course of science.
But beware: It takes specialized skills, experts and references to separate worthwhile investments from fads.
Before seeking profit through collectibles, investors should first apply unconventional thinking to companies they invest in, and that is the purpose behind the Visionary Lecture Series sponsored by Victoria Hayward, senior vice president, financial advisor and seniorportfolio manager at Morgan Stanley.
Speakers have includedNew York Timesbest-selling author Steven Kotler as well as David Roberts, an expert on disruptive innovation and exponentially advancing technology. Her speakers have shared their visions of the impact advances in technology and human performance may have on the global economy.
Hayward incorporates these ideas in her advisory practice."It's important to look for companies that are embracing these changing forces and facing them head-on, whether that's a company that is trying to adopt and utilize innovations across its systems, a company that enhances its product lineup in response to evolving customer demographics and tastes, or a company that is recognizing and adapting to the exponential growth of genetics, robotics, or nanotechnology."
Some investors want something less technical or more concrete. That means finding experts they can trust in galleries, workshops and studios who can produce, repair and authenticate fine possessions while also providing wisdom on pricing and provenance-that is, who owned an item previously and how it was obtained from another collector.
A world opened up when local collector Pam Beeler visited the glass studio of Christopher Ries, a Columbus native with pieces that provoked emotion and challenged sensitivity and intelligence.
"The pieces we would buy couldn't be just eye candy or purely decorative. There had to be an intellectual process as well as craftsmanship, as well as pleasing to the eye. The genesis of it wasn't investment so much as how it is visually stimulating," Beeler says.
Julie Devore operates Pickerington-based Resale Furniture, which specializes in quality furniture and furnishings. Originally an antique dealer, Devore moved to general furniture when antiques began to lose their luster for collectors 20 years ago.
Many things move the individual markets for collectible items as collectors and dealers share notions about what's hot and what's not.
Firearms are high-interest, perhaps due to worries about gun rights, but also for the beauty of vintage weapons, says Sam Schnaidt, co-owner of Apple Tree Auction Center in Newark. Any gun that takes modern ammunition, say after 1870 or so, has to be logged with the ATF, and Apple Tree handles that paper work.
Gold and silver are doing well, up considerably this year, says Schnaidt. Some of the rarest coins still command high prices, says Paul Lambert of American Coin & Collectibles.
Chinese furniture and decorative furnishings have become more costly as many people of Chinese descent have become more interested in buying back their heritage, says Devore.
But some collectibles are fading.
Antiques no longer maintain their value as well as high-quality pieces manufactured in the mid-20th century, Devore says.
At one time more than 4,000 collectors belonged to a national Heisey Glassware collectors association, but now only about 1,100 are active, a measure of how far the Newark-based Heisey's fine glass tableware and figurines have fallen in popularity and price, Schnaidt says.
World War II souvenirs were popular once, but now approximately 430 veterans, unfortunately, are dying each day in America. Heirs want to liquidate their collections, but they don't have scarcity value anymore, Devore says.
The recession burst the bubble in vintage collectible guitar values, says Dave Bush, a repair and restoration artist for guitarists like Columbus-based blues star Sean Carney.
"With Fender guitars, things are so interchangeable, with standard pickups and bolt-on necks, there's no real way to tell that this neck belonged to this guitar or these pickups were in this guitar from day one," Bush says. "And some people are so good at replicating the finishes on these guitars that it's extremely scary."
Indeed, Bush takes a "do no harm" attitude toward vintage guitars. He'll repair what he must to make an instrument playable, but he discourages customers from refinishing older classics.
Likewise, glass art is sometimes impossible to restore if broken, Beeler says, and collectors of other fine art, coins, stamps, musical instruments and other valuables say they generally don't want substantial alterations to originals. They want coins, for example, that are undamaged in bags from the US mint, typically scored somewhere between 60 and 70 on the 70-point Sheldon Coin Grading Scale.
In other fields, restoration is essential. Ryan Racing Restorations repairs classic race cars for collectors who want to compete with them in private events on real racetracks. Most have body damage, wear and tear and the particular stress of machinery used in competitive racing.
Spare parts often can't be found for race cars and prototypes where manufacturers only made one, five or 10 of the same model. So Ryan has accumulated more than 20 pieces of vintage industrial machinery to bend, punch, grind, lathe or polish metal parts, as well as a whole fiberglass shop to shape and repair body parts.
"The Porsche 911 has gotten really hot for the past five years," says Ryan, who also has a Ford Le Mans prototype and an Indy car frame currently in his shop.
"I had one customer in the '80s who made his money in clothes. He bought Ferraris. He was not an enthusiast-his wife was-but everything he touched turned to gold," Ryan recalls. "He hit the market right and bought a Ferrari 275 4-cammer, which was a very desirable car at $65,000 to $85,000, and he bought it at $95,000. We restored it, and he traded it two years later for a twin-engine turboprop that was worth a million dollars, and all his cars went that way."
Today, Ryan says Ferraris are almost impossible to find at any reasonable price, illustrating how scarcity can drive value, along with quality and provenance. Classic examples include first-edition books like Darwin's Origin of the Species, early works by Einstein, or The Great Gatsby by F. Scott Fitzgerald.
Book collectors learn quickly what to look for, says Karen Wickliff, owner of Karen Wickliff Books. "Tolkien and Kurt Vonnegut are two of the major ones, along with Hemingway. They want the first editions of some of the later books, but the first edition of the first book they publish has the greatest value. It has to have its dust jacket, the right cover, the right wording in the right order. It takes a lot of research to get the right one, so you're already talking about thousands of dollars."
There are many other rules of thumb smart collectors can learn from the experts. "At our auctions, there's usually a 50-50 split between those buying for resale and those buying for their own personal use or collections," says Schnaidt. He charges relatively modest fees at auctions, but some auction houses-including majors like Christie's and Sotheby's-can charge a "buyer's premium" of up to 25 percent.
"Can I buy GM stock today and know what it's going to be worth later on? Do you know the answer to that? If you're sure, go ahead and buy it," Schnaidt says. "Some people think buying stock is the right answer, others think putting (money) in the bank or in a hole in the ground is the right answer. We have no idea what the future is going to bring."
Mike Mahoney is a freelance writer.