The global investment atmosphere has changed drastically in recent times. Small, intermediate, and multinational companies have invested in intangible assets as securities. These include research work, patents, and trademarks, apart from their line of trade. Such investment not only conceals a company’s net income but also cushions the companies against possible insolvency. Influenced by such precedence individuals and small businesses have moved to a different form of the time value of money investment, antiques, and limited edition collectibles. Investment in antiques and collectibles could help in cushioning business enterprises from adversity related to market uncertainties and recession. Such uncertainties to the business include inflation of the currency; political instability heralded by changes in regimes and or policy changes. These antiques, whose value appreciates steadily due to their rare nature and high demand; from museums, public exhibitionists, royals, and collectors. Limited edition antiques and collectibles include high-end limited edition old cars, watches, old wine, paintings, and coins.
Antiques and collectibles appeal to a specific class of clients. Often, the customers are affluent and willing to pay huge sums of money for those items that appeal to them, especially the rarest ones with a touch of class. Most antiques are sold through public online and private auctions, and they fetch much higher than their initial prices at production. For instance, a 1964 Chevrolet ss409 impala bought at $15000 in 1990 could be sold in the current age at close to seven times its initial price to fetch close to $175,000. The dynamics of this trade are quite fluid and unpredictable but can be a plausible form of investment, especially for investors who can afford time on their investment.
The global economic recession of 2008-2009 had small businesses as casualties of insolvency. Several such small and large unstable corporations that lacked alternative forms of security collapsed. Bentley Meeker’s lighting business faced such a quagmire. He resolved to sell off his finest wine collection, which earned him enough money to cushion his business through the recession period. Collectibles include a wide spectrum of items such as belt buckles, old manuscripts, paintings, and coins. Collectors mostly keep antiques more as a hobby than for financial gains. The author notes that the collectible market is of high value and unpredictable. The sudden surge in demand for certain collectibles and the equal decline of such demand makes it a high-risk venture.
The antique and collectibles market is influenced by the demand for items involved and the commensurate supply. It is also influenced by unpredictable and unquantifiable factors like fashion and generational popularity. Return on investment in antiques is determined by rarity and origin of items. Some brands are known for quality and style that appeal to a certain class of collectors and are valued higher than other brands. The author noted that Burgundy wine’s value increased by 105% compared to other wines over a similar period. Therefore, the product brand plays a major role in determining the future value of the product.
Investment in antiques is based on commerce principle of the higher the risk, the higher the return on investment. Investing in lower supplies limits the number of clients who can access the products but increases demand for the product hence increase in prices. Like gambling, the risks of investment are high, but the rewards are worth the risk. Gemstones and jewelry do not pass as collectibles because they are privately and covertly auctioned. Additionally, their value is not quite easily determined.
Sullivan, Paul . “5 Ways to Value Your Collection, Whether It’s Fine Wine or Shrunken Heads .” new York: The New York Times, 1 March 2019. https://www.nytimes.com/2019/03/01/your-money/collectibles-value-market.html