In April, a new record entered the Guinness World Records: A Pokémon card was sold to YouTube star Logan Paul for over $5 million. Was this just a publicity stunt from an influencer, or was there more to it?
The world’s wealthiest have invested in trophy assets such as watches, art, cars and fine wine for hundreds of years, and these assets are becoming increasingly well known to the general public as alternative investments. Nostalgic collectibles such as vintage video games, trading cards and toys with large communities of loyal fans are starting to get more mainstream interest as their values rise.
Blurring The Lines Between Passion And Investment
The lines between passion and investing have certainly blurred in the last year, further explaining the rising collectibles market and why more and more people are considering it as a potential investment.
We started seeing this trend a few years back with traditional stock investing. Retail investors were no longer putting all their funds in basic index funds but wanted their investments to align with their personal interests or values. Think about the rise of thematic ETFs or crowdfunding, for example. Social investing apps and online communities around investing also started popping up, as I discuss in a recent article, making investing a fun and social experience where it is no longer just about numbers.
What Are The Risks With Collectibles?
The biggest risk with collectibles is that, because they’re emotionally driven, value depends on people’s tastes and trends. You’re ultimately betting on the brand having longevity and that in 10 years’ time people will still be interested in owning the item you’re investing in today.
In some cases, speculators turned out to be wrong. For example, ’90s toys such as Furbies and Beanie Babies were wildly popular, and some Beanie Babies sold for thousands of dollars as speculative investments; in fact, the toys reportedly once made up 10% of eBay’s total sales volume.
At some point, however, people simply lost interest. The bubble burst and the value of the toys dropped significantly. Franchises such as the Pokémon Company have so far stood the test of time, but as with anything, it’s smart to not put your eggs in one basket and to do your own research.
Read the full article here.
By Iris ten Teije a Forbes Councils Member
Published May 17, 2022