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Collectible Investments for the High Net Worth Investor

Book Description

Many high net worth individuals are interested in diversifying their portfolios and investing in collectibles. A collectible is any physical asset that appreciates in value over time because it is rare or desired by many. Stamps, coins, fine art, antiques, books, and wine are examples of collectibles. Where does the financial advisor or investment manager for these high net worth individuals go to learn about these investments? There is no comprehensive resource from the financial standpoint--until now. Dr Stephen Satchell of Trinity College, Cambridge, has developed a book in which experts in various types of collectibles analyze the financial aspects of investing in these collectibles. Chapters address issues such as: liquidity challenges, tax ramifications, appreciation timelines, the challenge of forecasting and measuring appreciation, and the psychological component of collecting and the role of emotion in collectible investing.


Key Features
Feature: Contributors are experts in collectible investing from around the world
Benefit: Gives financial advisors and wealth managers handy access to expert opinions to better advise clients interested in collectible investments
Feature: Experts discuss the pros and cons of collectibles from an investment perspective in their area of expertise
Benefit: One stop shopping, all expertise brought together in one volume, creating a handy reference guide
Feature: Experts discuss art, stamps, coins, antiques, wine, from around the world in one global perspective
Benefit: Wealth managers can gain information about a wide range of collectibles and learn about investing in these types with a global perspective

Table of Contents

  1. Copyright
  2. Brief Table of Contents
  3. Table of Contents
  4. List of Figures
  5. List of Tables
  6. Copyright
  7. Preface
  8. List of Contributors
  9. Part One. General Themes
    1. Chapter . The Role of High Net Worth Investment Managers in Collectible Investing for Their Clients
      1. High Net Worth Managers and Family Offices
      2. The Nature of Relationships between Client and Manager
      3. Investment Methods for Collectibles Favored by Managers
      4. Incorporating Art Indexes into an Investment Portfolio
        1. General Art Index
        2. Chinese Contemporary Art
        3. Contemporary Art
        4. European Impressionist Art
        5. Indian Art
        6. Old Masters
        7. Stamps
      5. Tools Used for Building High Net Worth Portfolios
      6. High Net Worth Investment Managers on the Pros and Cons of Putting Collectibles into Client Portfolios
      7. The Positives of Collectible Investments
      8. Conclusion
    2. Chapter . The Neuropsychology of the Collector
      1. Introduction
      2. The Modern Story: Neuroeconomics Meets Neurophysiology
      3. Before Neuroeconomics: Psychological Reinforcers
      4. Collecting Gone Awry
      5. Special Situations
        1. Aging
        2. The Abnormal Brain
      6. The High Net Worth Individual
        1. Motivation: Reinforcers
        2. The Process: The How
      7. Conclusion
    3. Chapter . Collecting and Behavioral Finance
      1. Introduction
      2. A Brief Overview of Behavioral Finance
      3. Known Behavioral Biases and Effects
      4. A Personal Confession
      5. A Wonderful Book (by Philip Mould)
      6. Conclusion
    4. Chapter . Collecting as Luxury Consumption: Effects on Individuals and Households
      1. Introduction
      2. The Nature of Collecting
      3. Problems of Collecting
        1. Problems for the Individual
        2. Problems for the Household
        3. Problems for Society
      4. The Benefits of Collecting
      5. Conclusions
  10. Part Two. Major Collectibles Related to Investing
    1. Chapter . An Overview of the Art Market
      1. Introduction
      2. How Are Works of Art Different from Stocks, Bonds, and Commodities?
      3. What Is the Size of the Art Economy?
      4. What Constitutes a Work of Art?
      5. What Constitutes “Investible Art”
      6. What Are the Components of Value?
      7. How Does the Principle of Supply and Demand Operate in the Art Market?
      8. Who Are the Buyers, Sellers, and Intermediaries?
        1. Collectors
        2. Museums
        3. Casual Buyers
        4. Dealers
        5. Art Fairs
        6. Auction Houses
        7. Investors
        8. Art Investment Funds
        9. Consultants and Advisors
      9. What Transaction Costs Are Associated with Art?
      10. How Is Art Taxed?
      11. Can the Financial Performance of the Art Market Be Measured?
      12. Which Strategies Might Be Successful for Art Investments?
        1. Broker-Dealer Strategies
        2. Blue-Chip Strategies
        3. Momentum Strategies
        4. Emerging Market Strategies
        5. Value Strategies
        6. Supply/Demand Imbalance Strategies
        7. Arbitrage Strategies
      13. Conclusion
    2. Chapter . Art as a Financial Investment
      1. Data and Methodology
        1. Art Indices
        2. Fine Art Market Performance
      2. Risk and Return
        1. Fine Art Markets
        2. Asset Class Framework
      3. Portfolio Diversification
        1. Desmoothing Returns
        2. Transaction Costs
        3. Including Hedge Funds
      4. Summary and Conclusions
      5. Appendix. Index Constituents
        1. General All Art
        2. Old Masters
        3. European Impressionists
        4. Modern Artists
        5. Contemporary Artists
    3. Chapter . Art Investing and Wealth Accumulation
      1. Introduction
      2. Literature Review
        1. Global Wealth Effects
      3. The Model
        1. Overview
        2. Risk Factors
        3. Global Wealth Growth
      4. Data
        1. Art Prices
        2. Wealth Growth and Financial Returns
      5. Empirical Analysis
        1. Methodology
        2. Results
      6. Conclusion
        1. Investor Perspective
        2. Econometric Perspective
      7. Appendix. Art Market Research Index Components
        1. Old Masters 100 Index
        2. European Impressionists
        3. Contemporary Art 100 Index
        4. 20th-Century Indian Painting Index
        5. Contemporary Chinese Index
    4. Chapter . Investing in Rare Books
      1. Introduction
      2. Why Collect?
      3. Who Collects?
      4. Books as Collectibles
        1. Which Edition?
        2. The Importance of Signatures and Inscriptions
        3. The Types of Binding
        4. Assessing Book Quality
      5. The Market for Books
        1. Auctions
        2. Booksellers
        3. Book Fairs
        4. Catalogues and Direct Advertising
        5. Internet and e-Commerce
      6. Return and Risk of Book Collecting
        1. Survey of the Literature
        2. Universe Selection and Book Pricing Data
        3. Book Index Construction
        4. Methodology and Book Index Performance
      7. Conclusion
    5. Chapter . Maps as Collectibles
      1. Introduction
      2. Similarities to Books and Prints
      3. Markets
      4. Prices
      5. Cash Flows
      6. Transaction Costs
      7. Primary Valuation Factors
      8. Other Factors Affecting Valuation
      9. Price Appreciation
      10. Risks and Correlations
      11. Conclusion
        1. Acknowledgment
    6. Chapter . Collecting and Investing in Stamps
      1. Introduction
      2. A Very Brief History of Philately
      3. The Economics of Philately
      4. The Psychology of Philately
      5. The Finance of Philately
        1. Heterogeneity
        2. Indexation
        3. Transaction Costs
        4. Market Depth
        5. Authenticity
        6. Condition
        7. Country Exposures and Emerging Markets
        8. Investing in Modern Material
      6. Setting Up a Hedge Fund to Provide Stamps for Clients
      7. Conclusion
      8. Appendix. The Mathematics of Building a Stamp Index
    7. Chapter . Wine: An Alternative Investment
      1. Introduction
    8. Chapter . Bordeaux Wine Vintage Quality and the Weather
      1. Vineyards
      2. Vineyards and Vintages
      3. Real Rate of Return to Holding Bordeaux Wine
      4. California's Climate for Growing Grapes
      5. Vintages and the Weather
      6. Market Inefficiency
      7. The Response of the Wine Press
      8. Conclusion
    9. Chapter . Collecting Classic Cars
      1. The Development of Classic Car Collecting
      2. Classic Car Collectors
      3. Cars as the Collectible Investment
      4. Finding Classic Cars
        1. The Auction House
        2. Private Sales
        3. Dealing with the Motor Trade
      5. Tips for Buying the Car of Your Dreams
      6. Conclusion
  11. Index
    1. A
    2. B
    3. C
    4. D
    5. E
    6. F
    7. G
    8. H
    9. I
    10. J
    11. K
    12. L
    13. M
    14. N
    15. O
    16. P
    17. Q
    18. R
    19. S
    20. T
    21. U
    22. V
    23. W
    24. Y