Collectibles as Investments
Beauty in the Eye of the Marketplace
Perhaps you expect that your authors will be uncritical cheerleaders for alternative investments. Far from it. We’re going to prove that by getting tough on some categories of alternatives that we think you should avoid. The first one of these is collectibles.
During times of economic dislocation—when people lose faith in conventional instruments like stocks, and bonds—investment dollars are often allocated to various unconventional vehicles. A mysterious and fervent devotion attaches itself to rare collectible items like watches, art, coins, stamps, books, jewels, antiques, wine, rugs, horses, paintings, carpets, sports memorabilia, automobiles, and various similar exotica. This can happen in good times, too.
Throughout history, people have sought to hedge themselves against national financial disaster by carrying off and hoarding beautiful relics. In his Decline and Fall of the Roman Empire (or was it the movie Gladiator, we don’t remember), Edward Gibbon notes that when pitiful Romans fled their cities under the barbarian onslaught, they took with them statuary, mosaics, and tapestries in the hope that they could be exchanged for far more than the thoroughly debased Roman currency. Similar things happened in the South during the American Civil War, and after the World War II in Europe, as the defeated countries found that their currencies were worthless.
Love and Pleasure
Devoted students and collectors ...