As the inflation rate in this country has subsided over the past 10 years or so, a lot less attention has been paid to collectibles as an investment.
Certainly, there have been continued hot spots in markets for collectible items as diverse as fine art and sports cards.
But like real estate, gold and other assets that tend to do well when inflationary expectations run high, collectibles just aren't getting the kind of ink they were accorded in the late 1970s and early 1980s.
One recent story, however, caught the eye of Mark Stumpp, chief investment officer at PDI Investment Strategies in Short Hills, N.J. It told of a card table, valued at 50 cents in 1821, that was put up for sale by an antiques auction house in 1991 for $1 million.
The tale prompted Stumpp to do a little research on what sort of annual compounded return the table brought its owners--and whether it worked out to be a better investment than paper securities like stocks and bonds would have been over the same period.
The price of the card table increased at an annual rate of 8.9%, Stumpp figured--making no allowance for the costs of storage, insurance or furniture polish.
If one had invested instead in commercial paper and stocks from 1821 through 1991, Stumpp calculated that the annual return would have been 8.7%, not including commissions.
"So the table was a good investment, but hardly a spectacular one," Stumpp concludes.
Stumpp also notes that the story suggests a prime rule for small investors in collectibles: To get an exemplary return, you need to buy something with uncertified value.
"In this instance, appraisers in 1821 goofed, valuing this particular card table as used furniture and not as high art," he says.
This is a lesson many young sports fans have discovered on the card-show circuit in recent years. By the time a given collectible has become recognized as an investment medium and acquires an active dealer market, the easy-money days are very likely gone.
The presumption that something like a baseball card will continue to increase in value rests heavily on the "greater fool" theory--that someone will come along tomorrow willing to pay even more than today's price.
In stocks, by contrast, you get an asset backed by a business that can grow and generate increasing dividends, Stumpp asserts.
"Taken as a group, stocks will appreciate with inflation and economic growth even if everyone recognizes their intrinsic value," he says. "Therefore, although beneficial, it's unnecessary to uncover undervalued stocks in order to make money in the stock market."
One could debate some of Stumpp's points. History has shown that there is a very real risk, at least some of the time, of buying overvalued stocks, especially if you don't diversify your holdings.
Economic growth may be as strong and persistent in the future as it has been in this country's past, but it isn't guaranteed to turn out that way.
Whatever the merits of that part of his argument, he puts collectibles in a useful perspective. By all means, people can enjoy collecting whatever interests them that fits reasonably into their budgets, whether it's stamps, old movie posters, vintage cars or, yes, even sports cards.
But if they are looking to make big money in collectibles, they can expect to need a lot of capital, tenacity and expertise--or else an exceptional amount of luck.