Adventures in Collectibles
The most important point to understand about collectibles is that, no surprise, the law of supply and demand governs their prices. In this respect, they are no different than any other commodity or investment. In my earlier description of the five levels of risk, I noted that collectibles fell in the riskiest category. They are only worth what a buyer will pay for them. That's why the baseball hit by Barry Bonds in his all-time home run record sold for $752,467, and why John F. Kennedy's rocking chair went for $415,000. The demand for this particular baseball, or this particular rocking chair, was great. Supply was limited to “one.”
Even when the supply is greater than one, there can be huge differences in the selling prices. In December of 2007, one of the most famously flawed stamps in U.S. history—the 1918 airmail depicting an upside-down Curtis JN-4 biplane—was sold for $825,000. A month earlier, another “Jenny,” as it is known, sold for $977,500. Condition was not a factor in explaining the whopping $152,500 difference. The probable reason for the disparity: The first stamp was sold at auction; the second stamp was sold privately.
The bad news is that supply often exceeds demand. There are many collectibles not demanded by anybody, in which case they have no market value. They may even be hard to give away.
A lot of collectors lose sight of this. Some tend to collect what is in the public eye at the moment. That's not the way to make money ...