Collectibles as Speculative investments

Posted originally by Collectible Kevin on our parent site Collectibles NJ

Today I have decided to talk a little bit about the business side of buying and selling collectibles. To start lets define what quantifies a collectible as a speculative investment and how people make money with them.

Arbitrage:

This is the process of taking advantage of an existing or perceived price difference between two marketplaces. Some examples of this are known as “thrifting” or “picking” in which the objective is to purchase items at a cheaper price than what they would sell for on the internet. You have to be careful to factor your expense of business which consists of the cost to facilitate a sale at your superior price. On auction sites this will include paying fees and shipping costs and materials. Many stores and those who travel to trade shows as merchants purchase items online to sell in person at their stores or convention stops. Arbitrage also exists between auction sales and buy it now offerings. It is entirely feasible to buy items on auction and sell those same items on buy it now while making a sustainable margin of profit. How much of a profit you will need in exchange for your time is ultimately up to the individual

Speculation:

This is the process of placing a bet on an item based on a possible future spike in value. Some of the ways you can practice these are by keeping track of major media movements in relations to items.

I.E. Is there a new movie, album, show or book coming out that could increase demand for a particular item? Is the news covering a particular person or group? Is the item a 1/1 collectible with a high ceiling?

Many autograph dealers and collectors will stock pile actors and famous persons when issues are reported with their health. This is morbid but true and profitable at times. A death can turn a hot commodity nuclear in autographs.

Athletes as Stocks:

The best example I have was purchasing several LOW RUN #’d Matt Harvey, Andrew Luck, RG3 and others chase cards before they ever played a game. I payed at the top of the market for them and when they both won week 1 playoff games I got 500% on top for them in the interim before week 2. Made 1000% on my Matt Harvey stuff when he started the all star game and got out just before he went in for Tommy John surgery.

There is something to be learned in the fact that a low number Bryce Harper RC Auto card used to go for $1600 and now bottoms out around $200 and that is make sure you land on the right side of the swings. I never hesitate to cut loss if I feel I could bleed a lot of value in the near future. Some items will never go back up and if you overpaid free up that capital and move on!

Some other tactics that lead to the POTENTIAL for profits include

Supply and Demand – Having the only 1 of something allows you to set the market pricing for an item. Whether someone will pay your market price, that is another story..

Completion Factor – Assembling multiple pieces of a hard to find collection or theme can increase the value of the sum of the parts

There is a lot of gamble in this kind of speculation and to be honest it can be as or more volatile than the stock market. Make sure you only spec on a bankroll that is comfortable for you and treat it like any other high risk investment. Do your homework!

 


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