If you stare at the Thomas Kinkade painting on your wall each day thinking "There's my retirement fund," prepare to pour skim lattes until you're 90.
Collecting as a hobby can be a fun, worthwhile and potentially lucrative way to pass time. Amassing collectibles as investments, however, can be a disappointing endeavor yielding nothing but piles of devalued tchotchkes for the next of kin to sort through.
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The founder of comic book industry bible Wizard, Gareb Shamus, said a year ago that the best advice a collector could heed was to buy what they liked and do their homework. Then again, he's also a Spider-Man collector who paid $1,700 for an issue with a cover drawn by artist Todd MacFarlane featuring the villain Sandman. The book's value jumped to between $30,000 and $40,000 when the Sandman appeared in the latest Spider-Man film.
Collectors such as Shamus have entire industries helping them along, with the Certified Guaranty Co. determining comic book quality and grading criteria. Wine aficionados have such resources as Robert Parker's Wine Advocate and Bordeaux market forecasts. Art collectors have the big houses such as Sotheby's (NYSE: BID - News), Christie's and Freeman's and their sales trends.
"Collectibles" investors, however, are beholden to a very subjective, eBay (Nasdaq: EBAY - News)-driven market in which their precious knick-knack can be worth $800 or less than $50. While sites such as Kovels.com offer some guidance, "collectibles" and the companies that make them are slaves to demand and market forces — and the realization that their mass-produced product is only worth as much as a buyer will pay for it.
"I tell people that keeping collectibles is like storing money under your mattress," says Lou Kahn, head of the Bakerstowne Collectibles appraisal and consignment service in West Hempstead, N.Y. "You're going to have the same amount of money next year, but it's going to be worth a lot less."
We took a look at several collector niches and came across nine where the products rarely appreciate in value and have questionable worth even when new:
Your grandmothers' collection of rosy-cheeked tots cowering below umbrellas or playing "ring around the rosie" aren't worth the crates you're packing them in? Blame Germany.
This saccharine-sweet ceramic cherubs first appeared in 1935 as physical manifestations of drawings by German nun Maria Innocentia Hummel. When U.S. soldiers returned from Germany after World War II, they brought these keepsakes home for their wives and children. The German company that created them, Goebel, ratcheted up production and began selling them at dime stores such as Woolworths for $4 to $5 a pop. That low purchase price led to a huge secondary market, high-priced Hummels and manufacturers who wanted a piece of the action.
In the '60s and '70s, the figurines made their way into Hallmark stores and airport gift shops and prices skyrocketed, with the "Umbrella Boy" figurine retailing for $1,500. As more were produced and countless "special editions" cranked out, Hummels' resale value sank like a ceramic anchor.
"People were buying them looking at what they sell for at retail, but they could be 50% to 70% less on the secondary market," Kahn said. "The bubble burst on Hummels because a lot of the old collectors became dinosaurs — they're not with us anymore — and the new collectors don't appreciate them, so it's the old supply and demand problem, where there's more supply than demand."
That supply just keeps growing as the generations that collected Hummels die off and leave behind thousands of their diminishing-value dust-collectors. Goebel shut down in 2008, but Manufaktur Rodental GmbH bought the brand last year and began producing more in limited supply. Though Kahn's firm sold a Hummel for more than $1,100 on eBay earlier this year, Kahn says most go for $50 or less — with prices continuing to plummet as estate sales add to the stockpile.
"The only way a Hummel passes away, so to speak, is when it gets broken or chipped," Kahn says. "So 60% to 70% of all the Hummels ever made are still out there."
There are three kinds of items antiques dealers and consignment shops simply refuse to accept: Norman Rockwell plates, Precious Moments figurines and Beanie Babies. While those last two items have become synonymous with American kitsch, the latter symbolizes the perils of using collectibles as commodities.
"The difference between old comic books or Beanie Babies — and they're worthless — is that people were buying Beanie Babies for a retail price of $4 to $6 and were hoping to sell them on eBay for $40 to $50," Kahn says. "They thought it would be worth a lot of money, but some of these people were crazy and went to Toys R Us and bought $4,000 worth of Beanie Babies that ended up not being worth what they retailed for."
While there are certain exceptions — misprinted versions of Iggy and Rainbow that sold for a combined $5,000, a Coral Casino bear for $2,800 and in-box third-generation bear for $900 — most Beanie Babies only enrich Ty Warner, the founder of Beanie Babies producer Ty Inc. who turned the toys into a $4.4 billion fortune and luxury hotel empire.
The overwhelming majority of Beanie Babies end up in large lots that sell for $2 or less per plush beanbag. That's a price Kahn places on par with the resale value of collectible plates containing Norman Rockwell illustrations, but still more than the return on the pastel, pink-and-purple Precious Moments figurines.
"Precious Moments are worth precious nothing — they have no value," Kahn says, noting he refused to consign a woman's collection of 7,000 such statuettes that she'd insured for $110,000. "I gave her some advice: Leave your door open, your lights on and your back windows open."
Franklin Mint Collectibles
The Franklin Mint
From die-cast cars to Marilyn Monroe dolls to the official coin sets of the world, the Franklin Mint sure knows how to make items with absolutely zero resale value. Sure, the Franklin Mint gets plenty of buyers to pay $260 for its silver medallions struck with the faces of every U.S. president, but it can't make them sell for more than $65 on eBay.
"They produced a lot, they advertised, but their items don't have much value," Kahn says. "Like Rockwell Plates, it's hard to get anything for them — you could sell them in a 99-cent store and you'd have a hard time getting it to sell."
If collectors are lucky, they'll get the "melt value" of their coins, which is the exact worth of the small amounts of precious metal the coin actually contains. In fairness, the mint doesn't guarantee or allude to an increase in value and isn't the only such organization to peddle perfectly useless items to potential collector investors.
The Danbury Mint also stocks keepsakes such as Michelle Obama inaugural dolls, Department 56 holiday homes and $99 Elvis TCB diamond pendants that, Kahn says, depreciate significantly once they are bought thanks to overproduction and a distinct lack of secondary interest.
"To go to a store and buy one of these items at retail price ... you're losing money," Kahn says. "Cars used to depreciate 10% when you drove them off the lot, but when you take collectibles like these out of the store, you lose about 80%."
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