There has been a fall of auction prices recently especially ‘Collectables’. This collapse mirrors the one that occurred last in 1978 thru 1982, discussed herein are the lessons learned from that collapse. The adverse conditions effect all parts of the economy, this includes the auction business. This downturn presents a great opportunity, if you have a plan and know how to execute it.
I attend 30-40 live auctions each year, and over the last two years have noticed a steady decrease in the auction prices. There are noticeable exceptions like, gold and silver items, one of a kind items, and mid-century modern items. Collapsing the most in value, restored items, imperfect items, and items that are commonly faked –even though they are real. It would be wise to discard all of your collectible value books printed after 2002, base your buying decisions upon the 2001 or earlier prices. The idea is not perfect, but you will reduce the risk of grossly over paying for an item.
The idea of making a large gain, with a quick transaction in collectables, is vastly more difficult than it was, even a couple of years ago. It will be wiser to develop a buy and hold strategy. A buy and hold strategy requires investing for the long-term and tying up capital for the long-term, if you need income stream now it will not work for you. For those of you that can afford to tie up cash for long periods of time, huge rewards are possible. If the price of an item keeps drifting down, it may have fallen into permanent disfavor, sell it if that happens.
Here is an example of this strategy, that worked for me . In 1979 I purchased a 1960 Mercedes-Benz 300 SL Roadster from a museum surplus auction in Texas for $7,500. I parked it in my garage. This was during the price fall of collectables that occurred during the Carter presidency. It was a rare, quality item, and based upon historical trends its price should recover. I sold it in 1992 for $105,000. You should consider storage of items purchased for this style of investment, and if you do not own the storage space the costs of rented space may eat up all of your profits.
There has been a fall in the prices of collectables at auction, and with some astute buying combined with long-term holding, huge profits can be realized.