Avoid the bubble markets - look here instead

paulfrasercollectibles

2015-06-26 13:25:16

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Avoid the bubble markets - look here instead

Paul offers two suggestions for collectors worried about buying into bubble markets

James Bond's submarine car sold for 550,000 ($861,767) this week.

It was one of just a handful of fair performances among a series of disappointments at RM Auctions' classic car sale in London, which totalled 3.8m ($6m) against a low estimate of 11.5m ($18.2m).

Yet this could be just what the classic car market needed.

"After the excitement of record auctions in the summer, the estimates got ahead of themselves," car expert Dave Kinney of USAppraisal.com told Bloomberg after the sale.

"This is a good sign that people aren't prepared to pay crazy prices for everything."

Historic Auto Group International's Hagi Top Index,which tracks the value of the classic car market, was up 9.3% in August, helped in large part by superb performances at the Pebble Beach sales.

It is up an eye watering 38.9% since the start of the year.

Those figures don't look sustainable to me. It's why the poor showing at RM Auctions could bea blessing for collectors- although I'm sure the auction house would not agree!

Money talks, and this week it has givenclassic car buyers a dose of reality.

It's great to see that a bubble isn't developing.

Avoid boom and bust

Whatever sector of the collectibles business you're interested in, the boom times are great for those looking to make a quick buck, but for those of us with more long-term aspirations, a market crashcan be disastrous.

Not only do you have items that are worth half the price they were last year, more devastating is the erosion of confidence in the market among buyers.

Mud sticks, and most investors and investment-minded collectors simply will not touch a sector that has so much uncertainty surrounding it.

That has certainly been the case in the fine wine market. Values grew by more than 250% between 2003 and 2011, according to the Liv-Ex Fine Wine 100 index, yet have dropped by a third since then. The reason? Wealthy Chinese buyers, largely responsible for the surge in prices,were unwilling or unable to maintain the price growth, and now investors around the world have got cold feet.

Seek steady growth

What you want is strong, annual growth, without the peaks and troughs.

Two of the most dependable collectible sectors over the past decade have been rare stamps and autographs.

Since 1995, the GB30 Rarities Index of British rare stamps has grown in value by 10.3% a year.

Rare British stamps are up a dependable 10.3% per annum since 1995

The PFC40 Autograph Index, which tracks the performance of 40 of the most sought-after autographs, is up by an average 14.0% per annum since 2000.

Those are the kind of solid, dependable gains I like.

To find out more, take a look at our Investing in Stamps and Investing in Autographs pages.

You can view our investment-graderare stamps and autographs for sale here.

Thanks for reading,

Paul

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