Liquidity is in the eye of the beholder


2015-06-26 13:27:53


Liquidity is in the eye of the beholder

In collectibles, selling up is simple when you have the right items, says Paul

When chatting to seasoned investor friends, I can guarantee that one of the main points they will cling onto in the discussion of collectibles as investments is the potential lack of liquidity:

"How can I be sure that I will be able to find another collector of British stamps when I come to sell?"

In response, I usually reel off the fact that there are an estimated 50 million stamp collectors in the world.

But there is an often overlooked aspect when it comes to liquidity in collectibles: desire. It's a factor that investors sometimes struggle to understand, and its why collectibles are known as "passion investments".

Take, for example, the record-breaking Ferrari 250 GTO that sold in a private deal this week for $52m. At that price, there aren't many people in the world who can afford to even consider buying one, yet John Collins of the Talacrest dealership in the UK told the Daily Mail:

"If someone wanted to sell their250 GTO, I could find a buyer in 30 seconds."

Ferrari 250 GTO recordIf your item is desirable enough, you will never have a problem selling it

There were just 39 of these Ferraris ever produced, and no matter what, top car collectors will always be willing to pay the price.

Prior to the $52mFerrari sale, the record for a 250 GTO stood at 22.7m ($36.4m), yet Bloomberg News reported that other owners - such as Pink Floyd drummer Nick Mason - have received offers between $40m-50m.

Collectors aren't just willing to pay top prices, they are willing to raise the record price by an outstanding 37.3% for the right item.

I'd like to see a stock that could compete with that. To my knowledge, no investor has ever been that desperate to buy a traditional asset - unless they know something that nobody else does.

These are legendary, timeless items that people will always be attracted to, and this same potential applies across the board with the top items in any collecting category.

To emphasise my point, let's start from the top

When you start collecting, you undoubtedly envisage yourself with a complete collection, no matter what the field you have chosen.

Within your field, there will always be one item needed to complete your collection that seems unattainable - such as the Ferrari 250 GTO. You would do anything to have it, and chances are there are thousands of other collectors out there competing for that very same piece.

This market is driven by passion, and it is this that ensures that legions of collectors keep on collecting.

Yet, just because passion is a big factor in many people's purchases, it doesn't mean you can't make informed decisions with a cool head.

To benefit from that liquidity and those potential returns, all you have to do is place yourself in one of the most popular collecting areas and obtain the most desirable items. People will soon be flocking to you, ready to pay huge sums.

We specialise in sourcing these top investment-grade items for our customers. Even if it's not on offer in our online store, we will do our best to find it for you.

We can also give you the knowledge and expertise needed to excel in collectibles, whether its choosing your field or when to sell, we supplythe complete package, caring for our customers long after their first purchase. Take a look at our free guide to investing in collectiblesto start.

All the best,

Paul Fraser

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