Heard the term “fun investments”?
I don’t like it.
Because when it comes to investing, fun suggests frivolity. It suggests a laissez-faire attitude, and most worryingly it implies that any returns you make are secondary to the amount of enjoyment you’ll be having.
The collectibles business is regularly branded as “fun”.
Over the coming months in this column I’m determined to prove to you that collectibles are investments to be taken seriously.
Don’t get me wrong – I’m no Scrooge.
There is no denying that owning a vintage bottle of Bordeaux, a rare stamp or historic manuscript can be extremely enjoyable, even, at a pinch, “fun”.
After all, a recent poll by Paul Fraser Collectibles found that 69% of collectibles buyers purchase for a combination of the sector’s investment potential and the joy of ownership.
But I demand that any investment should be profit first followed by the pleasure of possession.
And a growing number of serious investors are looking beyond the fun label and diversifying into collectibles, with Barclays’ 2012 Wealth Insights report finding that “treasure assets” form 9.6% of HNWI’s net worth around the world.
Foremost because of the potential gain, coupled with the sector’s low correlation to the turbulent equity markets.
Only then is this followed by the pleasure that comes from knowing you own a world rarity, as well as that ability to boast to your friends at the squash club.
And the world’s rarest autographs tick all the boxes.
Introducing the death spike
The top end of the autographs sector has historically provided excellent returns on investment.
The PFC40 Autograph Index, which tracks the 40 most sought after signatures, is up 14.03% pa between 2000 and 2012.
At £14,000 ($22,500), James Dean’s signature is the most valuable on the list. Why?
This is a market driven by supply and demand.
The public has mythologised Dean. There is subsequently a huge clamor for his memorabilia.
And with his tragic death at the age of just 24, when he had made only a handful of films, he had simply not been famous for sufficiently long to have signed many items.
It’s not much use to the departed, but death has a habit of enhancing demand, and subsequently, values for famous autographs.
And when a figure is sufficiently fascinating to the public, the commonly-seen initial spike in interest following their death can continue for many years, even decades.
We’ve seen it with both John Lennon, whose autograph is up 20.48% pa since 2000, as well as Princess Diana, whose signature has risen in value by 17.83% pa during the same time frame.
And we’re currently experiencing it with Neil Armstrong.
He has been the best performing signature in the past year. His autograph has grown in value by 26.05% between 2011 and 2012 – boosted in large part to the increase in interest following his death. It now stands at £7,500 ($12,000), yet demand for the first man on the Moon’s signature is so high that we could well see strong appreciation for many years to come.
Yet who are the names currently living that could see lasting gains in value for their signatures when they depart the scene?
3 living autographs to consider
Nelson Mandela, Fidel Castro and Muhammad Ali are all good possibilities.
All three have helped define the 20th and 21st centuries. All three are instantly recognisable around the world, and all three will still be talked about in 50 years’ time, such has been their impact upon the global stage.
Long-term profits through careful speculation? Now that’s my idea of fun.
Paul Fraser is the founder of Paul Fraser Collectibles, a UK-based company that specializes in high-end collectibles. It provides a free daily news service on the collectibles sector, read by collectors in more than 200 countries. To get in touch call +44 (0)117 933 9500 or email firstname.lastname@example.org