In the 1600s, the Dutch went crazy for tulip bulbs. In the book "History of Greed," David E. Y. Sarna calls the scandal the "first well-documented securities manipulation fraud." For two years, the Netherlands experienced a boom and bust in the tulip bulb market. The bust came in 1637. At its heyday, people bet their homes and businesses on trading tulip bulbs -- with one rare bulb selling for over $20,000.
According to Sarna, speculation reached the point that some people were buying and selling tulip futures without actually possessing the bulbs.
Though investing in collectibles isn't quite on par with putting your life savings in tulip futures, it takes an expert to know where the value is in markets as esoteric as some collectibles and antiques can be.
In August, Bloomberg.com reported that collectible cars had outperformed the S&P 500 Index. That assertion can be found in the story, "Bugattis sell for 'crazy money' as classic cars beat S&P 500" and is based on Hagerty's Cars That Matter "Blue Chip" Index, a compilation of estimated values for 25 of the most popular collectible cars put together by David Kinney. According to Bloomberg, the index increased 61 percent from its inception in September 2006 through July 2010.
The collectible car market can be incredibly volatile, which makes it a tough hobby for people of average means.
That's how it goes in the collectibles market, however. Everything from Beanie Babies to coins to wine can have incredible highs and dismal lows.
Though some investors in collectibles may be driven by the greater fool theory, presumably most collectors keep up with their hobby out of love, and not financial interest.
Though I'm not a collector, it seems like a fun hobby that could possibly make money. I did have a large collection of Breyer horses as a kid that I thought would be my ticket to instant wealth. Unfortunately there's not a big market for collectible horses with taped-on legs.
In my defense, the legs broke way too easily.
What lucrative collections do you have?
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