Author Topic: Alternative Investments  (Read 3005 times)

writser

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Re: Alternative Investments
« Reply #10 on: July 08, 2019, 05:33:09 AM »
I'll risk disclosing being a huge nerd but Magic cards also have gone through the roof the past 10/20 years. No reprints of old cards and the game is still popular or even getting more popular and for some playing formats you actually need these cards to play. Something like the infamous Black Lotus is now worth ~1000% more than it was 10-20 years ago and the rarest, best-preserved editions sell for $50k+. Years ago I considered buying a set of these hallmark cards (aka the power 9, for the insiders) just for bragging rights but I didn't pull the trigger. That would have been one of my best 'investment' ever (at least in terms of IRR). I still think it would be kind of cool to own them but I'm too much of a cheapskate to spend $25k on a couple of cards (and a safe to put them in ..). I wouldn't do anything with them. Not to mention the risk of fraud and/or grading issues that come up when you start buying cards for these ridiculous prices. Also I have a hard time considering them an 'investment'. It wouldn't surprise me if prices keep on rising for a while though as players get older - as long as the game doesn't collapse.

The meteoric rise in prices of classic cars / collectibles / wines / antiques is fascinating. Does it say something about the value of our money? About rising inequality? Interesting questions.
« Last Edit: July 08, 2019, 05:39:17 AM by writser »
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merkhet

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Re: Alternative Investments
« Reply #11 on: July 08, 2019, 06:23:20 AM »
I'm also in shock at how much Magic: The Gathering cards have appreciated since my high school playing days. I had a ton of cards that I ended up selling well over a decade ago when I stopped being interested in the game. I'm not sure I would have believed you had you told me in my teen years that this game had legs.

vpagano

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Re: Alternative Investments
« Reply #12 on: July 08, 2019, 06:46:01 AM »
It's funny really. I learned to read at home via dad's old baseball cards and comics and collecting bit me early. The monthly memorization of the Beckett's price guide eventually morphed into a love of markets and then as I got older stocks. Now, as I've turned 30 with a little more money to spend I collect antique tobacco / gum (T206 ex.) cards and bourbon. Pappy and other rare ones have had a very strong 5-10 year run from an IRR standpoint.

DooDiligence

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Re: Alternative Investments
« Reply #13 on: July 08, 2019, 07:57:13 AM »
My Grandpa got me into coins when I was a kid.

I stuck mostly to Morgan Dollars & St. Gaudens $20's because I was familiar enough with them to be able to grade unslabbed coins & would occasionally (rarely) get an MS60 that was advertised as AU58.

Also bought US Gold & Silver Eagles in mint & proof until gold went above $500 & haven't bought anything since.

I sold most of what I had at $1500ish & kept some Proof Silver Eagles, Morgan CC's in the Nixon boxes & a few St. Gaudens & Liberty $5's which I'd gotten from my Grandpa & will never sell.

I also kept a nice racketeer nickel set that he gave me.
These & the Nixon CC's are more valuable to me than the market would ever give.

Many decades ago, I found a 1916D mercury dime in a bag of silver that he'd bought & we both freaked out.

I was very young & he let me keep it.

I found out much later that the coin is a counterfeit but the love it contains, was & still is very genuine.

I believe that getting kids into numismatics may very well be fundamental in teaching the value of money & frugality.
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Foreign Tuffett

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Re: Alternative Investments
« Reply #14 on: July 08, 2019, 09:05:19 AM »
Following WEB, I would probably refer to most everything mentioned in this thread "speculations" or "collections" and not "investments." Unless you have an actual use case for it (buying narcotics on the internet, avoiding taxes, etc) I would throw Bitcoin into this bucket as well.

Practically speaking, I actually think there are lots of issues with speculating in collectibles. Storage, liquidity, transaction costs, regulations around the buying and selling of certain items like alcohol and firearms, possibility of getting ripped off, theft, etc.

I actually think the best way to consistently make money with these sort so things is to be a dealer/market maker. Locate deal flow, buy @ 0.5X and selling @ X, rinse and repeat. The internet has disintermediated many collectibles dealers, but viable business models are still possible.

For example, this guy is a dealer of collectible card game products. He buys boxes of cards wholesale and sells them to his lemming followers. He was clever enough to convert this process into a subscription based business model by leveraging Patreon.

https://www.patreon.com/AlphaInvestments

Jurgis

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Re: Alternative Investments
« Reply #15 on: July 08, 2019, 11:51:42 AM »
I am in the same camp as Foreign Tuffett. I tried collecting various stuff (stamps, playing cards, old books, coins, art) and I wasn't good at it plus my heart wasn't in it either. Plus you really have to go superdeep DD IMO so that you are not ripped of, defrauded, etc. Know the provenance, quality - or really trust external experts for that.

I think I'm too much functionality oriented to collect non-functional objects and not enough rare/top functionality connoisseur to collect Ferraris or Les Pauls.

I think I have destroyed quality of some coins while "cleaning" them when I was a kid. So I guess I contributed to rarity premium for other collectors.  8)

BTW, on topic we just went to Peabody Essex Museum. There's a show of collection of Peter Lynch and his wife: paintings/furniture/etc. For anyone interested.  8)
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LC

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Re: Alternative Investments
« Reply #16 on: July 10, 2019, 05:02:07 PM »
I echo the speculation sentiment. And also the magic card game craze. I think I have a box somewhere I should probably have priced.

I'll touch on Artwork: I love buying art and occasionally it appreciates in price. I have no idea how to do it formulaically or even judgementally to constitute an 'investment' operation. But what I do is buy art that I love, within my general price range. But I only buy originals (no prints etc.), and sometimes you get "lucky" in that an artist gains popularity and the prices of their work skyrocket. Concretely, pieces I've paid 500 bucks for, could sell for 10 or 15x that amount (in fact my logo on this forum is one such artist). I'd probably never sell any of them (unless it becomes crazily valued), but otherwise it's a win-win. Best case scenario is you have original, high-priced artwork that you love, worst case scenario is you have original, low-priced artwork that you love.
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bizaro86

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Re: Alternative Investments
« Reply #17 on: July 10, 2019, 05:35:11 PM »
Only downside I can think of:

My grandparents tons of art over the years. Some "hit" and most didn't as you would expect, and they have never sold any as far as I know. One piece was the outlier, and is worth low six figures now. It's on their wall, and every family get together I have to listen to all my cousins gush over how much they love it, presumably in hopes of inheriting the piece. I've suggested they sell it, as they could use the money, to no effect.

Jurgis

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Re: Alternative Investments
« Reply #18 on: July 10, 2019, 08:27:46 PM »
Only downside I can think of:

My grandparents tons of art over the years. Some "hit" and most didn't as you would expect, and they have never sold any as far as I know. One piece was the outlier, and is worth low six figures now. It's on their wall, and every family get together I have to listen to all my cousins gush over how much they love it, presumably in hopes of inheriting the piece. I've suggested they sell it, as they could use the money, to no effect.

Another downside:

My relatives had an original piece by pretty well known Lithuanian painter. Beginning of XX century, but Lithuanian, so probably five figures, not six figures. Maybe even below five figures. Anyway, they went abroad, other relatives lived in the apartment, some stuff got packed and moved by various parties... result: painting gone. Lot's of negative emotions, blame, etc.

Personally, I'm more sad that this painting hung in Soviet-style heated apartment for 50 years or so. Can only imagine the loss of quality due to overdamp/overdry conditions... Not that my house has much better climate control.  :'(


At some point I wanted to buy some Dali/Renoir/whoever "original" prints for my mom. But then I read about the scaminess of the print market and said, I'd better spend money on something else...  ::)


Another aside: couple years ago it was still possible to buy a well known (not the best, but close to best) early XX century Lithuanian painter good quality paintings in five figure range. I thought about buying, but did not. You'd still have to hire someone to check provenance. You likely won't get permission to export and I had no interest to keep it somewhere in a vault. It might not rerate higher either. A lot of Russian/Chinese art rerated up hugely as Russians/Chinese got rich. Might be too few (rich) Lithuanians for Lithuanian art to rerate hugely.  ::) There might be some pieces that I'd like just for enjoyment, but if I started looking to buy, I'd probably go DD on it and spend too much time researching the stuff.  :-\
« Last Edit: July 10, 2019, 08:40:40 PM by Jurgis »
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elliott

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Re: Alternative Investments
« Reply #19 on: July 13, 2019, 03:46:27 PM »
Quote
I actually think the best way to consistently make money with these sort so things is to be a dealer/market maker. Locate deal flow, buy @ 0.5X and selling @ X, rinse and repeat. The internet has disintermediated many collectibles dealers, but viable business models are still possible.

Exactly! As an individual, your piece needs to appreciatete a lot if you want to just break even. No dealer will purchase a piece for the price you see them selling for. I was involved in the art business for a while, and you really have to buy with such discounts. Its not because of greediness. You need that margin to cover your costs - at least, in the type of art I worked with. Display space, appropiate conditions, insurance, your time showing that piece to customers and telling them about it... And while the internet has disintermediated many dealers, many also can still charge a premium simply because of a matter of confidence.