Interview with JR Bissell: Stocks vs Collectibles
Stocks are a living, breathing organism; each morning you wake up there could be something in the news that dramatically alters a stock price. For example Chipotle was a great stock until E.coli poisoning problems started to hit the news. Although people will argue that volatility is necessary in order to make large spreads, it also adds a lot of risk and stress into the investment.
Collectibles are a lot less volatile, which also usually means less of a spread compared to a stock (except blue chip). In collectibles the population is already determined, they aren’t making anymore, you know how many exist. That’s why a collectible is considered worth purchasing with the intent of eventually selling at a future time for profit. The only exception to this really is sports cards, although the population most the time is set, they are living breathing organisms. Like stocks, if the athlete is still playing OR even still alive, news about their performance in the sport or personal lives (Me Too movement etc) can alter the price positively or negatively.
Although it must be said, some returns in collectibles can be astronomical and comparable to the returns in stocks with sometimes a lot less risk. I’ve seen coins purchased for $2k in 1981 sell in 2013 for $1.4 Million. I’ve also seen art such as the Chrome Rabbit, which was purchased by Stefan Edlis in 1991 for $945k and sold for $91 Million in 2019.
The reason I mention with much less downside is because unlike a stock that can completely plummet, most collectibles don’t have this steep concern. The collectible is still worth something, it will never go to zero. Mark Cuban likes to say he got into investing with stamps, he bought a stamp for 50 cents and sold it for $50 dollars, which is a great percentage return! His downside was also basically nothing; people like to purchase collectibles for a grand or less because their upside percentage return could be very high with extremely minimal downside risk (of course similar methods are used in the market too, like in the movie ‘The Big Short’ with high return penny stocks).
Overall, collectibles have very stable steady returns over the years, decades and even centuries. It’s not an investment that needs to be monitored 24/7 like a stock. Although general speaking the returns are slower, the upside is the downside lol.
Stocks can influence our emotion everyday based on theoretical gains or losses. People will have a good or bad day based on their stocks positions even without ever selling them. The saying “Only thing worse than being in the stock market is being married to someone in the market.” Until someone sells the stock, they never made or lost anything. However, their daily emotion is tied to their positions regardless of selling.
When people buy collectibles, there is no ticker to check every second of every day to influence the buyers emotions. The stock ticker turns people into these ‘addicts’ checking their positions every second. Collectibles are a lot easier on the buyers daily emotions, giving the owner a lot less stress.
Did you know there are 100,000 ounces of ETF gold for every ounce of real gold? Some of these institutions even charge storage fees for gold that never even existed. People like tangible wealth, it gives a feeling of security. With collectibles, someone can literally put $10 Million dollars in their pocket (coins that go for the these numbers). A million dollars in $20 bills weighs 50 pounds, even the so called “bin laden notes” (the 500 Euro notes) will weigh 2.2 pounds to make a million. So to be able to have tangible millions in the size of a pocket can be extraordinary.
Because bubbles are usually highly fueled by emotion and the fear of missing out, the market is a lot more susceptible to bubbles. Also, because emotion is a lot less prevalent in collectibles generally speaking, they have a lot less risk of a bubble (of course it can be very emotional bidding in auction etc). In fact, less than 24 hours after the beginning announcements of the 08 crash, a large art auction took place. It was almost as if the buyers had no idea the markets were in complete turmoil. New record sales all in the tens of millions. It’s even arguable that people try to find stability during a bubble in collectibles, but certainly most will agree that collectibles are a lot less risky when it comes to the concerns of bubbles.
Sometimes when the market is on fire, collectibles are less attractive and active because people want a piece of the action. Although, I would not say that when markets are doing well collectibles do poorly. When people feel rich (even if they never sold the stock) they tend to spend more. A lot of the time people like to spend that money on rarities such as art, high end whiskeys, coins etc. So I would not say that collectibles and markets have inverse behaviors or are correlated in a direct and obvious way.
Ease of Buying/ Selling
What is so nice about collectibles is you don’t need anyone to conduct buy and selling. There’s no need for any institution to conduct your trading and there’s no management fees (3% management fee and 30% of gains etc.) going thru a brokerage of any kind. it’s a very simple landscape in regards to buying and selling.
Although it sounds funny, it’s still worth mentioning that owning a rare piece of our planets history is very exciting. It’s a great conversation piece with friends and family, or even potential new clients if you decide to display it in a office etc. Although owning a large share of stock in a company gives someone status, it’s not quiet as glamorous and alluring of a status symbol as owning an original Monet or an ancient Egyptian artifact.
So to summarize, both markets and collectibles are fun playgrounds. However, the markets overall are great if you want those adrenaline highs and lows, along with the heavy action you can see every second of every day. Collectibles on the other hand are more steady less exciting, but still profitable and give you less stress while still having potential of very high upsides.