Tuesday, November 03, 2009

The Principles of Collecting - Part 5, Understand the market dynamics

If someone's just starting out in the field of collecting, there are a few things to keep in mind. Personally, I think you can boil them down to five basic principles. And these should work whether you're collecting subway tokens or vintage clothing. In the other parts of this series I talked about ways to determine what to collect and how to shape your collection.

But collecting requires acquisition. And for most collectors, that means purchasing items. And that leads us to the final principle.

Understand the market dynamics of your collecting subject

In the first post I talked about the importance of collecting your passion, rather than to make a quick buck. But that's not to say that knowing the value of what collect isn't important.

Even if you don't intend to sell anything, and let your heirs decide what's to become of your collection, it's good to understand value -- and how it's determined.

Basically, the value of any collectible is a function of condition, desirability, and availability.

Not all old objects are valuable. If they were very common (and easily found) then prices will remain low. If they're something that's not very desirable (say, hospital bedpans), then even if they're sort of scarce, they won't be worth much.

Remember, though, that the value of a collectible object isn't determined by the general public, but by other collectors. And so it's important to know what features make a particular item desirable.

Know the standards

For the average person, it doesn't matter if a book has a dust cover or not. It matters greatly to the book collector, and its presence (or absence) and condition impacts value. And if you're looking to add that volume to your collection, having that knowledge can be the difference between finding a bargain and getting fleeced.

Some objects decrease in value when reproductions arrive on the market, because it affects availability. Some don't. And sometimes the reproductions themselves become desirable.

And remember when we're talking about condition, it's not necessarily new-in-the-box. Some antiques are more valuable if they show wear. And for very old objects, some types of damage is acceptable (while other kinds are considered deal-breakers). Same with repairs and replacement parts. For some objects, these kinds of alterations don't affect value, but for others, repairs or partial replacement parts can make them practically worthless.

Nothing lasts forever (especially collector demand)

Fashions change, too. Rare objects in great condition still arent' worth much if they're no longer desirable. Think Beanie Babies, or pogs. Red-hot for a while, now just yard sale fodder. That's not to say that the value on these items might not increase should they become desirable again.

For many collectors, the thrill is in the hunt. Understanding the market dynamics just helps get you through the jungle safely while you're hunting.

- Ralph


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