Some things that people consider "collectables" have turned out to be great investments over the years. Certain coins, art and even wine, have actually outperformed the stock market over the past 10-20 years, but all collectables were not created equal. For every collectable turned great investment, there are ones that have lost nearly all their value. Below is a list of 9 such collectables, that should never be considered part of your investment portfolio. For more, continue reading the following article from TheStreet.
If you stare at the Thomas Kinkade painting on your wall each day thinking "There’s my retirement fund," prepare to pour skim lattes until you’re 90.
Collecting as a hobby can be a fun, worthwhile and potentially lucrative way to pass time. Amassing collectibles as investments, however, can be a disappointing endeavor yielding nothing but piles of devalued tchotchkes for the next of kin to sort through.
The founder of comic book industry bible Wizard, Gareb Shamus, said a year ago that the best advice a collector could heed was to buy what they liked and do their homework. Then again, he’s also a Spider-Man collector who paid $1,700 for an issue with a cover drawn by artist Todd MacFarlane featuring the villain Sandman. The book’s value jumped to between $30,000 and $40,000 when the Sandman appeared in the latest Spider-Man film.
Collectors such as Shamus have entire industries helping them along, with the Certified Guaranty Co. determining comic book quality and grading criteria. Wine aficionados have such resources as Robert Parker’s Wine Advocate and Bordeaux market forecasts. Art collectors have the big houses such as Sotheby’s(BID), Christie’s and Freeman’s and their sales trends.
"Collectibles" investors, however, are beholden to a very subjective, eBay(EBAY)-driven market in which their precious knick-knack can be worth $800 or less than $50. While sites such as Kovels.com offer some guidance, "collectibles" and the companies that make them are slaves to demand and market forces — and the realization that their mass-produced product is only worth as much as a buyer will pay for it.
"I tell people that keeping collectibles is like storing money under your mattress," says Lou Kahn, head of the Bakerstowne Collectibles appraisal and consignment service in West Hempstead, N.Y. "You’re going to have the same amount of money next year, but it’s going to be worth a lot less."
We took a look at several collector niches and came across five where the products rarely appreciate in value and have questionable worth even when new:
HUMMEL FIGURINES Your grandmothers’ collection of rosy-cheeked tots cowering below umbrellas or playing "ring around the rosie" aren’t worth the crates you’re packing them in? Blame Germany.
This saccharine-sweet ceramic cherubs first appeared in 1935 as physical manifestations of drawings by German nun Maria Innocentia Hummel. When U.S. soldiers returned from Germany after World War II, they brought these keepsakes home for their wives and children. The German company that created them, Goebel, ratcheted up production and began selling them at dime stores such as Woolworths for $4 to $5 a pop. That low purchase price led to a huge secondary market, high-priced Hummels and manufacturers who wanted a piece of the action.
In the ’60s and ’70s, the figurines made their way into Hallmark stores and airport gift shops and prices skyrocketed, with the "Umbrella Boy" figurine retailing for $1,500. As more were produced and countless "special editions" cranked out, Hummels’ resale value sank like a ceramic anchor.
"People were buying them looking at what they sell for at retail, but they could be 50% to 70% less on the secondary market," Kahn said. "The bubble burst on Hummels because a lot of the old collectors became dinosaurs — they’re not with us anymore — and the new collectors don’t appreciate them, so it’s the old supply and demand problem, where there’s more supply than demand."
That supply just keeps growing as the generations that collected Hummels die off and leave behind thousands of their diminishing-value dust-collectors. Goebel shut down in 2008, but Manufaktur Rodental GmbH bought the brand last year and began producing more in limited supply. Though Kahn’s firm sold a Hummel for more than $1,100 on eBay earlier this year, Kahn says most go for $50 or less — with prices continuing to plummet as estate sales add to the stockpile.
"The only way a Hummel passes away, so to speak, is when it gets broken or chipped," Kahn says. "So 60% to 70% of all the Hummels ever made are still out there."
BEANIE BABIES
There are three kinds of items antiques dealers and consignment shops simply refuse to accept: Norman Rockwell plates, Precious Moments figurines and Beanie Babies. While those last two items have become synonymous with American kitsch, the latter symbolizes the perils of using collectibles as commodities.
"The difference between old comic books or Beanie Babies — and they’re worthless — is that people were buying Beanie Babies for a retail price of $4 to $6 and were hoping to sell them on eBay for $40 to $50," Kahn says. "They thought it would be worth a lot of money, but some of these people were crazy and went to Toys R Us and bought $4,000 worth of Beanie Babies that ended up not being worth what they retailed for."
While there are certain exceptions — misprinted versions of Iggy and Rainbow that sold for a combined $5,000, a Coral Casino bear for $2,800 and in-box third-generation bear for $900 — most Beanie Babies only enrich Ty Warner, the founder of Beanie Babies producer Ty Inc. who turned the toys into a $4.4 billion fortune and luxury hotel empire.
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The overwhelming majority of Beanie Babies end up in large lots that sell for $2 or less per plush beanbag. That’s a price Kahn places on par with the resale value of collectible plates containing Norman Rockwell illustrations, but still more than the return on the pastel, pink-and-purple Precious Moments figurines.
"Precious Moments are worth precious nothing — they have no value," Kahn says, noting he refused to consign a woman’s collection of 7,000 such statuettes that she’d insured for $110,000. "I gave her some advice: Leave your door open, your lights on and your back windows open."
FRANKLIN MINT COLLECTIBLES From die-cast cars to Marilyn Monroe dolls to the official coin sets of the world, the Franklin Mint sure knows how to make items with absolutely zero resale value. Sure, the Franklin Mint gets plenty of buyers to pay $260 for its silver medallions struck with the faces of every U.S. president, but it can’t make them sell for more than $65 on eBay.
"They produced a lot, they advertised, but their items don’t have much value," Kahn says. "Like Rockwell Plates, it’s hard to get anything for them — you could sell them in a 99-cent store and you’d have a hard time getting it to sell."
If collectors are lucky, they’ll get the "melt value" of their coins, which is the exact worth of the small amounts of precious metal the coin actually contains. In fairness, the mint doesn’t guarantee or allude to an increase in value and isn’t the only such organization to peddle perfectly useless items to potential collector investors.
The Danbury Mint also stocks keepsakes such as Michelle Obama inaugural dolls, Department 56 holiday homes and $99 Elvis TCB diamond pendants that, Kahn says, depreciate significantly once they are bought thanks to overproduction and a distinct lack of secondary interest.
"To go to a store and buy one of these items at retail price … you’re losing money," Kahn says. "Cars used to depreciate 10% when you drove them off the lot, but when you take collectibles like these out of the store, you lose about 80%."
HESS TRUCKSThere are certain collectibles whose increasing popularity killed their potential value. Comic books suffered this fate within the past few decades as the number of titles and editions available outstripped collector demand — leaving old 10-cent titles with the most inherent value.
The same holds true for East Coast gasoline company Hess’(HES) toy trucks. The company began selling plastic versions of its tanker trucks in 1964, but as the toys became more popular in the 1980s and production increased to include not only more trucks, but minitrucks, resale prices plummeted.
"Early Hess trucks are good, if you have them from the early ’60s and 1970s," Kahn says. "If you have them from the ’80s, ’90s and on, they’re a flea market item."
An original 1964 truck recently sold for $1,500 on eBay, but versions of the same truck have sold for $620 or even $300 without the box. With the exception of a rare in-box 1993 truck that sold for $500, the overwhelming majority of Hess trucks sold after the 1970s resell for less than $50. While not a ripoff, it’s not a great investment.
"I tell these people that they should sell their collection and put it in gold or put it in the bank and get 1.5% a year," Kahn says. "It beats losing money every year."
THOMAS KINKADE PAINTINGS
The self-proclaimed and trademarked "painter of light" was so popular among fans of pastels and candlelit windows that his company, Media Arts Group, went public with a $110 IPO in 1994. Kinkade was MDA on the NYSE until January 2004, when he bought in back for $32.7 million after the stock had lost more than 80% of its value. It was kind of like buying a Kinkade painting that may have had some nonsentimental value in the pre-Internet ’90s, but when the Internet hit and the markets were flooded with Kinkades selling for much less than they were in stores, investment value plummeted.
"He has gorgeous stuff, but they QVCed it to death," Kahn says. "They sell beautiful Kinkade prints in galleries and on cruise ships, but the frames are worth more than the prints."
Thomas Kinkade Signature Galleries, which peaked at 350 sites in the 1990s, were half that number by 2005. The next year, former Thomas Kinkade Signature Gallery franchise owners Karen Hazelwood and Jeffrey Spinello were awarded $2.8 million and legal fees after successfully arguing that they were pressured to open more franchises, take on inventory they couldn’t sell and keep prices lofty while discounters and independent sellers unloaded their Kinkades for less.
His company’s assistant controller testified that Kinkade earned $53 million off the enterprise through 2005. More recently, Kinkade’s reproduction company filed for bankruptcy in June after defaulting on payments to Hazelwood and Spinello and says it plans to outsource its color-by-numbers operations. Unless collectors are desperately in love with paintings of houses essayist Joan Didion described as "lit, to lurid effect, as if the interior of the structure may be on fire," they should invest with the knowledge that only one person stands to profit off a Thomas Kinkade painting: Thomas Kinkade.
PRECIOUS MOMENTS FIGURINES
Few collectibles milk their rabid followers with such impunity that they almost insure fans will lose money with each passing year. Wide-eyed, innocence-embodying Precious Moments porcelain figurines have no such qualms about their greed.
It’s bad enough that Precious Moments collectors have to watch as figurines they paid $45 for at retail sell on eBay for 99 cents to $5 apiece, but Precious Moments Incorporated (PMI — yes, it’s a corporate entity based on figurines) has no problem making fans bank accounts depreciate as quickly as their collectibles. For $36 to $39 a year, PMI offers collectors access to its "Collectors Club," with benefits including the opportunity to buy "collectors only" statuettes, a "member’s kit" and a free figurine thrown in for good measure. PMI also partners with Bank of America on a Precious Moments MasterCard for the cutest debt imaginable and Precious Moments checking and savings accounts, so accountholders always remember where their expendable income is going.
Also, through a link on the PMI Web site, Collectibles Database Online will "value" collections for $30 in the first year and $19 each additional year. Collectors Club members are spared such indignities by getting a $10 discount in the first year. Most antiques dealers will tell collectors these statues are worth next to nothing for much less than that.
PMI’s former business partner Enesco discovered as much the hard way in 2004, when it severed the relationship due to faltering sales. Even PMI hasn’t been immune, as it was forced to scale back its Precious Moments Chapel theme park in Carthage, Mo., three years ago after "increases in gas prices and the general decline in tour bus activity" and a "reduction in paid admissions to the park." Kahn places the pricing of Beanie Babies and their ilk on par with the resale value of collectible plates containing Norman Rockwell illustrations, but that’s still more than the return on the pastel, pink-and-purple Precious Moments figurines.
"Precious Moments are worth precious nothing — they have no value," Kahn says, noting he refused to consign a woman’s collection of 7,000 such statuettes that she’d insured for $110,000. "I gave her some advice: Leave your door open, your lights on and your back windows open."
NORMAN ROCKWELL PLATES
There’s no one company responsible for the proliferation of these ceramic slices of Americana, which is just one reason they’re not worth very much.
Whether they’re made by Goebel, The Bradford Exchange, The Danbury Mint or The Knowles/Rockwell Society, the plates all have one thing in common: They’re all replicating the work of an artist who died in 1978 and whose illustrations were widely distributed through magazines like the Saturday Evening Post before then. If it’s not one of Rockwell’s original oil paintings of "The Four Freedoms" it’s not exactly a scarce commodity.
EBay’s offerings bear this out, as "limited edition" Rockwell plates from the 1980s and 1990s list for 99 cents each – with plates from the 1970s fetching $4 to $6. Though the occasional piece – like a 1975 Lincoln Mint sterling silver Rockwell Plate – will sell for $90 to $132, it usually has more to do with the surface it’s on than the image itself. Even a "rare" set of 12 Knowles China "Rediscovered Women" plates fetches only $95… or less than $8 per plate.
In an attempt to vindicate collectors who hold on to Norman Rockwell Mother’s Day and Christmas plates from their children’s birth years, this article’s researchers travelled to the Norman Rockwell Museum in Mendon, Vt., to see how they value the plates. In the museum’s foyer was a table stacked high with plates valued at $39.50 – selling for $19.
LLADRO STATUES
The great news for Lladro collectors is that their porcelain figurine may resell for $1,000 or more. The bad news? They likely purchased it for roughly $3,000.
Unlike the other collectibles mentioned above, Lladro figurines can start from a lofty price point. A Christmas-themed 20-inch figurine called "Santa, I’ve Been Good" sells on the Lladro Web site for $3,000. That’s a bargain compared with an 18-inch statue called "Koi" that retails for $4,800.
In the secondary market, however, it’s a different story. A mint-condition "Mermaid On The Wave" figurine purchased at retail for nearly $3,000 was purchased on eBay for $1,480 and $14.72 shipping. A figure of Don Quixote and Sancho Panza that warrants a $2,300 asking price and had one seller initially setting a $1,300 reserve went for $977. An image of Lord Ganesha commonly priced at $1,100 sold for $600.
Why the more than 50% depreciation in value? As with many "limited edition" collectibles, the supply isn’t so limited. The Ganesha figure, for example, had a "limited edition" of 2,000 figures. Even a $9,500 new release like the "Alexander Nevski" statuette is sold in editions of at least 500. The figurine maker takes pride in its "retired" pieces, but like many retirees, they’re not hard to get ahold of once they leave the shop.
CABBAGE PATCH KIDS
Xavier Roberts first peddled his famous yarn-haired dolls at craft fairs in the late ’70s, until Coleco bought the brand in 1982 and spawned the toy craze of the ’80s. Instead of selling just another mass-produced doll in a box, Coleco turned little girls into adoptive mothers by treating each doll as a one-of-a-kind "delivery," complete with adoption papers and individual names. Different outfits and facial features added to the illusion of uniqueness.
By 1983, demand for Cabbage Patch Kids was high enough to incite riots among eager parents trying to fulfill Christmas wish lists. While the dolls cost $25, many were resold for $100 or more.
Not surprisingly, many of these were bought by collectors looking to cash in later. However, they won’t find much of a return if they waited until now to sell. Toys ‘R’ Us was recently offering updated versions of the dolls on sale for $25. If you want a vintage doll in original packaging, they’re sitting on eBay for as little as $27. Used dolls from the early ’80s are being offered for as little as $1.
This article was republished with permission from TheStreet.
