Profile of the Collector, and my own beginnings

This chapter is too long and I'm sure many think it talks to much about me.  Once I got started, I had to get it all down.  I'm sure many of you will see yourself in my story...

CHAPTER FOUR

UNDERSTANDING THE COLLECTOR*

           

            To understand collector theory, you first have to understand the motivations of the collectors themselves.   Simply put, collectors need collectibles.  They must obtain them to assemble their collections. This need to collect can be very motivating and can stem from childhood experiences or feelings of nostalgia.  This need creates an economic demand for collectibles that moves marketplaces and should never be underestimated.  I am sometimes amazed at how much money is spent chasing collectibles.   

            So who is a collector?  Almost everyone is a collector.  Even people who don’t think they are collectors have some type of collection.  Collecting may be an instinct instilled in us from primordial times to keep us from throwing away important things like sharp bones from an animal carcass that may be vital later in life.  The collecting instinct might be a hunting instinct from an earlier time, when man was a hunter and gatherer and had to keep looking for food to survive.  In fact, collecting is very similar to hunting in many respects, and some collectors do refer to the joy their hobby brings them as “the thrill of the hunt”. The most exciting hunting spree isn’t always the one where the most valuable item was purchased at full price, but is often the cherished item that they hunted down in an out of the way place and bought it for very little money. 

Most die-hard collectors fit a certain profile.  In most cases, they were introduced to their hobby when they were young and impressionable.  Maybe they remember filling a Whitman album with Wheat “Pennies” when they were a child.  Perhaps they remember going to baseball games on summer days with their friends and watching the boys of summer smack the ball out of park and swapping their dessert at the schoolyard for the baseball card of a favorite player.  Possibly, they remember plunking down a small portion of their hard-earned allowance to buy the latest issue of Superman or Spiderman from a rotating “spinner” magazine rack. 

Some collectors collected from childhood and never stopped.  But sometimes, the desire to collect comes later in life stemming from an unfulfilled urge during the teen years.  They remember that old desire to have that state of the art hunting rifle for sale in the hardware store window, or that sleek red Corvette owned by the town banker so they can go prowling the boulevards with the top down and the music blaring.  That strong desire to own that cherished item, whether fulfilled or unfulfilled, never goes away.  Instead, it can fester for decades and spring up unexpectedly.

Regardless of when the seeds of desire were planted, the typical collector will most often enter their late teen years and slow or stop their collecting activities.  Their collections often were thrown away by their mom, junked, traded away to friends at school for a new toy, pilfered by their little brother or sister, or their dream for that car or that rifle will be set aside because it was too impractical.  Sometimes, these childhood collectibles were donated to a church charity drive, or garage sale to find themselves in the hands of another collector.  For the lucky few, these childhood possessions were placed in the attic or basement, in most cases improperly preserved, to languish away unloved until some day in the future.

But the collecting bug can go dormant and then suddenly spring back to life later in life when there is time to fill the empty holes in one’s psyche.  In most cases, a typically twenty-something or thirty-something collector is somehow reminded of their old collection or that old desire unfulfilled.  Perhaps because their own children are now old enough to take an interest in the topic or perhaps this “spark”  occurs when they run across a small collectibles show at their local mall.   Whatever it is that sparks their interest, they remember their old collection, or that old desire and they usually try to complete it or fulfill it.  A lucky few find their old childhood playthings improperly stored and waiting for them in the attic or basement.  Most of these collectors must build their collection from scratch. 

This is often the point where the new hard-core collector is born.  The reborn collector is no longer impeded by old barriers.  They are now out on their own, and they have met their immediate needs for food and shelter.  Without fear of reprisal from parents that focused on practicality, they can begin collecting in earnest. They have extra money, and a burning desire to recreate the collection they once had in their childhood, and perhaps even build a much better collection.  But after they have started re-acquiring the collection of their youth, they realize they don’t want to stop collecting.  They find that they enjoy the thrill of the hunt and the pride of ownership.  They enjoy the networking and the forums.  They begin to collect a complete series or run of collectibles based on a theme.  They may widen their search from a few favorite formerly owned Spiderman comics stolen and discarded by their kid sister to collecting every Spiderman issue ever printed.  During this process, they may eventually find that they are dissatisfied with the condition of their collection, and want to re-collect the same items in a higher state of preservation.  As the hunt continues, the dollars continue to flow out of the checking account at a faster and faster rate as the object of the hunt gets rarer, nicer, and more desireable.  These new hard-core collectors constantly struggle with the trade-off between how large and nice of a collection they really want and what they can afford.  Eventually, they focus into what they like the most, but that focus seems may shift over time.  

Collectors are the glue that holds the collectibles marketplace together.  They shape the values of collectibles in the long run.  Without collectors, there would be no dealers or vendors who cater to them.  Collectibles would hold little value because there would be no demand for them.  Regardless of who participates in the collectibles marketplace in the short run, it is important to realize that it is the collector who shapes prices for coins, baseball cards, toys, beer cans, movie posters, etc. in the long run.  They decide what is desirable and allocate their hard-earned money accordingly.  When you fully understand what excites a die-hard collector, you are on your way to understanding what kind of material you need to purchase to make big profits in collectibles.

In many ways, I fit the profile of your typical hard-core collector, so I’ll give you my background.  It may also give you an insight into where my ideas on collector theory originated.  As you read my background, look for commonalities in your own collecting origins and focus on understanding collector motivation. 

            My earliest brushes with collecting predate assembling my own collections.  Some of my earliest memories of collecting were when I was 5 and 6  years old, on special nights why my father was feeling nostalgic, he would sometimes pull out an old felt-lined box wooden box at the kitchen table.  He would carefully open it up to reveal his own private horde of  silver dollars, silver certificates, obsolete coins, odd bus tokens, and strange foreign coins that he had collected over the years.  He would go through them one by one, gently handling them and reverently explaining what they were, why they were valuable or special and where he got them.  Many of them had toned with a rainbow pattern patina from years of exposure to the still air commingling with the decaying felt lining and the stained wood of that special box.  Sometimes Dad would even let me hold a coin and I would study the surfaces, marveling at the obsolete designs and wondering how those coins remained so nice for so many years and who might have held them.  Spending time with my Father this way was something that I always cherished.

 I first started collecting coins on my own when I was 9 years old.  At the time, I was working part time at a gas station that my parents managed. I received a small amount of money for my contribution to our family’s welfare, but one of the benefits of the job is that I could go through the change drawer and look for semi-valuable coins.  At that time, my brother and I shared a 4-hour shift every day.   He started collecting coins before I did by picking them out of the cash register so then I followed his lead, and started collecting them myself.  For a time, my brother and I would spend a lot of time talking about the coins in his little red coin price guide and imagining what it would be like finding some of those coins in change.  We became fairly fluent in the values and rarities in that book. 

Then something happened that really made me want to collect.  If you understand kids you can imagine that our increasing knowledge and shared shift at the service station began to lead to arguments about who should get the occasional well-worn wheat cent or winged liberty dime.  As a result of these escalating arguments, my parents decided that since my brother started collecting coins first, he was allowed to collect U.S. coins until he lost interest in them.  But, I was only allowed to collect the Canadian coins spent by tourists.   Living in Florida, there weren’t many of these coins in circulation!  I was devastated by this.  When you are a child, nothing makes you want to do something more than when you are told that it is forbidden.  It was aggravating, but I still helped my brother with his collection.  I continued to memorize facts in the little red price guide and check the cash register for “new” coins.  I spent time thinking about what made some coins more valuable than others.  Some coins were valuable because they were rare.  Others were valuable because they were interesting or in a high state of preservation.  Meanwhile I collected Canadian coins and waited.

Eventually, my parents realized my interest in collecting U.S. coins was more than just a boy’s passing fancy, so they relented and allowed me to collect U.S. coins too. I immediately started out by collecting wheat cents by date and mint location.  I collected what I could find in the cash drawer and what I could buy on such a limited budget.  But since I was a kid, I couldn’t afford the rare coins, and I couldn’t find the real rarities even though I started searching through hordes of rolls of cents from the bank.  At the time, I simplistically thought that the older a coin was, the rarer it was.   I looked forward to trips into the city and visiting the coin shop just to look at all the rare coins.  While I focused on cents, my brother built a respectable collection of silver dimes and bust halves. When the price of silver shot up to almost $50 per ounce in the 1970’s, he sold his collection and made a hefty return on his allowance money.  I then tried to jump on the bandwagon by collecting silver coins, but it was too late.  I then began to follow the gold and silver market every day in the newspaper watching and waiting for any sign that the price would rise again.  It never did.  However, reading the spot price of silver and gold sparked my interest in the financial markets in general.  I wanted to know why gold and silver went up so high, so that I could capitalize on it when it happened again. So I started studying the commodities market and I developed an interest in business and economics.   Of course, it’s obvious now that the meteoric rise of silver in the 1970’s was a “price bubble” brought on by investors to tried to corner the silver market.  This was not the last time that I’d be fooled by a price bubble!

I was 12 years old in 1977 when the movie Star Wars came out.  Anyone who saw the movie when it first came out will tell you that it was light years ahead of anything else in its genre.  Because of the impact that movie had on me, I put coin collecting on hold, and spent my allowance on Star Wars comic books.  I tried to keep them in “like new” condition.  This eventually lead to collecting more comics of different types.  I remember finding the third issue of Marvel comic’s Iron Man at a neighborhood flea market and showing it to my comic book reading friends.  It was worth much more than I paid for it and it was somewhat rare.  I was intrigued by the rarity and value.  After that, the chase was on!  I had to have more.  Over just a couple years, my collection, though modest, became fairly valuable.  I was intrigued by the disorder in the comicbook marketplace compared to the coin market.  the comicbook market seemed to act like the immature cousin of the coin market.  It has some similarities, but it seemed to be a lot more “fast and loose”.   

A few years later, my collector focus started to shift again, and I eventually sold my comics for a decent profit to a local comic book store.  I used some of the money to jump start a new coin collection. I then continued my pursuit of coin collecting, through college and beyond.  During that time, I delved into collecting high grade nickels, gold coins, Morgan dollars by die variety, high grade proof coins, etc. 

After college, a friend of mine rekindled my desire to collect comic books again.  This spark grew into a flame that raged out of control as I met other hard-core collectors. I would attend comic book shows with a briefcase full of rare comics and wheel and deal on the bourse floor.  My friends and I drove hundreds of miles to all the major comic conventions in the southeast. I even set up shop at some of the smaller shows.  At that time, on-line auctions were still in their infancy, so my mobility translated into profits.  It wasn’t uncommon, at that time, to buy a “book” for a few hundred dollars at these conventions, and sell it on the internet for hundreds more after other internet forum members vouched for my honesty.  In the span of a year, on three occasions, I bought and immediately sold books for more than $500 profit which was a lot of money to me back then!  I also began buying and selling rare toys if I saw a bargain.  I didn’t really collect toys, but comicbook collectors and toy collectors often gathered in the same places.  I once bought a toy collection of the original Star Wars action figures in unopened packages for $1200 and resold it for $2200 in less than 24 hours to a dealer who met me halfway between my city and his at a gas station 100 miles from home in the middle of the night.  I even gave one of my friends $100.00 for riding as security.  By this time, I had learned most of the elements associated with profiting from collectibles, and I scoured flea markets and conventions to find rare collectibles to re-sell for profit.

Though I eventually got married, my wife seemed to tolerate my collecting bug.  It was the pressures of being a young professional and going back to school for a Masters degree that eventually caught up with me, and I sold off my comic book collection (again).  Since that time, those same books more than quadupled in value.  For the last decade or so, I’ve been dabbling with rare coins, including ancient coins and foreign gold coins.  I also bought some old video games in their original packaging on speculation.  For the last two years, I’ve been collecting comics.  As the years rolled by, I saw which of my collector theory ideas withstood the test of time and which did not.  But after watching almost all of the items I sold go up in value year after year following their sale, I learned one very important lesson which I began follow strictly: Unless certain criteria are met, it is almost always a bad idea to sell carefully selected collectibles. Only sell what isn’t working.  Once you have something good, hold onto it tight!

Is my self-history lesson over?  Almost; here’s the big finish.  As I said, I was bouncing back and forth between comics and coins when I went back to school.  I took night courses in business and economics.  I began to see that the study of economics was augmenting my hard-earned collector experience.  A firm understanding of economics is a powerful tool for understanding collectibles markets.     

As I bounced back and forth between coins and comics as my passions lead me, I found opportunities to exploit the differences in the coin and comic book marketplaces.  I began to realize that comic book collecting was still somewhat in its infancy, with respect to coins which is arguably the most mature hobby of its kind.  If you were to assign a rank to the maturity level of a marketplace, the coin market would be a “10” on a scale of 1 to 10. Since I’ve dabbled with them, comics have gone from about a “5” to somewhere around “7” and rising fast.  Back when I started collecting comics, I accurately predicted that someday, high grade comics would have a very high premium associated with the highest grade specimens, like coins do though at the time, the premium was negligible.  I also predicted that someday comics would be “slabbed”, which I predicted would profoundly accentuate the price difference in higher grades.  I predicted that slabbing of comics would also cause a boom and bust as it did for the coin market. This boom has occurred and I’m seeing evidence that this bust may be beginning as well.  But, did I throw caution to the wind and buy all I could buy to make a fortune on this great idea?  Sadly, not like I should have.

So, wait a second…does my history have a happy ending?  Definitely!  Even though I missed the boat on some opportunities, I did, eventually, learn from my mistakes.  Even though I didn’t buy certain collectibles when I probably should have, it did teach me what is best to buy now.  I also learned a valuable lesson:  The first rule of collecting is that hindsight is 20/20.  All veteran collectors have their “if only I had kept or bought that” stories.  My happy ending is I’ve been very successful with my buying and selling once I mastered collector theory.  I learned a lot about markets and collectibles along the way and I can and do draw on that experience, today, and it gives me great returns.  Do these ideas work?  Absolutely!  I can now identify what to buy, when to buy it, how to buy it, how long to hold them, when to sell, and how to get the most out of selling.  These principles have helped me make real money in the comic book, toy, and coin markets and they govern the marketplace of other collectibles as well.  They can help you too.

Epilogue:  I put the finishing touches on the above about a year or so ago.  It's worth mentioning that since that time I've absolutely flipped over currency collecting and antique check collecting.  I am very impressed with their potential and the fast and loose nature of their markets.  Currency collecting is somewhat immature, which provides lots of opportunities.  Check collecting is in its infancy.  It may someday take off since it's loosely tied to currency collecting.  But the real neat thing about them is the amount of beauty and history you can obtain for your dollar.