LONDON – stocks, bonds and commodities? Old hat.
Once reserved for the super-rich or just the eccentric, all sorts of unusual investments, from vintage handbags and shares of fine art to rare Pokemon cards, are now the happy hunting ground for stuck gamers.
Such amateur investors, often armed with lockdown-era savings, seek higher returns than traditional markets, where skyrocketing prices raise warnings of bubbles. In turn, they raised the prices of some “alternative” assets by hundreds of percent over the past year.
And just like the free trading apps like Robinhood that hordes of tiny stock traders have used to rattle seasoned hedge funds in recent “Gamestonks” episodes, digital platforms offer would-be investors as little as $ 20 (S $ 26) try it with collectibles.
Apparently, value can lurk in all sorts of places.
Collector cards based on Nintendo’s successful 1990s video game Pokemon have appreciated in value over the past year.
A first edition of his fire-flying character “Charizard” shot up 800 percent in a year after YouTube star Logan Paul paid $ 150,000 for one in October. Recent auctions valued the card at $ 300,000.
Chicago-based Pokemon enthusiast Zack Browning, who bought four of the cards in 2016 for less than $ 5,000 each, estimates his entire Pokemon collection is now worth $ 3 to 5 million.
Browning, who began his career as a Pokemon investor after graduating from college in finance, described the playing card resurgence as “amazing and unbelievable.” He said parts of the Pokemon market are more predictable than the stock markets, which he believes are overvalued.
“Pick-me-up”
Of course, it is much more difficult to measure the profit or loss of a painting, or to measure the demand for such collectibles, than in the stock or currency markets, since items often have little in common and can only be traded occasionally, for example through auction.
However, a luxury investment index released by compiler Knight Frank on Wednesday (February 24) showed that “relatively affordable luxury pick-me-ups” performed well despite prime assets like art depreciating during the pandemic.
While the AMR All-Art Index, based on auction prices, fell 11 percent last year, according to Knight Frank, Hermes’ iconic Birkin handbag, which was first launched in the 1980s, rose 17 percent before fine wine and classic cars.
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Andrew Shirley, editor of the Knight Frank report, said last year’s most expensive Birkin sold for $ 200,000 and that Asian luxury collectors in Asia were “very happy to bid on handbags online.”
For people unable to make $ 200,000 per item, there are platforms like New York-based Otis that launched in 2019.
These platforms buy and certify everything from a Pokemon card to a basketball jersey signed by basketball legend Kobe Bryant, and offer investors shares in the items that they can buy and sell.
Last year, Otis offered customers the opportunity to buy shares in a work by British street artist Banksy for $ 20 a share. Those stocks hit $ 34 earlier this month, a 70 percent gain that valued the piece at $ 722,000, Otis said.
Investors are typically between 25 and 45 years old with disposable income in excess of $ 100,000, Otis founder and CEO Michael Karnjanaprakorn told Reuters.
He said the most expensive item on Otis was a 1986 basketball card that was discontinued by sports card maker Fleer. It was sold for $ 10 per share two months ago and has since grown 305 percent to over $ 40.
Reuters was unable to independently verify the prize gains.
“Don’t Invest Your Pension”
On another collectibles platform, Rally, the number of users doubles every 30 days, according to CEO George Leimer. He said “several hundred thousand” investors used the platform but declined to be specific.
Coveted Pokemon cards in the six-digit range also appeared on the platform, said Leimer.
“The drive behind this is very similar to what we see in the rest of the retail investing world,” he said, pointing to the growing popularity of Robinhood and other such apps.
But few appear to be bank profits; Leimer said the percentage of investors who withdrew their profits rather than reinvesting them was in the “low single digits”.
As customers flock to alternative assets, many are warning of risk.
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John-Paul Smith, a former senior equity strategist at Deutsche Bank, is now trying to buy art from the north of the UK. He sees little difference between the behavior of some “alternative” investors and the stock frenzy.
“Banksy is pure dynamic, it’s like a hot tech stock,” he said. “Psychology is similar in every market.”
Conceptually, however, it seems “less stupid” to buy unconventional assets today than it has ever done in the 30 years Smith has followed the markets. Not only are stocks expensive, but the huge incentives from the central bank and government will ultimately boost inflation, he said.
He urges investors to distinguish between a passion or hobby and an investment. If all they want is to make a profit, they probably won’t, considering how esoteric any part of markets like art can be.
“I wouldn’t advise anyone to take their retirement,” he said, an attitude that Pokemon investor Browning also took.
