Memorabilia Investment: The Golden Oldies
Michael Jackson’s jacket, a Madonna dress, even plates bearing the Queen of England’s face—in a world of cold hard investment, the collection of special items that hold a particular value because of their significance in our collective memory makes a welcome change, and perhaps represents the ultimate alternative investment.
In a $2 billion sector in which the collector can choose anything from stamps, ball gowns and even locks of hair, the scope is also there for the investor to find items which mean something to them personally.
"Collecting is passion. If your motivation is purely financial, you are not going to make a great collector," said Jon Baddeley from London auction house Bonhams.
But Baddeley told CNBC that as well as an emotional attachment, there are tangible gains to be made when you invest in your love of something. He arranged the first ever rock and roll memorabilia sale in the 1970s, which he said fetched around $300,000. Today, he said, that market would be worth around $300 million.
And what should you look for at auction? "Predominantly provenance—is it what it says it is?" asks Baddeley. If not, the message is stay away.
Some of the most famous items have achieved prices worth remembering: A Cuban flag signed by Che Guevara and Fidel Castro went for nearly $160,000; a Michael Jackson jacket for just over $30,000; and even a lock of Admiral Lord Nelson’s hair went for $23,000.
And the outlook for further growth is good, according to Paul Fraser of Paul Fraser Collectibles: "The average is a 10 to 20 percent increase a year. In the past it didn’t mean so much when interest rates were a lot higher, but now we have got low interest rates and low inflation, collectibles are scoring well," he said.
While there is special interest for the Olympics, especially in the London market as the city prepares to host the 2012 games, this year is also important for another, royal reason: Queen Elizabeth’s Diamond Jubilee. And royal memorabilia collecting is something of a national sport in itself in the UK.
Margaret Taylor is one royal enthusiast with a palatial collection, which she showed to CNBC. "I started collecting just over 30 years ago, when [Prince] Charles and Diana got engaged," she said. And Taylor isn’t sure of its value, but she’s not bothered—you only know what its worth when you sell it, "and I’m not selling it!" she said.
Collections like Taylor’s, which include everything from cardboard flags to stuffed toys and photographs of the royals to mini statues of them, may not be the most business-orientated assortment, but she’s got plenty of passion for it.
"Enjoy it, look after it, and it will grow with you. But don’t expect to make a fortune overnight," she advised.
From the Queen of England to the Queen of Pop, investors are finding lucrative ways to cultivate their interests, as Founder and CEO of Marquee Capital Chetan Trivedi found in his recent venture to start the world’s first Madonna fund.
So, why Madonna, and how much is she worth?
"When we looked around the market place to determine which type of assets we wanted to collect, we were trying to find a celebrity that met a number of different check boxes," he said.
"Ones that we felt were not over—priced today—a bit like Marilyn Monroe and The Beatles. So we looked at a celebrity that we thought would bring us a good return in the future.
"Madonna checked all the boxes. She’s iconic, she’s broken all kinds of records, and she’s set trends. And her assets are very hard to come by. They are very rare," he added.
Trivedi brought a couple of pieces to the CNBC studio—Madonna’s costumes for both her 'Material Girl' and 'Open Your Heart' videos.
And their value? "It is hard to tell, but one rule of thumb is—it’s a bit like investing in property: 'location location location'. In memorabilia its: 'iconic, iconic, iconic.'"
"If you buy iconic assets they will never go down in value—in fact history has shown they actually go up in value significantly. I’d be very surprised if the 'Material Girl' costume would not break the Madonna barrier of $250,000," he said.
Yet again, a passion for the area is a requirement for Trivedi. "It is still largely untested as an investment class. I do believe that you’ve got to have an underlying passion for the assets that you’re buying. With the right type of iconic status assets, you can make good returns from this."
He also had a final warning for investors. "You have to be very careful as to where you buy your assets from." In one auction house, Trivedi said, an FBI investigation found that about 90 percent of items were found to be fakes. "You have to look for provenance as well, literally tracing back the asset through the different owners, all the way back to its origins," he said.
So, in this lucrative market where over 200 million investors are looking to expand their collections, memorabilia investment may well be worth your while long-term.
Baddeley had some parting advice: "Do some ground work. See what prices do fetch at auction, join the collecting society, talk to dealers, talk to other collectors," he said.
"Gain that knowledge, then dip your toe in the water and start buying. Then your collection will become an investment."