RINKER ON COLLECTIBLES — Column #1236 Copyright © Rinker Enterprises, Inc. 2010

When Is a Good Time To Jump Into the Market?

Jim McMahon’s e-mail reads: “My question is about colleting cap guns.  I have noticed a decline in prices on eBay.  In your opinion, is this decline a temporary thing?  How close to the bottom do you think we are?  Is now a good time to get into the market?  I know you do not have a crystal ball.  However, I am certain you have some insights.”

Actually, I do own a crystal ball.  I used it during a brief career as a stage hypnotist.  The crystal ball was only a stage prop.  Its ability to forecast was non-existent, a state that continues to persist.  The future forecast for the antiques and collectibles business as cloudy and murky is normal.  The market continually faces large numbers of uncertainties.  In 2010, the future is dark and gloomy throughout much of the market.  Bright spots are scarce.  Having been involved in the trade for over 40 years, I have vivid memories of the future appearing bright and sunny.  Hopefully, such happy days will return.

The antiques and collectibles market is a fun place to play if you like riding roller coasters.  The market fluctuates.  The only issue is the height of the rises and the steepness of the declines.  There are times when the car falls off the track.

Throughout the 20^th century, every collecting category experienced a decline in price and collector interest.  Prices eventually stabilized.  This stabilization gave new buyers confidence to enter the market.  As the number of new buyers increased, prices rose.  The collecting category experienced a renaissance.

The situation is different in the 21^st century.  Today, bottoming out has multiple meanings.  First, a collecting category may bottom out at zero and disappear from the scene.  Geisha Girl ceramics is an excellent example.  The articles, books, collectors, and collectors’ clubs that fueled the market have disappeared.  Most individuals offering the material on eBay have no concept of how to identify what they have, let alone the pattern variation.

Thanks to eBay, it necessary to raise the question of what something is worth once every collector owns an example.  In theory, the next example offered has no value since there is no buyer.  In truth, there is always a buyer, although he may be willing to pay only a few cents to a few dollars.  Although affordability plays a critical role in collecting, a sufficient dollar spread between the low and high end of material is necessary.  A low measured in cents and a high of less than twenty-five dollars is not sufficient to sustain a collecting category.

Second, economic considerations are only one aspect of bottoming out.  Collector numbers also is critical.  The number of collectors in every collecting category is limited.  The limit varies.  It can be as small as a hundred or as high as five to ten thousand.

Hundreds of collecting categories are facing declines in their collecting base.  An insufficient number of new collectors are replacing older collectors who die or have lost their collecting ardor.  Once again, the unthinkable needs to be considered.  Is it possible that the number of individuals interested in a collecting category can reach zero?

The immediate response is no.  There is always at least one collector.  This truism is correct.  However, five to ten collectors are not enough to establish a viable collecting marketplace for a collecting category.  I once wrote a “Rinker on Collectibles” column that dealt with the issue of how many examples must one own to have a collection.  My answer was ten.  How many collectors must one have to sustain a collecting category?  Ten is not enough.  Neither is 25.  The minimum is 50.  Even this number seems low.

Thanks to the Internet, it is possible to establish chat/membership groups numbering fewer than 50 members.  I have encountered several during my surfing.  These isolated units are transient.  They are not strong enough to allow the identification of their specialized collecting interest to evolve as a collecting category.  When they chat and/or blog about an established collecting category, they do help sustain it.

Third, interest in a collecting category can bottom out.  It is a mistake to think of collecting categories only in terms of the collector.  In the 21^st century, amateur and professional decorators and recyclers are the primary engines that drive and sustain many collecting categories.  Martha Stewart drove Jadite to unprecedented heights in the early 1990s.  Collectors played only a minor role in its rise and fall.  The Jadite secondary market plummeted as Martha’s interest faded.  The 2010 Jadite market is a shadow of its 1995 self.  Will it ever return?  Unlike the Kingston Trio’s Charlie whose fate following his ride on the Boston MTA “is still unlearn’d,” Jadite’s fate as a collecting category is clear.  It will never return to its glory years.  The odds of any renaissance are slim to none.

Trendiness is a hallmark of the 21^st century antiques and collectibles market.  While many understand and accept the concept of “here today, gone tomorrow,” there remains a hidden belief that eventually everything returns.  When talking about fashions and even decorating styles, it is hard to argue the contrary.  However, there are no guarantees.  The fall from grace can be permanent.  Some collecting categories will not recycle.  They bottom out to obscurity.

Fourth, information can bottom out.  Although memory and investment are the primary drivers in the 21^st century antiques and collectibles market, information is critical to sustain interest in a collecting category.  Collecting is checklist driven.

Price guides play a far more important role than merely as a pricing source.  They provide a collecting checklist of what is available in the marketplace.  As much as I railed against the lack of information in priced picture guides, I always appreciated their checklist value to new as well as established collectors.  Knowing what to hunt is critical to collecting.  Not all new discoveries happen in the field.  New discoveries can occur when a collector skims through a reference book or collector’s club newsletter and finds an object that he did not know existed and now very much wants to add to his collection.  The loss of every collectors’ club newsletter, specialized auction catalog, and book title is a blow to the long-term future of a collecting category.  The pending demise of Collector Books at the end of 2010 is a blow to the trade as a whole.

Jim’s specific questions about the cap gun market are universal.  In considering my answers, insert the name of your favorite collecting category whenever I mention cap guns.  If the answers apply, think long and hard about what happens next.

Prices for cap guns most likely will continue to decline on eBay.  The cap gun market was driven by multiple collecting groups: (1) the nostalgia buyer who wanted to buy back his childhood treasure; (2) the cap gun collector; (3) the toy manufacturer collector, such as Hubley, (4) the licensed TV cowboy hero memorabilia collector; and (5) the western collector.  The average age of collectors in all these collecting categories continues to rise.  In the first four of five categories, the average age of the collector is over sixty.

The anti-gun lobby and the mothers of the world have essentially removed toy cap guns from toy store and Big Box store shelves.  Who needs a cap gun when you can have your own blaster in a home video game?  A simple cap gun is too mild a weapon for today’s youth.  They need something with a lot more firepower.

If Jim’s goal is to collect cap guns as an investment, my advice is to put his money into the stock market.  There is no growth left in the investment portion (boxed cap gun sets associated with TV cowboy heroes) of the market.  Recent auction results suggest that this market sector is having a difficult time sustaining its previous highs.

If Jim’s goal is to just have fun and collect, now is a good time to enter the market.  While prices will continue to drop, the rate of decline continues to slow.  However, Jim has to accept that the odds of selling his collection in the future for more than he paid for it are not in his favor.

There is little secondary market support for the cap gun market.  The last major trade references were published in the late 1990s.  While there are some new publications, they are either article compilations or published outside the United Sates.

Rinker Enterprises and Harry L. Rinker are on the Internet.  Check out www.harryrinker.com.

You can listen and participate in WHATCHA GOT?, Harry’s antiques and collectibles radio call-in show, on Sunday mornings between 8:00 AM and 10:00 AM Eastern Time.  If you cannot find it on a station in your area, WHATCHA GOT? streams live on the Internet at www.gcnlive.com.

SELL, KEEP OR TOSS?  HOW TO DOWNSIZE A HOME, SETTLE AN ESTATE, AND APPRAISE PERSONAL PROPERTY (House of Collectibles, an imprint of the Random House Information Group, $16.95), Harry’s latest book, is available at your favorite bookstore and via www.harryrinker.com.