RINKER ON COLLECTIBLES — Column #1472

Copyright © Harry Rinker, LLC 2015

Developments That Can End a Collecting Craze - Part III

The first two column in this three-column series explored six reasons why collecting crazes end: (a) a decline in media attention; (b) changes in manufacturers’ strategy that ultimately floods the retail and secondary markets with so much new product that even the most diehard collectors become discouraged; (c) the role played by specialized price guides; (d) other manufacturers joining the bandwagon; (e) knockoffs and fakes; and, (f) a decline in retail sales.  This column focuses on six other developments that contribute toward the ending of a collecting craze: (1) the secondary market pricing itself beyond the financial capacity of the average buyer; (2) the internet; (3) the collapse of the speculative market; (4) space considerations; (5) time; and (6) the absence of fun and the disappearance of enthusiasm and optimism.  When a collecting craze ends, it is the result of a combination of developments – the more developments that can be identified, the faster the decline, collapse, and end.

Collecting must be affordable to attract large numbers of collectors.  When the per unit cost of objects in a collecting category is under 10 dollars, collectors abound.  Large collections can be assembled for minimum expenditure.  Ty Warner’s insistence that retailers sell Beanie Babies at their suggested retail price fueled the Beanie Baby collecting craze.

Prices for commonly found objects increase dramatically in a short period of time once a collecting craze starts.  Prices double in a matter of weeks or a month or two.  It is not unusual for values to quadruple or quintuple.  Prices for ultimate unit/masterpiece and upper echelon pieces increase even more.  The gap between the most valuable and the least valuable item in a collecting craze widens.

The average per unit price of objects is one of many analytical secondary market measures.  Once the price for commonly found material reaches $50.00 per unit, the average collector thinks twice, maybe three times.  Another measure is the cost to acquire ultimate unit/masterpiece and upper echelon pieces.  A top price between $250.00 and $350.00 does not discourage collectors.  Once the top price exceeds $500.00, the average collector is eliminated from this sector of the market.

As prices climb in a collecting category, the category essentially prices itself out of the market.  Few collectors can pay out $1,000 or more multiple times a year.  While there are collecting crazes that take place at the top end of the market within specific collecting categories, most collecting crazes are mass phenomena.

I remember life before the internet, which equates me with the dinosaurs when I mention this to my college students.  It is easier to focus on the negative rather than positive aspects of the internet.  When a collecting craze first develops, the internet is a key element in accelerating it.  Collectors find items at prices they are willing to pay.  The internet spreads the craze globally.

A collecting craze survives only when the price of the objects in the category keep rising.  The internet provides an easy method to track this process.  Inevitably, so many objects in the craze category flood the internet that supply exceeds demand.  Once this happens, the middle and bottom of the craze become unstable and tenuous.

Although collecting craze participants do not recognize when price stabilization occurs, they do notice when objects no longer sell through and/or prices begin to fall.  Like many craze participants, they see the price decline as temporary rather than permanent.  Rats deserting a sinking ship demonstrate a greater understanding of what is happening than collectors who do not bail out immediately once a collecting craze takes a financial downturn.

Collecting crazes attack speculators.  These speculators often are bandwagon followers rather than experienced speculators.  As such, they lack the sophistication to maneuver effectively within the financial curve of a collecting craze.  When objects start selling significantly above secondary market retail or book, the bandwagon effect occurs.  Experienced speculators start buying in quantity.  Their turnaround time is measured in days and occasionally weeks.  Unsophisticated speculators hoard, waiting until the secondary market rises significantly before selling.

Hoarding creates a false sense of scarcity.  Manufacturers contribute to this through their marketing practices, especially uneven market distribution.  Rumors and misinformation abound.  As the rumors increase, participants in a collecting craze are uncertain about which rumors are true and which are false.

Speculative markets collapse quickly, often in days and weeks.  Experienced speculators know to get out the moment this occurs.  Most collectors participating in collecting crazes do not.  Ultimately, they face the unpleasant situation of accepting the reality that they only will recover pennies on their purchase dollars.

The days when a collector will devote a room, rooms, or large space (basement or garage) to a single collecting category are over.  Quantity is no longer king-of-the-hill.  Quality is not either, but that is another “Rinker on Collectibles” column.

Today’s younger collectors devote a limited amount of their household space to their collections.  The space may be a corner of a room, a few wall shelves, or one or two display cabinets.  This is why collecting crazes involving smalls have a longer collecting life than crazes involving larger items.

Space consideration also is essential because of the high probability that a collector will experience multiple moves during his/her lifetime.  It is easier to move 50 to 100 objects than it is to move 250.  Small is good, but small and light is better.

Younger collectors allot a specific space for their collection(s) before beginning the collecting phase.  Once the space is filled, they are prone to withdraw from the market.  They have no interest in acquiring objects they cannot display.  Individual repeat buying, especially for new product, is essential for a collecting craze to survive.  When this ceases, a collecting craze is near its end.

Time is the enemy of all collecting crazes.  The old maxim “nothing lasts forever” applies.  While not every collecting craze is a speculative bubble, more than 75 percent are.  Collecting crazes can last as long as one or two generations.   It is a rare collecting craze that survives for three generations.  These statements are true when discussing tight, narrow sub-collecting categories.  Analyses of broad collecting categories such as ceramics, furniture, glass, and toys are not feasible from the collecting craze perspective.

The difficulty is that those caught up in a collecting craze have neither hindsight nor foresight.  Participants become so involved in the collecting crazes that they wear blinders, thus keeping their focus on the immediate and forward.  The enthusiasm of the moment blinds the participants to long-term realities.  Collecting craze participants want to be told that their momentary love affair will be permanent and financially beneficial

Passion, enthusiasm, and optimism are essential ingredients in driving a collecting craze.  Collecting crazes generate an enormous sense of excitement.  Collectors become euphoric.  Participants are convinced that they have discovered Shangri-la or the Holy Grail.  The collecting experience becomes mystical and religious.

Participating in a collecting craze is fun.  New friendships are formed with dealers and other collectors.  There is always someone new to meet and something new to learn.  Being a member of a collectors’ club, attending an annual convention, and interacting through social media becomes a pleasurable obsession.

When a collecting craze begins its decline, optimism and fun vanish.  A pale shroud covers the collecting category.  Same old, same old becomes the order of the day.  Collectors grow old.  New collectors satisfy their collecting urges elsewhere.  It becomes harder and harder to discuss the collecting category positively.  The exception being that the decline in secondary market prices has bottomed out.

Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the twentieth and twenty-first centuries.  Selected letters will be answered in this column.  Harry cannot provide personal answers.  Photos and other material submitted cannot be returned.  Send your questions to: Rinker on Collectibles, 5955 Mill Point Court SE, Kentwood, MI  49512.  You also can e-mail your questions to harrylrinker@aol.com. Only e-mails containing a full name and mailing address will be considered.

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.