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Discover Mid-America — August 2005

Capitalizing on the investment appeal

Antiques and objects d'art are, for investment purposes, more analogous to the equity people have in their homes than they are to stocks and bonds. Generally speaking, a fine antique, like a good house, doesn't just hold its value but grows in value the longer it's held.

Smart investors have always included such tangible assets in their strategy for diversification. Art works and antiques can be great places to park otherwise taxable assets. It's an appeal the trade could do a better job of marketing.

An unusually large pot done by Hopi-Tewa artist Paqua Naha, now deceased, and known as the original "Frog Woman." Naha was the matriarch of a pottery-making dynasty; her daughter, Joy Nastasie also took the name Frog Woman and credited her mother with inventing this distinctive white ground pottery, which became a family hallmark. The works of all the potters in this famous family routinely sell in four figures, even for the smallest pots. (photo by the author.)

Some practical suggestions for an investment-grade inventory

1. Don't deal in damaged merchandise.
Sometimes touted as "shelf pieces," these items are — unless they're rare and unavailable in any condition or exhibit repair strategies that are themselves antique — worthless to any serious collector. Thus, they have zero investment potential.

2. In general, avoid items touted as "limited editions."
With this "come-on" manufacturers of contemporary collectibles have sought to compensate for a lack of historical credentials for the items in question by implying that there is something exclusive about their distribution. In most cases, the edition size is very large — so much so that the regular-line batch of other 20th century models produced by the same company could actually be smaller. The concept of limited edition, in everything from fine porcelain to art prints to fashion dolls, has become so overused, overblown and oversold that it is becoming synonymous with mass-produced kitsch.
Such items now glut the antique malls. The most beautiful and finely made of them (.e.g. high-end glass and fine porcelain) may well achieve investment-grade status, but they will do so in their own right and despite their limited edition status, not because of it.

This is a close-up (the better to show the facial detailing) of a Lladró figurine. The English title of the piece is "The Little Tramp," but I kind of like the original Spanish, which would translate into English as "The Eternal Poet." Now, I happen to know something about Lladró, having myself literally written the book on it (Collecting Lladró, 2nd ed. Krause Publications, 2003), but I'd be the first to say that the sheer prolificacy of this manufacturer of fine porcelain means that buying decisions with an eye to future value have to be made with care. Legend has it this item was only produced for a short time because of a copyright dispute with the Chaplin estate.(photo by the author from her own collection.)

3. For investment sales appeal, pick categories with a track record.
Some folks (including one well-known pundit with his famous storage closet) are betting an awful lot of money on the long-term investment potential of late 20th century toys "in their original package." Many of these toys are promotional items for the film industry, their value inextricably chained to the fortunes of the films they represent. Would a buyer be better off saving his pennies and collecting even a few antique toys whose value is intrinsic and doesn't depend on their original packing materials? Probably.

4. Leave some room in it.
Know what you're buying and what it's worth. Sounds like basic commonsense, doesn't it? Yet, the trade has an unfortunate share of inventory bought too dear at auction. Just to get their money out of it, dealers have to price it in double and triple digit percentages above what it would ever be worth to an investing buyer. On the other hand, I've seen dealers get lucky with high-end items bought for peanuts at auction, then mark them up to within a nickel of any future value. Either way, the item loses its investment potential.

Of fine porcelain and finely hand-made, Lladró is not junk, and I fully expect it to appear among the prized antiques of the future. Here's a close-up of the figurine "Kittens in a Basket with Flowers" (my literal but descriptive translation from the Spanish), detailing Lladró's famous flowerwork — every leaf, petal, and stamen of which is separately applied, a labor-intensive process that tends to drive the retail price up. This item will retire from production at the end of this year, but it's been made since 1983 and, for much of its production life, retailed well in excess of $600, which means people have been buying it for years at that level. (I was lucky enough to buy this one on the secondary market at a fraction of its current retail value.) (photo by the author.)

5. Buy what you like, at the best value for the money, devil take the fads.
Hey, wait a minute, isn't that supposed to be advice for collectors? Well yes...But I've heard some dealers say the only way they can bear to part with their inventory is to buy things that just aren't their cup of tea so they won't be tempted to keep everything they buy. If the result of this philosophy is the preponderance of resin figures, plastic kitchenware and no-name bone china knickknacks that currently litter the antique malls, I'd just as soon dealers try selling what they actually like — you know, stuff they wouldn't be embarrassed to display in their own homes.

As for trying to capture the market in fads, consider Jadeite glass of the ‘50s and ‘60s. How much would you be willing to bet on this market's ability to sustain, on any long-term basis, Fire King's current, irrational, art glass prices? (Don't get me wrong. I have two different sets of it myself that I'd love to add to. But I'll be a monkey's aunt if I'll pay the prices I see on it today.)
As a dealer, your best insulation against being snookered by a fad is to buy what you like and at an attractive price. Why? Because after X years of working in the trade, you should be able to trust your own instinct enough to believe that if you like it, there are plenty of buyers out there who will like it, too.

Promoting your inventory for its investment potential

This article is not meant to suggest that dealers encourage people to invest in antiques, arts and high-end collectibles instead of investing in the stock market or buying a home for an investment.

You don't have to have a degree in accounting or certification as an investment banker to say that fine arts and antiques can be a solid element in a diversified portfolio of assets. And they're attractive not just for their monetary value but for the aesthetic enrichment they provide. While watching such assets appreciate in value, collectors can enjoy looking at something far more aesthetically appealing than electronic ticker tape.

As a dealer, you're certainly qualified to draw that conclusion. So what's wrong with using it as a selling point?

Peggy Whiteneck is a writer and collector living in East Randolph, VT. If you would like to suggest a topic she can address in her column, email her at allwrite@sover.net.

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