(Business 2.0) – Just imagine that in 1998 you ignored your stockbroker's recommendation to buy Level3, Inktomi, and Theglobe.com. Instead you blew $50,000 in hard-earned cash on a 1959 Gibson Les Paul Standard electric guitar--the one you always wanted, with the sunburst finish. Today you'd have an investment worth $150,000--and you'd probably still be taking your broker's calls.

Not many investments--financial or collectible--would have tripled your money during the past five years, but vintage guitars are hot. For that we can thank the baby boomers, who grooved on the wail of Jimi Hendrix's Fender Stratocaster and the twang of Keith Richards's Fender Telecaster and who now want to buy the icons of their youth. "Fine guitars are functional art," says Gil Hembree, coauthor of the enthusiasts' bible, The Official Vintage Guitar Price Guide 2003, and a collector himself for some 40 years. America invented jazz, blues, and rock, and vintage guitars, he says, "made the tones of popular American culture. People respect and love the instruments that create those tones, and that creates demand."

That demand has recently been driving prices up faster than Eddie Van Halen's crazed riffing on "Eruption." Last year Vintage Guitar magazine's index of 27 models built between 1950 and 1964 had its best year of the past 10, rising more than 20 percent. "I keep buying back guitars, paying more than I sold them for," says Steve Clemente, owner of Sunrise Guitars in Montgomery, N.Y. "I tell my customers, 'I'll give you back your purchase price tomorrow in a trade. In a year, I'll give it back to you in cash.'" Adds Tim Page, co-owner of Buffalo Bros. Guitars in Carlsbad, Calif., "Show me a stockbroker who'll do that for your investments and I'll move my portfolio today."

The other side of the pricing equation in any collectibles market--scarcity--has also been working in guitar collectors' favor. Naturally, instruments played by real rock stars tend to see the fastest appreciation and fetch the highest prices. Two custom-built guitars played by the Grateful Dead's Jerry Garcia, for example, sold for a record $957,500 and $789,500 last year. But collectible instruments of more humble provenance are also in short supply because relatively few great guitars were ever made (and most of those were played hard, beaten up, modified, or taken off to Japan in the 1980s by yen-rich collectors). Though electric guitars were invented in the 1930s, early models were plagued by an annoying hum when played at high volume. It wasn't until the '50s, when Gibson figured out how to double-coil the wires to cancel the hum, that the instrument finally took on its distinctive sound. Once Leo Fender and rival Ted McCarty at Gibson married wood, electronics, and plastic in dramatic sweeping shapes, music was never the same again.

But even during this golden age, the guitars were produced in limited quantities. Gibson, for instance, built just 643 sunburst Les Pauls--which Hembree calls "the American Stradivarius"--in 1959, when they sold for $260 each. And by the mid-'60s, largely because both Gibson and Fender tried to expand too quickly, quality started to slip. Many collectors are wary of anything made after 1965, leaving few true classics still available to U.S. investors.

If you're interested in putting your money where your (six) heartstrings are, you're best off buying from established dealers who offer an approval return period. Don't expect any steals from them, but the peace of mind will be worth the extra cost. (Besides, says Eliot Michael, owner of Rumble Seat Music in Ithaca, N.Y., dealer profit margins usually run only about 10 to 20 percent.) While reputable dealers do sell on the Internet, be careful of apparent bargains on eBay: Some of these guitars have replacement parts or refinished wood, both of which reduce value. Others may be outright forgeries, made with "aged plastic" parts and passed off as original.

Again, if peace of mind is important, you should stick with the "blue chips"--pre-1965 Les Pauls, Strats, and Teles--because they are most likely to hold their value. But $15,000 for an ax may be more than most beginners are willing to spend. If that's your situation, Hembree suggests looking at instruments like the Gibson ES-330, though he cautions that the narrower-neck models of the late 1960s are less likely to appreciate. Recent Paul Reed Smith guitars are also gaining in popularity, and some can still sell for as little as $1,700.

As is always the case with hot collectibles, your biggest risk is that the item will go out of style without warning. Musical tastes change: The 1980s, when disco ruled and synthesizers pushed guitars off the stage, were a dark time for guitar collectors.

But today's teens still get excited about the guitar greats of yore, especially Hendrix, Jeff Beck, and Eric Clapton. They're also listening to rock bands--from the Wallflowers and the Foo Fighters to new garage bands like the Vines and the Hives--that put classic guitars front and center. (Wallflowers frontman Jakob Dylan played his vintage cherry-finish Gibson ES-330 at this year's Super Bowl.) The kids playing rock guitar today--or dreaming of doing so--could be the vintage Stratocaster investors of tomorrow. That's the kind of leading indicator collectors want to see. --MARC BERLEY