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Cashing in on collectibles
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July 9, 1999: 6:25 a.m. ET
Fads can render profits, but you may be better off keeping what you love
By Staff Writer Nicole Jacoby
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NEW YORK (CNNfn) - Beanie Babies, Furby and now Pokemon. At dizzying speeds, the crazes come and go, leaving many would-be collectors wondering where to turn next.
Armed with little more than speculation, an increasing number of novice collectors are hoping to cash in on the newest fads, but many specialists say they shouldn't bother.
"It's virtually impossible to make a lot of money (in collecting)," said Hugo Marsh, head of the toy department at Christie's in London. "The main income you are going to get is pleasure."
No-risk investments are a rarity in the volatile collectibles market, and Marsh and other experts overwhelmingly recommend collectors simply stick to what they love.
"It's nice to have money in the bank. But it is also nice to have things on shelves, be it robots or dolls," said Marsh.
A new national pastime?
Collecting has evolved into somewhat of a national pastime in recent years - thanks in part to a bullish U.S. economy, which has bolstered the disposable income of much of the population, and the advent of online auctioneers such as eBay (EBAY), which have made sought-after items ever more accessible.
The San Jose, Calif.-based Internet company also helped spark the collection mania by creating a much-needed network for these once neglected hobbyists.
Pre-eBay, collectors were dependent upon quarterly trade magazines and periodic newsletters for information on the latest trends. And flea markets, garage sales and auctions were the places to find prized items.
eBay and the many copycats that have since sprung up, including auction sites supported by Yahoo! and Amazon.com, have opened up lines of communications between collectors across the globe and have eliminated geographic boundaries that once may have limited trade.
The media frenzy surrounding eBay has also played an important role, spawning interest in collecting among those who before may not have considered it.
"The eBays and Amazons have really brought (collecting) to everyone's fingertips," said Michael Schwartz, director of entertainment memorabilia at Butterfield & Butterfield. "The information now available has peaked the interest and created an additional value."
Beyond the frenzy
Not surprisingly, many of the recent fads in collecting have been driven more by marketing than fundamentals, leaving some purists gritting their teeth.
"McDonald's and others have done a superb job creating a market in a new type of toy," concedes Marsh, referring to the Teeny Beanie Baby craze the fast-food chain has set off in recent years.
But whether Beanie Babies and other heavily-marketed items, such as "Star Wars" figures, will survive the hype and retain their value remains to be seen.
"A lot of people jump on these items while they're hot and can make a quick profit if they can read the trends," said Schwartz. "But where they'll be in five years, who knows?"
Determining true value
The value of a collectible, like any commodity, is largely determined by supply and demand.
Sometimes, as with Furbys or Tickle-Me Elmos, a reasonably generous supply will be outweighed by an extreme demand, pushing the value of the product higher. In other cases, the absolute rarity of an item will determine its price. A 1932 movie poster from The Mummy, for instance, brought in more than $400,000 in 1997 in part because it was one of only two existing copies.
But other factors also came into play.
"It also happened to be an amazingly beautiful poster, that added to the piece. And the condition was pristine," Schwartz said.
Aesthetics, condition and even timing can determine the price of a collectible.
Movie critic Gene Siskel cashed in on John Travolta's 1994 comeback by putting the actor's white Saturday Night fever disco suit up for auction shortly after the release of the cult film Pulp Fiction.
"The timing in that particular case was extremely critical," said Schwartz. Siskel was able to garner a bid of more than $140,000, making Travolta's disco digs among the most expensive costumes in movie history.
Online auctioneer eBay, too, has found that collector interest in -- and the price of -- items fluctuates on the basis of specific events. Star Wars items, for instance, were particularly in demand in the months preceding the release of George Lucas' long-awaited prequel "The Phantom Menace." And Elvis paraphernalia tends to be especially popular in the weeks ahead of the anniversary of the rock-and-roll king's death.
Sadly, so-called "good" timing does often stem from less-than-positive events. The death of a celebrity often brings about renewed interest in associated accouterments.
Predicting the unpredictable
Sometimes, gauging the value of a particular item is beyond even a specialist's skills.
"You can make an educated estimate based on information and based on experience, but anything can happen in an auction situation," said Eric Alberta, assistant vice president of the collectibles department at Sotheby's.
Take producer David O. Selznick's Best Picture Academy Award for "Gone with The Wind." The much-coveted Oscar was ultimately sold for more than $1.5 million, even though Sotheby's had estimated the trophy's price tag was unlikely to exceed $300,000.
"A lot is simply wrapped up in how much somebody wants (an item)," said Alberta. The Selznick Oscar happened to have a "potent combination."
"It was unusual on the one hand, and yet so recognizable on the other," Alberta said.
Familiarity can be an important characteristic, since ironically, items can sometimes be too rare to have value.
"Collectors get a buzz out of finding things," said Marsh. So if collectors have never heard of a particular toy or movie, they are less likely to hunt it down or feel that tug of satisfaction when they stumble upon it at an estate sale.
Predicting the next hot trend
Iconographic Hollywood memorabilia, including movie posters and costumes as well as television and rock-and-roll memorabilia, have all seen renewed interest of late, as baby boomers come of age and spend their newfound wealth on these nostalgia items.
But collectors shouldn't limit themselves to these items, say specialists.
"If you only collect what's 'hot,' then you are stuck with it when it goes out of fashion. You'll have something you didn't like to begin with," said Alberta. "It just doesn't make sense."
There are other disadvantages as well. Collectors who are dispassionate about what they collect are less likely to do their research and won't acquire the knowledge or contacts necessary to build a strong collection.
Other tidbits of advice offered by auction house aficionados:
 Don't be too broad. A collection tends to have more value if it is focused. And one good piece tends to be better than five of lesser quality.
Do your research and try to deal only with reputable dealers. Many novice collectors abandon their hobby after getting stung by unscrupulous retailers.
Finally, remember that when it comes to collecting, anything goes.
"Collecting knows no boundaries. Pez, popsicle sticks, Hawaiian shirts, vintage can openers… it's amazing what people will collect," said Schwartz. "Whatever strikes a chord..." 
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