Sunday, May 22, 2011

Knicks-knacks aren't investments

Marketing is a funny thing. It can convince people to buy things before they even realize they don’t want them, and, perhaps worse, it can lead people to believe that something barely worth what they pay is an “investment.”  

Americans, especially, have been caught up in these marketing schemes for knick-knacks and “collectibles;” we have bought into the concept of buying these things as “investments” with the expectation that we will someday sell them for a profit.

The worst culprits, according an article from “The Street” fittingly titled “9 Completely Worthless Collectibles,” include well-known (and perhaps beloved) items like Precious Moments, Beanie Babies, Cabbage Patch Kids, Thomas Kinkade prints, Norman Rockwell plates and Lladro statues – mostly items that have now come to symbolism “American kitsch.” I think all of us have been caught up in at least one of these brands, holding on to it with the belief that it was worth something. Even one purchase made with this assumption, however, is too much.

Many of these things are barely worth the packaging they came in, which happened because, when popularity increased, so did the producers’ appetite for income and thus so did production levels. I’m not sure if these companies lack a basic understanding of economics, but many of them drove themselves out of business. Stuff peddled as “limited edition” was, in actuality, the result of “unlimited” production. And, as our first economics class taught us, supply and demand dictates that as supply increases, the market value of demand does the opposite.

The moral of the story? Don’t put your money on something that isn’t a proven investment. Don’t take everybody else's word for it, and don’t buy into something just because your aunt owns a huge collection, you’re lured in by its doe eyes, or you like the catchy slogan (like Kinkade’s self-proclaimed status as the “Painter of Light.” He’s bankrupt now, by the way.)

Always do your research. And if you are going to buy yourself some kitsch to proudly display in your glass-faced cabinet, at least do it with the honest understanding that it’s probably not worth what you paid, and very unlikely worth more.

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