Taxes and Treasure, Caesar and Sparrow

As you can see, it has been quite some time since my last post.  I 've travelled far and wide since but that can wait for later posts.

I have truly realized the importance of "giving unto Caesar that which is Caesar 's", in other words filing one 's taxes.  Even the wee folk have to pay taxes, NO ONE ESCAPES.  Filing them, even this late in the year, has left me feeling lighter not only in the wallet but on the shoulders as well.

Now on to new ventures.  I look forward to joining Captain Jack Sparrow on his latest adventure, in Pirates of the Caribbean 4, this Friday evening.  Nothing adds to this leprechaun 's viewing pleasure than enjoying a rollicking adventure with a good pint.  If you happen to be the first to spot me, by all means join me, I will have a cold one waiting for you.

If your seating arrangements restrict you from making introductions but you manage to spy what my favourite pint (for movies) is, just email that information to me and I would be happy to send you a pint.

Stay tuned for my beer enhanced thoughts upon the movie next week.

Collecting for Profit (Fun is the Prerequisite)

I promised to write this article discussing the joys and challenges of investing in collectibles for an acquaintance over a year ago.  She runs a collectible store and was telling me about the sad case of a customer who bought a large quantity of a particular fad item only to have taken substantial losses.

I am not going to decry the merits of investing in collectibles nor am I going to get into the mathematics of modeling collectibles as investments in this article.  If one wishes to purchase collectibles for the purposes of investing, keep in mind that there isn‘t really an open market for collectibles.  Many would argue that there is given the numbers who are engaged in this hobby or business.  What I mean by open market is a market that has liquidity.  If you compare collectibles to the stock market of which I am far more familiar, one can see that there is no market maker in the collectibles arena.  That is, there is no guarantee of a buyer OR a seller of a particular collectible.  Where as in the stock market, there is always a price for a stock, although that price may be zero.  Also, there are storage and maintenance issues.  Although, stocks can be held in certificate form, the vast majority of shares are traded on account.  In general, one purchases a collectible and stores it at home.  This means the collectible takes up space and undergoes the same physical risks (fire, flood, theft) to which the house is subject.  On top of that, selling actually involves the physical delivery of the item ie shipping issues.

That being said, I did formulate an actual strategy and some tactics on how to invest in collectibles.  By strategy, I mean HOW to invest, not what or when to do it.  The strategy resembles a well known one called dollar cost averaging.  One should invest a fixed amount at regular intervals.  What this does is insure that you are not putting too much money in at any one time AND it allows some measure of diversification.  Following this strategy will prevent buying a thousand dollars worthy of one hockey card only to have the player become the most reviled one in the league.  It also increases the likelihood that you might get the rookie card of the MVP of all time. 

Keep in mind, that collectibles should not form the core of your investment strategy, just an aspect of it AND a fun aspect of it at that.  Buy something that you will enjoy keeping in case NO ONE is willing to take it off your hands.  You are less likely to lose interest in it and that increases the chance that you will have it years from now when its value may skyrocket.  Also, keep in mind why you purchased it.  This often happens with stock investors, where they fall in love with stock and feel that it will always appreciate in value.  If you are purchasing the collectible or purposes of investment and price appreciation, develop an educated estimate of what a REASONABLE price appreciation might be.  Compare similar collectibles and develop a comfortable idea of what an average return might be.  Keep in mind that average means that you can expect a 50% chance of beating it AND a 50% chance of NOT beating it.  Also, try to find out the size of possible losses.  As a rule of thumb, factor in a possible 100% loss.

I will leave you with the most important question to ask when embarking on the path of investing in collectibles.  “Are you a collector or an investor?”  The goal of the investor is to get a positive return from their investments.  The goal of a collector is to have a collection that they cherish.  The collector cherishes both the items that have appreciated in value and those that have not AND the amount appreciated or depreciated have little bearing on how cherished they are.  Once you have answered that question, we can begin exploring the finer tactics in collecting for investing.

To Find or Seek?

So it was a toss up, say something worth saying or you give you chance to find some leprechaun treasure.  So I decided that while you were seeking the treasure, I would try to find something to write about.

Since I have always had a fondness for Bare Naked Ladies, as well as millions of dollars, this will be the inspiration for the first bauble from my treasure pot.

Please tell me what YOU would do with a million dollars and you can have your pick from the treasure pot that I ‘ve buried somewhere in my cellar.