The Contrarian View. There is value in understanding why collectibles go up. Indeed there are times when some collectibles do go up in value faster then the market in general. My research has led me to a lot of material on art with well documented prices etc. I can not prove it, but I strongly suspect that you could substitute the word "collectibles" (or "coins" or "stamps", or "political buttons" or "any-damn-thing-you-collect" for the word '"art" in the following and find things to learn. Several (rather dry) articles I read suggest that one big reason is that the world has seen a significant increase in wealth since the end of the cold-war. This money needs someplace to go and people -most particularly RICH people- buy art -if only to impress the other rich guy / gal. As an example, Ireland has an increasingly well educated population that speaks English, (but hoist a few with and Irishman and see if you can understand word one -but this is another story), and sits closer to America then any other European country. Finally, it has managed to keep itself out of the charitable French organization deceptively named called the "European Union". Ireland has been kicking economic butt sense the mid 80's and the value of its art has been tracking right along. Clearly a strong local economy is good for the home-town artists. Unless it isn't. A weak local economy may have its effect too. Wealthy (and presumably smart) Japanese investors saw the difficulties that their economy would face in the late 90's and seeking to get their wealthy out of Japan went ga-ga for the impressionists. Surprise! The impressionists went up like mad.* Taxes are another cause of the art-appreciation effect. One analyst suggests that in America, rolling back the punitive top tax rates in the 1970s goes a long way to explaining why art did so well in the 1980s. Interested in investing in art? What side d'ya think will win the next election? Sometimes taxes and the local economy get together and really screw things up. Sweden had a hot economy in the 80's and comparatively relaxed tax regulations. This was followed by a retightening of taxes in the 90's -at about the same time the world's art markets were "correcting." If world-wide art prices were correcting, Scandinavian art -up smartly in the 80's- have been "languishing" ever sense. ("Languishing" is a technical investment term. Means that your kids do State U. after all, rather then Ivy-League.) To the extent that the above is true -and applies to whatever you collect -and I think it is and does- you would do better to study the world's economy and politics then the World Gazetteer of Collectible Stamps. Ask yourself if you are smarter then the guy you are buying it from, the guy who has owned if these last few years and might reasonably be expected to have been reading up on it more carefully then you have. (If he died recently and you're buying it from his kids -and a spoiled rich lot they are- you can skip this question.) If you are buying from a dealer, ask your self how much it must appreciate before you have made back his commission or mark-up. More on dealers shortly. Finally, if you are still telling yourself that your collection will finance your retirement, ponder this next question. The Sum of the Parts.... Is a complete collection more valuable then the sum of its parts? I set out to answer this question to my own satisfaction and am not at all sure I have succeeded, so I leave it to you to chew on. To put it another way -What might be the value of all the Major League Baseball player's bubble gum cards for a given year when compared to the value of all the necessary cards if purchased one at a time from various sources? Go down to the Chevy dealership and buy a car and you will pay one price. Buy it one part at a time -factory originals -from the same dealership's parts-department -and exactly the part that some book says you need- and it will cost you quite a bit more. Paper-work and handling charges and all, and you still have to put it together. Why then, do dedicated collectors work so hard to finish their collection? (And I know that some collections are never finished.) To some degree, they are working hard to get a complete Chevy that is goes down in value the very moment it is complete. One of the answers has to do with the handling charges and paperwork. E-Bay and Craig's List not-with-standing, it is the dealers that make it all happen, and dealers have to make a profit. In some ways, the question I am really asking is, "How much value is added to the world when all -or most -or even an awful lot of the X's in the world are gathered up in one place and labeled?" Certainly some value is created. Take a bunch of rocks, and dead bugs, and dried out plants, hire a couple of PhD's to sort and label them and you have a natural history museum. Truth to tell, I haven't been to such a place in years, but loved -absolutely LOVED the field trips me' school-mates & I took to the Denver Museum of Natural History when I was little. So the best answer I can come up with as to why collector's work so hard to assemble stuff that is likely to be less valuable then it cost to assemble can be answered in two words. It's fun. And this is an altogether good and sufficient answer.

CONCLUSION: James Sproule for The Art Newspaper puts it so very well that I will lift most of what he says, mangle some of it and flat-out get the rest of it wrong. But it makes sense to me, and this is all the matters. Mr. Sproule says suggests that market moves are a consequence of people making mistakes, correcting those mistakes, and trying not to make them again -or at least to make new mistakes. The problem comes when enough people are making similar mistakes for long enough. At that point, what in retrospect is clearly a mistake, can look like a whole new trend and rationales can be dreamt up to support why the world has changed. One could argue that when a thing gets hot -it attracts money and interest -and this makes it hotter and this attracts more money and more people and this attracts.... This is nothing more or less then a bubble market. Financial markets are certainly subject to such bubbles, but financial investors can rely on reassuring--if at times [wildly] inaccurate--economic models, as what drives prices Not so for art collectors. Financial investors often lament that their investments are undervalued by the wider market. Similarly, investors in art have to accept that public taste is fickle, and not everyone's taste is going to be as good as their own. He closes so well that I type here in bold and italic: I don't wish to suggest that collection is a bad investment -but I do stress that it is NOT an investment at all.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ * The Japanese were also buying American golf-courses like mad then. Many have been sold at horrible losses. They bought one in Carmel or Pebble Beach or some-such-place where you and I couldn't afford the green fees. Paid a ridiculous amount and a few years later, they sold it back for about one-tenth their cost to the SAME PEOPLE THEY BOUGHT IT FROM. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~