By DAVID GROSSBERG
Some people pay attention to football scores. Some people watch the weather. I watch the Dow Jones Industrial Average. When Lehman Brothers stock fell 45 percent last September, it felt like that moment when the roller coaster has been chugging slowly, upward, then crests a peak and starts what feels like a drop into space. The stock market continued its downward plunge. Yet when I looked at the historical documents hanging on my walls, I couldn’t escape the realization that my Abraham Lincoln-signed commission has outperformed my mutual funds!
Even though I was pleased that my autographs may have held their value, it bothered me to think of them as an investment. I have purchased my collection over the last 18 years out of a passion for history, not for investment reasons. In fact, most seasoned autograph collectors and dealers will tell you, “Buy what you love. Don’t buy for investment purposes.” With the exception of some very high-end, quality content items, this axiom is still good advice.
Still, the fact that Lincoln’s John Hancock outperformed the Dow made me want to understand the relationship between economic downturns and collectible values. While the economy has been unpredictable, the views of veteran autograph dealers and auction houses were fairly consistent.
Steven Raab of The Raab Collection told me, “During the Great Depression, prices went down, though to a lesser degree than other commodities. The desire to collect autographs is a strong one.” He added that “As for recent recessions generally, they have had minimal impact, with some temporary reduction in sales for some dealers and little difference at all for others.” Raab said that 2008 was a very strong year, but that it was still too early to tell how 2009 will fare.
Chris Jaeckel is the proprietor of Walter R. Benjamin Autographs, a firm started by his grandfather over a century ago. The company does not have conclusive documentation of how the autograph market fared during the Great Depression, but Jaeckel did recollect hearing that during that time sales were off. “My grandfather’s brothers helped him through some tough times. How long it lasted or the extent to which business dropped off, I do not know.”
Collectibles have a magnetic draw, even during depressed times—the same reference made earlier by Raab. In an article on the Auction Rebel website about how a recession affects an eBay business, Gary Hendrickson writes, “To a large degree, people make spending and buying decisions based largely on what makes them feel good, and not necessarily on what’s best for their financial well being. Even in good economic times, collectors regularly spend their money on things that make them feel good, not based on sound financial decisions.” The author goes on to recall how buyers rationalize their purchasing decision with statements like “Well, we can always eat hot dogs for two weeks.”
If you are one of those folks who would give up filet mignon for that must-have item, then the theory of buy low, sell dear might apply. In non-recessionary times, the prices of quality, in-demand autographs have steadily increased over time. It is important, however, to realize that this is not an across-the-board statement. Hoarding Brady Bunch signed photos will not bring you the same rewards as high-quality Civil War letters.
Steven Raab has an informative website (www.raabcollection.com) that addresses the “autographs as investments” question. The most recent data (2002) reveals that the best historical autographs experienced extraordinary increases in value as compared to other investments, and great scientific and literary autographs also had a fine track record, according to Raab. More routine letters and documents did not experience as large an increase.
Autograph houses provide an up-to-the-minute pulse on how a market is doing. Bill Panagopulos of Alexander Autographs reported that “Examining the results of our last auction, and those of our colleagues in the trade, we’ve seen that content material—that is letters and documents that have something very significant to say, or that describe crucial events in history, are tending to bring continually higher prices, while very routine material has only maintained previous price levels.” Panagopulos also noted that they have witnessed a decrease in bidders both from collectors and dealers.
“A careful buyer, playing the many auctions out there, has more opportunity to purchase great material with less competition and at lower prices than at any time in recent memory,” he added.
If you are speculating you need knowledge, discipline and patience.
• Your knowledge will allow you to determine both authenticity and salability. If an item wasn’t in demand before the economic downturn—but you can buy it for a really low price—guess what, it still won’t be in demand when the economy turns up.
• Employ discipline to stay focused. If your expertise is in the autographs of royalty, don’t stray into literary figures.
• Patience implies that you might have to hold on to an item until the market accelerates. Make sure your cash liquidity allows you to hold on to the item for the long-term without jeopardizing your mortgage payment in the short-term.
Chris Coover, of Christie’s, is a manuscript veteran of 30 years. He has seen the many ups and downs that the free market has to offer. Coover told me that this recession definitely offers many opportunities for the smart, knowledgeable collector. The recession, rather like a forest fire, clears the underbrush and dry tinder, so that new seedlings, new collections, can germinate.
Alexander Graham Bell once said, “Sometimes we stare so long at a door that is closing [the recession] that we see too late the one that is open.” Our current economic situation presents opportunities that one might not have found during more robust times. Take advantage!
