I thought this was an insightful video on the difference between collecting and investing. The host of the YouTube channel “Reserved Investments” has been a collector and investor in a variety of items since he was a kid.
The YouTube channel discusses collectibles and the market surrounding these items. He covers a wide range of collectible types and goes in-depth to understand what makes items valuable. One of his goals is to help people understanding speculation, limited markets, expanded markets, and how to allocate assets to create an individual portfolio.
In the video below, the host describes why he believes the collectible market is currently being dominated by investors and speculators rather than collectors. One of the anecdotes he shares is a recent transaction in the collector coin market. A trusted coin dealer who he’s been doing business with for some time now can’t even make a return phone call to him regarding a recent purchase. The dealer is too busy handling large orders coming in from investors. He explains how the experienced dealer comments that “it’s happening again,” meaning that the market is flooding with activity. For people who’ve been through three or four of five bubbles, the signs are usually similar going up, and they know lots of pain awaits on the other side.
He also explains that just because the market is currently an investor driven market doesn’t particularly mean that it’s a sophisticated market. An investor-driven market includes a variety of participants such as market manipulators, speculators, and even the highest net worth people in the world who can pay almost any price for a given item.
One of his messages is to be very careful in these markets where the activity is hot, and prices are rising rapidly. He discusses market manipulators and how prices can be skewed to take advantage of others. He also brings up the fact that market movers with enormous financial resources can influence other people to join along and overpay. These less-sophisticated buyers with much fewer resources may have to sell quickly if and when their financial situation takes even the slightest turn.