The E-Sylum:  Volume 7, Number 36, September 5, 2004, Article 19

INVESTING IN COINS AND COLLECTIBLES

  The August 29, 2004 issue of The New York Times had  an
  interesting article about investing in art and collectibles such
  as coins.  Professor Michael A. Moses, who teaches
  management at New York University, spent four years
  studying the value of artwork, and has created "an index that
  tracks the value of art sold, mainly by the Sotheby's and
  Christie's auction houses in New York. [The] index includes
  more than 13,000 transactions going back to 1875."

  He and his coauthor "published a report on the index in the
  American Economic Review [in 2002]. By their calculations,
  the value of art has kept pace with the Standard & Poor's
  500-stock index over the last 50 years, though art's returns
  have zigzagged more. "For people who have a 20- to 30-
  year horizon, I have no problem talking about art as an
  investment," Professor Moses said.

  His view is not an orthodox one. Other people with knowledge
  of financial matters and collectibles are far less convinced of
  the investment potential of art, antiques, fine wine and rare
  coins."

  "Stocks and bonds go up in value because they're priced at
  the present value of their future cash flows," Professor Guay
  said. "An antique isn't going to generate any earnings or throw
  off any cash. Stocks and bonds do. The only way you're
  going to make money on an antique is selling it to someone
  who likes it more than you do."

  "There are only so many buyers for a given set of works,
  and they're not all sitting ready to spend money on you,"

  "When dealers sell such a work, they typically get a bigger
  cut than brokers who sell stocks and bonds, said Jeffrey E.
  Daniher, a Cincinnati financial planner and coin collector.
  Markets for collectibles tend to be small and inefficient, he
  said, and dealers have often incurred high costs for storage
  and insurance they want to pass along to buyers."

  On the other hand:  "When my WorldCom stock went sour, I
  didn't have anything but a piece of paper," Dr. Brager said.
  "If the market for wine takes a downturn, I've still got the
  wine to drink."

  To read the full article, see:  Full Stroy
  (Registration required)

  Wayne Homren, Editor

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