One piece of advice that investors hear again and again is to always buy the best quality investment available. This platitude is particularly common in the stock market. Pundits will often recommend best in breed companies with strong business models and good management, like Apple, Coca Cola or Google. These types of companies have traditionally given shareholders consistently high returns over many decades. The reasoning behind this "buy the best of the best" investment strategy is that superlative quality investments should ultimately produce superior returns.
This idea of buying quality also applies to alternative assets like art and antiques. It is accepted wisdom that high end antiques tend to appreciate at a far more rapid pace than lower quality antiques. In fact, low quality or damaged antiques may not appreciate at all over time. Instead, they usually either stagnate in value or depreciate, due to their undesirable characteristics.
But this concept of buying high end antiques can be taken one step further. Instead of settling for just high quality antiques, you can also apply the "best of the best" doctrine. Now, most people equate ultra high end antiques with jet-setting tycoons placing million dollar bids at a Sotheby's or Christie's auction. But this is largely a myth. In some niches of the antique market, prices are low enough that even average people can successfully invest in the very highest quality pieces.
In fact, there are a surprising number of antique categories where the finest examples available only cost between $500 and $1,000. Indian silver rupee coins from the Mughal Empire, Mid-Century fountain pens, vintage cigarette holders and European art medals are just a few examples of investment grade antiques that qualify.
There are actually far greater numbers of ultra high end antiques accessible than those few categories I listed above. And sometimes, shockingly, these best of the best antiques don't even cross the $500 mark! But how can this be?
To put it simply, alternative asset markets are highly inefficient. Unlike the traditional securities markets, where computer trading algorithms constantly search global exchanges for bargains, few people delve into the intricacies of investment quality antiques. Therefore, it is a largely unexplored and underrated asset class today.
This means that tangible assets are, by default, left to the bold and adventurous investor. In contrast, the rest of the world crowds into the increasingly precarious stock and bond markets. These conventional investors hope against hope that another financial crisis doesn't eviscerate them before retirement arrives. Personally, I don't see the appeal of most traditional financial assets when fine art and antiques offer the savvy investor so much more.
Of course, the very highest tier of some categories of antiques can be prohibitively expensive. For example, the very finest investment grade jewelry commonly sells for millions, if not tens of millions, of dollars. Similarly, the very best ancient Greek coins can trade for anywhere from a few tens of thousands of dollars to millions of dollars. So, in order to make the best of the best antique investing strategy work, you must be willing to explore more obscure niches. But the monetary payoff for investing in high end antiques can be significant.
It is amazing to live in an age where a person can purchase a museum quality antique for the same amount of money as the average monthly car payment (about $500 in 2017). These unparalleled high end antiques drip with precious metals, glittering gemstones and exotic hardwoods. Historic and enticing, these luxury items have endured as objects of desire for hundreds of years already, and will undoubtedly continue to do so for centuries more to come.
