Collectible Investments for the High Net Worth Investor (eBook)

Front cover 1
Half title page 2
Title page 4
Copyright page 5
Table of contents 6
Preface 8
List of Contributors 12
Part I: General Themes 16
Chapter 1: The Role of High Net Worth Investment Managers in Collectible Investing for Their Clients 18
High Net Worth Managers and Family Offices 18
The Nature of Relationships between Client and Manager 19
Investment Methods for Collectibles Favored by Managers 22
Incorporating Art Indexes into an Investment Portfolio 25
Tools Used for Building High Net Worth Portfolios 36
High Net Worth Investment Managers on the Pros and Cons of Putting Collectibles into Client Portfolios 42
The Positives of Collectible Investments 44
Conclusion 45
Chapter 2: The Neuropsychology of the Collector 46
Introduction 46
The Modern Story: Neuroeconomics Meets Neurophysiology 47
Before Neuroeconomics: Psychological Reinforcers 51
Collecting Gone Awry 53
Special Situations 56
The High Net Worth Individual 58
Conclusion 63
References 64
Chapter 3: Collecting and Behavioral Finance 68
Introduction 68
A Brief Overview of Behavioral Finance 71
Known Behavioral Biases and Effects 72
A Personal Confession 78
A Wonderful Book (by Philip Mould) 79
Conclusion 81
References 83
Chapter 4: Collecting as Luxury Consumption: Effects on Individuals and Households 88
Introduction 88
The Nature of Collecting 89
Problems of Collecting 90
The Benefits of Collecting 95
Conclusions 96
References 97
Part II: Major Collectibles Relatedto Investing 100
Chapter 5: An Overview of the Art Market 102
Introduction 102
How Are Works of Art Different from Stocks, Bonds, and Commodities? 103
What Is the Size of the Art Economy? 104
What Constitutes a Work of Art? 105
What Constitutes “Investible Art”? 107
What Are the Components of Value? 110
How Does the Principle of Supply and Demand Operate in the Art Market? 116
Who Are the Buyers, Sellers, and Intermediaries? 117
What Transaction Costs Are Associated with Art? 124
How Is Art Taxed? 126
Can the Financial Performance of the Art Market Be Measured? 127
Which Strategies Might Be Successful for Art Investments? 129
Conclusion 132
References 132
Chapter 6: Art as a Financial Investment 134
Data and Methodology 135
Risk and Return 144
Portfolio Diversification 154
Summary and Conclusions 160
References 162
Index Constituents 163
General All Art 163
Old Masters 163
European Impressionists 164
Modern Artists 164
Contemporary Artists 165
Chapter 7: Art Investing and Wealth Accumulation 166
Introduction 166
Literature Review 167
The Model 168
Data 172
Empirical Analysis 174
Conclusion 183
References 186
Art Market Research Index Components 187
Old Masters 100 Index 187
European Impressionists 187
Contemporary Art 100 Index 188
20th-Century Indian Painting Index 188
Contemporary Chinese Index 189
Chapter 8: Investing in Rare Books 190
Introduction 190
Why Collect? 191
Who Collects? 192
Books as Collectibles 193
The Market for Books 197
Return and Risk of Book Collecting 200
Conclusion 207
Chapter 9: Maps as Collectibles 208
Introduction 208
Similarities to Books and Prints 209
Markets 210
Prices 213
Cash Flows 215
Transaction Costs 216
Primary Valuation Factors 219
Other Factors Affecting Valuation 221
Price Appreciation 224
Risks and Correlations 226
Conclusion 228
References 229
Chapter 10: Collecting and Investing in Stamps 230
Introduction 230
A Very Brief History of Philately 230
The Economics of Philately 231
The Psychology of Philately 233
The Finance of Philately 233
Setting Up a Hedge Fund to Provide Stamps for Clients 241
Conclusion 242
References 242
The Mathematics of Building a Stamp Index 243
Chapter 11: Wine: An Alternative Investment 246
Introduction 246
Chapter 12: Bordeaux Wine Vintage Quality and the Weather 248
Vineyards 249
Vineyards and Vintages 249
Real Rate of Return to Holding Bordeaux Wine 250
California’s Climate for Growing Grapes 252
Vintages and the Weather 252
Market Inefficiency 256
The Response of the Wine Press 256
Conclusion 259
Additional Reading 259
Chapter 13: Collecting Classic Cars 260
The Development of Classic Car Collecting 260
Classic Car Collectors 264
Cars as the Collectible Investment 264
Finding Classic Cars 265
Tips for Buying the Car of Your Dreams 268
Conclusion 270
Index 272