Buying on the Bandwagon… Or Off?

Short-term fads run hot before going cold. It’s as if we’re so enamored of something, and then we’re not. These night-and-day situations with fads bring to mind how some of us might spend money. There’s a difference between blowing mad money on the trinket of the day versus investing some real money in something of value, representing capital we want to protect. In that sense, numismatic items have traditionally proven to appreciate in value (with some exceptions, of course). Rare and high-demand numismatic pieces have brought record prices in the last several years.

Conversely, while buying rare coins might be considered by many to be an investment in something tangible – real capital assets, so to speak – there are others who might think of buying rare coins to be more of an “experience.” And that would follow suit with a trend we’re seeing more of in recent years – people spending money on life experiences, whether they be dining, entertainment, or travel… Or even the “experience” of buying and owning luxury goods, such as fancy homes, fast cars, ostentatious jewelry, designer clothing, or – yes – rare coins.

Experiences may not pay the bills, but for so many they’re essential for helping get the most out of life. For example, my wife and I had an absolute blast when we recently saw both the Eagles and Steely Dan in concert in Houston. The ticket prices were astronomical, and I could have bought a couple of nice coins for the same price as those tickets. I grew up listening to the Eagles and Steely Dan, and sadly both groups have lost founding members in recent years. This experience of getting to see both bands on stage (and they still sound great after all these years!) was fabulous. We are so happy we were able to enjoy that great time with friends. It was “worth it”!

What do you do then if you’re trying to get the most out of life and invest in some real capital? Ultimately, you can have your experiences and put something back for later, too. Striking a balance, while so difficult to do, can be the best of both worlds… You know – kind of like having your cake and eating it, too!

Just be careful when you’re trying to have the best of both worlds. Sometimes prime “opportunities” are really just fads – a term I dropped a few moments ago. So often, promoting an item is more about timing and popularity than about the merits of any actual value that item might hold. Remember Big Mouth Billy Bass, the wall-mounted sensation that hooked millions in 1999? The motion-detector sensor would trigger the artificial (but animated!) bass to sing songs like “Don’t Worry Be Happy” by Bobby McFerrin or “Take Me to the River” by Al Green.

It seems virtually everyone had to have a Big Mouth Billy Bass. Even Queen Elizabeth II reportedly had a Big Mouth Billy Bass displayed on the grand piano of Balmoral Castle! Can you imagine the looks that garnered? The first 20 times I heard the singing fish, I laughed heartily. Like myself, after hearing it more than 100 times, most of my fellow employees didn’t find it amusing anymore. Someone pulled out the batteries – more than once!

Big Mouth Billy Bass was a novelty item that brought pleasure and a few laughs to lots of people for a nominal price – no big deal. Besides, we need to laugh. Some will tell you laughing is the best medicine. But recognizing the difference between entertainment and value is confusing. What many people don’t recognize about their financial decisions is that much of what they do is like hopping on a popular bandwagon passing in the parade that day. The music, frivolity, and joy provided by the band on the wagon is great, but the band, parade, and amusement that day will be just a memory shortly.

I treasure my memories, but so many of my most cherished memories are inextricably connected to coins – many of which I still have. They hold both memories and value, which is a marriage of two very important things. Besides, I like memories that also represent tangible value.

Buying nice numismatic items shouldn’t be too easy. There are no bargains. That being said, an item needing a “sales pitch” is usually suspect right off the bat. Always be conscious of the difference between a rarity and a promotional item. Promotional items aren’t all bad, but maybe limit these purchases to your mad money and use your real money on rare coins.

I’ve been blessed with some great mentors in numismatics. While I won’t mention names, quite a few old-timers will recognize the sentiment if not the exact quote. Overheard more than once at coin shows over the decades when viewing wholesale dealer sales is this pithy saying: “Save the sales pitch, sonny – I invented it!”