Building a Collection During the Recession

Minimalism has established nostalgic materialism as a cash grab, but perhaps now is the time to build a collection.

Werner Muensterberger posited in his book Collecting: An Unruly Passion in a reductive fashion the obsessions of collectors stems from an inability to separate something which “elicits feelings” and the item’s lack of “life”. He further expounds this shortcoming is a product of a trauma, usually in childhood, where one seeks to convert “passive irritation” into “challenge and accomplishment”. One museum curator and avid collector called Muensterberger “psycho babble … [which fails to recognize] collecting is a happy, positive, and enriching experience.” Whether you end up as a Michael Steinhardt or a Rudolph II collecting is certainly a hobby with staying power and no shame should be a part of building a collection. As for Muensterberger, one of his stone heads he collected from Sierra Leone, recently sold for the price of a nice home in the Midwest.

We are in a recession. I am not going to argue the semantics with people who juggle dictionary definitions based on political pendulums. Unlike previous recessions in most young people’s lives cash is a relatively attractive asset class (Cash? Really?). I know it’s not my first choice either. Dollar Milkshake Theory is basically a meme to me, but the relative strength of the DXY because Powell took action unafraid, but admirably less recklessly than Volcker. If the past is anything to go by this will be a temporary strength, so my strategy is to acquire collectibles. People often need to liquidate their collections during economic downturns and this is where relative dollar strength will be a great weapon to acquire something.

Jeff Bezos said last week to “keep some dry powder on hand” for a potentially worsening situation. A picture is worth a thousand words – prices in collectibles are declining in a similar fashion to bitcoin, because the puddle deep market depth of collectibles has the most stagnant liquidity of almost any asset class short of a 10 year CD. While I don’t think we have bottomed out I maintain a healthy amount of skepticism regarding when a billionaire gives the plebians financial advice. I believe a DCA into collectibles (1920s baseball cards, uranium glass, etc.) starting now for those who can afford it is a prudent strategy for those who believe something more than dead presidents on fiber or a federal reserve stablecoin cryptocurrency is a good store of value.

Picking what you collect in is almost as important as when you start collecting. Pokemon, Yugioh, and books resonate with me, but what you collect should not just be an investment, but a personal appeal to your own taste. Anselm Rothschild collected a very small collection of art in Austria during years where the art was “deemed worthless”. As a contemporary comparison I still believe 99.9% of NFTs are worthless, but there are perhaps one or two diamonds in the mountain of trash. See you on Antique Roadshow space cowboys.

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There are a lot of places to "park" money. I feel some people get so laser focused on single asset class with either a willful ignorance or just ignorance. I hope it is the latter. The best free lunch is picking from all the baskets, I'm paraphrasing some billionaire who wants to eat your lunch so let's just dig into this already.