From the guy who told you to buy heartland real estate in 2016, I've got another long-term investment idea I think you should consider. Investing in rare books and various types of memorabilia with autographs. Not only can investing in collectibles be lucrative, but it's also a ton of fun as well.
For example, I have been a collector of rare Chinese coins since I studied abroad in China in 1997. In fact, there's a possibility the rare Chinese coins I purchased in 1997 are now worth big bucks!
Back in 1997, I was a foreign exchange student in China. The country was just opening up and I had a fascination with the warring states period between 475-221 BC and the various dynasties.
As a result, I bought all the rarest coins I could find. Initially, some of them were fakes. But over several months of intense research and discussion, I began to recognize the real coins from the fake ones. Now, I have a full booklet full of rare coins from every dynasty and every warring states period.
And one of the reasons why I believe my Chinese coin collection could be worth a lot is because I saw several of my most prized pieces at the British Museum in London in 2016! You don't put common goods in museums behind bullet-proof glass. Six years later, they are surely worth more.
Collectibles As An Investment
The reason why I enjoy investing in collectibles is that they are tangible objects that can be enjoyed. It's the same thing with investing in real estate. If you can enjoy your investment and then sell it for a potential profit years down the road, that's a huge win.
During my Chinese coin collecting phase, I purchased books to learn about Chinese coins and their history. I spoke to other collectors and dealers to gain more insights as well. Then I methodically went to build my collection for every dynasty. It was so much fun! And now, for them to be worth a small fortune feels even better.
I used to collect fine watches as well. Watches such as the stainless steel Rolex Daytona can sell for large markups because they are hard to come by. You need to be a long-time purchaser of watches for dealers to even offer you the opportunity to buy. But investing in luxury watches has a high hurdle rate in the tens of thousands. Therefore, I stopped.
However, investing in other collectibles, such as rare books, rare comics, and shoes has a much lower hurdle rate. Given I spent more than two years of my life writing my new book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom, I had a realization that could be lucrative for collectors.
The Pandemic Created Scarcity In Some Assets
For the most part, the pandemic has been terrible. But there are silver linings, such as being able to work from home and spend more time with family.
The pandemic has also boosted the intrinsic value of real estate, probably forever, since we're all spending more time at home. In other words, the real estate demand curve has shifted up.
Before the pandemic began, foreigners were purchasing roughly $100 billion in U.S. real estate each year. Given the pandemic has lasted for over two-and-a-half years, there could be at least $250 billion worth of pent-up demand for U.S. real estate once the pandemic is over. Foreigners will be gobbling up U.S. real estate once borders fully open once again.
Hence, a logical conclusion is to buy up as much coastal city real estate before foreigners do. In fact, Bloomberg recently reported the return of foreign buyers of U.S. real estate to the tune of $59 billion in the 12 months through March 2022. The amount is likely to accelerate in the future.
Collecting Rare Books With Autographs
But here's another realization. The pandemic has also throttled in-person events since 2020.
One of the most fun things collectors used to do was go to trade shows. Going to card shows, stamp shows, book shows, and so forth pre-pandemic was so much fun! I once went to Comicon and was able to collect all the He-Man figures I owned from the 1980s. So sweet!
At these conventions, you could meet your favorite sports figures, authors, and actors. You could also pay a pretty penny for signed pictures and books if you were a super fan. I remember there were 80-person lines for the three actors who turned out from a Star Trek TV show.
Given the law of basic supply and demand, the value of collectibles with signatures should now be much higher. Given the pandemic reduced in-person events, it also reduced the supply of collectibles with autographs!
And what are the types of collectibles that are not damaged by autographs, but actually enhanced by autographs? Books, comic books, pictures, and sports memorabilia!
The Value Of Signed Books Has Increased
Take my situation for example. If COVID didn't exist, I would probably do 15 in-person book-signing events in San Francisco, Berkeley, Los Angeles, New York City, Honolulu, Washington, DC, and Williamsburg. I have family in New York City and Honolulu. Meanwhile, I haven't returned to Williamsburg, Virginia, the city of my alma mater, William & Mary, in almost 10 years.
At each event, I would probably have signed between 50 – 200 copies of Buy This, Not That. As a result, there would be between 750 – 3,000 signed copies of my book. But because I plan to do zero in-person events due to COVID and having two young kids, there will be much fewer signed copies. So far, I've only sent out ten signed copies to folks who have gone above and beyond to help me market my book.
Personally, I'm on the hunt for collectible books with autographs. I will build my collection over time from authors I really appreciate. And in 30 years, I will pass on my rare book collection with signatures to my children.
I'm a big fan of enjoying my investments. Therefore, I plan to not only collect rare books with signatures but also carefully read them as well.
In fact, I might buy two versions of each book.
The first version won't have a signature and will be less expensive so I can read it without fear of damaging it. The second version will have a signature and will be sealed in a hermetically sealed plastic bag so its condition will stay pristine for decades.
Start Investing Small In Collectibles
I'm going to start small and work my way up with my book collecting.
For example, I'm going to look for promising new authors who are coming out with new books. Because a new author is a relative unknown, they'll probably have some signed books readily available at bookstores. They might even directly send you a signed book if you pay them.
The investment cost for a signed new author's book will simply be the retail cost of the book. An insignificant amount. However, the upside from your investment could be massive. Because not only are you entertained or enriched by the contents of the book, the book itself could end up being worth more in the future.
First of all, we will only buy a book if we believe the value we receive will be equal to or worth more than the cost of the book. Adding more value is one of the reasons why I decided to include 110,000 words in Buy This, Not That, instead of the suggested 80,000 words. If the book was going to cost $25 – $29 anyway, I wanted to provide 38% more pages of advice!
However, few people think BEYOND the retail price of the book. Because few people are collectors with an investor's mindset. The signed book you buy at retail might end up being worth 100 times more if the author becomes a bestselling author and does something significant. Heck, in some cases, it might be worth 1,000 more.
In Search For First-Edition Books
The other great thing about investing in signed books by first-time authors is the higher value associated with first-edition books.
Let's say you read The Catcher In The Rye by J.D. Salinger in 1952 when it first came out. You thought the book to be brilliant for the relatively unknown author. You decided to purchase a signed copy for $3. Instead of storing it in a protective bag, you let the book sit on your shelf for the next 70 years. How much would it be worth?
By one online marketplace, the book could be worth $55,000! That's a nice 18,333% return on your $3!
And if the book was in pristine condition, even without a signature, the book may command a sale price of $65,000. Now imagine how much a pristine book with a signature would be worth? I would say in the hundreds of thousands of dollars!
In my mind, if you can identify a promising writer who is going places, it is a no-brainer to at least buy two copies of their book and try and get a signature. You will know the book is going places if you read it, have good taste, and love it. You can also catch the book on the upswing if it hits one of the bestsellers lists.
The cost of the book is already covered by the joy you experience by reading the book. But to then have the optionality of the book becoming a multi-bagger investment is very enticing.
Why First-Edition Books Are More Coveted Investments
As a first-time traditionally published book author myself, I ended up learning a lot about the book publishing process.
My wife and I spent around 40 hours editing and re-editing Buy This, Not That over five final revisions. Each time the book was revised by a Penguin Random House content editor, we had to re-read the book to make changes. Then we'd send the book back to the copy editors, who would then spend hours editing the book for grammar and technical issues before sending the book back for our review.
After multiple “passes,” the book goes to final editing. A typesetter then makes sure the book's content fits appropriately on the hardcover pages.
All told, over 100 hours by seven people went into editing Buy This, Not That before it went to the printing presses. You would think the book would be perfect right?
One of the reasons why first-edition hard copy books are the most coveted books by collectors is due to ERRORS!
The Surprising Error Found In My Book
After 40 hours of editing, my wife and I felt great submitting the final version. I was told after submission, I was no longer able to make any changes. I was fine with this because the book was as perfect as it could be.
Then one day in the hot tub, I decided to re-read my book. The version of my book I was re-reading was the one Penguin's PR team was sending out to the media for review. And to my surprise, in this final version, I found four spelling errors of the same word! What the heck?
I reached out to my editors and PR and asked if this PR version was hopefully not the final version. My wife and I wife looked at the final version we sent the copy editors. It didn't have this obvious spelling error at all.
Unfortunately, or fortunately, the final first edition of Buy This, Not That will contain this annoying spelling error! It turns out, that someone ended up retyping the four subtitles to capitalize the first letter of each word. In the process, the person proceeded to spell a word wrong multiple times. I won't tell you what it is to not ruin the surprise.
Thankfully, the reader will still be able to understand the meaning of the sentences despite the typo. It just makes me look careless for those who don't read this post.
There may also be other errors in the first-edition of my book I'm not aware of. Like opening a pack of Topps cards, you might discover a book has an off-centered cover. Who knows! But what I do know is that finding misprints in books is like an exciting treasure hunt that could yield a large fortune.
The Value Of Errors In Collectibles
The reason why errors in collectible items are valuable for collectors is once again due to supply.
Errors will be corrected in future editions of books, thereby making those first-edition books with errors limited in supply. The more limited the supply of books with errors, the more valuable the books may be in the future!
Let's take a look at the example of how valuable a stamp error could be.
The Inverted Jenny Stamp
The Inverted Jenny (also known as an Upside Down Jenny, Jenny Invert) is a 24-cent United States postage stamp first issued on May 10, 1918, in which the image of the Curtiss JN-4 airplane in the center of the design is printed upside-down. Only one pane of 100 of the invert stamps was ever found, making this error one of the most prized in philately.
A single Inverted Jenny was sold at a Robert A. Siegel auction in November 2007 for $977,500. A block of four Inverted Jennys was sold at a Robert A. Siegel auction in October 2005 for $2,700,000.
On May 31, 2016, a particularly well-centered Jenny invert, graded XF-superb 95 by Professional Stamp Experts, was sold at a Siegel Auction for a hammer price of $1,175,000. The addition of a 15% buyer's premium raised the total record high price paid for this copy to $1,351,250.
Then on 15 November 2018, the recently discovered position number 49 stamp was auctioned by Robert A. Siegel Auction Galleries for a new record hammer price of $1,350,000, with an 18 percent buyer's premium raising the total cost to US$1,593,000.
For a collector's item that only cost 24 cents, a $1+ million return is pretty damn good! Look out for errors in your collectibles.
Creating Limited Supply
The reason why a Stainless Steel Rolex Daytona watch can sell for a large premium over retail is partly due to Rolex limiting the supply of the watch. Rolex could easily produce more if it wanted to. But that would take away from the value of the watch and its brand.
Personally, I don't plan to sign more than 100 first-edition hard copies of Buy This, Not That. Part of the reason is that I can't get my hands on that many copies. As part of my book deal contract, I only received 24 hardcopies to keep and give away to friends and family.
If I wanted to sign 100 copies of Buy This, Not That, I would have to go to bookstores, show my ID, and ask if I'm allowed to sign. Meanwhile, each bookstore might only have a couple of copies each. And like I said earlier, I don't plan to host in-person book-signing events until COVID dies down.
Besides, virtual talks are so much more efficient and have much larger turnouts. My talks with Google and Yelp had about 500 people sign up each.
100 Signed Copies Limit
If the book ends up selling 15,000 copies over a 12-month period, that would mean only 0.67% of first-edition signed copies of Buy This, Not That will ever be available in its existence.
Because after 15,000 copies are sold, Portfolio Penguin will issue the second edition. The second edition fixes any apparent errors and updates with new figures if necessary.
If BTNT goes on to be a big hit, then the value of a first-edition and first-edition signed copy of Buy This, Not That will go up.
For example, let's say Buy This, Not That sells 1 million copies. That would mean only 1.5% of books in circulation will be first editions. And only 0.01% of all books will have signatures. As time goes on, these books will be lost, sadly thrown away, or destroyed, making this first-edition copy all the more rare.
If you are a collector, just make sure you try to keep the book in as pristine condition as possible. The value of a book is logarithmic based on every increased level of its condition.
Invest In First-Edition Bestselling Books
Upon release, Buy This, Not That became an instant Wall Street Journal bestseller. My book will be reprinted with a new cover with emblem within the next six months. As a result, the first edition and signed first editions with stamps will be even more rare!
For a limited time, if you purchase at least 10 hardcopies on Amazon and leave a fantastic 5-star review, I'll send you a signed and stamped special edition hard copy. Just e-mail me at sales AT financialsamurai DOT com with your receipt.
I'm excited about starting my own signed rare book collection and putting out a rare signed book myself. Maybe I'll even create a secret signed version of BTNT where only five in the world will ever exist.
Venture Capital Investing
In addition, one of the most interesting funds I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. The investment minimum is also only $10, as Fundrise has democratized access to venture capital as well. Most venture capital funds have a $200,000+ minimum.