Are high-end collectibles becoming the realm of the superrich?

Adam Davidson has an insightful take on the fine art market during the current economic downturn. The interesting piece of statistics is that 11 of the 20 highest prices ever paid at auction for fine art have occurred since 2008, when the recession began, culminating with the sale of Edvard Munch’s “The Scream” for about $120M a few weeks ago. The short of it is: The fine art market has exploded during this economic crisis. That is because fine art does not follow the rules of the global economy. Fine art is part of the economy of a small subset of the super-superrich. Their economy is booming. It is a case of the superrich getting ultra-richer.

Another thing is that fine art is not good investment. You don’t spend $120M on The Scream hoping to flip it for $130M. No, you’re paying $100M for some paint on canvas partly to show that you can. Fine art is a status symbol. “The art market”–to quote Davidson–“is a proxy for the fate of the superrich themselves.”

Does this paradigm apply to collectibles? As much as we want to think of high-end collectibles as fine art, does the economy of high-end collectibles correlate with what’s happening in the fine art market?

The Debbie Reynolds Auction last June, where Marilyn Monroe’s “subway” dress from The Seven Year Itch sold for $5.5M and Audrey Hepburn’s ascot dress from My Fair Lady sold for $4.4M, would suggest that high-end memorabilia does fit the bill. I would put Steven McQueen’s Le Mans suit ($960K) in the fine art category as well. These items appear to be “gotta have it” pieces for their respective buyers. Like a fine art painting, they are one-of-a-kind items and no one else can own them. So, indeed, they were acquired as show-off pieces.

Moreover, really expensive fine art is difficult to resell. I think that is true for collectibles, too. It has been pointed out that no painting bought for over $30M has ever been resold at a profit. The point of no return (ha, get it?) for collectibles is undoubtedly lower than $30M. The question is what would it be? $1M seems reasonable, but I would even venture lower. Maybe even at $250K.