Kevin O’Leary Highlights Collectibles as a Top-Performing Asset Class

In a recent LinkedIn post, Kevin O’Leary discusses the remarkable performance of high-value collectibles as an asset class, drawing parallels to the art market and emphasizing the importance of rarity.

O’Leary shared a personal anecdote about a significant acquisition to illustrate his point. He recounts his experience bidding on a dual Logoman Kobe Jordan autographed card:

“I found myself last August at 3:00 in the morning bidding on a dual Logoman Kobe Jordan auto. It was at $8 million when my wife went to bed, and she said, ‘If you buy that card tonight, don’t come to bed.’ And when, we woke up, I’d paid $12.93 million for it. Today, it got bid $20 million for it.”

This experience led O’Leary to commission an analysis of collectibles as an investment. As the investor notes, the findings suggest that this asset class can outperform many traditional investments, provided one focuses on the right segments.

The Rarity Factor in Collectibles

The analysis conducted by O’Leary’s team examined the price appreciation of all collectibles over an 18-year period. The results, according to O’Leary, bore a striking resemblance to the trajectory of modern and contemporary art in the late 1950s. He highlights a crucial takeaway from this comparison:

“So 90% of the appreciation always attributes to the piece uniques. So you’re better off to buy an oil Warhol for $30 million, or a Picasso for $140 million, even though that Picasso traded for $120,000 in ’58. You just want the rarest of the rare. Everything else just stays relatively flat.”

This emphasis on uniqueness and rarity is a recurring theme in O’Leary’s commentary. He argues that focusing on the absolute rarest items within any collectible category is key to achieving significant returns. The vast majority of other items, while still holding value, tend to appreciate at a much slower pace, if at all.

Comparing Collectibles to Traditional Art Markets

O’Leary draws a direct parallel between the high-end collectible market and the established fine art market. He suggests that investors looking to enter the collectibles space should adopt a similar strategy to that of seasoned art collectors.

“So you’ve really gotta go into it the same way that art is,” O’Leary advises. This implies a need for deep knowledge, careful curation, and a focus on provenance and historical significance when acquiring pieces. For O’Leary, the potential for liquidity and dramatic appreciation in unique collectibles rivals, and in some cases surpasses, that of traditional investment vehicles.

Liquid Assets and Investment Strategy

The question of liquidity is also addressed by O’Leary, who challenges potential investors to find another asset class that offers better liquidity with comparable returns. His personal investment in the Kobe Jordan card, which saw a significant increase in its bid value, serves as a prime example.

According to O’Leary, the strategy for success in this market is not about diversifying across a wide range of collectibles, but rather concentrating on the absolute top-tier, unique items. This approach, he believes, is what drives the most substantial appreciation and offers the most compelling investment case within the broader collectibles landscape.