Let me tell you a story. If there's one thing you should know about me, it's that when I'm not trying to decipher finance and its myths for you, I spend most of my time listening to and compulsively collecting vinyl records (well to be honest, I have the same problem with DVDs and books).
Ok, nice story, but why should you care? After all, if you're here, it's to understand what cryptocurrencies are, whether buying shares of your favorite soccer club is a good idea or not, or whether you should invest in blue chips or not.
Let me explain. While collecting vinyls (and books and DVDs), I discovered that, without knowing it, I was already an investor. I decided to figure out how many records were actually in my collection. I didn't know until I decided to put my collection on the eBay for vinyls.: Discogs. I found out that I had a little bit more than 700 records at home, but also that their total value exceeded 10 000 euros. Not bad, right?
This all happened about two years ago. In the meantime, the collection has obviously grown in size and value. But the main thing I realized was that the value of many of my records had changed (both up and down). Browsing Discogs, I was surprised to see that the Impératrice first EP I had bought for 10 euros in 2015 on their label's website, was now trading for at least 100 euros. Another example: this reissue of Grant Lee Buffalo's Fuzzy, found after some intense research throughout Europe and finally bargained for in a FNAC (by the way, did you know that Vivid regularly offers Super Deals in this store?), after the department manager kindly agreed to turn over the store's reserve at my insistence. Purchase price: 13 euros. Current price: 80 euros at least.
After a while, the question inevitably came to me. What is this obsession I have with always wanting to know the price evolution of my records? What would happen if I decided to buy them at a low price, to find the hidden gem and resell it at a high price? And there it was: the revelation. I was thinking like an investor.
If you think it through, the logic behind trading records and stocks is much the same. Prices are primarily driven by supply and demand. You know, that fundamental economic concept that says the more demand for a product and the less supply, the more its value will increase on the market. It's the same for stocks and records.
And like those Amazon shares you regret not buying in 2015 when they were only worth 250 euros (the stock is listed at 2,830 euros as I am writing this), you may miss out on a golden opportunity with a record. I will always keep in mind Paradis’ sole LP, which I finally gave up buying due to the lack of enthusiasm of my girlfriend. Price in 2016: 25 euros. You can’t find it anywhere now for less than 500 euros.
Speaking of my girlfriend — when I told her about my eye-opening revelation about being an investor and my idea to write a post on the subject, her first reaction was to tell me about Chanel bags.
Did you know that luxury bags are actually considered a particularly good long-term investment? For example, Chanel's iconic Classic 2.55 was priced at around $220 in 1955 and now costs $6,800. That's an increase of almost 3,000%, and even 200% when inflation is factored in!
Another example, the Birkin by Hermès has seen its price increase by almost 500% in the last 25 years. One of its special editions even holds the record for the most expensive handbag in the world, as one was sold for $380,000 at an auction in 2017.
In a way, the luxury bag is like the Blue Chip of non-financial investment. You bet on a reliable brand, which has been around for a long time and whose reputation is well established. There are relatively important guarantees that in the long term, the price of the bag, like that of a Blue Chip, will increase. It may take time, but that's also what investing is all about: knowing how to give time to time and not letting bulls, bears and trends dictate your behaviour.
Whether it's about records, designer bags or financial investment, the lessons for investors are the same. You have to be informed about the product you are buying. For records, I tend to look for limited edition releases or I bet on the fact that an artist or a record will become mythical in the long term. My girlfriend, on her side, focuses on reliable values which she knows and which she is almost sure will increase in the future. For stocks, it's the same thing, you have to know where to look for information and learn to decipher it, like company's earnings reports that we teach you to read here and there.
Keep in mind that no matter what type of investment you make, it's not an exact science. But it's easy to limit your risk by doing the proper research and educating yourself on the subject. That's what we at Vivid strive to do. We want to explain the ins and outs of the financial world so that you can make informed decisions and see your money grow. That's why we recently launched our Invest Feed, to help you become an informed investor.
I have more to say on this subject, though I don’t want to spoil it just yet. Quick hint: what do Bernard Arnault and Jay-Z have in common?
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