As the stock market continues its seemingly boundless rise, many are wondering when the music will stop. While a healthy equities market is great for everyone, it is no measure of health to be decoupled from reality. Nor is health measured by travel in only one direction. The reality we're seeing throughout the economy – as a direct result of the COVID-19 pandemic – just doesn't seem to align with the exuberance on Wall Street.
Part of this is that the Fed has ramped up the money-printing machines. The Fed has also promised near zero rates for the foreseeable future, offering savers very little incentive to park cash. Another contributor is the stimulus enacted by Congress, with more expected to follow.
Many are asking: I know this equity boom can't last forever, so if I want to diversify outside of equities, where else can I invest? Rare collectibles is a possible answer. Many segments of the collectibles market have performed on par with - or outperformed - equities for the past 40 years, and are historically far more decoupled from equities than most other asset classes (much more than real estate, for example).
COVID-19 has created an interesting situation for collectibles investing. With more people working from home, the time they might have spent commuting or traveling for work is freed up for other pursuits. Some are using this time to pay more attention to their financial portfolio and are seeking new diversification strategies. In other cases, they're pursuing collectibles investing because they have a passion for classic cars, luxury watches, or fine art. When they learn that these asset classes perform so well, and that there are now platforms that allow them to invest fractionally, the stage is set!
For our part, we've seen about an 80% increase in interested investors, and others in the space seem to be experiencing similar surges in demand. Stay tuned!
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