WHEN I WAS A CHILD, I remember my parents putting great store by antique furniture, silver cutlery, bone china, cut glass and fine rugs. My maternal grandparents had rare books and old prints. My paternal grandfather had built an extensive stamp collection.
When Clem—as we all called him—died in 1988, he left me his stamp collection. I rarely look at it these days, but I’ve been dutifully carting it around for 30 years, through six changes of residence. I also have a few of my maternal grandparents’ books and their 200-year-old dining room table, as well as a couple of antique end tables I inherited from my father. In fact, I have a slew of family possessions, all beloved for their sentimental value.
But when I was a child, I thought these objects had not just sentimental value, but also real value—and so did most everybody else. These household possessions were seen as stores of value that had the potential to appreciate over time. It was a notion worthy of a pre-industrial era: Your wealth surrounded you—there to be touched—and ready to be sold or packed up and moved, depending on what the moment required.
Today, the concept seems almost quaint.
Over the past century, collectibles have generated surprisingly strong returns. Indeed, the latest Credit Suisse Global Investment Returns Yearbook reports that a basket of collectibles increased in purchasing power 30-fold over the past 118 years, equal to a 2.9% annual real return. Global stock markets, by contrast, were up 387-fold, including dividends—a 5.2% annual real return.
But it’s hard to imagine collectibles will shine so brightly in future. Nobody seems to collect stamps. The price of beautiful antiques has collapsed, dismissed as “brown furniture.” This is the Ikea generation. Possessions are temporary. We lease cars, rent movies and stream music. Why bother to buy?
If we’re going to purchase anything, it’ll be numbers on an account statement. In that, we have trust. We don’t even bother with stock certificates. Surprised by bitcoin? Maybe we shouldn’t be. It’s the ultimate embodiment of our new sense of value—a currency backed by nobody, built on computer code and completely dependent on our collective faith.
My mother and my in-laws are still firmly in the “beautiful possessions” camp, but my children and stepchildren are in the new world. Between them stand my wife and me, inheriting items we love but which we strongly suspect our children won’t.
There’s a rationality to all of this. Ideally, wealth should be easy to trade and easily valued, and household possessions are neither. If items offer psychic income, we shouldn’t expect them to deliver significant dollar returns. While stocks and bonds ought to generate a positive real rate of return, household items will likely lose value, unless their price is bolstered by their scarcity—and even that won’t help if there isn’t sufficient demand.
And clearly, demand today is weak. No doubt the pendulum will swing again and things old will enjoy renewed interest. But I doubt the pendulum will ever swing all the way back: Household possessions will likely never again be viewed as significant stores of wealth. They’re just things—things destined to deteriorate over time.