A Different Kind of Blue Chip Stock

If you are part of the crowd that thinks that adults that collect vintage toys are weird, then you probably don’t understand the financial considerations of the hobby, i.e. speculation.  Speculation, if you remember from your Finance class in college, is the practice of engaging in financial transactions that carry risk in an attempt to profit from fluctuations in the market value of a tradable good, namely stocks.

Think of a vintage toy as a type of stock.  Keep in mind that not every vintage toy has the potential to appreciate in value, just as not every stock has the potential to go up or pay large dividends.  Blue Chip stocks, however, are a different story.  Blue Chip stocks are known for being stable, increasing in value and for paying out healthy dividends.

Just like the stock market, the vintage toy market has numerous segments and each of these has its own Blue Chip toys.  One such segment is die-cast cars and the Blue Chips within this segment are Hot Wheels Redlines.

Mattel first introduced Hot Wheels to the world in 1968 as the “fastest metal cars in the world”.  They were such a huge success in fact, that Mattel became a household name and changed the toy world forever. Have you looked at Mattel’s market cap lately?

Cars like the ones pictured here sold for .69 cents back in 1968.  Today, they command prices in the hundreds and even thousands of dollars.  The factors that determine which cars are most valuable depend largely on where they were made, their color, the color of their interior, the color of their glass, and whether they have any toning present.  Other key factors are known rarity, whether they are pre-production cars, or if they are are prototypes.

In order for a Redline to be considered a Blue Chip it must exhibit a particular combination of the attributes mentioned above and most importantly it must be MINT.  Any Redline car that is in mint condition (even the common ones) will carry a desirability premium.

Now, for the record, I don’t collect Redlines as investments.  I collect because it’s fun and because it’s a trip down memory lane.  I would never suggest to anyone to start buying Redlines to make money.  This small article simply means to explain the speculation component of the hobby to those who are not familiar with it.

As with any market, there are up times and there are down times, and the Redline market is no exception.  Just because you have Blue Chip stock doesn’t mean you won’t ever lose money.  It does however, mean that you will fair better than everyone else in a down market and that you may be among the first to rebound.

Even though collectors like myself tend to frown upon collectors that are only in it for the money, last I checked this was still a free country.  The Redline community though, is small, and the majority of collectors prefer dealing with people that are in it for the love of the hobby and who can contribute knowledge.

Speculation, nevertheless, is here to stay.  We all know a Blue Chip when we see one and even the hobby purists among us will unabashedly tell you which cars are “investment grade.”  If you are a beginning collector (whether for love or for money) just remember to buy the best quality cars you can.  Buy MINT and buy cars that are in high demand and cannot be easily found.  Think Customs in desirable colors, 1973 castings and cars that are still in the blister.

As I said before, the speculation aspect to me is secondary to the pleasure I derive from collecting Hot Wheels.  However, it is nice to know these little gems are worth their weight in gold.  Indeed I know people who have sold their collections to pay for weddings, college, or as a fast way to come up with cash.  If I had to look at the hobby from an investment perspective, I would think of it as parking my money.

I hope this has enlightened those of you who only see us as “immature adults” buying toys.  While most of us don’t look at it from a financial perspective, it doesnt take a genius to realize there is a significant financial component to the hobby.  Inevitably when you’re spending a lot of money on something the first thing you think about is value.  Whether that value is emotional or financial is up to you.

Happy collecting.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s