Bubblenomics: how the Beanie Babies speculators got it wrong

Discuss

82 Responses to “Bubblenomics: how the Beanie Babies speculators got it wrong”

  1. ChickieD says:

    I think the Greek currency crisis can be tied back to overspeculation in the Beanie Baby market. 

  2. Bucket says:

    I’m pretty sure ammunition is today’s beanie babies. 

  3. TombKing says:

    Unsurprising really. The scholastic books of that sort are pretty much shovel ware marketed to the grade schoolers at the book fair. My kid found several poor entries in his Pokemon guide he got in grade 3. I don’t think they put much thought into that particular flavor of book other than the kids will buy it.

  4. rattypilgrim says:

    I was working in an antique collective at the time. Some of the dealers stooped low enough to cash in on the craze and offered them for sale. There were several instances where moms with a baby in a stroller and a couple others in tow had lists of the most desirable Beanie Babies, the ones they thought would have the most value later on. They thought they were making an investment. It was heart breaking. I wanted to tell them to save their money for their kids’ futures but I didn’t want to insult them or make them feel bad. The Beanie Baby scam was shameful. If you’re poor nothing goes right and the rich keep taking more and more…

    • knoxblox says:

      Beanie Babies, Thomas Kinkade, etc. There’s always going to be some speculation scam going on.

      Reminds me of David Hannum’s famous quote about suckers born every minute. I wish it wasn’t true, but it sure seems that way.

    • Jarrod Henry says:

      I remember working a summer job at McDonalds when they had those things.  I’ve never seen people that willing to kill others or myself for something.  They always believed we had a secret stash of them somewhere and were just keeping them for ourselves.   And they hated us for it.  Never, ever , ever underestimate the hatred of a boomer mom who thinks you’re stealing something from her precious child’s college fund.

      • fredh says:

        Ran into something similar, Jarrod, when I worked in a record store during Elton John’s Princess Diana tribute version of “Candle in the Wind” on cassingle. So, add  a royalphilist mania to that perceived collectability. The line of customers LITERALLY broke the lock to get in as I walked to the door to open for the day. The younger me just called my manager. The current me would have called the police.   

        • weatherman says:

          …and strangely enough, these two trends actually converge

          • Spieguh says:

             $25 Buy It Now, obviously a sound investment strategy!

            Of course, I spent my youth and hard earned lawn-mowing dollars collecting sports cards which are now worth somewhere between jack and squat.

          • Lupus_Yonderboy says:

            Friends and I did the same with comic books and I don’t feel bad about it at all.  There’s a big difference between a childhood hobby and an adult’s “investment strategy”.

    • Brian Decker says:

       While I appreciate your sentiment I fail to understand your quote “If you’re poor nothing goes right and the rich keep taking more and more”.  You pointed out the fact that people were CHOOSING to make a bad decision and suffered financial loss for that decision.  Multiply those bad decisions across a lifetime and you pretty much have the answer to why some people are poor and others are not.  Financial decisions carry financial risk – uneducated or misguided ones carry a exponential risk.

      • rattypilgrim says:

         The poor and uneducated have little to access to the information that would help them make better decisions. They don’t have financial planners. It’s quite a generalization to say people are poor because they have led a lifetime of bad decisions and others are not because they’re better decision makers. There is less chance of upward mobility now than there has been in many, many generations. It’s extremely difficult to rise above poverty once you fall into it. The future is very dim for those living (and working) in poverty as more of the basic social and welfare safety nets are being removed by the people who pay the least taxes but reap the most benefits their financial power bestows on them.

  5. Crispiann says:

    I think the mid-late 90s was the apex for most collectibles. The internet helped markets to explode, for communities to develop which created even more demand, but eventually it brought about a national/global equilibrium and the ease of obtaining collectibles simply makes them less special. Star Wars action figures are another example. Notwithstanding a resurgence of interest caused by the movies, prices have stayed remarkably flat for 10-15 years. It’s only the very rare items that rise. As much as I’d like to blame that on the prequels, I think it is endemic to all collectibles. Even buying printed priceguides is a fool’s errand nowadays since the only priceguide you need is ebay or other internet sources.

    • redstarr says:

      I totally agree.  A lot of the fun of collecting used to be the thrill of the hunt, that you could be on a constant look-out for the items needed to add to or complete your collection and that that was the challenge.  If you wanted a full set of something or the rare ones of something, you were going to have to work on it and wait on it. There was shopping and searching and swapping and trading. Now you can just log onto the internet and a couple of clicks and damn near everything produced (especially if you’re talking semi-modern things, especially things that were made with holding onto them in mind) can be at your house in a couple of days if you’re willing to pony up the cash. 

       The thrill of ownership was better then,too.  If you had a cool collection, there was a joy of having accomplished something, having amassed the collection, a “where on earth did you find this?” and stories about where you picked it up, kind of deal.  Now you can just go on ebay and get it, it’s not the same.

      It also made seeing what stuff is worth and actually selling it for market price easier for everyone.  And that stole a lot of the hidden treasure factor.  Now if someone has a box of old comics or old records, they’re going to do a quick googling and see what they’ve got and it’s not too tough to ebay the stuff that’s valuable.  Used to be unless it was clearly obviously worth something significant you could still find good entry and mid-level collectible stuff in yard sales and thrift shops and such.  Most folks weren’t going to research to see if they had 10 dollar comic or 25 dollar comic or record.  And they certainly weren’t going to go to the work and expense of finding a buyer to pay top value for those relatively small-time things.   It was going into a big box and sold for one price or for a few cents to a buck or two a piece. You could hunt through it and if you were a collector, it might be worth it to you.  Now, you see a lot less of that.  The big box has already been cherry picked down to the very least valuable stuff.  And that’s decreased the joy of being an educated collector,too.  When you had to know the difference between a first edition and a later edition and which variants of things were worth something and what things were worth, there was a bit of geeky fun in it.  Now that anyone can just google it or just check ebay, it ruins that pride of knowing and being able to spot the good stuff. 

  6. fuzzyfuzzyfungus says:

    “Collectability” is something of a self-refuting prophecy.

    Even assuming an item manages to catch that whiff of nostalgic interest, retro-chic, or whatever ineffable tug at the brainstem makes a decent number of people give a damn about something old, regardless of rarity, it still has to suffer significant attrition in order to appreciate in value.

    Once you have a good that is, explicitly, being purchased and hoarded as a ‘collectible’ attrition drops through the floor, and it’s game over. At best, you might see a bit of demographic churn, as people who didn’t have money at the time attempt to recapture the period with the money they have now.

    • Yup. Which is why 1950s comic books actually sold for collectible prices in the 1980s (the vast majority of the supply having been read to death by the owners or thrown out over the decades by the owner’s parents), and why “collectible” comics from the 1990s don’t have nearly the same kind of value. 
      Basically, if adults are being encouraged to buy 5 and put them all in special protective packaging, chances are good that they won’t be worth as much as you think in 20 years. 

      It’s the stuff that’s actually bought for, used by, and loved to death by kids that tends to end up having collectible value later. Which is kind of a nice moral to the story, when you think about it. 

      • jandrese says:

        Ultimately for something to retain value someone has to care about it and want to buy it in the future.  If it’s something that was beloved by children and played with to death, then yeah, it’s not hard to see why nostalgia would kick in and make them want to relive some of those happy memories. 

        Beanie Babies were just stuffed animals, with no particular special traits other than limited supply due to artificially low production runs.  That’s why very few people give a crap about them today and they’re worth next to nothing. 

      • Preston Sturges says:

        That’s why pre-1950 hand painted tin windup toys are collectible.

        I liked the story in the Washington Post about how people bought their dream homes.  One guy was an artistic type, and his uncle had given him an old but “Modern” chair when he was in college.  his uncle told him to not throw it away.  The chair traveled around for years from apartment to apartment, getting strapped into pickup trucks etc.  Finally the guy got curious about it, and discovered people had been searching for it for years because it was missing from a set made by Frank Loyd Wright. he sold the chair and bought a vacation home with its own waterfall. 

    • redstarr says:

       Yep.  I read an article years ago that summed it up that “If it’s sold as a “collectible”, it probably isn’t.”

  7. davex says:

    After doing estate cleanout following a relative’s death, I ended up with several large tubs of Beanie Babies. I ended up finding out that if I sold them for 25 cents each, and scattered them everywhere during my yard sales, I could sell bunches of them every time kids would come along with their folks. The kids would find them, and end up grabbing a handful of favorites before mom and dad knew what had happened– if you have a chance to pick up a big box of them CHEAP before a yard sale, you should try it!

  8. Comedian says:

    Coincidentally, back in 1998 a guy named Phil Brooks wrote a usenet post in Rec.Toys.Lego that taught me all I needed to know about price guides in general.  I found it in google’s usenet archive here: http://groups.google.com/group/rec.toys.lego/msg/71e0c4f3ebcfe637?hl=en&dmode=source

    I’ve tried to look him up in the past, and even emailed off a thank you note for the many invaluable lessons he put in that post.

  9. austinhamman says:

    it seems like the title should be “how wrong the Beanie Babies speculators got it” since it doesn’t seem to go into any detail into how they got it so wrong.(though one needn’t write an article on that, you can say it in two words: “they’re guessing” )

    • RadioSilence says:

      You were expecting more than a few photos taken from another site and some snarky comments from Buzzfeed? 

  10. Tom Rombouts says:

    Hi -

    I posted this in the comments there earlier, but I think this 2004 L.A. Times article is actually a better overview of the Beanie Baby boom and bust:   http://articles.latimes.com/2004/aug/26/business/fi-beanies26

    • annoyingmouse says:

       “Forbes magazine ranks Warner as the 65th richest person on Earth, worth an estimated $6 billion” 

      This single line probably goes a long way to summing up everything about this whole thing.

  11. Daemonworks says:

    See the Dutch economy in the early 1600s for details.

    https://en.wikipedia.org/wiki/Tulip_mania

    • BillStewart2012 says:

      Yeah, but tulip bulbs actually took some time and effort to grow (though Internet Years were a lot longer back then, if you had to ship messages around by paper or actually talking to people.)

      Back in the 90s, my wife used to describe one of her internet startup jobs as being “in the tulip bulb business”, and she was doing infrastructure and not even consumer dotcom stuff.

  12. H.E. Pennypacker says:

    My GF started buying them in ’94 cause she thought they were cute. In ’95 she sold her collection, made enough to pay for her freshman tuition at OSU. She thanks all the Beanie Baby speculators (especially the one that spent $900 on a dinosaur).

  13. Preston Sturges says:

    I always tell people I lost my retirement investing in Beanie Babies. It gets a laugh. 

  14. 10xor01 says:

    Still beats an investment in Enron.

  15. Antinous / Moderator says:

    I don’t generally call for history to be burned on a bonfire, but I’m willing to make an exception in this case.

    • mjfgates says:

       Be good. My twelve-year-old likes Beanie Baby bears, and the fact that we can get ‘em at the thrift shop for a dollar makes them double-awesome.

  16. SCK says:

    MTG isn’t that much different, though things have calmed down and prices have steadied. I’m just glad I sold my entire collection in 1995 for enough to pay for an entire year of college, tuition and all other expenses.

    • Jim Nelson says:

      Ha! I remember the days of $10,000 decks encased in lucite hard cases. Normally attached to some wanker who just wanted to show off how much money he spent on the damn thing.

      Watching my brother devastate them with better gameplay was a very satisfying experience (he still plays every once in a while, just lost interest when tournament rules changed).

      • SCK says:

        Laughing… I remember those wankers too. People with way too much money who wanted to use EVERY Legend they could own.

  17. NickPheas says:

    No-one mentioning Psychoville?

  18. SedanChair says:

    Ah, good old redneck economics. Don’t you worry about these complex financial instruments; your Franklin Mint commemorative plate is guaranteed* to increase in value!

    *die poor

    • Rider says:

      Sorry I don’t get the connection to rednecks?

      • fuzzyfuzzyfungus says:

        Franklin Mint has nothing on Kinkade or ‘Precious Moments’; but Christian kitsch and shlock-nationalist Americana have a certain… demographic perception… about them.

        • Donald Petersen says:

          My parents retired to the Ozarks in the 90s, eventually moving to Arizona in 2003 or so to bluestate it up a little bit.  (They’re finally back in Southern California now, thank god.)  Up until they left the Ozarks ten years ago, they’d still see people (even actual storefronts) dealing in Beanie Babies.  And yes, necks were quite red out there.

        • BillStewart2012 says:

          Did anybody actually buy Precious Moments et al. as investments?  Buying it as overpriced kitsch because it’s soooo cuuuute! is just an issue of taste, but you can say that about lots of Bad Art.

    • fuzzyfuzzyfungus says:

      On the plus side, the ‘Franklin Mint’ has yet to take down a series of major economies, only to be rewarded for it…

    • Ironically, my great-grandparents’ collection of soft-core pornographic salt and pepper shakers (here’s a naked lady in the bath, and seasonings come out of her removable tits! let’s display it in the china cabinet!) was probably both more redneck and more valuable than anything ever made by the Franklin Mint. 

      • Preston Sturges says:

        Oh yeah, somewhere i have a real flimsy ceramic mug from the 1940s/1950s with a naked lady statue at the bottom of the mug so you can’t see her until you finish your beer.

        Sometimes consumer goods  from WW2 are valuable because they were made with different formulations or materials just for the war years.

      • Antinous / Moderator says:

        You’re my niece?

  19. Vicq_Ruiz says:

    The Beanie Baby still has a role to play in our economy though…..with food and energy removed from the government’s inflation calculations, the current value of Beanie Babies is now the second most important component used to measure inflation.  Only CRT monitors are weighted higher.

  20. anwaya says:

    Frankly, Beanie babies invite floccinaucinihilipilification.

  21. Will Rogers says:

    This is article is a copy-paste of the source article, http://www.pitch.com/FastPitch/archives/2009/05/14/and-you-thought-your-investments-had-tanked-studies-in-crap-rages-against-the-beanie-baby-handbook, and neither of them actually discusses the “how” of how they got it wrong.

  22. rocketpj says:

    Comic books are another fine example of this false collectibility concept.   Sellers are only too happy to play up the ‘future value’ idea.

    • anonotwit says:

      I did have a handful of comics that were worth something. I believe my brother sold them for drugs back in the late nineties (along with my father’s record collection).

      • BillStewart2012 says:

        So somebody at least got some value out of them, and somebody else got some fun instead of having them sitting around in a box in the attic like all those vinyl records that I really need to get around to digitizing some day.

  23. Preston Sturges says:

    I knew a family that was ready to tear itself apart over who would inherit a collection of Humels like the little-girl-on-the-fence-with-a-bluebird, you know,  the crap sold on the back cover of Parade Magazine.  They were convinced this stuff was worth a fortune. 

  24. Leto_Atreides says:

    You know what is really weird? Daily life products that are sometimes sold  in “limited edition” or “collector’s edition” packages. Who in their right mind would collect a cereral or kleenex box?

    • rocketpj says:

       There is a certain mindset that is highly interested in gathering and collecting.  Sometimes it makes them a lot of money, sometimes they end up collecting something wholly uninteresting like meat cans.

      I have a coworker who paid for his house with the money he made buying antique radios at garage sales and selling them to rich collectors.  I personally have a box of comics in my closet which are worth, roughly, what I paid for them 30 years ago. 

    • Preston Sturges says:

      I think some of this stuff is just marketing trial balloons.  There are many varieties of Spam that are much better than the original (Lite, Spicy, Cheese) because they have lower salt. 

  25. Preston Sturges says:

    HOSTESS JUST ANNOUNCED TWINKIES ARE COMING BACK!!!!!

    That means the Twinkie market is going to crash!

  26. OtherMichael says:

    Looks like the authors, Les and Sue Fox, have a “new” “thing” American Art Advisor. Or as they put it:
    A * M * E * R * I * C * A * N       A * R * T       A * D * V * I * S * O * R

    A class act, all they way.

  27. petraardvark says:

    that’s why I like to collect free stuff.  Air sickness bags from airlines (the Russians re-use theirs – eew)  or names of women on tv who are named after spices – like Ginger on Gilligan’s Island, or Cinnamon from Mission impossible, Sgt. Pepper from Policewoman etc..

  28. Preston Sturges says:

    Frank Zappas Lost Collage 

    http://video.pbs.org/video/2253617192/

    Guy buys a collage for $7 and based on absolutely nothing decides it was made by a young  Frank Zappa who was not known to do collages. 

    They fly the guy out to see Gail Zappa, who recognizes the people and objects in the collage and says it was definitely done by Frank.  

    It was appraised at $50,000 IIRC

Leave a Reply