The Flow Of Capital Into Collectibles: A Sign?
(Edited)
We have seen some absurd pricing of collectibles of late. People are bidding up items to levels that far exceed what most feel they would go for.
In this video I discuss if this might be a sign or not. Often people move money into assets they believe will withstand a crash. The flow of capital is vitally important.
▶️ 3Speak
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NFT mania part 2: the return of cryptokitties :D
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Currency confidence is the number 1 thing I worry about. One look at Venezuela is all I need to know about their confidence in their currency is almost dead. Everyone will find a way to preserve their wealth and I think this is one reason why people are looking to alternatives such as gold, silver and other collectibles. They believe it will hold the value much more than something that will probably become almost worthless.
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This is an interesting topic and I have to tell you, I see things a bit differently.
Collectibles are attractive to many because of the possible profit they are hoping to make sometime in the future. There are different types of collectors. Some are collecting everything they think, or hope to have some value one day in the future, from paintings to coins. Others are niche collectors, focusing on something specific, like coins issued between a certain period of time.
I'm not a collector, but am working with one, I'm responsible for making the deals and I know for sure those investing in collectibles because they are afraid of hyperinflation are less.
The majority of collectors do it regardless of hyperinflation. Owning something very limited edition means a lot, even if it's not an internationally sought after item. It means power.
However, you can own a painting for example, that is evaluated to billions, but if no one is able or willing to pay the price, the painting worth as much as the highest bidder is willing to pay for it.
I hope it's not too confusing :)
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I disagree as well with the hyperinflation and collectibles being such a great hedge.
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This NFT market is new in a digital way, but collectibles are not, we can predict the future of these based on the previous history of collectibles, so indeed we may see more of this.
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Summary:
In this video, Taskmaster discusses the flow of capital in various markets, expressing concerns about overheated stock, bond, and real estate markets. He predicts a significant pullback in 2021 due to worsening earnings and potential economic closures. Taskmaster also notes the absurd pricing of collectibles, such as NFTs, and the trend of wealthy individuals investing in them. This behavior raises questions about market confidence and potential shifts in capital allocations.
Detailed Article:
Taskmaster starts by highlighting the fundamental concept that markets react to the flow of capital, with inflows leading to market uptrends and outflows causing declines. He points out the current concerns around overheated stock, bond, and real estate markets, indicating a potential pullback in 2021 due to anticipated declining earnings, particularly if economic activities are restricted.
The discussion shifts to the market for collectibles, where Taskmaster observes skyrocketing prices, especially in the digital realm with NFTs. While acknowledging the lack of historical data in this relatively new market, he contrasts this trend with established collectibles like art and coins, where prices are also reaching astronomical levels. Taskmaster notes that such high prices signal the presence of excess money in the market.
Taskmaster delves into the behavior of wealthy individuals who are gravitating towards collectibles, emphasizing that these individuals are typically astute with their finances. He argues that investing significant amounts in collectibles implies more than just having excess money to throw around; it may indicate alternative beliefs about asset preservation, such as protection against hyperinflation. Taskmaster, however, expresses skepticism about hyperinflation scenarios and cautions against overpaying for assets based on such expectations.
The video concludes with Taskmaster suggesting that the shift of capital into collectibles may hint at broader market sentiments and the redistribution of funds from other investment avenues. He underscores the importance of agility and flexibility in navigating potential market shifts and advises viewers to stay attuned to these dynamics.
In essence, Taskmaster's insights revolve around the interconnectedness of market movements, investor behavior, and capital allocation strategies, offering a nuanced perspective on the implications of rising collectible prices amidst broader economic uncertainties.