When Rationality Meets Passion: On the Financial Performance of Collectibles (Digest summary)

Investment in collectibles such as classic cars, fine wine, and visual arts is compared with investment in traditional US asset classes over the past 20 years to assess its potential return and diversification benefits to portfolios. Overall, diversification is the defensible rationale for their inclusion.

To explore the merits of an expanded set of choices of alternative investments, the authors examine the performance of collectibles (“passion assets”) for the last 20 years. The research is helpful both in providing a thorough survey of the related literature extending back several decades and in devising an up-to-date empirical test of three broad classes of the most popular collectibles—namely, classic cars, fine wine, and visual art.

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