Wealthy people who shopped too much used to be called collectors. Now they -- and those belonging merely to the aspirational class -- are all investors.
It's not just that they've spent the last year splurging on stakes in untested, newly formed public companies that have yet to produce products, much less profits. It's that during the pandemic, seemingly every luxury acquisition has become a so-called alternate asset class.
Rather than elbowing past one another for reservations at the latest restaurants from Marcus Samuelsson and Jean-Georges Vongerichten or getting into bidding wars for apartments at 740 Park Ave., they are one-upping each other in online auctions for jewelry, watches, furniture, sports cards, vintage cars, limited- edition Nikes and crypto art.
Bread lines grew longer and Birkin bags got hotter.
A number of retailers were reticent to speak about the trend, stating that they did not wish to be on the record talking about nearly sold-out $90,000 earrings during a time of growing wealth inequality.
A PRIMARY PASTIME
John Demsey, executive group president of Estee Lauder Cos., voiced that concern even as he admitted a primary quarantine pastime.
"All I do is go through watch porn," he said. "I'm selling watches. I'm buying watches. It's crazy. I have no reason right now to buy a watch. I'm at home all day at a computer. Time is staring me right in the face. What reason do I have to look at my wrist? But I want a tangible sign of something, so I'm looking at watches." And many other people are too.
Rolex Day-Dates that sold on the secondary market in 2020 for $30,000 are now going for up to $50,000 on some resale sites. The Nautilus 5980, a rose gold chronograph sports watch from Patek Philippe that has a retail price of $85,000, can seldom be found on 47th Street for much less than $200,000.
One reason for surging prices, according to Benjamin Clymer, editor of the watch site Hodinkee, is that "Switzerland shut down, so demand was there while the supply was dramatically reduced."
But also, he said, "the wealthy that used to spend money on travel aren't using it, so everything collectible is skyrocketing in value."
BLOGGER TO MOGUL
That includes cars, a hobby that began for Clymer in 2011 and took off in 2015, when a multimillion-dollar strategic investment in Hodinkee helped transform him from blogger to mogul.
In the summer of 2020, Clymer went searching for a 1973 Porsche 911 Carrera RS.
One had sold shortly before the pandemic through the auction site Bring a Trailer (or BaT, as it's known) for $560,000, but Clymer figured it might be a buyer's market. Perhaps he could get it for less.
He found a beauty from a dealership that hadn't listed the price on its website. It was in mint condition. Clymer asked for a quote and nearly fainted upon hearing the answer: $1.2 million.
"I said, 'You're crazy.' Less than a month later, it was sold."
By Thanksgiving, auction houses were sending out news releases almost daily touting their record-breaking sales.
A pair of Conoid lounge chairs from famed Japanese woodworker George Nakashima, which in 2019 commanded around $10,000, sold in October for $23,750 through Chicago auction house Wright. A Mesa coffee table by T.H. Robsjohn Gibbings, a British architect whose name is barely known outside of the furniture world, brought in $237,500 in December; the overall result of the sale was $2.5 million, roughly double what the house did at the same sale a year before.
In February, a digital artwork of former President Donald Trump facedown in the grass, covered in words like "loser," sold for $6.6 million, a record for a nonfungible token, or NFT, so called because there's no physical piece for the buyer to take possession of.
Fittingly, the image was paid for in Ethereum, a form of cryptocurrency that, among millennials, is almost as well known as bitcoin. Two weeks later, Christie's sold another NFT by Beeple, this time for $69 million.
The prices for the best vintage sports cards reached Andy Warhol levels. In January, a 1952 Mickey Mantle was sold through PWCC Marketplace for $5.2 million. In March, Goldin Auctions, a sports collectible site, held its annual winter auction. "We grossed $45 million," said Ken Goldin, founder and CEO. "Last year, it was $4.7 million."
One of Goldin's repeat customers is Clement Kwan, the former president of Yoox Net-a-Porter and a founder of Beboe, an upscale line of cannabis vaporizers and edible pastilles that The New York Times has called "the Hermes of Marijuana."
"Since the pandemic started, my financial portfolio has gone up 50%," Kwan said from Miami in March. "My collectibles went up by 200."
Kwan's windfall came after learning in 2019 that a documentary about Michael Jordan was going to be released the following summer on Netflix. That led him to buy up sets of Jordan's rookie cards for about $30,000 each. He also took a stake in Bleecker Trading, a sports memorabilia store in the West Village.
In May, Kwan sold a Jordan rookie card for nearly $100,000. By January, a particularly in-demand Jordan rookie card sold through Goldin for $738,000.
The renewed interest in Jordan extends to sneakers.
Those unprepared to shell out high sums for vintage collectibles are getting in on the action through recently established mutual funds.
Rally, an Android and iPhone app that sells fractional shares in everything from Rolex GMTs to dinosaur remains, had 100,000 users at the start of the pandemic and oversaw $12 million in inventory. Rob Petrozzo, its chief product officer and co-founder, said that the company now oversees $30 million of merchandise and has more than 200,000 users.
The way the app works, investors buy, sell or trade their shares as if they were stocks. New product launches are actually called IPOs.
"The equities space and the cryptocurrency space over the last few years created really savvy investors who understand the dynamics of the market, so it's a complement to their Coinbase accounts and their Robinhood accounts," Petrozzo said.
One of Petrozzo's "investors" is Nicholas Abouzeid, the 24-year-old head of marketing at MainStreet, a 50-person firm that helps startups find and claim tax credits and incentives from the government.
SHELVES OF MEMORABILIA
On a recent afternoon, Abouzeid was talking over Zoom from the bedroom of his home in Woodbury, Connecticut. In his long-sleeved white T-shirt and wood-framed glasses, he looked like any number of young white men who might work for Mark Zuckerberg or Josh Kushner. Behind him were shelves of memorabilia -- super plastic toys, sealed Nintendo games from the 1990s and collectible Nike Sacai Waffle sneakers.
In the actual stock market, Abouzeid made last year what he described as "more than what somebody should make in a year," buying and selling positions in high-growth technology companies such as Slack, Stitch Fix, Shopify and Fastly. "I'm in and out all the time," he said.
He extracted much of his profits and put them into Pokemon collectibles.
On one level, it's born of his nostalgia for the game, which he began playing in sixth grade. On another, it's "an alternate asset class and a way to diversify," as he put it.
His holy grail item is a first-edition "Booster Box" of Pokemon cards.
Upon its 1999 release, the set cost $110. In January, Heritage Auctions in Dallas sold one for $408,000.
Abouzeid doesn't have that kind of money, but in a June "IPO" from Valley Road, he bought 125 "shares" of one at a price of $25 each.
They're now worth $120 each, giving him a profit of about $13,500.