The Antiquity Theory


My uncle has worked in the antique market for over 15 years. Over that extensive period, he has indulged our family with the countless successes he has had. However, he explains that like the stock market, the antique business has its ups and downs. But like the successful investor, my uncle has persisted with the antique business and has in turn earned significant returns.

Firstly, my uncle sticks to a disciplined buying plan. He does not over pay for an antique at auction. For if he were to overpay, his returns on that antique would suffer. However, if he comes upon a rare opportunity, essentially finding a quality, high demand antique, in which knows has eager collectors, he will pay a small premium.

Secondly, he buys antiques that he understands. He has studied a significant amount about antiques, and has effectively acquired a niche in certain antiques. Thus, when my uncle attends antique auctions, he can efficiently appraise the fair value of those antiques he understands. My uncle explains that the best buying opportunity at an auction is when he knows more about an antique than other buyers present. With that advantage, he can effectively bid lower or at fair value to acquire an antique, while others remain perplexed by its value.

Thirdly, he likes to buy old and rare antiques. He explains that some in the antique market purchase relatively new items, hoping in the future those items become valuable antiques. However, he considers that approach to be a guessing game and thus sticks to buying antiques that he knows bear value now.

Fourthly, he explains that he buys antiques that possess a market of loyal collectors. Thus, he focuses his purchases on quality, brand name antiques. If he were to buy an obscure antique that antique would likely possess a small group of collectors. However, Coca Cola memorabilia, for instance, possesses a vast group of collectors that create constant demand. Conversely, my uncle explains that buying an antique that is in high supply in the market is not an intelligent decision. For instance, because those antiques such as Royal Doulton were mass produced in the past, their current antiquity is not rare and hence not valued highly by most collectors.

Finally, he stresses again that like the stock market, the antique market is full with amateur antique buyers. However, he likes this since he can buy valuable antiques without those amateurs knowing their true value.

My uncle represents, like the successful investor, an individual who can beat the market. He beats the antique market in that he is able to achieve higher returns on his antique purchases because he knows how to valuate an antique; measuring its auction price against its true value and formulating a return on investment on the spot. In all, his example is another reason, besides the psychological deficiency theory, to discount the market efficiency theory. For instance, the efficient market theory would assert that buyers at an antique auction contained all available information on present antiques and hence the true value of those antiques would be known and effectively priced in. A bargain antique, then, would not exist. However, my uncle purchases antiques at bargain prices consistently, because he knows more than the average buyer. And in turn, he can sell those mispriced antiques and gain 500% return at times.

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