SHINY THING$ 0134 ✨

Over the last 6 years at Rally, we’ve been incredibly lucky to get a lot of attention across all forms of media, and we built a platform greater than the population of some major cities through word-of-mouth. But without the press coverage we’ve been able to attract, it’s unlikely we would have been able to scale the way we have. For the all the polarization triggered by legacy media outlets, mainstream press remains at the forefront of storytelling - particularly in consumer financial sectors.

A few months back, we started a convo with journalist Charles Passy - a collector himself - about the current state of the market and Rally’s role in the ever-growing mindshare of collectible culture. This past week, his “Here’s why” article outlining collectibles as an investment published in MarketWatch with incredibly thorough reporting across the entire industry, including conversations with Rally investors and other platforms throughout the ecosystem. 

In this, the 134th installment of Shiny Thing$, we include an excerpt from the piece, which you can read in its entirety here. 

Originally published May 31, 2024, via MarketWatch

When David Larsen decided to start investing in collectibles a few years ago, he went all in, buying dozens of unique and rare items. Among them: A Michael Jordan jersey, a copy of Macworld magazine signed by Steve Jobs and a sought-after Lamborghini.

But Larsen’s cost to get in the game has been relatively little — about $20,000. That’s because he hasn’t been buying the items outright. Instead, he has been purchasing shares in each one — in most cases priced well below $100 apiece — through an emerging collectibles-investment platform called Rally that specializes in fractional-ownership structures. And it allows investors to trade those shares on an exchange, much like a stock.

It’s hardly the traditional approach to collecting. And it certainly doesn’t afford Larsen any opportunity to enjoy his investment in a physical sense — certainly, there’s been no opportunity to drive the Lamborghini. But Larsen, who is 42 and living in Southern California, doesn’t seem to mind. If anything, he’s happy with some of the returns he’s seen so far, including a doubling of his $100 investment in that Lamborghini.

These days, plenty of individuals like Larsen are happily finding their way into collectibles because of a wave of new or growing companies that go far beyond Rally and similar fractional-ownership enterprises. Think advisory services that help collectors buy, store and insure their valuables. Or grading outfits that authenticate items and, yes, grade them on a 10-point scale.

Yet another development is that more categories of collectibles are being taken seriously. Among the hot ones of late are VHS tapes, vintage Apple iPhones and Pokemon cards. To go hand in hand, auction houses are beginning to embrace such nostalgia-laden categories. Heritage Auctions and ComicConnect, two of the more prominent collectibles specialists, have held VHS events, for example.

Add it up and a world that was once seen as fairly limited to select groups, such as high-end buyers who attended rarified auctions to purchase pricey works of art or young hobbyists who frequented local collectible shops to buy baseball cards and comic books, has become increasingly more open and dynamic. Nobody is suggesting that you bet a material amount of your savings on collectibles, but many investors clearly want to have at least a little exposure to this asset class as part of a broader investment portfolio. The development of the collectibles market and the ability to more easily access it is one of the Best New Ideas in Money.

In recent years, collecting has surged, both as a pastime and, perhaps more significantly, as an investment strategy. The headlines in news outlet after news outlet have underscored this phenomenon — “The Most In-Demand Investment Might Be Your Baseball Card Collection,” declared The Wall Street Journal — as have some truly eye-popping sales. One case in point: A Mickey Mantle 1952 rookie card went for $12.6 million in a 2022 auction. Three decades ago, that same card sold for $50,000.

Admittedly, the pandemic is often seen as the wellspring for this boom. Those many months of being cooped up at home gave people time to start assembling new collections or to simply dig through their closets and attics to see whatever forgotten treasures they had. But experts and professionals in the collectibles field say this didn’t happen by itself.

Ezra Levine, is an industry veteran who in 2023 started Mascot, a company in the collectibles space that essentially acts as an inventory tool. But Levine says Mascot is connected to various platforms, such as eBay and Shopify so that users can catalog what they own and then easily put those items up for sale. Mascot is part of an emerging ecosystem that has evolved in recent years, making it simpler for collectors to begin their collecting journey. “There’s been a tremendous amount of innovation. It’s no longer this underground industry,” says Levine.

Rally has become that entry point for many wading into collectible investments. The company, which launched in 2017, didn’t invent the idea of fractional ownership of collectibles. Nor does Rally own the market completely — far from it. There have been other platforms with the same idea, notably in the art world.

But Rally, based in New York City, has distinguished itself in two ways. First, it features a wide range of collectibles, with more than 400 items as part of its current offerings. Pretty much anything goes, from a ticket to Elvis Presley’s last live performance (initial price: $8 a share) to a very rare copy, dating from 1776, of the Declaration of Independence (initial price: $25 a share).

The initial low per-share cost is key to Rally’s model, explains Rob Petrozzo, the company’s co-founder. “We want to make sure it’s approachable,” he says. The other distinguishing factor is that Rally’s shares are indeed traded on an exchange — though shareholders can also opt to hold on until the collectible is sold at a price accepted by the majority of its owners, with the money then divvied up. In theory, the collectible can stay on the Rally platform forever, though Petrozzo says items are typically sold within three to five years…

[read the full article on MarketWatch]

Until Next Week…

(+ Knicks in 5)