Collectibles include things like antiques, sports memorabilia, and cask whisky, and they’re becoming robust financial assets for several key reasons. They are tangible items whose value doesn’t tend to be correlated with traditional markets. In addition, there is a growing demand for certain classes of collectibles that is being fuelled by a combination of online accessibility and media exposure.
Scarcity creates value
If we take the example of cask whisky, we see that casks from the most prestigious distilleries, particularly those with a small level of production each year, tend to hold the highest values. This is because demand far outpaces supply, resulting in a market in which there are many more potential buyers than there are sellers.
Many investors in cask whisky will also highlight the attritional nature of the market as another key reason for their investment. Whisky, by its very nature, will be consumed at some point during its lifetime, further reducing the amount in circulation. This makes it a potentially valuable financial asset for those who are happy to occupy long-term positions.
Security comes from tangibility
Traditional investments like bonds and stocks can feel abstract and detached from reality in some sense, but the same is not true for tangible assets. A whisky cask can be seen, and a bottle of whisky can be held and enjoyed, adding an additional sense of security to these types of investments. The same is true of other collectibles; art can be viewed and interpreted, and sports memorabilia can be signed and displayed. This makes certain collectibles a viable form of portable wealth that can be shipped and stored by investors.
Transparent markets matter
At a time when public mistrust in large-scale institutions is reportedly on the rise, there is a lot to be said for building a transparent foundation and a culture of openness. Key to this are specialists and experts who will guide investors and help them make decisions by helping them understand the full risk profile.
“Anyone who says to you that the market is completely guaranteed is an extreme red flag,” says Alphie Valentine, Co-founder of Hackstons, whisky specialists who provide opportunities for both investment and consumption. It’s this type of approach that allows investors to avoid scams, connect with the right people, and combine their passion for a particular collectible with the direction and focus needed to build a robust portfolio.
Diversification creates stability
The value of cask whisky is largely decoupled from the wider economy in a way that stocks and shares will simply never be able to achieve. This is in part due to the supply-demand nature of the market, but also that cask whisky is an asset that benefits from maturation. Each year, a cask matures and typically becomes more valuable. This is a key point to note because it means that investors are able to build more stable and more robust portfolios by expanding the assets they hold positions in.
In some cases, cask whisky investors may use their new positions as hedges against inflation and economic uncertainty. While there is no such thing as a guaranteed return, having a portion of their portfolio largely detached from traditional markets gives them a higher degree of protection as they look to manage their overall risk exposure.
Nostalgia and passion as starting points
In the interests of balance, it’s only right to highlight the personal side of things. Although investment decisions should always be made with the benefit of real-world data and be directed by a pragmatic approach, there is a lot to be said for investing in a passion project. You only have to look at Hackstons on Instagram to see that comments are regularly made by people who moved into the market due to a pre-existing interest in whisky. There is a certain ‘pull’ there that is not typically seen with stocks, shares, and bonds.
Growing media exposure
This point follows naturally from the last, with a growing trend of high-value collectible sales being reported in the mainstream press as public interest stories. Many of us are fascinated by wealth and value, meaning that news reports of a highly lucrative sale often pique interest and get people talking in certain quarters. The result is a higher level of public awareness that then filters down to investments in a wide range of different collectibles, one of which is cask whisky.
Final thoughts
In the interests of balance and openness, it is essential that we finish with a few words on the issue of provenance. While a stock in a company can be bought from virtually any broker, a collectible is a tangible item that, generally speaking, only one person will have ownership of. It is a unique entity that needs to be checked and verified to make sure it is as advertised, and this is why establishing provenance is absolutely essential.
As a starting point, you should know that Hackstons supplies every investor with a Delivery Note that proves ownership and can be used to verify the cask’s contents and location. Performing due diligence, rather than blindly accepting that what is being advertised is what is actually for sale, is the smart way to protect yourself when entering a new market.
Pallavi Singal is the Vice President of Content at ztudium, where she leads innovative content strategies and oversees the development of high-impact editorial initiatives. With a strong background in digital media and a passion for storytelling, Pallavi plays a pivotal role in scaling the content operations for ztudium’s platforms, including Businessabc, Citiesabc, and IntelligentHQ, Wisdomia.ai, MStores, and many others. Her expertise spans content creation, SEO, and digital marketing, driving engagement and growth across multiple channels. Pallavi’s work is characterised by a keen insight into emerging trends in business, technologies like AI, blockchain, metaverse and others, and society, making her a trusted voice in the industry.
