Anatomy of a Collectible Craze: From Beanie Babies to Pop Mart - Investing Risks & Opportunities

Anatomy of a Collectible Craze: A Deep Dive into Cultural Phenomena and Investment Opportunities

In the world of business and finance, some phenomena transcend mere trends and become full-blown cultural crazes. In this article, we delve into the collectibles economy, exploring the anatomy of a craze, and analyzing how businesses can turn plastic into profit. We look at examples such as Labubu and Beanie Babies, evaluate the value of owning or licensing intellectual property, and identify stocks that can be used to ride these waves.

What is a Craze?

A craze is an intense collective impulse that burns incredibly bright, often for a very short time. Think of it like a flash fire in the consumer marketplace, spreading virally before quickly burning itself out. We see it time and time again. The driving force of this is a powerful cocktail of human psychology: FOMO, our desire for novelty, and the simple need to feel part of the group. Today's crazes have become more sophisticated as companies pull on specific levers to build the hype, such as the gamification of buying, engineering scarcity, exclusivity, community, and character and aesthetic design.

Accelerating Cycles: From Beanie Babies to Labubu

The entire collectibles cycle has sped up over the last three decades. Consumer psychology hasn't changed one bit, but the timeframe it takes for someone to come up with an idea all the way to distribution has shrunk dramatically due to the ease of designing a product these days, contracting with a third party to manufacture it, and marketing it. Also, the average length of a craze or fad is so compressed. The time it takes for a product to go from conception to mainstream mania has decreased markedly.

The Rise of a Formalized Collectibles Economy

The Internet has made a more formalized economy out of the collectibles system. We now have exchanges where you can buy collectibles, as well as digital collectibles. Although NFTs haven't really fulfilled their early hype, they're showing some staying power within a smaller group of enthusiasts, which brings us to the rise of subculture collectibles. Every major platform facilitates a collectibles culture for small groups of like-minded enthusiasts. There is a craze for everyone, and the way that we buy and trade these objects we obsess over really reflects our current plugged-in culture.

Pop Mart and the Labubu Enigma

Pop Mart is a Chinese IP giant that has gained ownership of Labubu. By owning the property, Pop Mart isn't paying massive licensing fees. They have a multi-channel sales model of 500+ stores and more than 2,000 robo shops, which are basically high-tech vending machines. For investors who are looking to buy shares of Pop Mart, it is a company that is based in China and listed on its main stars on the Hong Kong exchange, but it does trade over the counter here in the United States under the ticker PMRTY.

Investor Tips: Navigating the Collectibles Market

* **Diversify:** Instead of investing heavily in one company, consider investing in larger companies like Mattel or Hasbro that have a diverse portfolio of brands. * **Focus on Infrastructure:** Consider investing in the marketplaces where these items are sold, such as eBay or Etsy. * **Exercise Caution:** Avoid these types of businesses altogether. There are much easier places to invest. In conclusion, while the collectibles market can be enticing for investors, it's important to approach it with caution. The potential for large returns can be attractive, but the risks associated with this volatile market can be significant as well. Diversification and a focus on companies with strong financial foundations can be the key to successful investing in this sector.