Even with all the resources in the world, there were some things that wealthy people could not access during the pandemic. High end restaurants closed; supply chains for luxury goods were just as disrupted as those for toilet paper and basic necessities. Those developments left the wealthiest consumers in the world with a lot more disposable income to spend, along with more time on their hands.

In turn, the prices being earned by auction houses and bidding sites have skyrocketed to unprecedented levels. One online auction house that specializes in sports memorabilia noted that during its winter auction, its gross proceeds were $45 million. Thus with just one auction, it took in nearly ten times the $4.7 million it had earned over the entire previous year. Although rookie cards and game gear signed by the greatest players have always brought high prices, the peaks rose astronomically during the COVID-19 pandemic. For example, a Michael Jordan rookie card sold for $100,000 in May 2020, to a buyer who turned around and auctioned it for nearly $740,000 a few months later. And it isn’t just Jordan cards. A signed pair of 1985 Air Jordans sold for more than half a million dollars on another site.

The price frenzy extends to a range of luxury items, beyond sports collectibles. Watches, furniture, and vintage cars have all sold for record prices, to wealthy people who freely admit that they see buying and selling such items as their hobby. Spending their time looking for and purchasing one-of-a-kind status symbols also has been a source of the growth in one sector of the NFT (nonfungible token) market. By purchasing access and ownership rights to digital files, wealthy collectors signal that they are willing to spend money on images and content that others can download for free. They also can reinforce their self-image as someone on the cutting edge when it comes to collecting and owning art.

But not everyone can spend $6.6 million for a video by an artist named Beeple. So for wealthy but not ultra-wealthy collectors, the Rally auction app allows them to buy shares in items that the consumers bet will increase in value. Some users buy a few shares in a recently unearthed dinosaur skeleton; others put their money down on a vintage Rolex listed by the app. Another option is to buy into a first edition box of Pokémon cards. That may sound silly, but a mint condition box of cards recently sold for $408,000. On Rally, users can purchase shares, for $25 each, of this collectible, then reap the profits as the prices climb. For these buyers, the purchases are less for their collections or hobbies and instead are more like an investment, similar to the stock market.

As the prices climb, auction houses and investors are enjoying rapid increases in their wealth, buying power, and profits. But is there a ceiling effect? If and when wealthy consumers can start traveling freely or staying in boutique hotels more readily, will they lose interest in the hobby of spending and earning back millions in a single transaction? Or is the thrill something built to last, rather like the heritage luxury items that people covet?

Discussion Questions:

1. What defines the value of these luxury items? What defines their prices?
2. For sellers, such as auction sites, is it more effective to market such purchases as investments or as fun opportunities to collect unique items? Explain your answer.

Source: Jacob Bernstein, “Here’s How Bored Rich People Are Spending Their Extra Cash,” The New York Times, March 20, 2021; Mitchell Clark, “NFTs, Explained,” The Verge, March 11, 2021