The Ten Top Reasons to Profit from Ephemera (in a Tough Economy) by Michele Behan #120, 12 May 2008

First - the bad news. You can't pick up a newspaper or turn on a news show without being inundated by headlines of economic woes. The burst of the housing bubble has given way to the subprime mortgage meltdown and the worst credit crisis in America since the 1930s. Turmoil in the financial sector has affected all areas of our economy. A crisis of confidence has overshadowed freewheeling investors, who now operate in a climate of fear and apprehension. We consumers are left to cope with ever-rising gas prices and exorbitant grocery bills, while our homes are losing value and our credit sources are choked.

The economic ravages of this market downturn have been described by New York University economist Nouriel Roubini as a "very dangerous" crisis not seen since the Great Depression. What's a bookseller to do in these uncertain times?

One word: diversification.

Diversification is defined as "the process of accumulating securities in different investments, types of industries, risk categories, and companies in order to reduce the potential harm of loss from any one investment." Financial investors are advised to spread their risk by putting their assets in several different categories of investments, such as stocks, bonds, money market funds, and even precious metals. At the very least, stockholders are encouraged to invest in funds with a broad range of stocks, rather than hold individual stocks, in order to protect themselves from failure in any one sector.

In the same way, booksellers should consider spreading their financial risk by diversifying in different, yet related, business ventures. Adding ephemera - short-lived items usually made of paper, such as documents, letters, postcards and photographs - to your mix of inventory could be one of the smartest moves a bookseller can make in these tough economic times.

Now - the good news.

Here is a list of ten reasons why adding ephemera to your inventory of books can add to your profits:

10. The collapse of the housing market may increase the availability of ephemera.

Heirs who depend on liquidators or auction houses to dispose of their deceased loved ones' belongings have traditionally derived most of the estate proceeds from the sale of the family home. The dispersal of miscellaneous household items was often little more than an afterthought. I've heard estate sale operators tell stories of ephemera unknowingly discarded by family members. In one true story, a large quantity of vintage Halloween paper dating from the 1920s was found in a home's basement. Since the heirs saw no value in all this paper "junk," it was promptly dumped into the nearest trash can. Luckily, the auctioneers arrived on the scene in the nick of time and retrieved the Halloween ephemera from the garbage - those items alone netted the heirs $3,500! The collapse of the housing market makes the value of an estate more dependent on the lucrative stuff found inside the house. Now that houses have lost 20% or more of their value in some markets, these old papers and pieces of ephemera stand a better chance of being spared from the trash heap and made available to us and the collectors who search for them.

9. Collectors are living longer and continuing to add to their collections.

Changes in life expectancy and advances in health care are enhancing the quality of life for senior citizens. This translates to a new pool of experienced collectors who, rather than planning to dispose of their collections when they reach their 60s or 70s, are instead adding to those very collections. These advanced collectors have the interest and the financial resources at their disposal to provide a ready market for ephemera. Additionally, the increase in healthy and active seniors means that new collectors, freshly retired from the workplace with time on their hands, can be recruited as customers. Longer life expectancies increase the pool of potential buyers looking to acquire good quality ephemera, which we younger folks are happy to supply.

8. The fluctuating value of the dollar is attracting international investors.

Items of ephemera are avidly sought by many collectors outside America's boundaries. Because the dollar has lost its buying power against foreign currencies, international consumers are taking a new look at goods sold in the United States. As the dollar approaches nearly historic lows, merchandise offered by U.S. sellers offers an attractive value to the foreign collector who can take advantage of the exchange rate to nab bargains.

7. Sites such as eBay make it easy to offer ephemera to a worldwide audience.

In conjunction with the fluctuating value of the dollar, never before has it been easier to attract a global base of collectors. The epitome of making lemonade from lemons is to make a declining dollar work in your favor by choosing to sell your wares to a worldwide market. In true melting pot fashion, the fact remains that many paper items avidly collected by Europeans have migrated to America throughout the last four centuries. Finding these items, allowing international customers to purchase them and sending them back home across the ocean can put real money in your pocket.

6. Paper collectibles are perceived to hold their value better than paper dollars.

Not since the 1970s has inflation reared its ugly head at its present dizzying pace. Combined with an ongoing recession, the inflationary pressures in today's economy have been termed "stagflation" by media such as the Wall Street Journal and The New York Times - representing the marriage of stagnant economic growth and destructive inflation. Stagflation is not a pretty picture. Nevertheless, consumers who have lost faith in the power of the dollar will be more inclined to park their inflationary currency in tangible investments, such as ephemera, in the hope that such collectibles will hold or even appreciate in value. Such thinking can only help those of us who deal in paper collectibles.