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The Danger of Collectibles Investing

Last update on: Feb 25 2020

Antiques, collectibles, and other unconventional investments have done well the last few years. That attracts more people to them. Unfortunately, it takes a lot of knowledge or the help of a very good, honest consultant to do well. The big problem is paying too much because an item is either a fake, inferior quality, or not in good enough condition to warrant the price. Here’s an interesting piece on a man whose job is to inspect vintage cars to determine if they are real, fake, or partly fake. It shows how hard it is to buy wisely in the unconventional asset market.

“The fraud lies in holding it out to be the real machine when you know it is not,” says Martin Emmison, a lawyer who specializes in collector-car cases at Goodman Derrick LLP, a London firm. Emmison notes that many counterfeits begin life as legitimate replicas before being passed off as originals by unscrupulous dealers.

As a rule, Schroeder’s antennae begin to twitch whenever he is confronted with a model he knows is easy to knock off using an authentic but much less expensive chassis from a model of similar vintage. A Ferrari hardtop can be turned into a more desirable Ferrari Cabriolet, and a road car like a 1973 Porsche 911 Carrera can be made to look like a Porsche 911 Carrera RS race car, its much more valuable cousin.

Uncovering a fake requires an encyclopedic knowledge of classic cars and can turn on the smallest of clues: Schroeder recently discovered a counterfeit Mercedes 300SL Gullwing (the real deal is worth about $1.2 million) because of a slight aberration in the font used to stamp its vehicle identification number. Also suspect are sellers who are vague on a car’s recent ownership or who claim to have discovered the chassis of a famous race car that has been missing for decades.

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