Best Investment Advice: Avoid the Next Fad

It is with great hesitation that I release one of my darkest secrets from my childhood. Like any other child that was influenced by his/her time, I was a sucker for beanie babies. That’s right. Laugh all you want. Go on, get it out. If you want to know the truth, it wasn’t really about the toys. Believe it or not (and I know many of you may not believe me), I was primarily interested in them because I saw them as a great investment opportunity. Here’s a brief explanation of why I thought it was a great investment.

Beanie Babies as an Investment?

If you don’t know anything about beanie babies, consider yourself the lucky one. I was in elementary school (and maybe middle school as well) when they were popular. Beanie babies are  small collectible stuffed animals. There are hundreds, if not thousands, of different types of them. The best part about them at the time was that they were in huge demand!

There were some that were more difficult to get your hands on because there were less of them produced than others. For example, the bears were usually the most valuable and rare. Better yet, they had names to distinguish them from each other. I used to know many of these by heart and would have an estimate value for the popular ones in my head.

If I have still failed to convey how “hot” these glorified paperweights were, let me paint a picture. I remember, on a couple of different occasions, standing in a long line to get a chance at finding the rare beanie babies. In fact, imagine those horror stories of people mauling others down on black friday but only a couple degrees less severe. People would wait for the doors to open for the chance to flood into the store to find the rare beanie baby that was missing from their collection before anyone else had the chance.

Last, but not least, I should also point out the condition of the beanie babies mattered. Oh, did it ever! Most of the serious collectors had them stored in plastic bags if not in a glass display case. I may or may not have had both. The beanie babies also had tags which were extremely vulnerable to wear and tear. Rest assured, they invented tag covers. Plastic covers that in the shape of a heart to protect the paper tags. God forbid that you get a crease on your tag! It actually did matter. Any sign of wear would significantly lower the value.

How Much Money Did I Make?

Over a short period of time, my collection grew. I had only a few of the rare bears, but I did have a few. The average collector was lucky if he/she had one. I took great care of mine (as I hinted above) and looked to making a fortune. The sad fact of the matter is the I missed the opportunity. I drowned with the sinking ship, so to speak. As many of you now know, beanie babies are no longer popular.

My initial investment as a pre-teen and teenager proved to be a huge failure. My hundreds of dollars that I invested in hope for a great return has earned me a big fat zero. Actually, it has left me with boxes of cloth animal-shaped things. In fact, my parents recently discovered these boxes in my old bedroom closet and gave me a window of time to dispose of these worthless items.

Best Investment Advice

So, after all these years of waiting for beanie babies to come back into demand to be able to cash in on my huge investment, have I learned my lesson? Absolutely. If someone were to ask me the best tip of advice for a young person, I would advise them to avoid investing in a fad. Invest in something that will stay logically around for some time. Make sure that the popularity makes sense and don’t jump on the bandwagon just because everyone else is. Think about the many fads the have come and gone. The most recent one that stands out to be are the animal bracelets called “Silly Bandz.” This makes me think back to slap bracelets, where you would have a ruler-like toy that could wrap around your wrist once you slap it against your skin.

What Fads Have Come and Gone? Do you have any investment skeletons in your closet?

*featured image provided by: Dominique Godbout

44 Responses to Best Investment Advice: Avoid the Next Fad

  1. I clearly remember these things too. In fact, my current boss still collects them. It is hilarious really.

    Great post though. I totally agree. Investing in fads is really risky and you often don’t make your money back. Brat dolls and some others also went through a similar situation and people bought them expecting to make a ton of money. Not the case. It is much better to invest in something with substance and longevity.

    So, what did you do with all of your beanies? Donate them?

    • Corey says:

      I haven’t decided yet. I have until Christmas to decide. It’s just hard to give them away after that investment. Maybe your boss would be interested in buying them. haha.

  2. You could maybe donate them to a children’s hospital or social services to give to children going through foster care. It sounds like you took very good care of them, so they would probably welcome them =) (I also had a billion, but none of the “super rare” ones – I still have them bagged up haha).

  3. ImpulseSave says:

    I’m so glad someone wrote about Beanie Babies. I remember reading books about them as kid: with the projected values and the great returns you could get on retired beanies. It never even occurred to me that these would go out of style: they were like plush gold! Alas, what I thought would get me through at least the first year of college is now sitting in a box in my closet. I can’t give them away! Great post :)

    • Allison says:

      Me too! I thought I was going to pay for college with my beanie baby collection. I’m glad I’m not the only one :-)

  4. Aaron Hung says:

    I was into trains when I was little, now I have a bunch of old trains sitting in the attic, too lazy to sell. But beanie babies Corey?? :D

  5. Football cards! But since everyone collected them, everyone has them…

    I do have a toy called hootin hollow haunted house that goes for over $500 on ebay though. But I like it and will keep it…

  6. charles says:

    Like with everything else, if your timing is good, you can buy while the fad is HOT and get out before it starts to cool down.

    • Corey says:

      Very true. The difficult part is finding the right timing. I prefer the long term investment where I don’t have to stay up with the latest news. I might have to do this more as I approach retirement age, but for now, I prefer to buy and hold.

  7. Doctor Stock says:

    Interesting… you make a great point. The same is true with stocks… there’s always the “hot” tip, the next great thing. I tend to wait until there are proven results…

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  10. Hank says:

    Like Doctor Stock pointed out, there is a great correlation between your story and buying stocks. It is not so much a danger investing in fads or trends but knowing and understanding that they are a fad when you buy them and that there has to be an exit strategy is often the hard realization.

    • Corey says:

      True Hank. The difficult part, like you said, is knowing when to get out. I prefer to invest in long-term investments. Granted, everything is a risk, but I can’t keep up with the latest news to stay on top of short term sales.

  11. Suba says:

    Fortunately growing up in a different country, I never had any of these “valuable” collection. Even if I had known I don’t know if I would have invested in collectible. I attribute that to sheer laziness and my OCD. I know I have to investigate every single thing about the investment and I know I cannot. I might have bought a “collectible” mutual fund though :) and lost my money in a different way.

    • Corey says:

      haha. Yes, fortunate for you. I am becoming more like you Suba. I probably don’t investigate as much as I should, but I make sure to ask the right people before jumping in. I am learning more about investments every day.

  12. Great story. :) I must be super resistant to fads because I never got into any of them. If you sold your collection at the right time, you would have made a lot of money right? You just have to know when to bail. haha, I don’t know how to to that so I just avoid the hot fads.

    • Corey says:

      haha. Yeah, If only I had known that these types of things would go out of popularity. As a teenager, my thought was that the longer I kept them the more they would be worth. I never thought they wouldn’t be worth anything. Oh, how I was wrong.

  13. Loved the post, I am not familiar with these things but I certainly know what fads are and have seen them in other products. Fads could be hard to resist, call it peer pressure ;)

  14. I do remember beenie babies but I never really understood the fad, sorry Cory! I can remember the stories about people selling them on ebay for ridiculous amounts of money. Interesting comment about comparing fads to investing, only fads are much more difficult to predict whereas equity investments are usually tied to some news about earnings, etc.

  15. 101 Centavos says:

    Fads are a sure money-maker for those getting in on the ground floor. My oldest thought he was going to make a killing by buying Webkinz from yard sales, and reselling them on Ebay. He had a couple of successes with a couple of rare ones. Emboldened, he overextended and went down in flames. Lesson learned.

  16. Sounds like a good life lesson. Makes me wonder about gold at the moment???

    • Corey says:

      That’s a great point Shaun. I have been thinking along the same lines. It’s too risky for me. I’m going to avoid it, but if others do well with it, by all means.

  17. Buck Inspire says:

    I bought a few pogs (tradable cardboard caps), Magic trading cards, a bunch of old comics, and basketball cards. Never got into Pokemon. Fads never work out unless you are lucky and got out during the peak of the frenzy. Great advice for investing as well!

  18. Evan says:

    What about all those people who are smart enough to get out prior to the bubble bursting?!

  19. Just about any toy that is hard to find becomes more valuable. Then when you find it & stock up hoping to sell you find out the hard truth.

    The recession has made “safer investments” like antiques lose their market value too.

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  22. Phillip Coley says:

    In a society where everyone sells their highly specialized knowledge/skill/product to someone else who is in need of said product , it is a given that the seller has superior knowledge to the buyer. That’s why a transaction occurs. If we accept that the seller is justified in abusing his customer due to their lack of full knowledge, we no longer have an economy.

    Secondly, laws to large extent exist to preserve the culture. If there is no legal recourse to taking advantage of anther’s lack of complete knowledge, we find ourselves with an unacceptable amount of hollowed out, literally, people, and social decay marches on.

  23. [...] from 20′s Finances presents Best Investment Advice, and says, “I share a secret from my child that details the worst investment I made ever. [...]

  24. Interesting article, I’ve had a similar experience investing in POGS in the past, I made some money but when the FAD died out no one was interested. I have posted the POGS on eBay but there seems to be little interest. Excellent advice here for anyone considering to do this.

  25. I agree with this post completely, beware of fad stocks because they come and go. I personally experienced this during the technology bubble and lost a lot of money, go with the established investments and if you do decide to take a punt make sure you know what you’re doing.

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  28. […] @ 20s Finances writes Best Investment Advice: Avoid the Next Fad – Wondering what is the best investment? Read about how to make sure your investment […]

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