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How to make a Fortune - By Michael Stillman Arthur Rackham's pre-Disney Peter Pan is seen in valuable 1906 edition. By Michael Stillman Looking to make a fortune in books? A recent article on the London Telegraph's website has some ideas, but I don't know. The article is headed "Book a limited edition fortune," by David Derbyshire. That title may be a headline writer's contribution, as Derbyshire is a bit more cautious about getting rich in his copy. In a reality check statement, he points out, "Although few people will ever make a fortune investing in books, some owners are making respectable returns." The no fortune part is probably not news to most booksellers. The article points out that, "Not that long ago, dedicated book collectors had to seek out rare editions on the musty shelves of bookshops...." Where are they going now? Not the answer you are probably anticipating, the internet. No, they are going to "mainstream bookshops," those places which sell new books. What Derbyshire tells us is that publishers, "in an attempt to cash in on the demand from collectors," are putting out high quality limited editions of modern works. Evidently, the bookstores have been encouraging the publication of such editions. A typical run might be 1,000 copies (not all that limited). The publisher sends a handful of copies to each bookstore, a small enough volume to sell out quickly. Often, the volumes are signed by the author, making them even more desirable. Buyers may then choose to post their copies for sale on the internet for a tidy mark up, or put them away until their value reaches a "fortune." There is nothing new about high quality limited editions. These have been produced on a regular basis for over a century, although in the past they were more likely to be classic works and authors, rather than newer ones. However, I think the appeal in those days was more to the collector, to the person who wanted something nice to put on the shelf. I don't believe the appeal was quite so blatantly financial. Rather than publishing these editions for people who want something fine to hold in their hands, they seem to be created solely for the purpose of making money in the resale market. Of course, at some point someone better actually want one of these for collecting purposes, or one day this house of speculation will collapse. I don't expect that I will ever be one of those people who buys such an edition to collect, but perhaps others will. If the author stands the test of time, it is likely there will eventually be collectors willing to pay up for these limited editions. The article cites a few examples, both old and new, where profits have been realized. For example, there is a Peter Pan book published in 1906 that is now worth around £6,000 (that's $11,400 U.S. dollars). Blimey, Captain Hook! An investment like that could make you wealthy, provided the key to eternal life is found during your lifetime. More recent examples include Saturday by Ian McEwen. Sold at a bookstore in January for £35, it is now priced online for over £80. Here's something you know that Mr. Derbyshire does not. "Priced" online does not always mean "sold" online. But let's suppose this is a very good item and the owner does sell it for £80. How many copies can he buy, and how many of those will sell online for such a price before the market for these marked up copies disappears?
How to make a Fortune - By Michael Stillman none A doubling of your investment in a few months is a great return, but if all you can do this with is one £30 copy, it's still only going to provide you with profits enough to buy dinner tonight, not get rich. If this were a stock, you could buy 1,000 or 10,000 or however many units you could afford, and sell them later at the market price without depressing the market. You could get rich. But, you can't buy and sell 1,000 copies of a "rare" book without turning the market upside down. To put it another way, you can't buy a thousand copies without paying too much for most of them, and you can't sell a thousand copies without selling a lot at bargain prices. Yes, you might make some "respectable returns," but you sure aren't going to make a fortune. The article quotes London antiquarian bookseller Nigel Williams with what I believe is better advice. He believes a buyer has a greater chance of "being lucky" by buying a first edition by an unknown writer who later becomes a name. He points to the first edition of the first Harry Potter book, a run of around 500, now worth in the area of £25,000. I would agree that this is a better prospect as it is a rare first edition of something that went on to be enormously popular, truly the first of a kind. The designed limited edition, something a colleague of mine has referred to as a "manufactured rarity," is not the first of something that became great. It is a standalone item of no particular significance in the history of books. However, even this is a real crapshoot. For every first edition Harry Potter, how many thousands of books are published that gain little or nothing, at least not for years and years? How would you know to pick Harry Potter? Can you read all of the thousands of new books to determine which ones you should buy? Even if you attempted this, what are the chances you would have come across this particular book, there being only 500 copies of it printed? It's like first having to win a lottery for the privilege to buy a lottery ticket. Here is some advice from the most successful stock investors, that I believe equally applies to newer books. They will tell you not to try to buy a stock at its low point. Your risk is great that it will only go lower. They will tell you to wait until it has recovered perhaps 20% before making a purchase. Wait to make sure there really is some value there, even if this means giving up a little of the gain. It is well worth this sacrifice to avoid investing in a lot of losers. My guess is this advice works just as well with books. Wait until you see some signs of life for a particular book. You may pay a little more than the list price, but you'll avoid loading your shelves with thousands of unimportant books in the hopes of finding a Harry Potter for $5. Wait until it reaches $100. Yes, you will miss that first 2,000% gain (from $5 to $100), but at a value of almost $50,000 (in U.S. dollars), that is still a profit of $49,900. It's okay to leave that last $95 on the table if it saves you from buying a lot of junk. To read this interesting article from the Telegraph's website, go to http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/04/30/nbooks30.xml&sSheet=/news/2005/04/30/ixhome.html

How to make a Fortune

- By Michael Stillman

Arthur Rackham's pre-Disney Peter Pan is seen in valuable 1906 edition.

By Michael Stillman

Looking to make a fortune in books? A recent article on the London Telegraph's website has some ideas, but I don't know. The article is headed "Book a limited edition fortune," by David Derbyshire. That title may be a headline writer's contribution, as Derbyshire is a bit more cautious about getting rich in his copy. In a reality check statement, he points out, "Although few people will ever make a fortune investing in books, some owners are making respectable returns." The no fortune part is probably not news to most booksellers.

The article points out that, "Not that long ago, dedicated book collectors had to seek out rare editions on the musty shelves of bookshops...." Where are they going now? Not the answer you are probably anticipating, the internet. No, they are going to "mainstream bookshops," those places which sell new books. What Derbyshire tells us is that publishers, "in an attempt to cash in on the demand from collectors," are putting out high quality limited editions of modern works. Evidently, the bookstores have been encouraging the publication of such editions. A typical run might be 1,000 copies (not all that limited). The publisher sends a handful of copies to each bookstore, a small enough volume to sell out quickly. Often, the volumes are signed by the author, making them even more desirable. Buyers may then choose to post their copies for sale on the internet for a tidy mark up, or put them away until their value reaches a "fortune."

There is nothing new about high quality limited editions. These have been produced on a regular basis for over a century, although in the past they were more likely to be classic works and authors, rather than newer ones. However, I think the appeal in those days was more to the collector, to the person who wanted something nice to put on the shelf. I don't believe the appeal was quite so blatantly financial. Rather than publishing these editions for people who want something fine to hold in their hands, they seem to be created solely for the purpose of making money in the resale market. Of course, at some point someone better actually want one of these for collecting purposes, or one day this house of speculation will collapse. I don't expect that I will ever be one of those people who buys such an edition to collect, but perhaps others will. If the author stands the test of time, it is likely there will eventually be collectors willing to pay up for these limited editions.

The article cites a few examples, both old and new, where profits have been realized. For example, there is a Peter Pan book published in 1906 that is now worth around £6,000 (that's $11,400 U.S. dollars). Blimey, Captain Hook! An investment like that could make you wealthy, provided the key to eternal life is found during your lifetime. More recent examples include Saturday by Ian McEwen. Sold at a bookstore in January for £35, it is now priced online for over £80. Here's something you know that Mr. Derbyshire does not. "Priced" online does not always mean "sold" online. But let's suppose this is a very good item and the owner does sell it for £80. How many copies can he buy, and how many of those will sell online for such a price before the market for these marked up copies disappears?

How to make a Fortune

- By Michael Stillman

none

A doubling of your investment in a few months is a great return, but if all you can do this with is one £30 copy, it's still only going to provide you with profits enough to buy dinner tonight, not get rich. If this were a stock, you could buy 1,000 or 10,000 or however many units you could afford, and sell them later at the market price without depressing the market. You could get rich. But, you can't buy and sell 1,000 copies of a "rare" book without turning the market upside down. To put it another way, you can't buy a thousand copies without paying too much for most of them, and you can't sell a thousand copies without selling a lot at bargain prices. Yes, you might make some "respectable returns," but you sure aren't going to make a fortune.

The article quotes London antiquarian bookseller Nigel Williams with what I believe is better advice. He believes a buyer has a greater chance of "being lucky" by buying a first edition by an unknown writer who later becomes a name. He points to the first edition of the first Harry Potter book, a run of around 500, now worth in the area of £25,000. I would agree that this is a better prospect as it is a rare first edition of something that went on to be enormously popular, truly the first of a kind. The designed limited edition, something a colleague of mine has referred to as a "manufactured rarity," is not the first of something that became great. It is a standalone item of no particular significance in the history of books.

However, even this is a real crapshoot. For every first edition Harry Potter, how many thousands of books are published that gain little or nothing, at least not for years and years? How would you know to pick Harry Potter? Can you read all of the thousands of new books to determine which ones you should buy? Even if you attempted this, what are the chances you would have come across this particular book, there being only 500 copies of it printed? It's like first having to win a lottery for the privilege to buy a lottery ticket.

Here is some advice from the most successful stock investors, that I believe equally applies to newer books. They will tell you not to try to buy a stock at its low point. Your risk is great that it will only go lower. They will tell you to wait until it has recovered perhaps 20% before making a purchase. Wait to make sure there really is some value there, even if this means giving up a little of the gain. It is well worth this sacrifice to avoid investing in a lot of losers. My guess is this advice works just as well with books. Wait until you see some signs of life for a particular book. You may pay a little more than the list price, but you'll avoid loading your shelves with thousands of unimportant books in the hopes of finding a Harry Potter for $5. Wait until it reaches $100. Yes, you will miss that first 2,000% gain (from $5 to $100), but at a value of almost $50,000 (in U.S. dollars), that is still a profit of $49,900. It's okay to leave that last $95 on the table if it saves you from buying a lot of junk.

To read this interesting article from the Telegraph's website, go to http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/04/30/nbooks30.xml&sSheet=/news/2005/04/30/ixhome.html