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Liquidity and Market Value

Any time you make an investment, you must take into account liquidity and market value risk. With collectibles, this risk is considerably higher than with other securities such as stocks and bonds. Usually, the market for collectibles is not very liquid and amateur collectors can lose money on their investments quickly. This is very common with investments in art and numismatic coins for which you are often dealing with individual buyers and sellers. This is a big reason for the success of eBay. With competitive markets, prices are more easily verified.

Another way to look at market value is in buying or selling a used car. The most popular provider of comparative information on cars is the Kelley Blue Book. Before the Internet, you had to find someone who subscribed to the Kelley Blue Book to find the wholesale and retail values of cars. Today, that information is widely available, making the market much more stable and affording you the ability to see what similar cars with similar features are selling for.


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