In 1979, when I was thirteen, I bought my first pair of expensive sneakers.
They were yellow and blue Nike Waffle Trainers, and I got them on sale for $23.77.
So imagine my surprise when I recently saw a pair of Nikes sell for — get this — $110,000.
Today, I’ll explain what’s going on here…
Then I’ll reveal how you can take advantage of it to earn big profits outside of stocks.
An Alternative to Stocks and Bonds
To kick things off here, let me explain how most people invest…
Most folks stick with stocks, bonds, and ETFs. If they’re adventurous, maybe they’ll add some bitcoin.
But the rich invest differently. And this difference might explain why they keep getting richer.
You see, according to recent research from Motley Fool, the rich mainly invest in “alternative assets.” What are these alternatives? Well, for starters, they include private startups and private real estate deals — the kind we focus on here at Crowdability.
But they also include “collectibles” like art, baseball cards, and you guessed it, sneakers.
As of 2020, the wealthy held about 50% of their assets in these alternative investments, and just 31% in stocks. The remainder was in bonds and cash.
Why would they do such a thing? Let’s take a look.
Three Reasons the Wealthy Invest in Alternatives
For starters, investing in alternative assets provides diversification. So even if the stock market keeps crashing like it’s been doing recently, these assets can keep growing in value.
Furthermore, they offer a hedge against inflation. In inflationary times like we’re in today, that’s a valuable trick.
But perhaps most important of all, they can provide market-beating returns.
For example, over the last 25 years, early-stage startup investments have delivered annual returns of 55%. That’s about 10x higher than the historical average for stocks.
And meanwhile, according to the Motley Fool, over the last decade:
- Wine has shot up 127% in value.
- Classic cars have gone up 193%.
- And rare whisky is up an astonishing 478%.
So how can you get access to these alternative investments?
Let’s take a look.
Recently, a new type of website has emerged to give ordinary people the ability to invest small amounts of money into everything from fine wine to fine art.
Essentially, just like you can buy a $100 stake in a startup, now you can buy $100 worth of a vintage Bordeaux, or of a classic piece of art from Keith Haring or Basquiat.
One such website is called Collectable.
Collectable specializes in sports. Its offerings include everything from a sports jersey worn by Willie Mays, to the sneakers Kobe Bryant wore in his 1996 NBA rookie game.
It also offers a secondary market, so you can aim to sell your investments at any time.
And this is where our $110,000 pair of Nikes comes back into the picture…
Curry in a Hurry
Late last year, Collectable offered a nice pair of Nikes for sale.
Here’s what they looked like:
Like the ones I bought in 1979, they were yellow and blue. But the feet they ended up on are a little more famous than mine.
You see, Steph Curry of the Golden State Warriors wore them during eight games in the 2012-2013 season. This was when Curry broke the record for three-point field goals (272) made in a single season.
On November 7, 2021, Collectable offered investors like you the chance to buy a stake in Steph’s sneakers for $10/share.
At the time of the offering, the total value of the sneakers was $78,500. But only about two weeks later, Collectable accepted a buyout offer for them for $110,000.
After all the fees, investors in the offering made a quick return of 33.8%.
Not bad. Annualized, that adds up to about 3,432%.
Keep in mind, all the typical caveats about investing apply here:
For example, don’t invest more than you can afford to lose; invest in what you know; and be sure to dip your toe into the water before diving in.
Furthermore, many alternative investments aren’t entirely “liquid.” That means they can’t necessarily be converted into cash at the snap of your fingers.
So don’t invest your rent or grocery money into these offerings.
But if you’re looking to invest like the rich, platforms like Collectable are a great place to start!