People have almost been murdered for this hot collectible — it’s that desirable.
Yet it’s been blanked by the mainstream media.
Little wonder — The Wall Street Journal doesn’t usually pay much mind to the buying habits of high school and college kids…
However, this collectible has come a long way in the past few years. And today, I’ll show you why it can’t be ignored any longer.
This collectible can double in a day. But that’s just the start. The rarest and most coveted examples can do much better.
One item that originally sold for $245 was listed on eBay for $19,999. That’s about 80 times your initial investment. And before you ask — that’s not just a “swing for the wall” price. A number of these collectibles sold for that.
I warn you — this asset is extremely unconventional. In fact, there’s a good chance when I tell you what I’m talking about, some of you will shake your heads and close your browser.
That would be a mistake. Big. Huge.
Trust me — this sort of opportunity doesn’t come around every day.
So what asset am I talking about? What’s this secret market? And how can you play this emerging opportunity?
I’ll give you a hint: You are very familiar with this collectible. You use a (less valuable) version every day.
I’m talking about shoes. Sneakers, to be exact.
But not just any sneakers. Let me explain…
Turning Function Into Fashion
In the 1980s, Nike sneakers were all the rage. And Nike Air Jordans were so popular people were almost literally killing to get them.
But along with that huge success came a problem.
Nikes became ubiquitous. In the push to produce millions of sneakers — and to save money — quality dropped.
In fact, Nike became embroiled in a sweatshop story or two. For a while, it became an emblem of corporate American greed.
When your audience is young tastemakers, that’s the kiss of death.
So Nike tried a new tactic. It cleaned up its manufacturing processes. Eliminated sweatshops.
And in addition to upping overall quality, Nike made a brilliant marketing decision: limited editions.
These are sneakers made in extremely limited quantities. Highly distinctive. Art, even. Almost always associated with a celebrity (usually basketball stars, but not exclusively).
High fashion at ordinary-people prices.
Calling them a huge hit would be a massive understatement.
Enter the sneakerheads — as collectors call themselves.
These are loyal buyers, to the point of being slavish. They’ll stand in line for hours, even days, for the chance to own the latest hot pair of sneakers.
If a new limited edition isn’t sold out in hours, it almost feels like a dud. Minutes is more like it.
Also within minutes, those newly purchased shoes are going up for sale online.
Cashing in Online
While most buyers are shopping for themselves, the number of people who see the shoes as an investment is growing…
According to the Los Angeles Times, market research firm NPD Group estimated sneaker sales at $1 billion in their 2016 study of the global reseller market.
Limited retail releases — most of them well under 500,000 pairs total — are reduced to an even smaller pool when you get to the secondary market.
Only a few thousand pairs make it onto resale sites in most cases — sometimes only a few hundred.
And as I mentioned above, the value of these sneakers has exploded ever since eBay enabled the secondary market and other trading sites like StockX and GOAT have come along, creating pricing and sales volume transparency.
Almost every limited-edition sneaker Nike releases is sold for somewhere between $100–250. And almost every single one of those shoes is immediately worth more on the secondary market.
By the way, Nike may be the king of the sneaker hill, but by no means are they the only game in town. Adidas, Converse, Vans, Puma, New Balance and other manufacturers produce iconic models that do well on resale.
Think of pristine sneakers like fine wines. Plenty get consumed over the years, but the longer you hold the unused item, the more it’s worth.
Mind you, each purchase isn’t guaranteed profit — sometimes price can vary widely simply by foot size.
But my point is this: There’s no shortage of demand. Assuming you do your homework and don’t buy a dud, the floor for collectible sneakers is basically a double-digit return.
And what’s more — the market is expanding…
Global Growth Surges
The trend has spread worldwide. Particularly to Asia, where the appetite for American luxury goods is insatiable.
More people chasing the same number of shoes can only mean great things for the secondary market.
As long as supply remains tight — and there’s no reason Nike will change its strategy now since it’s worked for the past 30 years — prices aren’t about to drop.
If anything, the huge secondary market markups we’re seeing today are likely a harbinger of things to come. For example…
- A pair of Jordan 4 Retro Eminem Encores is in this very moment up on StockX at an opening bid of $10,000
- A pair of 2016 Nike Air Mags sold for $52,500.
- And a pair of Converse sneakers Michael Jordan wore in the 1984 Olympic gold-medal game against Spain sold for $190,373…
That said, if you decide to jump into the fray, don’t rely on the greater-fool theory. You don’t need to buy sneakers for crazy valuations and hope someone else will pay a crazier valuation later.
Rather, you can buy these sneakers new, at retail prices. Even if prices crater — and the idea of $20,000 shoes seems ludicrous in a few months — there’s a strong established baseline below that.
And that baseline — which has been around for decades — is still well above retail prices.
Even better, you don’t need to hold these sneakers for long stretches of time.
If you’re worried about prices falling, you can unload them the same day you buy them for a healthy profit. Either through trading sites yourself — or through one of the many dealers that snatch up new releases as they come out.
In other words — at any given time, you’re making around a $250 investment, max.
If the shoes wind up worthless, your bank account will barely notice. (And you’ve got a hip pair of shoes to wear or to gift.)
Much more likely is that $250 will be worth $500 or more within a day, if you’ve done your research.
And if you snag an exceptionally hot pair, that $250 could easily jump to $2,500 or more in a year or less.
That’s an investment I want to make.
To your wealth,
Editor-at-large, Unconventional Wealth
Steffi Baker is the editor-at-large of Unconventional Wealth. For the past 10 years, she worked with a small strategy consulting firm that dealt exclusively with wealth-management companies, helping them market themselves to ultra-high-net-worth clients.
Through this line of work, Steffi attended events in London and New York and hobnobbed with household names and international...