Evaluating collectibles as alternative investments: a hedonic pricing analysis of vintage Hot WheelsTM

Purpose - The purpose of this paper is to examine the factors that affect the pricing of collectibles and to consider the extent to which their returns relate to such assets as stocks, gold, real estate and commodities as well as what happened to prices during the COVID-19 pandemic. Design/methodology/approach - Using a hand-collected data sample of over 2,000 revealed sales prices of vintage Hot Wheels cars from 2009 to 2023, the authors create a price index using a hedonic regression model to form a characteristic-free return series. The authors then use the single-index and multifactor models to determine the relationship between the asset’s returns and market risk factors. Findings - The results show that certain factors, such as the scarcity of the color, the condition of the car and the year of the sale, are significantly related to price. In addition, based on the price index, the authors find that during the time period of our study, the return on Hot Wheels cars is not related to typical market-related factors such as the market index and momentum, but does show a positive relationship with the volatility index. Research limitations/implications - The study uses a sample of only one of the most popular Hot Wheels cars from 1971, the Olds 442. As with all investments, past returns are not indicative of future performance. Practical implications - As many individuals purchase collectibles not just as a hobby but as investments, this paper provides evidence that it may be a viable strategy. Originality/value - Previous research has examined other collectibles such as art, wine and stamps as alternative investments, and this is the first paper to examine vintage Hot Wheels cars with data taken from a previously untapped information source. The results of this paper should advance our knowledge of alternative investments and their relation to market factors.