Gwen Moritz

A Bedtime Story

Gwen Moritz Commentary

A Bedtime Story
(TonelsonProductions / Shutterstock)

If you took my advice and watched “LuLaRich” on Amazon Prime, it’s time to watch “Beanie Mania” on HBOMax. This is an especially good assignment for Gen Zs who don’t remember the late 1990s, because the lesson to be learned from Beanie Babies applies anytime something with limited intrinsic value is promoted as an investment.

Beanie Babies were everywhere. My sons, both born in the ’90s, managed to acquire a handful, although I don’t remember buying a single one. My husband was a newspaper reporter at the time, and his mother gave him a Beanie pelican called Scoop. It still sits on his chest of drawers, and every once in a while I pound the dust off of it.

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According to the “Beanie Mania” narrative, the fad started with suburban Chicago women who discovered that some models (if that’s the right word) were available in other markets that weren’t available locally. In the infancy of the internet, they started calling small toy and gift stores — the only retailers to which toymaker Ty Inc. wholesaled the specialty product — in other areas, having the stores mail them all models they couldn’t find locally. Then they would trade with or resell to each other and to other parents whose kids clamored for the toys, finding each other on America Online (another ’90s phenomenon).

This was not exactly an artificial market as with LuLaRoe and other multilevel marketing schemes. MLMs need not find an end user as long as more and more “consultants” are persuaded to buy inventory to resell. These Beanie buyers paid the regular retail price, but a secondary market quickly developed because the value to collectors quickly exceeded the retail price.

The smart money took advantage of the opportunity for arbitrage. They bought Beanies to flip immediately. These resellers were not unlike ticket scalpers, whose risk from buying blocks of tickets decreases as the gap between face value and market value expands.

The stupid money — you’ll see some of these folks in “Beanie Mania” — became convinced that the value of a nonessential item produced by the hundreds of millions would always increase. And Ty Warner, founder of Ty Inc., fed this naivete by “retiring” Beanies on pre-announced dates, creating and then profitably filling a rush of new demand for items that were supposedly going to become rare.

At one point, Ty Inc. announced that it would discontinue making all Beanies at the end of 1999 — and then reconsidered citing market demand. Ticket scalpers really are working with a finite number of tickets to a given event. But Ty Inc. was like Doritos: “We’ll make more.”

How malevolent was Ty Warner? He ditched cash Christmas bonuses for employees of his wildly profitable company and instead spent pennies apiece on a special employee-only Beanie. It actually was a rare model with real market value, but he discouraged reselling by giving each toy a number traceable to the employee. Thanks, boss.

As quickly as it ramped up, the Beanie craze collapsed. Eventually no one was willing to pay more than a previous buyer and Beanies-as-investments came to a screeching halt. The market was flooded by sellers hoping to break even or limit their losses, and the glut accelerated the decline in value.

The obvious lesson is this: Don’t buy things as an investment unless you know you are buying below current market value and can flip an item for a profit immediately — and then do so. The idea that things always increase in value is magical thinking.

I’m not talking to folks who collect for the sake of collecting. If you have the money and interest, go for it. I do some of that myself. But don’t pretend you are investing for the future or your kids or grandkids. You are just scratching your own itch.

To observe what a crapshoot the future value of things is, watch some episodes of “Antiques Roadshow” that give updated values on past appraisals. Even spectacular, one-of-a-kind antiques have declined in value because fewer people want them. The internet that once facilitated the Beanie explosion has simplified the hunt for specific items — and revealed how many pieces are available.

There is still a modest market for Beanie Babies. In researching this column, I learned that my husband’s pelican is worth about $5, maybe $10 if you include the cost of shipping. But only because its tag is normal. If it had a tag with an identified printing error, Scoop could be worth thousands.

Just my luck.

Gwen Moritz is a contributing editor at Arkansas Business Publishing Group.