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August 16, 2021

The Rise and Fall of Beanie Babies

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Beanie Babies are a fascinating microcosm of a marketplace; supply and demand, scarcity, and value pricing. The little stuffed creatures with beady black eyes quickly grew from a $5 a toy market to a speculative frenzy with prices as high as six figures

How could a few cents of fabric and beans become such a crazy marketplace?

In a stroke of genius, the Ty toy company discontinued or modified Beanie Babies that didn’t sell well. The marketplace of collectors quickly discovered that particular babies had extremely minimal quantities. If everyone wants something, but there isn’t enough of it, what happens to the price? It goes way up. 

The increasing prices produced a flood of speculative Beanie Baby purchases. Even casual collectors became rabid fans as they eyed the potential of making significant returns on their stuffed friends. 

Unfortunately, artificially inflated markets tend to correct after a time, and Beanie Babies were no exception. Many collectors had collections worth half as much as they paid, speeding the decline in interest. 

If there is a lesson to be had, it is this: anything can become worth way more than its apparent value. How can you use scarcity and collectability to your advantage in your marketplace?

For more watch this interesting video:

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