How the Beanie Baby Bubble Burst

Investing in Magic Beans

They’re cute. They’re cuddly. And in 1998, they were gaining recognition as a safer investment than any stock. They were Beanie Babies. Savvy investors shunned Pets.com and put their savings in plush stuffed animals.

Following the brand’s 1993 launch, Beanie Babies’ parent company, Ty, deftly manipulated the market by limiting supplies of certain Beanies and “retiring” others to a plush zoo in the sky. As certain species of Beanies became elusive, collectors’ demand for them shot up. And as a few began fetching tremendous prices – a royal blue Peanuts the Elephant was pulling in $5,000 in 1998 – hobbyists collectively decided that every Beanie Baby would eventually be worth a fortune. With prices skyrocketing, investors who wouldn’t ordinarily have been in the market for stuffed animals jumped onto the scene. So began the Beanie boom.

Plush Comes to Shove

To investors, Beanie Babies were at least as sound as gold. According to 1998’s The Beanie Baby Handbook  - which sounds like an objective source to us! – folks would be foolish not to put part of their retirement savings in Beanies: “Basically, if you can afford to do this, simply putting away five or ten of each and every new Beanie Baby in super mint condition isn’t a bad idea.”

Each Beanie Baby retailed for around $5, but if a collector just held onto them for a few years, they could cash in their investment for untold riches. A mint condition Ants the Anteater could be traded for a college education. Realtors would line up to swap beachfront properties for a Doodle the Rooster. The Beanie market had reached a permanently high plateau.

Just how prudent was cashing in your 401(k) to buy a Crunch the Shark? The Beanie Baby Handbook didn’t just detail the critters’ current values; it estimated what their market price would be in 2008. That $5 plush doll sitting on a drugstore’s shelves would be worth $60 in just 10 years! That’s a 28% annual return on your initial investment. And that was for a relatively common Beanie.

A (Stuffed) Bear Market

But there was a problem: True collectibles, like old comic books and baseball cards, are valuable because nobody expected them to be valuable. So they got chucked in the trash. Unfortunately for investors, Ty was cranking out millions of some of the toys, and kids weren’t destroying them. They were going into collectors’ cases, so their rarity never soared. Even that royal blue Peanuts the Elephant that commanded five grand wasn’t that rare; Ty had made 2,000 of the curiously colored pachyderm.

Investors soon realized that Beanies were a classic bubble, and after a few heady months, the market collapsed. Today, examples of Seaweed the Otter that The Beanie Baby Handbook predicted would be worth $60 regularly fail to fetch a buck or two on eBay. But on the plus side, he’s still as cuddly as ever!

So Beanie Babies couldn’t hold their resale value. But you know what will? The new MINI Convertible! Not only will it hold its value, you’ll have fun zipping around town with its BRAND ATTRIBUTES TK. And you don’t have to keep it on a shelf to keep it in mint condition.