Horowitz, general counsel to the Office of Management and Budget under Ronald Reagan, paid less than $10,000 for each item in his collection, but is now taking a step toward more significant purchases. He is attracted to the combined value of the documents as investments and as objects of great personal interest–a sense that traditional investments alone rarely provide. "Every once in a while, I think we should buy more emerging-markets mutual funds," Horowitz muses. "Then I think we should take a more major chunk and spend it on autographs."

VALUE JUDGMENT: While auction prices for coveted historic autographs have reached seven figures, some experts still consider this market undervalued compared with other historical collectibles. Investment-minded collectors seek out "excellent letters," which tie famous personalities to important events. But buyers need to be wary of hucksters, find reliable dealers and keep in mind that the field’s appeal as an alternative investment is secondary to the enjoyment of owning a piece of history.

Although signatures of famous people have been prized for centuries, autographs are relative newcomers to the arena of investment-quality collectibles. This once very quiet corner of collecting began showing signs of growth in the early 1980s; it has been particularly robust in the past few years. Nathan Raab, a principal at the Raab Collection in Philadelphia, which specializes in American letters, notes interest in the high end of the market is especially strong. "We are watching the market move," he says.

Last year, the Raab Collection, founded by Raab’s father, Steven, commissioned Abraham Wyner, a statistics professor at the University of Pennsylvania’s Wharton School of Business, to conduct a historical study of autograph values. Since World War II, the highest quality documents have averaged an annualized return of more than 10 percent.

Wyner tracked autograph prices for 60 prominent figures, starting in 1892 when signatures of obscure presidents sold for less than a dollar. In 2002, Lincoln’s and Washington’s autographs were the most valuable, almost 100 times more expensive than documents signed by George H.W. Bush, Jimmy Carter or Gerald Ford. In 2002, a Lincoln letter sold for a record $3 million, and a document signed by Albert Einstein went for almost $2 million. While these prices may seem inflated, several veteran dealers and collectors believe the market is still undervalued compared with other historical collectibles, such as coins, books and stamps.

Message, not Medium
Determining the value of a signed document is as much art as it is science, but there are guidelines. In most categories of collectibles, condition and rarity are the value drivers; with signatures, however, the content associated with it is king. "Condition is almost the least important," says David Lowenherz, president of Lion Heart Autographs, a dealer in New York. "A fascinating letter written pre- or post-presidency will be worth more than a commonplace letter written during a presidency," he explains. All things being equal, however, letters signed when a president is in office typically sell for more; if the letter is addressed to a well-known figure, the value increases.

Like many dealers, Lowenherz has his own passion: international autographs of artists, musicians and scientists. He sells pieces in those areas and also handles Americana. He recently offered a letter from Thomas Jefferson to Thomas Paine about the Embargo Act of 1807 for $75,000. It is the last known communication between the two men. "The fact that it is a last letter and a relationship that stretched over many, many years makes it not only important, it makes your hair stand up a little bit. You get goose bumps," Lowenherz says. He estimates that a more common letter, from Jefferson to a senator, for example, would sell for about one-fifth that price.

Autograph collecting encompasses a range of items: letters, documents such as property deeds, signed photographs, books, manuscripts and sheet music. Some collectors opt for historical content, while others look for letters with personal and even deeply moving passages, Lowenherz says.