The economic downturn hit the collectibles market hard.

Prices tumbled and many collectible items were not even put up for sale because owners who had purchased during the price run-up feared offers would be too low. Many potential buyers were too shell-shocked to make any financial moves of any kind.

Only now, as investors thrash about for alternatives to the stock market, are they starting to consider collectibles as an alternative for a portion of their money. Both the Sotheby's and Christie's international auction houses posted record profits in the first half of this year.

The challenge of the collectibles market—an array of segments from fine art to furniture to jewelry and classic cars—is that it can be just as complicated as the stock market. It requires advance research, talking with experts, playing hunches, bargaining, and having the patience to wait for items to appreciate.

That is why it always makes sense to buy collectibles that you like. After all, they're only worth what someone else is willing to pay for them, and you could wind up holding them forever.

Finding unusual, high-quality collectibles that aren't available in large quantities and capture the flavor of an exciting time or person is no easy task. It is a hunt that includes not only the low-buck neighborhood estate sale on a Saturday afternoon, but also the Christie's auction of Elizabeth Taylor's jewelry scheduled for December that is expected to bring in more than $30 million.

"The collectibles market, like the financial market, has its ups and downs, and nothing was doing well in 2008 and 2009 because the bottom simply dropped out," says Nicholas Lowry, president of the Swann Galleries auction house in New York. "Even people with a lot of money didn't want to be seen spending publicly on art during the downturn because it could have been viewed as callous."

The fire sale of collectibles that some predicted as the economy began its swoon never took place because people didn't want to sell prized possessions in an unfavorable environment, he says.

"Things are a lot better now, with the turning point when people realized that the financial markets were no longer the safest places to invest money," Lowry says. "Before the economic downturn, there was a crazy bubble of insane collectible prices. It came down, and now I see a strong market on the way to a great recovery."

It should come as no surprise that jewelry is a collectible universally admired and resilient in popularity.

"The one area of the collectibles market that has been recession-resistant is jewelry, with fine jewelry sales ranging from $100 to $5,000 remaining very strong," says Louis Webre, senior vice president of the Doyle New York auction and appraisal house, noting that desire for jewelry never goes away in any economy. "There is plenty of supply and demand for jewelry; it is easily transportable, and if someone wants to sell jewelry, it is very easy to do so through auctions."

While Webre always tells customers to "buy what you love" and doesn't talk up the investment potential of collectibles, there is always the hope that when your descendants or an estate want to sell the item in the future, it will be worth more than what you had initially paid for it.

The collectible market's performance is highly segmented. For example, the market for moderately priced collectible furniture and home decorations, which Doyle auctions for an average item price of $650, is soft right now, Webre says.

"The economic downturn sent the collectible print market down by a good 50 percent at all the auction houses, but it started to come back later in 2009 because there was more demand than supply," says Tudor Davies, head of the prints department at Christie's in New York. "We're not back up to 2007 prices, though the exception would be anything that is very rare or distinctive in quality."

Historically, the high point of each collectible's cycle is always higher than the one that preceded it, says Davies. One reason is the fact that buyers now are more broadly based, with auction bids coming from countries all over the world and Asia in particular. The more bidders, the higher the potential prices.

Stepping up from hobbyist to collector and investor is a major move.

"A collector is someone who takes a specific approach to buying which is reasoned and considered," says Davies, who says someone who collects as a hobby is basically a shopper for decorative purposes. "Everyone buys the art that they love, but a collector is setting out to build a collection, and that collection is usually built around certain key factors."

Buying collectibles at the current stage of the market is advantageous because it represents relatively reasonable prices in a market that always has long-term prospects, Davies says.

"We are a little over two years after a major correction in the market, and the average cycle in the art market is 15 to 20 years," says Davies. "Whatever happens in the next one, two or three years in terms of small corrections is not really meaningful in the great scheme of things."

Having patience with volatility is the general requirement for every market in 2011.