It's Sergeant Pepper's wealthy hearts club band

Rock star memorabilia can be worth a fortune but, writes Dido Sandler, you have to know the market to make your investment sing

Beatles gear is the top seller in the burgeoning market for rock memorabilia. In 1983 the handwritten original of the John Lennon anthem Imagine sold for pounds 7,000. Thirteen years later, just one and half verses of Being For the Benefit of Mr Kite was bought for pounds 66,400.

Ted Owen, entertainment consultant at Bonhams auctioneers, believes The Beatles have a lot more mileage in them beyond the success this year of the "Anthology" series, which has pushed the market to new highs. Every generation will rediscover them, he says, and Sixties super- groups will always be popular.

In the past 20 years a multi-million pound market has grown up, with rock museums and Hard Rock Cafes competing with private collectors in the United States, Germany and Japan to snap up memorabilia.

Mr Owen maintains that spending money wisely on rock memorabilia constitutes a sound investment. Special-edition records can fetch high prices, providing they are in mint condition. The first few thousand off the press of The Beatles' first LP, Please Please Me, which sports gold lettering on the black background instead of yellow, currently sell for pounds 3,000 in stereo form, or pounds 800 in mono.

The early (and often awful) recordings of pop stars can also be valuable. Beanos, a London record shop, recently sold a copy of David Bowie's first disc on Vocalion Records, when he was still part of R&B band Davie Jones and the King Bees, for pounds 1,500. Meanwhile, a tape of Gary Barlow's songs before he joined Take That recently went for pounds 15,000 at auction.

Items from Sixties icons with lasting appeal, such as The Beatles, Jimi Hendrix, The Rolling Stones, The Doors, Janice Joplin, Cream, as well as Elvis, are safe investments, and prices are climbing steadily. And as one star or star group's clothes, first recordings, guitars, and even school books become expensive, collectors cast around for new heroes to spend their money on.

But Stephen Maycock, Sotheby's specialist in rock 'n' roll memorabilia, believes this is still a very young and unstable market. He says: "If you like something, fine. But I wouldn't buy it as an investment."

Madonna's pointy bras, for example, have deflated since their peak. A few years ago they sold for pounds 4,000. But the market became flooded with her underwear and Madonna herself has waned in popularity. As a result, the bras are now worth half the sum.

Michael Jackson's fedora hats have suffered a similar fate. There are too many of them on the market, and Whacko Jacko has also lost a lot of his appeal.

However, the death of a rock star does great things for the value of memorabilia. Sets of Queen autographs rose from pounds 60 to pounds 600 overnight when Freddie Mercury died. Sets of autographs from The Rolling Stones before Brian Jones died are sold at a premium, as is gear from Hendrix, Joplin and Jim Morrison. Kurt Cobain, nihilist lead singer of Nirvana, is growing as a teen cult symbol. His autograph leapt in price, from pounds 40 to between pounds 250 and pounds 600 overnight, after his suicide.

Peter Doggett, editor of Record Collector magazine, says it helps if your star had a pretty face, deep inner meanings, poetic leanings, and captured young people's imagination - like Cobain and Jim Morrison.

He adds that less profound bands, such as Slade, do not tend to attract collectors in the same way, although their records continue to be played on the radio.

Investing in up-and-coming bands is a far more speculative and risky venture, although the potential rewards are great. Che Osborne, assistant manager of Beanos, says Oasis is going to dominate the world this year. But Mr Owen wonders whether the band has the staying power to make it over the longer term.

The Oasis collectors' market grows apace. The band's promo-only debut 12-inch single, Colombia, sold for pounds 10 in late 1994. Two years later, it is worth more than 10 times as much.

Alanis Morrissette, Sheryl Crow, Blur and Manic Street Preachers have also been tipped. Smashing Pumpkins are coming up and so is techno-punk band The Prodigy, whose first single, What Evil Lurks, on XL Records, is currently worth pounds 60. Mr Doggett believes it will sell for pounds 200 by the end of the year.

Auctioneers are probably the best place to go to buy higher-ticket items of memorabilia, over pounds 200. The cut is lower than that of the dealers: Sotheby's charges 15 per cent on the seller as well as 15 per cent on the buyer. There is no guaranteed price, so prices may go higher here than at dealers, although a sale may also bomb. Dealers, on the other hand, generally charge a 100 per cent mark-up, or two-thirds on a higher- ticket item. Records usually sell through dealers, unless there is something especially rare about a piece of vinyl.

Alternatively, to cut out the middleman, try classified ads in music papers like Record Collector or other specialist magazines.

As with most collectables, you have to know what you are doing or you will waste your money. Mr Owen says would-be collectors should focus on an area they like, and learn all they can. You can build extra value to your collection by gathering an entire set of items around a particular theme - such as Sheryl Crow's outfit and guitar from the LiveAid concert at which she played with Bob Dylan.

You should always buy items in perfect or near-perfect condition. Beginners should beware, however, of the thriving counterfeit market. For example, all The Beatles road crew used to sign autographs on their behalf. But these official fakers did not try anything more than mere signatures of the Fab Four.

q Dido Sandler works for `Financial Adviser'.