As a bookseller, we receive emails every week asking about the value of "old" or "rare rare books". The presumption is that "old" equals "valuable" and books that date back into the 19th century are "old." This presumption is almost always incorrect but what many people don't realize is that there is a category of books that are not very old but can be worth a lot of money because, despite being relatively recent, they are quite rare and considered to be important cultural milestones.
"Modern first editions" is a term that is generally applied to books published in the 20th century that are rare enough and/or important enough (preferably both) to be collectible. Modern firsts is one of the most active areas of book collecting today for a number of reasons. Because the books are modern, they are often available in sufficient quantities, even as first editions, to be able to satisfy a large body of collectors. Also, the collectible modern firsts are often the books that are considered "classics" and this means that many people will have read them and loved them: that's how they got to be "classics." Sometimes, half-jokingly, modern firsts is described as the field in which "you collect what you read in high school," and there's some truth to that: getting onto high school reading lists, is one step on the path toward a book becoming a part of the literary canon, and thus an integral part of our culture.
Modern firsts can be broken out into a handful of different sub-categories. There are the classic authors - Hemingway, Fitzgerald, Steinbeck - who mostly made their marks in the first half of the 20th century and whose continued popularity makes them the "blue chips" of the modern first edition world. There are those writers from the latter half of the century who established themselves as major literary figures, but whose works have not yet stood the test of time as much as their literary forebears' works have. And there are the "ultra-modern" authors—who are not only still writing books but, in some cases, just beginning their careers. There is a speculative edge to the modern first editions market in which these writers' works are actively sought and traded.
One reason that so many collectors start by collecting modern firsts is that, not only are the authors and books familiar, there is also a fairly low threshold for getting started as a collector: it's possible to buy first editions by some of the most famous and collectible modern authors for a relatively small amount of money. There are still Faulkners and Steinbecks that one can find, in dust jacket, for £100 or less.
The most important thing to remember about collecting modern first editions is "condition, condition, condition." Because many modern books are not inherently rare, what makes a copy collectible are qualities that make it at least somewhat rare, and in most cases, this is condition. There were 50,000 copies of The Grapes of Wrath printed and many of them still exist. But there are a relatively small number that retain their original dust jacket, and an even smaller number in which the jacket has been preserved in fine condition—this can make the difference between a £35 first edition (unjacketed, so-so condition) and a £5000 first edition (jacketed, book and jacket both in fine condition). With modern books, from 1920 on, collectible copies will have their dust jackets, preferably in very good condition or better.
Also, a rule of thumb in book collecting in general, and it holds true in modern first editions, is "earlier is better." The first edition is (almost) always "better"—i.e., more valuable—than a second edition. With modern books, there are early copies—review copies, advance reading copies, proofs—that were actually printed and sent out to reviewers before the first edition, and these help make a book that might not be especially rare as a regular first edition more collectible.
If there's any other "rule" that I advise collectors about, it is to follow your heart: if collecting books is primarily about buying low, selling high, and making money, there are probably other commodities in which the risks are smaller, the wholesale/retail differential is smaller, and there's more money to be made. But there are other kinds of "profit" than just money, and one kind is the satisfaction of surrounding oneself with beautiful copies of books that have particular value to you—be they cultural milestones or just books that you loved when you were young, and which helped shape the path you took in life. This is a very real kind of profit, and is one that every book collector has the opportunity to make, by choosing books that are inherently meaningful and valuable to him- or herself.