Aftermarket in the Toilet?

A. G. Russell said:
Since getting into the aftermarket in 1968, I bought knives at shows and offered them to my mail order customers and soon people were sending me knives to sell for them. This business is largely handled by others now, but, I have seen several down turns like the one being talked about and they always had the same result: Falling sales for knives priced under $500 and increased sales for knives over $1,000. If this is not the case today it will be the first time in 40 years. A. G.
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Sage wisdom!
 
TennKnifeman said:
Well I must admit I wade into this with some hesitation--but it won't be the first time I should have kept my mouth shut.

No matter how we feel about knives, they are governed by market conditions and basic economics. Supply and demand. Oversupply = low prices. Low demand = low prices. High demand with short supply = very high prices.

Outside factors affect demand. A lot of collectors getting on board a single collector will increase demand. I remember makers that have drawings today that never got anyone's attention until passers-by realized that that maker's knives were in such demand that he had to have a drawing--so the passer-by runs up and puts his name in the drawing too. Not because he wants the knife--but because obviously everyone else wants it. Mob rule or herd mentality--it is all the same.

I see rational advertisers in knife magazines go to one magazine "because everyone else is there." In other markets advertisers like to go where their competition is not--but not in the knife game. Again, herd mentality.

Same way with shows. Everyone wants to go to the "good" show, not based on sales, or expenses, but because everyone else is there. The determination of a "good" show is usually based on what "good" makers are there. (All 20 of them).

So when we look at knife values in the aftermarket the herd factor has to be taking into account.

Real values of aftermarket knives are not based on wishing it so.

No matter how many rah-rah atta boys a photo of your knife on internet forums gets, or a delusional self-appraisal on knife value based on how good a friend you think you are with a maker, those are not realistic values.

Knives are like stock. The real value of a knife in the aftermarket depends totally on what someone is willing to pay on the day it is sold. What you paid means nothing in the final sale price.

It may affect your own peace of mind, or you confidence in your business judgment, or may even make you feel a little cocky if you picked right when you run it out on a spreadsheet. But it will not affect the final sale price.

In my most recent auction I had two knives a collector had purchased in the 1980's. A Loveless with Frank engraving he paid $550. Also included was a Sheldon Damascus Bowie. Sheldon had trained under Moran, was from Frederick, Maryland, and had sold that knife to the collector in the same year the collector had purchased the Loveless. The collector paid Sheldon $1250 for that knife. The Loveless brought over $5000 at auction, the Sheldon less than $800.00. Sheldon had dropped out of knifemaking in the 80s, and Loveless, well we all know about Loveless.

If the consignor had wanted $1250 as a reserve on his knife he would still be owning that knife. Does that mean the knife market is soft? From his standpoint if he only owned the Loveless the aftermarket is very strong. If he only had the Sheldon the aftermarket is horrible--and soft.

All this has to be taken into consideration when talking about the aftermarket.
There are few industries that do as much as they can to restrain an aftermarket as handmade knives. Knifemakers themselves complain about shows at which a seminar or event takes too many people out of the room, or a dealer is taking money out of their pockets. Dealers (and auctioneers) are the aftermarket.


A few weeks ago I had an auction with 179 knives and sold all but four. A recent auction by someone else had over 25% of the knives offered not meet reserve. If a knife doesn't meet reserve in a room full of knife collectors--then obviously the reserve was too high. Where else will you go to sell that knife? It would have to be someone who is not involved in the auction. So who do that leave? Someone who refuses to buy at auction, or someone so out of touch with prices that the don't keep up (in other words a--well let's just say someone that doesn't keep up. You can fill in your own blank there).

The vintage handmade market is heating up. One of the reasons is the knives are undervalued for what they are, at least to the collectors who have taken the time to research the history of modern handmade knives. Considering it is less than a 45 year history all it takes is a few old knife books, some back issues of the knife magazines, and some old Knifemaker's Guild directories, all readily available if you dig a little. If you bought vintage handmades a year ago, especially as closeouts from knife dealers who only deal in tacticals or hot-today knifemakers-the aftermarket is not soft--it is very hot.

But while those type knives are rising, they do not compare with the prices that the latest Mike Walker zipper brings. Does that reflect a soft aftermarket? I don't think so.

I had an old pocketknife trader tell me at a show over 30 years ago--"Son, if you're not selling knives then your prices are too damn high".

I think those wise words can be applied to any collector, dealer, or knifemaker.

If sales are slow, prices are too high. Lower them. If it is less than you paid--obviously you paid too much for what the knife is or who the maker is.
That does not take anything into consideration for ego or what you think the price should be--but those things never really affect the final price anyway.

Unfortunately it is that basic.

J. Bruce Voyles
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Thanks for the post, Bruce.
 
Kevin Jones said:
David, don't you think everyone should be held accountable for things they say, claims they make and things they do?

Perhaps you should continue to like/dis-like and agree with/dis-agree with who you choose and others will do the same.
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Kevin, lets start digging up some of your early:rolleyes: work on the forum...
 
RogerP said:
No kidding. I get a chuckle out of the people who spend half their posts repeatedly asserting that they are ignoring him and not listeing to a word he says. Oh the irony...

Not to mention that some of those chucking rocks are standing in big glass houses.

Roger
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Bulletproof glass house, with machine gun ports, overlooking the ocean. Not a member of the granny sit-'n-knit club.
 
how the knife aftermarket reacts to the latest financial turmoil depends on a lot of factors

ie

what drives the aftermarket? is it a relatively small number of wealthy collectors or is it more broad based? how sensitive are custom knife buyers to changes in the economy?

as a small market and predominately demand driven prices can be quite volatile. it is clear how the actions of just a few people or even one person can cause dramatic price fluctuations. both up and down.

so what happens if a major collector or dealer or two needs to liquidate?

how much inventory can the market absorb and still maintain prices?

will others liquidate stocks or other financial instruments and buy assets they consider more "real" ? collectibles included

on the flip side certain luxury goods (and custom knives are certainly a luxury) still sold well even in the depths of the great depression.


the chicago show reports do not sound stellar, but there may be mitigating reasons like terrible weather.

i think it will be interesting how the NY knife shows go. that area depends on wall street bonuses for a lot of discretionary spending and i doubt bonus season will be very good this year.
 
RogerP said:
A bit of comedy is just what this thread needed. :thumbup:

Roger
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I agree with you wholeheartedly, Roger. Too many reasons being thrown around for the market being soft, not soft, etc.

I think I will figure this is a deadthread now, and check and see how much economic loss I suffered today elsewhere.

Whether the knife market is soft or not, anyone with taste who didn't overpay has still seen an increase in value in his/her collection.
 
I'm not so sure to what extent the real impact of current economic conditions has really had in the minds of the average US citizen, but, IMO, most folks in the US have suffered significant losses, both paper losses and realized losses, whether it be from substantial home value declines, from losses in their retirement plans, or from losing or risk of losing their job.

A person's perception of their own economic condition will dictate buying habits and no amount of insincere, overly optimistic viewpoints from the knife selling or knife collecting community is going to change that.

Right now, people's perceptions are very negative and cutbacks in luxuries are necessary. They should be because this is going to be a devastatingly poor economy for years, perhaps decades, to come for the vast majority of people, especially for the next generation of knife enthusiasts.

At this point, it is my opinion that the future of all markets involving the sale of any luxury items will be at huge risk and many weaker companies will discontinue.

IMO, net cash flow value of the overall custom knife market is going to be in for a dramatic decline, and a very rude awakening that is not the result of cyclical dynamics, thus, it will not have the benefit of a cyclical bounce-back economic recovery, which may have naturally occurred in the past as a result of future real economic upswings.

This is a bad deal we're in, it's not cyclically driven and it's here to stay for a long time.

People in the US are running out of money fast, and baby boomers, many of whom were some of the the biggest spendthrifts and wasters of money they inherited, are now looking to retire which means they'll save every penny they can for fear of possibly running out.

The transferred wealth they inherited from their parents, who may have bought a house for $50K and then later sold it for $1.2M before the market's bubble burst, has either significantly eroded through excess spending and/or investment market deterioration, or tied up in assets which are earmarked for retirement. IMO, these people are done spending for the most part and are probably scrambling to put their cash under their mattress right about now.

Unfortunately, the next, and the next after that, generation of folks will not have huge amounts of inherited wealth as the baby boomers experienced(mainly from pre-market collapse real estate ownership and disposal).

As for the small handful of very wealthy people out there who do buy customs(who I'd guess make up a very small percentage of the custom knife buying population), they'll continue to buy knives from the most popular makers while the not-as-popular makers' businesses suffer the most in the future. Sort of Harvard's long-tail theory in reverse. At any rate, I believe all knifemakers will experience declines in orders at some point in the not too distant future which will obviously have a direct impact on aftermarket sales values.

IMO, it's the probable and inevitably gradual decline of the small, not-so-rich custom collectors that's going to hurt this market the most.

Just my opinion.

And to think that I used to complain about Les' long-winded nonsensical posts and here I am doing the same thing. :p:D
 
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RWS, Decades? That sounds like you think the entire custom/handmade knife industry is toast. The only thing anyone is going to be able to afford or want to buy is the basic bottom of the line big box store made in China stainless for years to come? You may be right but I sure hope things aren't going to get the bad . The only correction that brought the U.S out of the great depression of the 30's was WW-II. You can guess where that train of thought would lead.
 
RWS- this is really where I was hoping this conversation was going to go. You've made some very intriguing points.
 
Sidehill Gouger said:
RWS, Decades? That sounds like you think the entire custom/handmade knife industry is toast. The only thing anyone is going to be able to afford or want to buy is the basic bottom of the line big box store made in China stainless for years to come? You may be right but I sure hope things aren't going to get the bad . The only correction that brought the U.S out of the great depression of the 30's was WW-II. You can guess where that train of thought would lead.
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Decades? My guess is yes. I don't see a light at the end of the tunnel on this one for the economy as a whole. Also, we've been at war and I don't think that has helped our economy a whole lot, do you?

I hope I'm wrong as well, Sidehill.

I'm not trying to be a doomsday whacko here because doomsday's not going to happen, but I see what I see and I see a lot of what other people in my profession see. The economic future for the next generation's kids, and theirs, appears to be very bleak.

I do think Americans are resilient critters. There's no question in my mind that we will pull through this and we will all make the necessary adjustments in our lives as the need arises no matter what happens, but we're in for a rough few years.

Just stay positive and keep pushing forward and things will always work out.

BTW, not even the poorest of the poor would resort to buying knives made in China. :D
 
I think a couple of things are missing from the conversation with regards to the custom knife after market....the rest of the World for instance.

Someone brought up Eric Meyer's(SP?) collection. He was from Europe and has a huge collection. Some of the most expensive knives of the day were bought by Eric.

While the dollar was weak the Euro was very strong and the Europeans were buying knives from US makers at a pretty good clip.

Lets not forget the Chinese who are now stepping up to buy not only very expensive knives but the sub $1000 knives as well.

Japan's economy is doing better, as such they are buying more custom knives again.

As RWS wrote Americans are resilient. As is our economy.

The economy, while no doubt is affecting some sectors of the market. Will undoubtedly open the door for other makers. Who through design, materials and a more competitive pricing will prevail.

There is the theory called the rule of three. In that within a market the top three are usually well known.

Example: List the top 3 colas in the US...Coke, Pepsi and ??? Coke and Pepsi own 85% of the market. The other colas are fighting it out for third rung and below on the Cola ladder.

Example: List the top 3 Ketchups in the US...Heinz, Hunts and ????

You get the point.

In the custom knife market there are many ladders that have many rungs filled. However, there are always those who get complacent or reach a plateau in their skills and cease to improve.

It is these makers whose "rung" is up for contention. As these makers slip (for whatever reason(s) there will be those who take their place...moving up the ladder.

This slippage will ultimately affect their position in the after market as well.

Perhaps as much as the economy, we may be seeing a changing of the guard.

Just a thought.
 
This is life.

According to knife collectors.

And standing all around us in a giant circle are folks who collect race guns, coins, antique shot guns, sculpture, modern art, classic cars, stamps, wristwatches, sports memorabilia, baseball cards, space-flown articles, bonsai, and royal koi.

And they all think we're nuts.
 
wow, Les! I was just listening to Steely Dan singing about "feelin' the change of the guard".
Can't buy a thrill!:)
 
RWS said:
...this is going to be a devastatingly poor economy for years, perhaps decades, to come for the vast majority of people, especially for the next generation of knife enthusiasts.
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I think your economic analysis is completely off. For starters, the economy isn't poor. It's not quite as good as it's been, and unemployment is creeping up, but it's still growing. There's a lot of thrashing on Wall Street, and they are reaping the rewards of their irrational greed, but the rest of the economy is still growing - not fast but still.

Yes, the housing bubble has burst. The people who were fueling their consumption using their house's equity will have to curtail their spending. The people who made stupid decisions on their investment, mortgage, or bought a house too expensive for them are suffering the consequences of their actions. This is not a majority of the market. For people who do not use their house's equity as a credit card, and had a reasonable mortgage for a reasonable house, nothing has changed.

More to the point, your idea that the baby boomers' money was inherited is a Marxist economic view, and is completely flawed. The baby boomers produced the vast, vast majority of the money they spent & invested.

My take on this whole thing is that the US custom knife market will suffer for the next 12-36 months, as people's perceptions will become less optimistic. This will revert once we're done with the credit crisis & possible recession.
 
I had no idea that the outlook for custom knives was so bleak. Hopefully there will be knives around in a few years for me to purchase.
 
ya know what Keith, those who stay interested will always come out ahead.
If you love it, as you clearly do, it will always be there for you, most especially when times are harder. I'm sure there's lots of knife guys here who've gone through hard times, and have depended on one another for strength in community.
In the end, that's what matters the most and as many have pointed out, change is the only thing you can rely on. Pendulum has its swing eh?
 
When I was attending publishing school at Stanford one of my drinking buddies was a guy from a Dutch publishing house, and when we got around to talking hobbies and collectibles he told me he collected ceramic plates with tulips painted on them. The story of the Dutch tulip boom is one of the best known collectible bubbles to bursts, even if it was in the 1600's.

The people who collected the plates, he said, were people who could not afford the high priced tulips. So they would collect a plate with the image of that tulip.

My friend commented that he had been in the US a few weeks prior to the start of the school looking for more plates for his collection. Naturally I asked why in the US. The reason he explained was after the bubble burst, the plates were so cheap they were used for ballast in the Dutch sailing ships. When the ships would arrive in ports, the plates would be tossed, and the ballast weight replaced with the cargo weight. So nearly all the tulip plated ended up in ports around the world--with hardly any left in Holland.

I have been through downturns before in the knife market, and witnessed the doomsayers, and the panic, and the fear. I've been around some who predicted that knife collecting would go the way of the tulip. And I've heard it for over 35 years. Maybe they're right this time about the horribly declining market. If so, it will be the very first time in my experience of 30 plus years in the game.

I know of several knife dealers (albeit in non-custom knives--but knives just the same) who became multi-millionaires by, as one mentor once told, "choosing not to participate in a recession". 1963 was a horrific year for the knife business, Kabar and Robeson both closed their factories. And at the same time, on the other side of the country, Buck started up and prospered.
Chuck Buck has told me they picked the worst year to start a new factory, but it worked for them.

The news media thrives on negative stories--but with the poor educational background of a lot of the reporters these days, many who do not even understand the economic definitions of a real recession or have ever read a history book--we cannot expect much else. The problem is when people start taking what they say as gospel. Edward R. Murrow used to end every bar session with his reporter apprentices at CBS with a single comment, "Remember, whether two people hear what you say, or 10 million over the radio--it doesn't make you one bit smarter."

A two day drop in the stock market is a recession to hear them tell it--this week. The economy is going through some crap--but if you ignore the news casts and the dips, how did the stock market end up from Monday's open until Friday's close. Forget the dips in between. And how will that look five years from now?

I had two new magazines ready to launch and was days away when Black Friday hit in 1986. My biggest regret in looking back is not going ahead and launching, but I listened far too much to the negatives. I'll never do that again.

How do you know when there is a bubble? My criteria is when someone looks over at you and says, "I can't believe it's bringing that kind of money". When you hear that kind of amazement it is time to be careful. I heard that exact statement about real estate in my hometown, which had a bubble of prices by Floridians moving to the mountains to escape hurricanes--until the insurance prices in Florida made the sales there difficult and when a Floridian did sell out they had much less money in their pockets. Prices adjusted.
We're seeing that with banks loaning to people who had no business getting loans, and we're seeing adjustments in real estate in locations that had bubbles.

If you want an analogy of values on collectibles look at MS-65 20 dollar gold pieces on the coin market. Good stuff brings good prices, junk stuff brings junk prices, and great stuff brings great prices. Two guys getting into a "mine is bigger than yours" competition will run up prices if they are going after the same stuff, especially in a small market like knives.

To truly analyze knife prices you have to know what is causing a knifemaker's value to increase. Is it a competition among collectors (ie. herd mentality), is the maker's knives improving that much, is he getting more publicity and awards, is he the internet darling of the week (and this will pass about as quickly), does he have a hot new design or new innovation, or are his knife prices steadily and slowly climbing over the years.

Voyles law: A person goes out of the business at the exact same speed he came into the knife business. If no one ever heard of him last week and now his name is on everyone's lips--when he goes it will be just as quick.

If you wonder why Loveless, Morans, Herrons, and Liles have gone up over what they originally sold for, take a look at their history of a slow steady increase in value.

If a knife that five years ago brought three figures and now brings five figures, and you jump on that bandwagon, you need to back off and take a long look at how you're spending your money. If you have so much that it doesn't matter if that knife price goes up or down--then play. If you have to earn your money by the week or the month, I would suggest looking back at the history of the maker, his knives, and the value rises and declines over several years, and being sure that run up in price is not a bubble--and if it is divert your money into a different maker's knives.

When knives prices get run up to a false level, far above what they should typically be--when those prices have been put to that level by impulsive, running-on-emotion, more-cash-than-sense, herd-mentality investors--then do not be surprised if those knives get soft when the brief attention span of such collectors gets turned in another direction.
This is not a softening of the market, it is a return to reality from the world of idioticy.

And be very careful if you are applying the softening of that segment of the market to the overall knife market.

I've been told that the used vintage knife market is declining, I was told that the vintage handmade (early makers of the 70's and 80's who are no longer active) was bad. And I guess in some people's minds that true. But I can't prove it by auction prices. In fact the results on auction prices on both those is exactly the opposite. They are thriving markets.

So panic if you like. Think negative if you like. But there are plenty of dealers and auctioneers (myself included) that will not hesitate to ease you of your pain and take the burden and anxiety of knife ownership from you if you are having too many sleepless nights.

If you prefer things more reassuring and stable might I suggest stock?
 
Some very interesting opinions/theories have been posted in this thread. Of course everyone has an opinion, many logical, some not. Only time will tell.

One thing that I didn't notice mentioned was public confidence. Our economic condition is largely driven by public sentiment, and to me, it seems like that confidence in our government is at or near an all time low.

Of course if you are lucky enough to have triple digit millions life is GREAT!

My opinion is that the current administrations policies and appointments set a course to have a country comprised of the VERY rich and various levels of the poor. A blatent plutocracy! The "middle class" is being decimated and left to pay the bills for all the bailouts of the greedy! :(:(

Peter
 
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