Collection Liquidation - Profit or Loss?

Kevin Jones

Kevin Jones

Joined
Oct 28, 2006
Messages
13,363
If for whatever reason, you had to sell your entire collection within 90 days would you most likely profit? break even? or lose money?

And is the future profit / break even / loss scenario a consideration when you purchase a knife?
 
Ahhhh, the old Investment question rears its ugly head once again. Resale value = investment quality. Sheesh. Takes ALL the fun out of collecting when you have to watch your calories so closely. :p ;)

Now, there are a lot of variables at play here: commissioning your pieces would understandably take a 15-20% hit. As it would have to. You lose profit. But for many the task and the marketing needs would substantiate this. Good for the collector, the commissioning party and the new collecting buyer.

I am convinced and have irrefutable proof that in order to gain all the value of any sale you have to market it aggressively. That includes clean, well-produced images if your market is on the net. (And that would expand your potential client base by about 1000% :thumbup: )

For me, I am certain I would at least break even. I have that distinct advantage of being REALLY able to show and create emotional visual interest through my images. 'No one needs a custom knife, they have to want it!'

Yup, I have a number of niche pieces and that market is really smaller. (STeven has reminded me of that.) That said, these niche players are also more rare. Might grow more than one would think. (I have been offered double what I paid for the Chinese folding subhilt, for example).

I dislike these conversations of value, though. For the collector to enjoy their pieces there is a LOT more involved in collecting knives than whether it is a good investment or not. Crap, the incredible amount of learning I have experienced and handshakes I have drawn from men and makers whose work will not make me a penny, or may even lose substantially is part of MY enjoyment. These conversations infer I should keep an eye out on such resale value when making purchases. Well, only if your blinders are so narrow to only see money.

I continue to buy what I like, from men who I admire, and while I own this piece I am gaining appreciable pride of ownership value. This may not show up when it comes time for resale, but that's irrellevant to the larger picture.

Go ahead--have at me.

Coop
 
For me, I expect I would make money. Not a lot, but some.

Resale value is a consideration, but not the only one by far. I heard Les describe an 80-20 rule in another context and that roughly applies to me in this sense: I WILL buy knives that I like that I also KNOW will be difficult if not impossible to resell and then only at a loss, but knives such as that will likely form 20 per cent of my collection or less.

To further plagiarize forumnites, Garsson described his approach in roughly these terms: Piece first, maker second, price third. That pretty much works for me. (If I got that wrong, he'll be along with a 2 x 4 presently).

I don't view discussions about investment as unduly mercenary, merely practical. If one can afford to have tens of thousands of dollars inv.. I mean, spent on custom knives ;) and be completely indifferent to their present and future monetary value, then one can afford to "buy what you like" as the single driving force behind the hobby.

Roger
 
In 90 Days ...... in todays market ....... I think most would struggle to make money. A longer time period then you increase your chances. Location and network play a very large factor, more so than the knives in some cases, especially when you talk about small margins.

I would add that too much focus on this aspect is starting to erode my enjoyment, and that will ultimately lead to fewer purchases.

Stephen
 
When you are asked how you did in Vegas, do reply with "Oh, I broke even." That usually translates into a loss. Given a 90 day limit to sell would probably net the same reaction.
Collecting should be done with disposable income, not income.
Greg
 
mckgreg said:
Collecting should be done with disposable income, not income.
Greg
Click to expand...

If food money qualifies as disposable income, I'm already following your advice :D
With very few exceptions (the really high $ pieces), my collection's exclusive purpose is to please me, that's all. Even the pieces I buy as "investment" must fit my taste. It's an egoist view, but why bother otherwise?
If I was to sell ALL my knives in 90 days, I'd probably make some money but nothing spectacular. If I take into account inflation and interest rates, it would be more like break even (like if I kept the money in a regular savings account). It's definitely more fun than keeping the money in the bank though ;)
 
Probably the only guy in the world that is somewhat of an expert on the subject.Had a huge collection that includedSlips,Custom Autos,Bowies and ABS
I have a suggestion.Buy what you likeyou may take it to the grave with you.
Sold a lot of slipjoints at break even andmade a bunch made money on others.
ABS no way.I have a great Bowie on this forum from a Top shelf maker and cannot give it away.Screw this.
My coin collection sold at a GREAT Profit
Sold all myBoses to one guy for 2 1/2 or 3 times what I paid for them and he got a deal.
My Randalls went for a HUGE profit.
ABS forged blades were my passion as you all well know.Made a bad mistake by collecting them from a standpoint of investing.
Purvayers will "piss down your leg and tell you it is raining".I bought into that crap.No way.It was bull$hit.I still have a bunch of ABS and custom folders to sell and it will be at a loss
Advice buy all the slipjoints you can get your hands on.They are timelessand will always hold their value
BTW bought and sold Corvetts for years.
Bought my second house and paid cash for it from that venture.
Good luck with your collecting.Buy what you like.You may end up with it for life
Randy
 
My collection would yield a pretty good profit at this time.

Here's a more important question. Something happens to you, where does your collection go? I keep a list and approximate values on my higher end pieces. A collector friend of mine will help my wife if need be. He's done the same so that at least a fair value will be attained.

Win
 
I would say that whenever you are compelled to sell anything, under a time constraint, breaking even is the best result that you can hope for.

The crucial issue, is the general desirability of what you have collected. If you are disciplined and collect superior examples from the best makers at realistic prices, you will be fine. If you simply buy whatever appeals to you, with no thought of resale, you can expect to take a serious beating in your wallet.

Building a collection of custom knives is very interesting exercise and an education in and of itself. I do my utmost to pay for new acquisitions by selling pieces that I already own, and try to slowly but steadily make improvements in the overall quality of my collection. This creates a structure that forces me to be very selective and to make hard judgements when I decide to buy a new knife. The net effect of this, is that when a knife from the collection must be sold, it usually is a nice example from a desirable maker, and an easy piece to sell at a fair price.
 
You'll lose money on the majority and make money on a select few. The cool thing is that very few hobbies allow you to have fun and recoup some of you dough.

Phillip :)
 
nifrand said:
Probably the only guy in the world that is somewhat of an expert on the subject.Had a huge collection that includedSlips,Custom Autos,Bowies and ABS
I have a suggestion.Buy what you likeyou may take it to the grave with you.
Sold a lot of slipjoints at break even andmade a bunch made money on others.
ABS no way.I have a great Bowie on this forum from a Top shelf maker and cannot give it away.Screw this.
My coin collection sold at a GREAT Profit
Sold all myBoses to one guy for 2 1/2 or 3 times what I paid for them and he got a deal.
My Randalls went for a HUGE profit.
ABS forged blades were my passion as you all well know.Made a bad mistake by collecting them from a standpoint of investing.
Purvayers will "piss down your leg and tell you it is raining".I bought into that crap.No way.It was bull$hit.I still have a bunch of ABS and custom folders to sell and it will be at a loss
Advice buy all the slipjoints you can get your hands on.They are timelessand will always hold their value
BTW bought and sold Corvetts for years.
Bought my second house and paid cash for it from that venture.
Good luck with your collecting.Buy what you like.You may end up with it for life
Randy
Click to expand...

..... well you can't really argue with empircal evidence. I am beginning to think that too much emphasis on the investment aspect of knives may have had an adverse impact on the market. Expectations are raised .... then dashed, too much attention on a few makers pushing their prices to the point that only a few can buy, saturation of certain "winning aspects".

Is it any wonder that so many people buy with their heads rather than their hearts ..... they keep being told they are stupid if they lose money! Sad state of affairs .... we've introduced capitalist economic principles at the expense of the escapism that most of us came here for!

Stephen
 
If your collection is based on buying what "you" like and that is your only criteria you will lose money.

If your collection is based on doing your homework and collecting with an eye towards investment. You should make money. As in any investment understanding the current and future market coupled with risk tolerance will in large part determine your ROI.

As for Purveyor's pissing down your leg and claiming its raining. Perhaps you should buy an umbrella. Contrary to what you are saying, the ABS sector of custom knives is one of the hottest out there. Many times collectors get the 'fever" , get caught in moment and buy a knife. That if they were looking at the knife as even a break even proposition they would not have bought the knife. Much as collectors and investors would like to blame someone for their purchase. Those giving the advise seldom if ever hold a gun to the buyers head. The same goes true for knife makers who sell all of their knives to a dealer or a collector before the show opens.

This is why you have to do your homework and know a makers position in the market. As well their position in the after market (which is influenced by the primary market).

Collectors buy into "Hype" and "fads" and are then stunned when it ends that they can't get their money back out of the knife. Investors purchase knives for either short term gains (usually the best way to go with collectibles) or in some cases long term gains. Long term being defined as 12 months or more. Either way their is a lot of risk associated with this. As custom knives do not come with a prospectus it is incumbent upon each collector to do the research.

Here are two research questions for you.

1) If in fact you do go to a purveyor to purchase a knife. Ask them what their trade in policy is. If they don't have one, get your umbrella out. If they offer a limited 6 month trade in policy. At lest check the weather for what the precipitation percentage is and maybe keep an umbrella in the car...just in case.

2) If the knife is being sold with a premium over retail. Understand that most of the time that premium will be most of the ROI that one can expect from the purchase of that knife with regards to a short term profit. The initial seller is the person who will get the greatest short term ROI. You have to take that into account and then weigh the long term investment potential of that knife.

Homework Question: Currently, there are makers whose knives in the after market have had a very high ROI. However, in the after market these prices have gone flat and are now coming down. Do you know who these makers are and what has caused this to happen. Note, the maker has no causal effect on this happening. Don't write your answers here, put them in your custom knife homework book....you know the one most of you are just starting.

WWG
Educating both collectors and makers.
 
Stephen F said:
Is it any wonder that so many people buy with their heads rather than their hearts ..... they keep being told they are stupid if they lose money! Sad state of affairs .... we've introduced capitalist economic principles at the expense of the escapism that most of us came here for!

Stephen
Click to expand...

Stephen F,

Whatever floats your boat is fine with me. It is your money and your escape, enjoy!
I just can't afford that level of indulgence. Caveat emptor, because escapes can become traps.

P
 
I think you may do better if they were "stolen" and you collect the insurance
 
WoodWorkGhost said:
If your collection is based on buying what "you" like and that is your only criteria you will lose money.

If your collection is based on doing your homework and collecting with an eye towards investment. You should make money. As in any investment understanding the current and future market coupled with risk tolerance will in large part determine your ROI.

As for Purveyor's pissing down your leg and claiming its raining. Perhaps you should buy an umbrella. Contrary to what you are saying, the ABS sector of custom knives is one of the hottest out there. Many times collectors get the 'fever" , get caught in moment and buy a knife. That if they were looking at the knife as even a break even proposition they would not have bought the knife. Much as collectors and investors would like to blame someone for their purchase. Those giving the advise seldom if ever hold a gun to the buyers head. The same goes true for knife makers who sell all of their knives to a dealer or a collector before the show opens.

This is why you have to do your homework and know a makers position in the market. As well their position in the after market (which is influenced by the primary market).

Collectors buy into "Hype" and "fads" and are then stunned when it ends that they can't get their money back out of the knife. Investors purchase knives for either short term gains (usually the best way to go with collectibles) or in some cases long term gains. Long term being defined as 12 months or more. Either way their is a lot of risk associated with this. As custom knives do not come with a prospectus it is incumbent upon each collector to do the research.

Here are two research questions for you.

1) If in fact you do go to a purveyor to purchase a knife. Ask them what their trade in policy is. If they don't have one, get your umbrella out. If they offer a limited 6 month trade in policy. At lest check the weather for what the precipitation percentage is and maybe keep an umbrella in the car...just in case.

2) If the knife is being sold with a premium over retail. Understand that most of the time that premium will be most of the ROI that one can expect from the purchase of that knife with regards to a short term profit. The initial seller is the person who will get the greatest short term ROI. You have to take that into account and then weigh the long term investment potential of that knife.

Homework Question: Currently, there are makers whose knives in the after market have had a very high ROI. However, in the after market these prices have gone flat and are now coming down. Do you know who these makers are and what has caused this to happen. Note, the maker has no causal effect on this happening. Don't write your answers here, put them in your custom knife homework book....you know the one most of you are just starting.

WWG
Educating both collectors and makers.
Click to expand...

Funny about you Les.You always have all the answers.
But the difference is I live in an imperfect world.
regards
Randy
PS I have bought a lot of my knives at ''dealer" or discounted from the makers through the years.Still losing money on them
 
Hi Stephen,

Have no fear, well over 90% of all custom knife buyers still buy knives without any thought of selling or trading them.

No one tells someone they are stupid for buying any particular knife. What is stupid is to expect others to pay you your money back or a premium for just any custom knife.

Most who buy custom knives buy what they like, to include me. However, should that be your main criteria for your selection you cannot complain when you go to sell the knife and lose 40 - 80% of your purchase price.

I am more sensitive to this as I am the one standing behind the table who hears the question fifty times a show (a hundred at the Blade Show)..."Do you buy knives?" That of course lets me know immediately I have no desire to buy anything this individual has. Against my better judgment I respond "yes."

(I know you are wondering why "Do you buy knives" tells me to say no. Two reasons, First, I am a custom knife dealer so of course I buy knives. Second the fact that they don't use a makers name.) **HINT TO COLLECTORS WANT TO SELL KNIVES AT A SHOW**....Bring a card with the makers name, type of knife, materials used and price with you to the show. That way you can just hand the dealer the card. This will save you from pulling out every knife you have.

It is then the collectors prize possessions come out of what ever case, bag or back pack they are carrying. It is then my job to tell people that I am not interested in their "beautiful, incredible, exquisite selection of knives". Depending on the mood of the customer their responses range from "thank you" to "you F*****G Idiot what the F**K do you know." See I'm the bad man who broke Clarance the Collectors heart. Usually because (as I'm told) "you are just saying that to work me on the price."

It never ceases to amaze me what people will pay for some knives.

WWG
Breaker of Collectors hearts.
 
nifrand said:
Probably the only guy in the world that is somewhat of an expert on the subject.Had a huge collection that includedSlips,Custom Autos,Bowies and ABS
I have a suggestion.Buy what you likeyou may take it to the grave with you.
Sold a lot of slipjoints at break even andmade a bunch made money on others.
ABS no way.I have a great Bowie on this forum from a Top shelf maker and cannot give it away.Screw this.
My coin collection sold at a GREAT Profit
Sold all myBoses to one guy for 2 1/2 or 3 times what I paid for them and he got a deal.
My Randalls went for a HUGE profit.
ABS forged blades were my passion as you all well know.Made a bad mistake by collecting them from a standpoint of investing.
Purvayers will "piss down your leg and tell you it is raining".I bought into that crap.No way.It was bull$hit.I still have a bunch of ABS and custom folders to sell and it will be at a loss
Advice buy all the slipjoints you can get your hands on.They are timelessand will always hold their value
BTW bought and sold Corvetts for years.
Bought my second house and paid cash for it from that venture.
Good luck with your collecting.Buy what you like.You may end up with it for life
Randy
Click to expand...

Les has warned me about ever using the "I" word here. :eek: You notice I did not. :D My intent here was to kind of conduct a small poll to verify my views regarding the current handmade knife market.

Randy I to, have gained experience with various collectables over the years including Corvettes. I have always said that if you find a collectable where you can also yield a return it’s a wonderful thing, as investment certificates are not very much fun to tinker with. Corvettes have been very good investments over the last 30 years, only if you know what to buy and how to verify what you are buying.

There are few things I have found a little different with the handmade knife community than some other collectible communities. One is that it’s a very welcoming and friendly group (collectors and makers). And that collectors for the most part do not even consider or serious consider re-sale at time of purchase. And will many times just dump a knife for whatever price once they are tired of it or something interest them more. Not that it’s anything wrong with that, just different in my experience.

Even though this is not where I intended this thread to go and I realize I may take a whipping from many in your defense, I have to challenge you on the BOLD statements you made above. As your statements regarding ABS forged knives have a negative impact on other’s ABS forged knife collections.

First, in the last six weeks, I have sold three higher end ABS knives form two different ABS makers. In all three examples the buyer got good value, and I made a very nice profit. Have I made a profit on every ABS forged knife I have sold? Of course not. Have I made an overall profit on all ABS I have sold? Yes, and I have an excel spreadsheet that at any moment I can tell you my return on investment on any single knife sold, group of knives, or my whole collection.

It's been my experience, the way you market and present your knives has a direct bearing on if you sell them and for how much. I see you are now posting photos with your listing.
Before, it was a challenge, especially for a novice collector to find the knife you were selling. Then after finding it there was a poor photo (I’m guilty of this too).

In my opinion, your initial asking prices in many cases were low. This along with the poor photo begs the question to someone who doesn’t know that you are a highly respected and knowledgeable collector “what shape is the knife in?”.

In my opinion, you may have gotten more for some of these knives by selling them through one of the on-line dealers, even after paying the commission.

In my opinion, some of your knives listed are the typical ABS Bowies of a several years ago that lack some of the curb appeal that many process now. The treatments that scream "buy me" too many collectors.

Randy, we have never met, however everything I have heard about you is good. And I’m not trying to bash you here as I know you have been selling a lot of knives and it takes time to present them to yield top dollar. But again, when you make statements or give opinions that affect me, I have to challenge you.
 
Stephen F said:
..... well you can't really argue with empircal evidence. I am beginning to think that too much emphasis on the investment aspect of knives may have had an adverse impact on the market. Expectations are raised .... then dashed, too much attention on a few makers pushing their prices to the point that only a few can buy, saturation of certain "winning aspects".

Stephen
Click to expand...

Steven, I tend to agree with you. I'm sure I going to get roasted, but do you really expect to make a profit on any custom made article? I'm curious if any trends may be observed. So, those that have made a profit on their knives could you provide us with the following: maker, maker wait time, and time between purchase and resale, and % profit. Also, those that have resold used knives, what was your margin of loss?

Bob
 
Hi Randy,

You know you are an impulse buyer, you have told me so. Buying a knife from a maker that is over priced to begin with (for either their position in the market or type of knife or materials used or any combination of the previous 3) getting it at dealer price, doesn't help. Although it may make it easier to recoup your initial investment.

If a seasoned and educated collector such as yourself can make mistakes (and we have all made them including me) imagine what the newbie collector faces.

As PTGDVC so eloquently puts it (as he usually does) "Caveat emptor, because escapes can become traps.

Im going to use that in my next book! <G>

WWG
Instigator of the "I" word in custom knife circles.
 
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