Collection Liquidation - Profit or Loss?

Kevin Jones said:
If collectors keep selling maker's knives on the secondary market for hundreds of dollars less than they paid for them, our collections will be basically worthless and the makers will be out of business.

I know of two instances in the last week where very nice MS knives were sold at aprox. 60% of their current market value on this forum. And I assure you, those collectors were not in bad need of cash.
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I understand your point, I am not sure which knives you refer to, but it is an issue, and I certainly do not advocate that. The real question is why it happened - Was a higher price asked to begin with and no interest, or the initial asking price too low. If the collector could not get a higher price when asked, why? Did he do it as favour to other collectors? Is he dumping because they have lost some intrinsic value?

But your statement also confirms what is implied throughout the many discussions on the subject - value retention is critical for most people. The answers to my rhetorical question on complexity also reinforce this, in that at least half the complexity of the subject comes from reading the market. As most people view this as a complex hobby it follows that most are also trying to read the market.

Markets contain elements of luck and gambling, they are also subject to phenomenons such as herding behaviour and prospecting (follow my leader, and rushing to the latest hot spot). This type of behaviour happens when the profit motive is the highest factor - and it happens all the time in custom knives.

I am not judging, I understand why, and I have also participated ....... but I come back to my original statement in this thread, that this aspect of the hobby and the oft disguised importance of it, is detracting from my enjoyment of custom knives.

I know it sounds like philosophical idealism, but what attracts me to custom knives are the elements of uniqueness, individualism, rarity and art: I find the behaviour associated with "markets" as I describe above at odds with this. That is my personal cross to bear, I am just trying to explain to people why I make the strange statements I do!:)

Stephen
 
Kevin Jones said:
Stephen, this is not just about profit and self fulfilling prophecies.
What about the responsibility of the collector to his primary makers and fellow collectors to help support the maker’s price structure?

If collectors keep selling maker's knives on the secondary market for hundreds of dollars less than they paid for them, our collections will be basically worthless and the makers will be out of business.

I know of two instances in the last week where very nice MS knives were sold at aprox. 60% of their current market value on this forum. And I assure you, those collectors were not in bad need of cash.
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These thoughts are interesting to me. While I understand exactly where you're coming from, if someone said the same thing regarding stocks & the stock market I couldn't take the comments seriously. Responsibility to other investors to ensure that you don't devalue their investments by selling your own below their perceived market value?

That said, I do understand that the knife market is more akin to the contemporary art market than the stock market.

Some makers will toil in obscurity, their work never resonating with the majority of collectors. Aftermarket prices for works created by these makers will be lower than their own sale prices. Other makers though, through talent, skill, timing and luck become popular. Their prices rise in the aftermarket, as the crowd chases after them. A few of those makers will remain popular enough, long enough so that their work retains it's value if not indefinitely then close enough.

In regards to selling prices, there are a few possibilities -either the sellers knew they were selling below market, or they did not.

If they knew they were selling low, there are a few possible reasons:

- The sellers actually did need or want to raise cash quickly and were willing to discount for a quick sale.

- Even at a price discounted to market the seller still made money on the sale. This ties into the point above. If I needed money quickly and could liquidate an assest immediately for below market prices but still have made money on the investment I'd be more inclined to this than part with something I'd take a loss on (unless I foresaw taking a greater loss in the future).

- The sellers lowballed the price for some other reason. Maybe they simply wanted rid of the knife? I suppose this possible, but I'd be surprised.

- The knives aren't worth what everyone thinks they're worth. I suspect this is closer to the truth, based off what I've seen recently in terms of aftermarket sales.

If they did not know the value of what they were selling, they're novice collectors (in any market). Novice collectors (myself included) will either learn the market, go find another market to play in or, rarely, contine to throw money away to the advantage of other collectors.

For the record, I do feel some responsibility to the makers whose work I collect. Both from the perspective of wanting to see them succeed personally, and from the perspective of wanting more people to fall in love with their knives. Can we as collectors do more to help them out? And would it be appropriate, or just pumping up our own 'investments'?

I'd pont to www.davorama.com as a good example. A collector is keeping Dav's work available for view while Dav is currently on hiatus and without his own website.
 
gaussian said:
These thoughts are interesting to me. While I understand exactly where you're coming from, if someone said the same thing regarding stocks & the stock market I couldn't take the comments seriously. Responsibility to other investors to ensure that you don't devalue their investments by selling your own below their perceived market value?

That said, I do understand that the knife market is more akin to the contemporary art market than the stock market.


- Even at a price discounted to market the seller still made money on the sale. This ties into the point above. If I needed money quickly and could liquidate an assest immediately for below market prices but still have made money on the investment I'd be more inclined to this than part with something I'd take a loss on (unless I foresaw taking a greater loss in the future).
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At first, I agreed it would be ridicules to apply my logic to the stock market, but then maybe not.

As a stockholder in a company, don't you hold a degree of responsibility to the company and fellow stockholders?

For example:Say you hold stock in a very stable company xxx and the financial analysts have estimated a .03 per share quarterly profit. The company reports a profit of .01 per share. In today's market with all the inexperienced investors and day traders, that company's stock could drop 10% or worst on that single day.
Are those investors that panicked and sent the stock tumbling in a sense behaving irresponsibly? Maybe, maybe not.

To the second point above, in both cases the collectors announced how much under their purchase price they were. Actually used it as a sales tool.

Both you and Stephen make excellent points regarding the logic to my post.
 
Keep in mind that the collectible knife market is very thin, and that for everything we enjoy there are numerous bargain basement knockoffs. 19 out of every 20 people we run into every day would be shocked to discover that a "common" knife could sell for the price of a major appliance. To them we are all crazy; they saw the same knife selling on the Home Shopping Network for $10. Perhaps the more savy ones will notice that the quality of your knife is at least as good as their Buck knife and offer you $50.

If any of our relatives gain possession of our collections; the majority will simply sell the lot at the local flea market for $200 and call it a good day. I have one female relative who sold off 20 1960s vintage Barbies at a garage sale for $5 a piece; all, while I was yelling at her on the phone, that the darn things were worth hundreds in that condition; she said that they were in the way and she didn't care to invest the time. It was better to collect $100 in instant gratification, then to expend a little effort to convert that into ~$4,000.

So there will always be knives selling well below our values, and most of these will be purchased by people who will equally devalue them; the classic kids in the front yard playing sword fight with two $20,000 katanas. It is only those few knives which fall into collectors hand which will be cared for, and priced accordingly.

n2s
 
not2sharp said:
Keep in mind that the collectible knife market is very thin, and that for everything we enjoy there are numerous bargain basement knockoffs. 19 out of every 20 people we run into every day would be shocked to discover that a "common" knife could sell for the price of a major appliance. To them we are all crazy; they saw the same knife selling on the Home Shopping Network for $10. Perhaps the more savy ones will notice that the quality of your knife is at least as good as their Buck knife and offer you $50.

If any of our relatives gain possession of our collections; the majority will simply sell the lot at the local flea market for $200 and call it a good day. I have one female relative who sold off 20 1960s vintage Barbies at a garage sale for $5 a piece; all, while I was yelling at her on the phone, that the darn things were worth hundreds in that condition; she said that they were in the way and she didn't care to invest the time. It was better to collect $100 in instant gratification, then to expend a little effort to convert that into ~$4,000.

So there will always be knives selling well below our values, and most of these will be purchased by people who will equally devalue them; the classic kids in the front yard playing sword fight with two $20,000 katanas. It is only those few knives which fall into collectors hand which will be cared for, and priced accordingly.

n2s
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Could not agree with you more......
 
Kevin Jones said:
Stephen, this is not just about profit and self fulfilling prophecies.
What about the responsibility of the collector to his primary makers and fellow collectors to help support the maker’s price structure?

If collectors keep selling maker's knives on the secondary market for hundreds of dollars less than they paid for them, our collections will be basically worthless and the makers will be out of business.

I know of two instances in the last week where very nice MS knives were sold at aprox. 60% of their current market value on this forum. And I assure you, those collectors were not in bad need of cash.
Click to expand...

Kevin,

I luv ya, BUT these views are so completely wrong, imho, that I am unsure where to begin.

This maybe news, but some makers overprice their knives, some grossly overprice their knives. Caveat emptor. There is ZERO obligation to support a maker's pricing structure. When a mythical maker tells me he is willing to repurchase any of his knives that I have bought for the price I paid him, I will consider changing my view.

I guess you have been fortunate enough to never own common stock in a company that went bankrupt and out of business. That is exactly what happens. There are thousands of knifemakers who have gone out of business. It happens every day. In the long run, we are all dead and our collections are broken up and sold off for a small fraction of their cost. In the meantime, for my own amusement, I spend the sale proceeds to buy NEW pieces from my favorite makers, and to buy from NEW makers whose work I like. Sounds like a pretty healthy arrangement to me. :thumbup:

"60% of their current market value" THAT IS OPINION (yours) pure and simple. We all have opinions about the value of things, but the MARKET VALUE IS whatever two people AGREE it is, at a particular moment in time. In a particular circumstance, you might be very pleased to trade your best Fisk for a liter of bottled water. A free market is just that, free from controls and constraints.

I am considering starting a new thread related to a particular knife that I have owned and recently sold. It would be a transparent chronical of the movement of the knife from the time it was originally sold by the MS to where it is today. This would necessarily require naming the maker, a few purveyors, several collectors, something that is not normally done around here. There are a couple of gaps in its provenance that some regulars maybe able to fill in. Would anyone be interested? I would also consider taking it off forum and sending it directly to those who request it.

Best,

P
 
Peter -

I've love to see a thread that chronicles the value and journey of a knife over some period of time. A lot of the threads that deal with knife values and the 'investing' side of collecting talk in, what my high-school english teacher would have called, glittering generalities.

Jeremy
 
I'd be interested in that story Peter. Since I don't know the content, I'll leave it to you as to whether it is better presented on or off forum.

Roger
 
As someone new to the forums. I have read some excellent informative threads... this being one of them. At first I'm not even sure I would call myself a collector but I have purchased and ordered a few custom knives some of which are now users and if my interest in knives continues and as my purchases accumulate then yes I guess I am becoming a collector. Thanks to all my fellow forum members for helping in my new and now on going education in knife collecting.
 
Roger,

I am inclined to do it on the Forum. I think it might prove to be a valuable insight for collectors and makers.
Be warned, you figure in the story.

Best,

Peter
 
ptgdvc said:
I am considering starting a new thread related to a particular knife that I have owned and recently sold. It would be a transparent chronical of the movement of the knife from the time it was originally sold by the MS to where it is today. This would necessarily require naming the maker, a few purveyors, several collectors, something that is not normally done around here. There are a couple of gaps in its provenance that some regulars maybe able to fill in. Would anyone be interested? I would also consider taking it off forum and sending it directly to those who request it.

Best,

P
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Count me in as an interested party off line.

Stephen
 
ptgdvc:

I to would be interested. Perhaps it was that nice sheep handled piece you sold recently.
 
ptgdvc said:
Kevin,

I luv ya, BUT these views so completely wrong, imho, that I am unsure where to begin.

This maybe news, but some makers overprice their knives, some grossly overprice their knives. Caveat emptor. There is ZERO obligation to support a maker's pricing structure. When a mythical maker tells me he is willing to repurchase any of his knives that I have bought for the price I paid him, I will consider changing my view.

First of all let me qualify my logic in that I'm not suggusting a responbility to makers across the board, just the ones a collector supports and the maker supports in return. If someone sells a $1900 Sendero for $1400 it effects me Jerry and everyone who owns Senderos.

I guess you have been fortunate enough to never own common stock in a company that went bankrupt and out of business. That is exactly what happens. There are thousands of knifemakers who have gone out of business. It happens every day. In the long run, we are all dead and our collections are broken up and sold off for a small fraction of their cost. In the meantime, for my own amusement, I spend the sale proceeds to buy NEW pieces from my favorite makers, and to buy from NEW makers whose work I like. Sounds like a pretty healthy arrangement to me. :thumbup:

Guessed wrong, I have been burnt as most avid investors in the stock market have been. My example was not addressing companies going out of bussiness but timid investors who devalue stockholders investments by 100 of millions of dollars because they should not be there to start with if they don't have the stomac for it. I lost over $20,000 when the market dropped 400 points the other day. It made me so mad I wanted to throw something, yet I have not pulled one penny out. And since, I have recouped quite a bite of it. It's all about buying sound investments regardless of whether it's stocks or knives.

"60% of their current market value" THAT IS OPINION (yours) pure and simple. We all have opinions about the value of things, but the MARKET VALUE IS whatever two people AGREE it is, at a particular moment in time. In a particular circumstance, you might be very pleased to trade your best Fisk for a liter of bottled water. A free market is just that, free from controls and constraints.

Wrong again, not just my opinion. One of the MS Bowies I refered to in my post originally sold for $1250 on a leading website I believe about 2 1/2 years ago if memory recalls. I remember because I considered this piece for purchase. If the owner of the Bowie in question had sent this piece back to the original dealer website, I garrantee he would have listed it in the $1400 range and sold within thirty 30 days as this perticular dealer has quite a following for this maker. The owner would have netted $1260 (as the dealer only charges 10% if he originaly sold the piece), instead of $825. My point here is the collector has to make the effort to list and sell the knife wisely to avoid receiving a finacial beating ever time he sells a knife. If this effort is made we all benefit.

I am considering starting a new thread related to a particular knife that I have owned and recently sold. It would be a transparent chronical of the movement of the knife from the time it was originally sold by the MS to where it is today. This would necessarily require naming the maker, a few purveyors, several collectors, something that is not normally done around here. Would anyone be interested?

I would be very interested in this.

Best,

P
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iiiiiiiiiiiiiiiiiiii
 
Attention on deck! New collector KRUG82 paying serious attention and making connections. :thumbup:

Yes, that is the knife I had in mind.
 
ptgdvc said:
Attention on deck! New collector KRUG82 paying serious attention and making connections. :thumbup:

Yes, that is the knife I had in mind.
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Glad to hear it too Peter as that knife was my second example reffered to in my post.

I luv you too man:D :D
 
Sorry guys. I need to stop talking to STeven so much and revert back to my old quite self... :eek: :D :D
 
Kevin,

"If someone sells a $1900 Sendero for $1400 it effects me Jerry and everyone who owns Senderos."

I completely disagree. Blips in perceived "Market Value" occur everyday. Somebody got a good deal on a great knife. Bargains happen. You and Jerry were not harmed in anyway. BTW, what would you propose doing to prevent this type of terrible event from occuring in the future?

Best,

Peter
 
ptgdvc said:
Kevin,

"If someone sells a $1900 Sendero for $1400 it effects me Jerry and everyone who owns Senderos."

I completely disagree. Blips in perceived "Market Value" occur everyday. Somebody got a good deal on a great knife. Bargains happen. You and Jerry were not harmed in anyway. BTW, what would you propose doing to prevent this type of terrible event from occuring in the future?

Best,

Peter
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Peter, that was just a made up example of something that happens every day (collectors selling too cheap).
I have bought my share of bargins, and that's not the point. And sometimes collectors need to free up cash for other things requiring them to sell quick and cheap.
Look BIG picture here.
It's about collectors needing to sell wisely to help keep the industry healthy, rather than bitching about how much money they have lost on knives and who to blame.
 
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