Collection Strategy & Economic uncertainty

peterinct said:
Les,
I am serious in my desire to invest. To be PERFECTLY clear of my intent:

This is my no risk emergency fund that banks are currently offering less than 3% annual return in a guaranteed CD or Treasury note.

I do not have a personal attorney that can create a contract by my request to satisfy my need, and I suspect if I were to hire one, the associated fee would take a large amount of my anticipated return.

I prefer NOT to take posession of any knives, only the $11,000 return.

If you are sincere, I could probably create the paperwork and as long as it is signed by you and a witness, that should suffice.

Essentially, it only needs to specify that I will entrust you with $10,000 to be invested by you, and you will provide $11,000 in return at the end of 12 months or sooner.

I have no desire to be involved in confrontational or differences of opinion discussions, but 10% GUARANTEED return is a VERY attractive investment.

Peter
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Careful...Guarantees work until they dont. If a custom-knife math equation existed guaranteeing 10% return 100% of the time, we;d have a LOT more pure-investment types running around here.

For small sums, its a decent idea though. You give Les 10K and then he puts that 10K into custom knives that he will buy at less than market prices, which he will quickly turn over for a profit. He gives you 10% and keeps the rest of the markup. He wins, You win....

...until something in the economy actually changes enough to heavily influence the number of custom knives being sold...then you better hope that 100 other people didnt also jump at the good deal and whatever you have in writing will hold up in court.

Excerpt:
"J.D. from Get Rich Slowly had a reader ask where I can I find a guaranteed return of 10%. The short answer is that there is no place where you can get a guarantee of 10%. If they were common, no one would be buying treasuring bonds, CDs, or putting money in high-interest savings accounts at much cheaper rates. In fact, if a 10% guaranteed investment did exist, and it was easy for the common man to get it, inflation would adjust upwards of that 10% level. Business owners would realize they could be more profitable taking that guaranteed return rather than taking a risk that their business would outperform it. Some would probably just quit the business all together, but others would simply charge more for their products, because they are inherently taking more risk."
 
HI Martin,

It would be a legal contract between two people.

If it was that easy Les your mailbox would be overflowing with checks by now.
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You would think that would be the case. See this goes to my point about investing in custom knives. People are convinced you cannot make any money with them.

Why? Because they have bought and sold knives that consistently lose money.
This is what gave rise to the "I Buy What I Like" defense. As a way to justify the loses.

I was losing money the first couple of years. So I changed what I was doing.

Having spent Mi$$ions Of Do$$ars on custom knives (without ever taking a loan) and not being in debt up to my eyeballs. I think I can safely say, yes you can make money with custom knives.

There is even an easier way to have a collection that will virtually cost you nothing. While at the same time should you sell the knife...any money you received would be 100% profit. Simple in design...takes some effort to execute this plan.
 
Hi David,

...until something in the economy actually changes enough to heavily influence the number of custom knives being sold...then you better hope that 100 other people didnt also jump at the good deal and whatever you have in writing will hold up in court.
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Something has happened in the economy...don't you read the papers or listen to the news???? :D

David, my word is much more binding than anything you would find in a court of law.

However, once Peter gets his check....those who say "custom knives are not good investments" will have to find their way over to the corner of the room. Sit down and be quite.

As in May 2010 we will compare Peter's 10% return with the Dow and the S&P 500 and see who did better.
 
HI Peter,

If you would like to draft a contract that would be fine with me.

You can even pick who the witness(s) is who signs the paper.

The only thing I would require additionally is the use of your testimonial for advertising.
 
Les Robertson said:
Hi David,



Something has happened in the economy...don't you read the papers or listen to the news???? :D

David, my word is much more binding than anything you would find in a court of law.

However, once Peter gets his check....those who say "custom knives are not good investments" will have to find their way over to the corner of the room. Sit down and be quite.

As in May 2010 we will compare Peter's 10% return with the Dow and the S&P 500 and see who did better.
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Les,
Something has certainly happened with the economy, but that doesnt mean your niche market has yet felt the full results. Lots are still living in their dreamworld in relation to their finaces longterm.

Your word may be more binding than a court of law, but courts and lawyers exist so that no one has to hope and pray that someone is honest. Im not saying you would go back on your word...just that its a dangerous path to follow.

No one is saying knives can't be a good investment...im just saying that your offer is a dangerous one from both sides of the fence. It may not be dangerous based on your track record or the current market for custom knives, but its assuming that:
1. Things wont change
or
2. You are good enough that you will be able to maintain your 10%+ track record regardless of any change or any economic situation that could possibly play out. This could be as simple as a complete devaluation of the US dollar or as unlikely/remote as a complete ban on knives/guns such as happened in the UK. I bet there are more than a few high-end gun dealers in the UK that never expected to be looking for new jobs.

You are also assuming that there is a volume of knives and buyers out there that will not be exhausted. Where is the ceiling? Lets say you had 1 million dollars to invest for people....are there enough investment-grade makers and knives out there to fill the huge demand your pool of money has created, then enough collectors out there with an equal demand to buy the knives from you?
 
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for the amount of work it would entail to make someone else 10% on their investment, I hope there'd be some left over for the guy doing the buying. I can't imagine that custom knives could generate much more than 20% margin on average.
But, then again, an extra infusion of cash could increase buying power enough to generate a few extra percent, which might make it worthwhile for the buyer, especially if the one doing the buying knows what time it is, which I submit Prof. Robertson truly does, at least from what I've learned in my short time here.
I'll look forward to the outcome of all this one year hence.
 
Hi David,

I understand and appreciate you level of risk aversion.

No one is saying knives can't be a good investment...im just saying that your offer is a dangerous one from both sides of the fence. It may not be dangerous based on your track record or the current market for custom knives, but its assuming that:
1. Things wont change
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Risk = Danger.

People view this economy as being horrible based primarily on housing and bank/investment firm failures.

People forget about the Tech Bubble bursting in 2000 (investors lost billions)

After 9/11 the Stock Market had to be suspended...CLOSED for several days.

Nothing like this happened last Sept/October.

There have always been market sectors in trouble. Look at all the Billionaires who lost Billions of Dollars!!! Most are still Billionaires!

2. You are good enough that you will be able to maintain your 10%+ track record regardless of any change or any economic situation that could possibly play out.
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I have been a full time custom knife dealer for 14 years. I have no other source of income but from buying and selling custom knives. My wife owns her own business...but we have to pay for our health insurance and everything else. No paid vacation days...No paid sick days. We don't work...we don't get paid. Nothing special there as just about anyone who owns their own small business(s) is in the same boat.

When I decided I was going to go full time... a huge risk with a 4 and 6 year old daughters. There was only one person I knew that had faith in my abilities....Me. Every other person I knew (Family and Friends) thought being a full time custom knife dealer could not work.

So when you ask me if I feel I can do this. The answer is yes...I do it every day.

This could be as simple as a complete devaluation of the US dollar
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Actually, up until recently the US Dollar has been devalued against most of the world's currencies. Ask our Canadian, UK and Aussie members how their currency is doing against the US Dollar compared to a year ago.

or as unlikely/remote as a complete ban on knives/guns such as happened in the UK. I bet there are more than a few high-end gun dealers in the UK that never expected to be looking for new jobs.
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Any business person with a good understanding of their market will know when it is time to get out. Can't speak about the High-End Gun Dealers in the UK. Perhaps they need to open up shop in Germany or the US.

Here in the US, the Gun people are afraid of the future of assault rifles. Needless to say, currently assault rifles and ammo sales are through the roof.

So the smart business owner would have a business strategy in place. Pay off all your debt, look at the next business you would like to get into. Get your D&B report and FICO scores as high as you can get them (to apply for credit in your new venture), etc.

Don't wait until you have to file bankruptcy to start looking for a fall back position. It is too late then.

Danger is generally perceived as such who are not familiar with the act that is about to be undertaken.

Each year in the US there are almost 40,000 people killed in car crashes each year...yet you continue to drive.

Each year 36,000 people in the US die from the Flu...yet you continue to expose yourself to thousands of people each year.

People die from Eboli...but continue to eat beef.

People die from Salmonella...but continue to eat lettuce, tomatoes, peanuts and here lately pistachios.

Every day you partake for risky things. The difference is that you have come to terms with the risk and have determined it is worth it to engage in that activity.

Investing in custom knives seems risky to you and many others reading this. Why? Because you either don't understand it or just for whatever reason think it won't work.

That is human nature.
 
Hi Lorien,

Thank you.

for the amount of work it would entail to make someone else 10% on their investment, I hope there'd be some left over for the guy doing the buying. I can't imagine that custom knives could generate much more than 20% margin on average.
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The margin, depends on who is buying and what they are buying. :D
 
Les Robertson said:
Hi David,

I understand and appreciate you level of risk aversion.



Risk = Danger.

People view this economy as being horrible based primarily on housing and bank/investment firm failures.

People forget about the Tech Bubble bursting in 2000 (investors lost billions)

After 9/11 the Stock Market had to be suspended...CLOSED for several days.

Nothing like this happened last Sept/October.

There have always been market sectors in trouble. Look at all the Billionaires who lost Billions of Dollars!!! Most are still Billionaires!



I have been a full time custom knife dealer for 14 years. I have no other source of income but from buying and selling custom knives. My wife owns her own business...but we have to pay for our health insurance and everything else. No paid vacation days...No paid sick days. We don't work...we don't get paid. Nothing special there as just about anyone who owns their own small business(s) is in the same boat.

When I decided I was going to go full time... a huge risk with a 4 and 6 year old daughters. There was only one person I knew that had faith in my abilities....Me. Every other person I knew (Family and Friends) thought being a full time custom knife dealer could not work.

So when you ask me if I feel I can do this. The answer is yes...I do it every day.



Actually, up until recently the US Dollar has been devalued against most of the world's currencies. Ask our Canadian, UK and Aussie members how their currency is doing against the US Dollar compared to a year ago.



Any business person with a good understanding of their market will know when it is time to get out. Can't speak about the High-End Gun Dealers in the UK. Perhaps they need to open up shop in Germany or the US.

Here in the US, the Gun people are afraid of the future of assault rifles. Needless to say, currently assault rifles and ammo sales are through the roof.

So the smart business owner would have a business strategy in place. Pay off all your debt, look at the next business you would like to get into. Get your D&B report and FICO scores as high as you can get them (to apply for credit in your new venture), etc.

Don't wait until you have to file bankruptcy to start looking for a fall back position. It is too late then.

Danger is generally perceived as such who are not familiar with the act that is about to be undertaken.

Each year in the US there are almost 40,000 people killed in car crashes each year...yet you continue to drive.

Each year 36,000 people in the US die from the Flu...yet you continue to expose yourself to thousands of people each year.

People die from Eboli...but continue to eat beef.

People die from Salmonella...but continue to eat lettuce, tomatoes, peanuts and here lately pistachios.

Every day you partake for risky things. The difference is that you have come to terms with the risk and have determined it is worth it to engage in that activity.

Investing in custom knives seems risky to you and many others reading this. Why? Because you either don't understand it or just for whatever reason think it won't work.

That is human nature.
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I understand and do appreciate your experience, planning and track record.

That being said...past performance is simply not a guarantee of future results.

I am all about calculated risks...but you are taking a calculated risk and turning into a legal 10% guarantee on ROI. I suppose thats YOUR risk, though, assuming how its written up will hold up in court if an "unplanned event" happens and youre not able to meet the 10%. Think more along the lines of "I need an operation and won't be able to do business for the next 6 months, but I have ten legal contracts that all have to generate a 10% return."


I also had a problem thinking about the deal. Say i have 10K to give you. Is that 10K backed by cash? If you have the backing to secure that 10K, why arent you just investing it yourself and keeping all the profit?

Just playing devil's advocate....Im assuming your offer was more to prove a point than anything else.
 
Hi David,

I also had a problem thinking about the deal. Say i have 10K to give you. Is that 10K backed by cash? If you have the backing to secure that 10K, why arent you just investing it yourself and keeping all the profit?
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Excellent Idea!!!!

Do you know of an investment that will guarantee me a 20% (in writing) return on my money? If so please let me know what that is! I'd love to see my picture on the front page of the Wall Street Journal, Forbes, Money, Smart Money, etc. :D

Making money proves the point better than anything else.


Just playing devil's advocate....Im assuming your offer was more to prove a point than anything else.
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What???

My offer is to make money! Remember the first rule of a successful business is to make money. If you are not doing that, everything else is fluff...Give a Call to GM, Chrysler, AIG, etc. All those nice buildings, Corporate jets, fancy trips and furnishings...how did losing site of rule number 1 work out for them? :D

The Devil's advocate is for those with out plan.
 
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Les Robertson said:
Hi David,



Excellent Idea!!!!

Do you know of an investment that will guarantee me a 20% (in writing) return on my money? If so please let me know what that is! I'd love to see my picture on the front page of the Wall Street Journal, Forbes, Money, Smart Money, etc. :D
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Well I'd say if you were guaranteeing that you could make 10% for us, and assuming you werent just doing that out of the goodness of your heart, it must mean you'd be making a % profit on the investment, as well. Unfortunately, you can't guarantee it to yourself as theres no one to go after if things go south...

FWIW, I think some of those same publications would put you on the cover if you actually found a way to 100% guarantee a 10% return. After all, why would people dump money into anything else that would generate less than a guaranteed 10% if they had your zero-risk solution? The answer is that your solution simply cannot be risk-free.
 
2knife said:
It seems to me there is much more volatility in custom knives, compared to vintage knives. (New cars vs. used cars..) Perhaps a "safer" bet, for something like dumping a load of money into a broad market - Case, Randall knives for instance, a wide collector base. But, less chance of reward too.

Something about the idea of "investment knives" is unappealing, turning a fun hobby/ passion into a stock commodity.
I don't really like that kind of thinking.
The idea you are just finding a safe-haven for your money, and trying to find the best investment-
I'm not there, thinking this way.. . I have to admit, I've seen both profit and loss in knife trading. - (more loss usually)
selling/trading w/ dealers at shows, especially. An acceptable risk/reward for playing the game. The more important issue to me has been "getting the right knife", when it comes along.

And, it is a far more rewarding thing when it happens, than for investment's sake. We can probably all agree on that?
David
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For the life of me, I can't understand what some of you guys have against having a hobby you enjoy, yet not losing your ass while in enjoying it. :confused:

I like the concept as opposed to losing a $100,000 on a luxury boat the first year of enjoyable ownership, or spending hundreds a month playing golf.
 
Hi David,

Unfortunately, you can't guarantee it to yourself as theres no one to go after if things go south...
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Interesting story; 8 years ago when I was trying to get a mortgage for my house. One bank loan officer explained to me that because I was self-employed I was a bad risk. Forget the fact I had an 800+ FICO score, never late on a mortgage payment and had more than enough in investments to pay for the house outright! No, no I was self-employed scum.

She talked very slowly and used small words to help the lowly custom knife dealer understand why I couldn't get a loan (unless of course I were to transfer all of my investments to that bank).

I then asked her if she owned the bank? She looked confused and said "no". To which I replied, then you really have no job guarantee. Quite frankly your bank could go belly up tomorrow and be out of a job isnt that right? She replied, "Yes I suppose that is possible." To which I replied "See it is the bank that owns your job...not you. The Bank can do whatever it wants with their job...as you are just the person filling that job. In my case I am the owner and I can guarantee you one thing...I will be the last person to be fired! A guarantee you cannot make.

I then asked her where she got her MBA, she replied she didn't have one. I replied well I do, so now we can change your assumption from me being the idiot in the conversation to you being the idiot.

3 1/2 years ago that bank went under and was bought out by Wachovia, which then went under and is now owned by Wells Fargo. My morgtage was held by Countrywide which failed and is now owned by Bank of America. I had to jump through a lot of hoops just based on the fact I was self employed.

Point to all this...I guaranteed this woman that if my business got in trouble I would be the last person to be fired. The Bank that turned down my loan went under and the mortgage company who held my mortgage went under...Robertson's Custom Cutlery is still here.

So David, I understand you aversion to guarantee's. The very people who told me I could not get a mortgage initially....are the very same people who were probably replaced with other employee's....and so it goes.

You see the woman who told the lowly custom knife dealer (using very small words and speaking very slowly) had always had someone there to take care of her. She received a check every two weeks, health insurance, life insurance, dental, eye, prescriptions, vacation days, sick days, paid holidays. She had a "guarantee" right up until the time she was fired because the bank went under!

For the last 14+ years the only person who guaranteed all that listed above, not just for me, but my family (don't forget two college educations) is ME! :D

Without going into the financials should something go "south" the $11,000 would be paid out...as guaranteed....as per the contract Peter draws up which I am sure will hold up in court.

BTW, what about that 20% guaranteed investment I was asking you about? :D

Just playing devil's advocate.
 
Les Robertson said:
Hi David,



BTW, what about that 20% guaranteed investment I was asking you about? :D

Just playing devil's advocate.
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Once you show me a guaranteed 10% risk-free plan, we can start looking for 20% plans. :D

Again, anecdotes and past history of success do not guarantee continued success. I only have an issue with the guarantee, not your track record.
 
HI David,

Just because I might have reservations doesnt mean someone else might say "Whoa free money, where do I sign?"
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Who said anything about free money???

First you have to write a check.

Free money is finding a $5 bill lying on the ground. That is free money.

As STeven said, if you are not going to invest, then it doesn't make any difference.

You seem to be trying to do "due diligence" without all the facts (i.e. a signed contract).
 
peterinct said:
I'm willing to invest $10,000 for a return of $11,000. Prior to the exchange of funds, I will need that "writing" by an attorney in the form of a contract clearly stating the duration of the investment, as well as a guarantee against any deviation of the $11,000 return. I assume 12 months or less.

If possible, send a copy of the contract so that I can have it reviewed and I will bring a check to Blade.

Sounds good to me.:D

Peter
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that would be cool, seriously!

but what interests me more than the 11k check peter will receive undoubtedly, is les' detailed list of the knives he bought with the 10k, maker's name, type of knife, materials used, price paid and sold for, etc.

i might become an investor... life's pretty expensive over here, but a turnover of $ 500'000 is enough to make me quit my current job.

hans
 
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