While it is possible to make money on some of the knives we've bought, I think there are two major factors to consider. First, it's usually easier to buy than to sell. Although the internet and forums like this one have made it easier, it's still sometimes difficult to find the right buyer. Working through a purveyor is expensive and cuts the chance for a profit. Second, knives require regular maintenance, sometimes a lot of it. So, while it's possible to turn a profit occasionally, my experience has been that knives are best bought because you enjoy them.
That's a great point
That is the problem with art, as well
Collectibles are not very liquid
If you find a Picasso in grandpa's attic
It's gonna take you quite a while to find the right buyer
You could put it on EBAY I guess....???
Those of us around in those days quoted the Casey book endlessly. One of the things that is troubling today is those who had not heard of it.
That's interesting
I was wondering if anyone used the book in the 80's as "advice" to why custom knives ARE a good investment
Les===>
With regards to the totality of the custom knife market. What is most important is: Does the knife have a value price?
The majority of custom knives being sold today are over priced. Which is why very few custom knives have "investment" potential. The "over pricing" eliminates the investment potential as all of the money goes immediately to the makers.
I don't buy your blanket statement that knives are over priced
A certain knife may be "over priced" to YOU
That's it
How can you tell an individual consumer that the product they are buying is overpriced?
How do you know what utility or value I place on a knife?
To make a blanket statement with out knowing the consumer's preferences (or income) is ridiculous..IMHO
Maybe I LIKE giraffe bone knives and am willing to pay a "stupid premium"
I think Rolex watches are overpriced
Bill Gates may not feel the same way
And I don't think people who pay $20,000 for a Rolex are "stupid"
Maybe the Rolex helps them get laid or it impresses the guys at the country club...........
If they are over priced, the sellers lower their prices
If they don't lower their prices, they will go out of business soon
Model of
Perfect Competition...google it
While you are at it, Google: indifference curve, budget constraint,substitution effect,income effect, marginal utility curves,utility maximization problem.......
And I definitely don't buy the term "investment grade"
Just because some seller labels it as investment grade, I'm supposed to believe it will have a higher rate of return?
Please....................
That's straight out The Franklin Mint Handbook of Marketing
Given market volatility, speed at which the market cycle is now rotating and the ability to "mine" information. Long term is probably not the way to go.
The one thing I have seen in the last 18 months is the willingness for people to pay "stupid" premiums for the knives they want. Which is why the "flavor's for the months" of 2 - 4 years ago have taken a hit in both the primary and secondary markets.
What do you mean speed of the market cycle?
Do you think there is an increase in the speed of boom/bust cycles?
What stat/data do you use to gauge the "speed of the market"?
A lot of makers who are charging too much for their knives are being exposed and their sales and waiting lists have dropped off.
So why don't they lower the prices if they are "overpriced"?
Do you know something they don't?
that given the volatility of the market and cycles of custom knives trends.
Huh?
How do you gauge custom market knife volatility?
Do you mean volatility as in a knife makers
beta?
Whether or not it is positively correlated to the custom knife market as a whole??
Too bad there is no volatility index for custom knives
Like the VOLATILITY S&P 500 (^VIX) Index
Or ANY index for custom knives
That would answer a lot of our questions!!
The closest I have found with regards to a knife index came from the mouth and brain of A.G. Russell:thumbup:
It seems buying a knife for $400 and selling it at $460 (a 15% ROI in 12 months) is not "sexy" enough or not enough of a return?? How does 15% ROI compare with what the Bank is offering. True they guarantee that 4% every 6 months. Don't forget that the IRS gets a taste of the 4%.
You can make that profit selling Pez dispensers on Ebay
Or Busse Knives or telephone insulators
I can go to Walmart and buy a 10 dollar Gerber knife and sell it on Ebay for $14.20 to some guy in Winslow, AZ who doesn't have a car to drive 30 miles to the nearest Wal-Mart...........
You are always talking about value pricing
Like it's some great secret
Do you believe in the
Efficient-Market Hypothesis?
I do
I think everyone has access to the same info
If Giraffe bone (or brass guards) decrease in demand
The sellers know it (they lower their prices on giraffe bone)
The buyers know it (they are willing to pay LESS because they read somewhere that giraffe bone cracks easily)
How do YOU determine the magically "corrrect" price of a knife?
Tell me step by step from when you get the knife
To when you put it on your web site
Do you try and establish a "reference price"?
Understanding Reference Prices
People often compare a products price to a reference price that they maintain in their minds for the product or product category in question. A reference price is the price that people expect or deem to be reasonable for a certain type of product.
Several factors affect reference prices:
Memory of past prices
Frame of reference (compared to competitive prices, pre-sale prices, manufacturers suggested prices, channel-specific prices, marked prices before discounts, substitute product prices, etc.)
➢ Creating the most advantageous (and believable) competitive frame of reference is essential to achieving a price premium
Prices of other products on the same shelf, in the same catalog, or in the same product line
➢ The addition of a more premium priced product typically increases sales of other lower-priced products in the same product line
The way the price is presented for instance, absolute number versus per quart, per pound, per hour of use, per application, for the result achieved, etc.; also four simple payments of $69.95 versus $279.80; for automobiles: total purchase price versus monthly loan payment versus monthly lease payment
The order in which people see a range of prices like when a realtor uses the trick of showing the poorest value house first.
http://www.brandingstrategyinsider.com/2008/04/understanding-r.html
(I think reference prices, set in consumers minds, based on whatever biases or asymmetrical information problems they have, is the biggest obstacle to pricing)
Do you look at past sales on EBAY?
Do you look at comparable knives (or substitute goods), and their prices?
Do you look at what the guy is charging for a fairly similar knife at the table next to you at The Blade Show?
Do you ask what potential buyers think of it?
Or do you just go by your gut feeling based on what is in your memory?
I think most knife makers either use
cost plus pricing or value pricing
Most of the time they probably don't know there is a term for their pricing system
A maker who uses past sales,values customers place on utility or conspicuous consumption (aka Keeping Up With The Jones's)or the price of the knife at the table next to him at The Blade Show===>
He IS using value pricing....
In all honesty, I think the auction method of pricing is the best way to extract "consumer surplus"
It's really a beautiful concept
You out out the knife with a pencil and a sheet of paper
You charge what is the HIGHEST amount a buyer is willing to pay
I don't see why all knives for sale at a knife show don't use the auction style of pricing???
My guess is some consumers don't want to wait till the end of the auction
They want to buy the knife NOW, and get to the pool hall to show off the knife and have a few beers........
I do agree with you Les on one issue==>
Specialization
My area of specialty is gaming stocks
I know all the companies
I follow their news and financial reports
I look at their financial ratios and compare them to industry avg's
I track ALL the gaming stock prices
I look at trends, like number of indian casinos opening up
It seems to me that one would do good to specialize in, say, custom fixed blades
or meteorite bolster knives or giraffe bone or daggers......
That way you get a good feel for the market and the current prices
Given all available info on supply and demand..
When I 1st started collecting knives
I didn't know a Camillus Mark 4 from Kinfolks WWI fightin' knife
I just though they were all called Kabar's!!!
After buying and selling a few on ebay, hanging out in BRL's forum, reading a few price GUIDES
I got a feel of the market prices
Now if I go into an antique shop
I feel like I have done my homework and can make the best buying decision as I possible can
I'm glade this thread is revived
One of the main reasons I stared collecting knives was the mixture of behavioral economics and history
My 2 main areas of interest
I'm surprised no one has written a book on knife investing
I like hearing what is important and not important to you custom knife collectors
And whether you guys are
Homo Economicuses
Homo economicus, or Economic human, is the concept in some economic theories of humans as rational and broadly self-interested actors who have the ability to make judgments towards their subjectively defined ends.
I think most of you are
I have faith in you all....
BTW....I found my DREAM graph!!!
I have some thoughts on creating a knife portfolio
I'll stop for now
So I don't get accused of posting a "wall of text".....
You've read up on your junk science:barf: Maybe you should buy some carbon credits to offset your guilt and move this post to the political forum:yawn:
:barf:
