Custom Knife Investment

When the crowd wants in, it's time to think about getting out.
Buy them because you like them, not because you hope to make money out of them. There are more great makers and many more good knives than there are good investments. Sure many famous makers are hot and will remain so, but there are hundreds of knives for sale on today's market by very good, well known makers of 20 years ago for less than they sold for new.
 
RJ said:
The only issue I see with investing in knives is the somewhat limited audience/market. Unless you are a dealer, you can be limited to a few internet sites and maybe a show to resell the knife. Plus there are very few people who are willing spend a lot of money to purchase the knife from you (the "knifenut" community is small compared to the total population). Now with other types of investments like stocks, gold, silver, ect, you have have a bigger market because they are seen as traditional investments and more people would be apt to buy it from you.
Click to expand...

I agree with you to an extent, however there's more knives being sold by collectors (@ a profit) than you may think.
Get good photos taken and put your knives "out there" and you may be surprised how many people come knocking with $$$.
 
By the way, there's a psychological term for the intersection of luck = opportunity and preparation, it's "planned happenstance." ;)
 
nice discussion guys.
i do agree and disagree with everything thats said here.
lets take a contrarian view on knives as an investments.
just got this crazy idea.
why not a group of collectors pool in money and form a mutual fund kind of portfolio of knives.something like fractional buying.
say 3 collectors join hands and buy 10 lovely knives.they all own them.
they could rotate the knives in their collections and they decide to sell the knives say in 4-5 years and get a fresh purchase.
anyone likes this ?
kevin,bob?
 
Hi RJ,

I agree with you that it can be a limited market. As well I am not saying it is easy to buy and sell custom knives as an investment.

However the forums, EBay and shows offer several opportunities

There are several members of this forum who buy and sell custom knives (at a profit) on a regular basis.

Lastly, I think another misconception (at least with regards to what I am writing) is that I am recommending investing in custom knives for your retirement, send you kids to college, etc.

To clarify I am saying that you can buy custom knives and sell them at a profit...on a regular basis.

This would add even more enjoyment to the hobby.

One of the main reasons that others outside the custom knife community don't take custom knives as an investment seriously...is....well read this thread and so many others like.

If you tell enough people that custom knives suck as an investment...eventually they will take you word for it.
 
Hi Yitz,

I have always found...without exception...the harder I work and more knowledgeable I become..the "Luckier" I get.

Ask anyone who owns their own successful business how many times they have heard "you're so lucky."

My quote was from the middle of the 1st Century AD.

Psychology wasn't officially recognized as a science until the 1880's with Wilhelm Wundt (the father of psychology).

Seneca was just a little ahead of Psychology. :D
 
There are several members of this forum who buy and sell custom knives (at a profit) on a regular basis.

Lastly, I think another misconception (at least with regards to what I am writing) is that I am recommending investing in custom knives for your retirement, send you kids to college, etc.

To clarify I am saying that you can buy custom knives and sell them at a profit...on a regular basis.

This would add even more enjoyment to the hobby.
Click to expand...

Les, I couldn't agree more:thumbup::cool: To be more specific. In the last 4 years I have sold 53 knives from my collection with an average ROI of 12,46% (yes I used Kevin's spreadsheet :thumbup:) and reinvested all the money in other knives to upgrade my collection. The result is that now, although my collection is smaller, it is of a higher quality.

Marcel
 
Hey Les,
Seneca wasn't ahead of psychology, he was just an early psychologist. :) Many of the ancient civilizations had keen insights to offer about human behavior. What modern psychology does is help people understand how the concepts apply to them and train them how to use it to their advantage. For example, you hear about people finding a great Scagel at a garage sale for $50, but without the knowledge to recognize and evaluate the find, they wouldn't know enough to buy it.
 
Hi Yitz,

Actually he was a small business owner...an entrepreneur if you will (although they didn't call it that back then :D) and he understood what Luck was.

Now finding a Scagel at a garage sale for $50...now that is Luck.

In the end Seneca was not so lucky...he was forced to commit suicide.

The psychological phraseology for Seneca would be "Luck...you have to take the good with the bad!" :D
 
Is being able to buy--and then sell a custom knife at a profit considered investing or dealing? I would guess that investing requires a longer time frame.
If you get drawn for an Emerson at the Blade Show and sell it for $100 profit before you leave the room are you an investor? That is real ROI by the way.

The painful thing is the person who collected what they like, from the personable knifemaker who played up to them and worked them ("Come here and let me show you what I made with just you in mind!--I've actually heard that said.) Just because a maker is personable to collectors, is good at getting publicity, and makes a clean knife doesn't make the knife he makes a good investment.

I call these types ostrich collectors. They stick their head in the sand (with their butt up and flapping in the breeze). They ignore the fluctuation of trends, styles, and makers, and then years down the road they bring me a clunky ivory micarta handled hunter made by a maker everyone knew as a "nice guy", whose star declined after all the knife mags had run their profiles on him.

He paid too much at the time, he wasn't in tune enough to unload it when he should have, and now he brings it to me to auction for him and I am the one who has to break his heart. Sometimes the guy walks away in a huff because he can't stand the truth.

Yes, there are knives out there that are good investments. And it can be done. But I would venture it IS done by very few, because collectors will not take the time to do their homework and blunder through a show (or an internet forum) following the crowd and buying whatever catches their eye.

You try to collect like that, just don't be mad at me when you bring me your collection to auction and I tell you the brutal truth.

Unfortunately I've yet to see a collector who only bought Loveless, Lake, and Morans.
 
Les Robertson said:
Hi RJ,

I agree with you that it can be a limited market. As well I am not saying it is easy to buy and sell custom knives as an investment.

However the forums, EBay and shows offer several opportunities

There are several members of this forum who buy and sell custom knives (at a profit) on a regular basis.

Lastly, I think another misconception (at least with regards to what I am writing) is that I am recommending investing in custom knives for your retirement, send you kids to college, etc.

To clarify I am saying that you can buy custom knives and sell them at a profit...on a regular basis.

This would add even more enjoyment to the hobby.

One of the main reasons that others outside the custom knife community don't take custom knives as an investment seriously...is....well read this thread and so many others like.

If you tell enough people that custom knives suck as an investment...eventually they will take you word for it.
Click to expand...

I had forgotten about ebay. It does offer an opportunity for a wider exposure, however there are limits. How many people would feel comfortable buying a Loveless, Moran or Scagel on ebay for the prices they command as opposed to say a dealer with a good reputation? Lots of people would buy one if it sold for $100 because they are willing to risk that money, but what about $10,000 or $20,000? I would say a knives under $1000-$1500 would be the best bet for ebay.

I see knives as good or bad of an investment as any other "non-traditional" commodity such as comic books, sports cards and memorabilia, art, watches.
 
Les Robertson said:
Hi RJ,
One of the main reasons that others outside the custom knife community don't take custom knives as an investment seriously...is....well read this thread and so many others like.

If you tell enough people that custom knives suck as an investment...eventually they will take you word for it.
Click to expand...

So true.

I also fine those who put little or no effort into selling their customs are most often the same who blab all over the internet that custom knives are a bad investment with no resale value.

You know, those who take a photo of their knives with their cell phone, post a thumbnail on a forum "for sale" area, then drop their price by $50-$100 every hour or so the knife doesn't sell.

Sure, your knife sell it anyway you like. However selling knives in this fashion hurts the seller, the maker's primary and secondary markets and every other collector who owns that maker's knives.
 
RJ said:
I had forgotten about ebay. It does offer an opportunity for a wider exposure, however there are limits. How many people would feel comfortable buying a Loveless, Moran or Scagel on ebay for the prices they command as opposed to say a dealer with a good reputation? Lots of people would buy one if it sold for $100 because they are willing to risk that money, but what about $10,000 or $20,000? I would say a knives under $1000-$1500 would be the best bet for ebay.

I see knives as good or bad of an investment as any other "non-traditional" commodity such as comic books, sports cards and memorabilia, art, watches.
Click to expand...

Wider exposure, but not necessarily the right exposure. I don't buy or sell on eBay.
 
Les Robertson said:
Again, you might want to rethink that custom knives are a bad investment thing.
Click to expand...

While you have made through the thread valid points with a nice incite from the resellers perspective I personally still see them as a bad investment, which I should have stated...If you got the initial outlay to get into it with some consistency then I could see it making one enjoyable business, what could be better then getting to fondle amazing one offs then move on to an even better piece day to day? I just don't see the custom market in that way...when I begin to sell my blades that I forge I will sell to anyone and not market to a specific sub-culture in the hobby, and if they make a profit in resale thats pretty awesome but majority of people I don't expect them to buy with profit in the back of their mind.

Thanks for your perspective though, I could see a job like yours being extremely enjoyable!
 
Marcel54 said:
Les, I couldn't agree more:thumbup::cool: To be more specific. In the last 4 years I have sold 53 knives from my collection with an average ROI of 12,46% (yes I used Kevin's spreadsheet :thumbup:) and reinvested all the money in other knives to upgrade my collection. The result is that now, although my collection is smaller, it is of a higher quality.
Marcel
Click to expand...

Here's a poor scan of a condensed version of the collection spreadsheet template Marcel refers to. It's actually a template derived from my personnel spreadsheet that we discuss and I offer to collectors who attend my seminars. Though some informational columns (associated knife expense for example) are left off so I could print in one page.

The first section of the spreadsheet is basic knife/collection management information and the second section is more investment and tracking information. It's much simpler than it looks. You just fill in the columns when you purchase a knife and update it when you sell knives and the spreadsheet formulas auto calculate ROI, collection value, dollar amount invested, projected ROI on collection, actual ROI from sales etc, etc,.

Managing information like this is very helpful if you were ever to have a loss or estate purposes for your family if something were to unexpectedly happen to you.

This is obviously not for everyone, however when I started collecting custom knives I had quite a bit tied up in collectible classic sportscars so I was determined to start a custom knife collection with as little funds as possible. My goal was to ultimately build a fine custom knife collection financed by re-investing profits from buying/selling knives. This spreadsheet proved to be a helpful tool in reaching my goal. The actual spreadsheet has a damascus pattern page background :cool:, rather than the white you are viewing.

CollectionDocTemplate2A.jpg


CollectionDocTemplate2B.jpg
 
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Hello gentlemen!
I find this thread very interesting and yet very intriguing.
I’m no knifemaker or a collector, just a retired guy that likes knives and other stuffs.
I know that we find here the most prominent knifemakers and collectors in the business, so I guess no better place to try to understand a bit more of knife collecting.
What is considered an investment grade knife?
If a knife is used is it still an investment grade piece?
If not, how to evaluate a knife that will be sitting on the shelf?
I can easily understand the stock market and other assets but confess I can only tell if a knife is good or not, by using it.
In fact, what I most see is someone just starting to make knives and selling the first one for something like US 150-300 and IMO it is most of the time much worse than a cheap commercial knife.
What are the guidelines?
Victor
 
comments withdrawn, but I believe Iainfm and Soccer are scammers trying to steal people's customs.
 
Les Robertson said:
Hi RJ,

I agree with you that it can be a limited market. As well I am not saying it is easy to buy and sell custom knives as an investment.

However the forums, EBay and shows offer several opportunities

There are several members of this forum who buy and sell custom knives (at a profit) on a regular basis.

Lastly, I think another misconception (at least with regards to what I am writing) is that I am recommending investing in custom knives for your retirement, send you kids to college, etc.

To clarify I am saying that you can buy custom knives and sell them at a profit...on a regular basis.

This would add even more enjoyment to the hobby.

One of the main reasons that others outside the custom knife community don't take custom knives as an investment seriously...is....well read this thread and so many others like.

If you tell enough people that custom knives suck as an investment...eventually they will take you word for it.
Click to expand...

All very well said, Les. A good summation for the crowd out there.

Bob
 
Thanks Bob.

I did an article for Knives Illustrated (with some serious editing help...article was way to long :D from Bruce Voyles). The article will be out later this month.

Good basic article with examples (named names and put photos of their knives in the article).

I purposely left out the very obvious names that come up in conversation here all the time.
 
The Aforementioned article titled: Five Rules of Investing in Handmade Knives

Is in the current issue (August 2010).

There are some great photos in the article!
 
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