Hi Joss,
Wow you have an MBA too! Congrats.
I hate to throw a monkey in the wrench but there are those who can get 6 Kit Carson Model 4's from Kit.
Travel to the show $500? What if you can drive? What if you are sharing a room with one or more people and you only stay one night. Travel costs are now less than $100.
What if you get the 6 from Kit in the Pit on Thursday night? Now your Friday is open to see whoever you want.
Come on you know from "B" School that you have to look at all scenarios and then determine courses of action for each scenairo and then create contingency plans for each of those scenarios. Sometimes the $$$$ is the easiet part of the formula.
Of course we both know that all of this is moot. Any collector worth a darn has already contacted their favorite makers weeks before the show, received the email photo's or at least descriptions. If it is something they want they have already sent a check or given a CC number to hold the knife.
I realize that you abhore this practice, but "proactive collecting" changes almost all of the betas. Excellent point about travel. What is the effect on the "accounting" variance if the buyer does not travel to a show? Likewise what is the variance if the maker does not have to travel to the show? Costs to the collector go down and profit goes up for the maker. However, the cost of the knife remains the same. Now you have to define "Cost". Obviously in both cases the "Cost(s)" go down but the "Price" stays the same.
My point is that there are "Investment" Grade knives starting at $250. All it takes is a $25 premium and congrats you just made a cool 10%. True it's not the money you can make with a Billion $$$ M & A. None the less it will "beat the street" and kick the snot out of most CD's or Money Market Accounts.
Again, let me reiterate, you have to know when to buy and one to sell. This does not require the focus of a Day Trader. However, some of the same techniques can be utilized.
Sometimes an MBA can be a detrement to the collectibles market. Finanical entities love to "Crunch the Numbers" utilizing formula's that may not be able to take into account current and emerging trends. These formulas rely to a degree (on a sliding scale) on different variables. These forumlas cannot take
into account the "Buzz" of a collectible. As well they will not be able to determine when the "tipping point" occurs and how that will affect the life cyle of a product. Once you figure this out you have missed the opportunity to capitalize fully on the investment potential. You have to be there at the beginning of the life cycle if you wait till the growth portion you missed the opportunity.
You have to be able to identify future great makers before the rest of the custom knife world figures it out. You can't wait till the Buzz starts and other start to look as this will have a negative affect on your ROI.
Joss as you have probably guessed my MBA was geared towards the Marketing track <G>
Using some of your forumlas how would the investment potential of Don Fogg's work be impacted if you stopped your constant praise of his work? You are respected as a knowledgeable collector. If a thread like this started again and you did not chime in with Don's name, the other seasoned collectors would wonder what is going on. Add another variable, you start to sell his work off at or slightly below current value. Questions would arise and no forumla you have could determine the affect your acts would have on the Fogg market.
Collectibe markets differ signficantly from Financial markets due primarily to the human element. Financial institutions try to cover every angle with financial formulas and remove the human element as much as possible. CPAs and MBAs crunch the numbers including reduntant equations specifically included to counter act human bias.
Collectible markets make little or no sense to many who do not understand the collectible. Go back a few years and look at the Beanie Baby Craze. There were people who made hundreds of thousands of dollars on a $4 stuffed animal. Except some of those stuffed animals sold for upwards of $10,000......$10,000!!!!! Today that stuffed animal is worth closer to $1,000 than $10,000. Obviously market timing would have been a skill to possess. How many people held on to bad stocks because the fell in love with them. They ignored market conditions and held onto it too long. The same is true for the work of some makers.
This was the case with the knife Jerry Hossom lamented over. THe knife has $2,000 worth of Warenski engraving (unfortunately it was Buster and not Julie...who knew?) The unknown maker of the knife probably was at the height of his career when Buster engraved the knife. The question is why did a multi-thousand dollar knife become "worthless"? Actually it is not worthless! All Jerry has to do is build up that makers work again and create a demand for the knife. You know....Go "Retro".... Own a "Piece" of History.
What is something worth? What someone will pay for it.
How about the "Pet Rock" for those of us old enough to remember that. Who would have thunk it! The guy made a Million + on that wacky idea.
Custom knife makers as what they think the market will bear. Sometimes the eat the bear and sometimes the bear eats them.
Alot of the collectors who were around in the mid-80's and early 90's learned a very harsh lesson about the high end collectible market. This was especially true of those who were into the Interframe folders. The Japanese (who were prolific buyers of these knives, in particular the ones with thousands of dollars of engraving and gold inlay), their stock market did a nose dive, the economy tanked and their high end collectibles were sold for pennies on the Yen.
Many of those knives made it back to the US. Dealers thought they could recycle them, however, that market had hit the point of diminishing returns and sales stagnated. The custom knife community lost a lot of collectors in the 90's especially when the Tech Stocks seemed so lucrative. We all know how that turned out.
The implosion of the high end folder market let to the birth of the tactical folder market. A previously unheard of phenomenon occured...a custom folder for under $300. From big name makers to! These were later to be called Tactical Folders and they ruled the custom knife world for the next decade.
As the Knifemakers Guild were dealing with their internal struggles, declining membership and a slowly dying show. The ABS stepped up and created its own show in Reno, has a major presence at the Blade Show, as well the Arkansas and SOS Shows. The ABS hunter has become the new "Tacitcal Folder". They are affordable, use top grade materials and the ABS has their school and numerous hammer-in's to help instruct their old and new members knife makers.
What value do you give to this variable in the formula for collectibles.
But wait!!! Is the school turning out too many Smiths? What is the appropriate number per year or do you just keep allowing anyone to attend with the tuition? At what point will the ABS saturate the market with Master Smiths? What are they doing to bring in a complimentary amount of collectors for each new JS and MS. Will lack of collectors actually force the Master Smiths to lower their prices to compete with other MS makers and those up and coming JS makers who are now on Anthony's QPR makers to watch list? Will the "Superstar" price increases allow the "Non-Superstar" MS's to raise their prices. Will the increasing prices the MS's are charging simply take them into the arms of a fortunate few who can afford their knives. Will this in turn end their careers as those fortunate few get their fill of a particular Superstar and move on the next "Superstar". Many variables to be considered indeed. Lastly, will Giraffe Bone finally be banned by the ABS????
Lots of questions, lots of variables and lots of research to do.
Joss lots of hints in the thread as to who I am.
Danbo, nice to see you again at the show. You seemd to have one of the better selections of the dealers there without a table.
