Bandaidman,
You wrote:
"Les Robertson guarantees a 10% return and no more research is needed. that is one of the sillier things you have ever said. thanks for the laugh"
How is this funny? Is there anyone else in custom knives, maker or dealer who will offer this guarantee.
US Treasuries offer a guarantee and so do Savings Bonds, but not anywhere near 10% and not in 12 months or less.
Are there people who make 10K a year reselling knives as investments sure. For this you have to have a varied portfolio and now when to buy and when to sell.
If you want to make $10,000 a year guaranteed sounds to me like you need to invest $100,000 with Les.
Can the average or even more advanced collector make 10K a year, I don't think so.
My collection grew in value over several years. I haven't made the 45K because I haven't sold it, why because it is my collection. I also purchased coins 18 years ago as investment, I had to wait forever but those are now good investments. Same with Assault rifles, bought a lot of those and sold them for a nice profit (when I had my FFL). My kids got into Beanie Babies when they were hot and each one made over $2,500 in less than a year. Point is if you understand the collectible markets you can make money in them. Two years ago when banks were paying less than 1% for savings accounts and CD's were right around 2%. Just about any knife you bought from a well known maker you could make 5% on if you resold it while the market was still hot for those. Now that CD's are pushing 6% or more in some places, you need to invest more wisely to figure out which ones will bring 10 - 15%.
Questions:
1) do you have any clients who have made a minimum $10k profit (a much easier figure) yearly for the last 5 years? Yes.
2. I will make it easier for you if the answer is no to #2...how about $5k/yr for the last 5? Yes
if you can provide rough examples of how they did so (ie bought x amount of knives for 4000 bucks, sold later for 15k), it would greatly assist in the judging the veracity of your reply. if this presents a problem i will be satisfied with a simple y/n. What they bought then has little or no impact on what you would have to buy today.
Ok example. I had a client who got drawn for an Onion ($800) and two Boguszewski's (2,000) at the Las Vegas Tactical Knife nvitational. He sold all three before he left the room for $7,800. The next day he got drawn for another Onion ($800) sold it for $3,200. His purchase price was $3,600 and he sold those knives for $11,000. A profit of $7400 in less than 24 hours. A total ROI of about 250%.
Can you count on getting 2 Onions and 2 Boguszewski's at a show? No. Does it happen? Yes.
The key for these investors is that they have the money to invest and they are early adopters of new types of knives. They purchase several of the new makers knives. As the demand increases they start to sell off the knives making anywhere from 10 - 20% in less than a year. They continue to keep knives on order with this maker and continue to resell them. Until they start they hit the point of diminshing returns (the investor would set that trigger). At that point they divest themselves of that makers work and move on to the next maker.
This happened when Emerson knives hit a certain point the resale value in the aftermarket started to come down. Many of those people moved to Ken Onions knives. As Ken's aftermarket started to cool, one of the major buyers of his work started buying Boguszewskis (and he still buys Onions).
If you had bought $3,000 worth of George Herron's knives per year (starting about 10 years ago) Up until about 2 years ago when George semi-retired. That would have been 8-10 knives. The Stag handled Skinner you bought for $350 would today be selling for around $1,500. Your ROI would be right at 325% (over 10 years) you would have had a average annual ROI for 32.5%. Even adjusting for inflation you would have seen a return over 26%.
Now which example of a US Treasury are you going to show me will give you 26% return (and you have to adjust for inflation as well as the 25% Short Term Capital Gain, if you sell in less than 12 months. As the US Treasury Dept. will send a note to you and the IRS informing both of you of your profit. Where as Mr. Herron is not going to do that).
Again, is it easy no. Can it be done yes.
Bandaidman, if you want to be an ivestor it is going to cost you time and money. You will have gain a fair amount of expertise of both the current and future custom knife market. You will have to be able to accurately predict future wants and desires of the collectors and which makers will be able to fill those needs. Then you will have to put your money where your mouth is and buy the knives. Then you will have sell them to gain any profit on your investment. It is only then will you realize if you knew what you were doing or not. How is that for a laugh.
If you are not willing to risk your money on your ability to forcecast market trends then you should not attempt this.
Ok, I'll give you one with training wheels. Contact Mike Obenauf, order a Large Model 2 (it will take you 6 months or so to get it). Then post it on your favorite selling place. THe knife is $375 + $15 for S/H your total investment will be $390. Your asking price will be $450. If it takes you a year to sell this knife your ROI will have been slightly over 15%. Which investment do you have that will get you a 15% return this year?
Now lets say you're really aggressive and you order 6 of these knives. Instead of shipping costing you $15 it costs $20...but for all 6 knives. Now each knife costs you only $378.33. Now your ROI jumps to 18%. The first 5 you sell and make a profit of 71.67 per knife X 5 = $358.35. You now have $19.98 of your money into the 6th knife.
BTW, Les sells Mike's knives at $375 (Mike's retail). You dont even have to contact the maker. See how easy he makes it.
Pick your next maker and repeat.
Like I said you will have to spend your time and money.
This is how build a $50,000 collection with $5,000 worth of your money.
THe adivce for the first $50,000 was free. Any more information and I will have to charge you.
WWG
You have stumbled into a thread completely unrelated to your specific plight, but in a way, it is fitting.
Fogg has done more for the custom knife world than most will ever know, he just does it in a quiet way. Don has been giving demos at hammer ins for at least 25 years. Check out the site map on his web site, it's huge and full of information for the maker or collector. Also one of, if not the longest running web sites on custom knives. His bladesmith forum is also a wealth of information and he is very active there. I have a great deal of respect for Don Fogg and what he has done for custom knives. He also has become a Master Smith twice in the ABS, no easy task.
No thanks.
