Guitar Investments

[fronobulax]

I followed the link to this from Guitar Squid so if you are getting a feeling of deja vu, you know why.

The article talks about guitars as investments and cites five specific examples where the price is low but is expected to rise. No Guilds. The cheapest examples they cite are around $6000 but most "investments" would require five figures and up. I found the article interesting for two reasons. First, the expert cited is David Kalt, a former options trader and broker, who runs Chicago Music Exchange. That right there might explain why we folks at LTG often feel CMEs prices are outrageously high. CME presumably was not founded to serve "players". Second, since I cringe at the thought of guitars as investments, the article gives me a different perspective even though I'm still going to park my money elsewhere and suggest that anyone who asks me does the same.

 

[West R Lee]

I see all guitars as an investment to one degree or another Frono. Whether you are truly speculating that the value will increase with the intention to one day make money, or whether you just take comfort in knowing (like most of us) that if you pay $2000 for a guitar and get arthritis so bad you can't play and need to recoup your $2000, you will. Or it may just be an investment with personal enjoyment being the dividend. Any way I look at it, guitars are an investment.

West

 

[chazmo]

The latest thing I read about the car collecting world was really interesting and a bit disheartening.

There are now speculator pools-- essentially funds that buy cars at auctions and hold/resell -- that are driving up prices for collectible cars.

What irks me about this is that it's not about the cars... These fund managers aren't going to be driving these cars or showing them in public. It's strictly about money.

I guess it's a sign of the times.

The cars these funds are buying are not on my radar anyway, so it's just discussion on my part.

But, honestly, I can imagine the same thing happening in the guitar world.

 

[fronobulax]

I see all guitars as an investment to one degree or another Frono. Whether you are truly speculating that the value will increase with the intention to one day make money, or whether you just take comfort in knowing (like most of us) that if you pay $2000 for a guitar and get arthritis so bad you can't play and need to recoup your $2000, you will. Or it may just be an investment with personal enjoyment being the dividend. Any way I look at it, guitars are an investment.

West

We have a definition difference. When I talk about investments I mean something I do with my money to make more money. For most people in the USA the investment is something that will eventually be sold to pay for something else, such as a college education for a child (or grandchild) or retirement. To me there is a fundamental difference between buying a $2000 guitar now because I expect to sell it for $5000 in five years and buying a $2000 guitar now and finding myself blessedly lucky when I sell it for $5000 in five years after being a steward of the instrument and having the pleasure of playing it for those five years.

 

[West R Lee]

I see all guitars as an investment to one degree or another Frono. Whether you are truly speculating that the value will increase with the intention to one day make money, or whether you just take comfort in knowing (like most of us) that if you pay $2000 for a guitar and get arthritis so bad you can't play and need to recoup your $2000, you will. Or it may just be an investment with personal enjoyment being the dividend. Any way I look at it, guitars are an investment.

West

We have a definition difference. When I talk about investments I mean something I do with my money to make more money. For most people in the USA the investment is something that will eventually be sold to pay for something else, such as a college education for a child (or grandchild) or retirement. To me there is a fundamental difference between buying a $2000 guitar now because I expect to sell it for $5000 in five years and buying a $2000 guitar now and finding myself blessedly lucky when I sell it for $5000 in five years after being a steward of the instrument and having the pleasure of playing it for those five years.

My point exactly, but I see them both as investments, just as I see my home. I don't ever plan to sell it, but if I had to, maybe I'll get my money back and then some. To me, what you're talking about would be considered speculators.

West

 

[fronobulax]

[quote="West R Lee":1a6f5drz]I see all guitars as an investment to one degree or another Frono. Whether you are truly speculating that the value will increase with the intention to one day make money, or whether you just take comfort in knowing (like most of us) that if you pay $2000 for a guitar and get arthritis so bad you can't play and need to recoup your $2000, you will. Or it may just be an investment with personal enjoyment being the dividend. Any way I look at it, guitars are an investment.

West

We have a definition difference. When I talk about investments I mean something I do with my money to make more money. For most people in the USA the investment is something that will eventually be sold to pay for something else, such as a college education for a child (or grandchild) or retirement. To me there is a fundamental difference between buying a $2000 guitar now because I expect to sell it for $5000 in five years and buying a $2000 guitar now and finding myself blessedly lucky when I sell it for $5000 in five years after being a steward of the instrument and having the pleasure of playing it for those five years.

My point exactly, but I see them both as investments, just as I see my home. I don't ever plan to sell it, but if I had to, maybe I'll get my money back and then some. To me, what you're talking about would be considered speculators.

West[/quote:1a6f5drz]

OK. For purposes for further discussion with West, I'll try and use "speculators" instead of "investors". I think we agree on two different concepts but not what to call them :wink:

 

[West R Lee]

I guess the practice iteslf doesn't much bother me either Frono. It's no different than "speculating" or "investing" in anything else, whether cars or real estate or guitars or gold. I think the reason it get's under some people's skin is that it takes those items off the market while others would prefer to have a shot at whatever commodity because they have a genuine appreciation for that commodity and it's use, in this case guitars. But there are two sides to the coin, yes, it makes them more scarce, but it also increases the value. Supply and demand are the basic principals of economics. I understand that some folks get bent out of shape because some guitars are less available to them, but others who own those guitars also reap the reward if they so desire.

West

 

[Christopher Cozad]

What a great topic, especially as it relates to Guild guitars!

I appreciate Frono's point regarding the (popular) lack of *investment* guitars sporting the Guild logo, and his clarity regarding the use of the term "investment". History has demonstrated that, if you wish to purchase a guitar today with which to make more money later than you originally spent on the instrument, you typically don't buy a Guild. "Players" purchase Guilds (and for good reason), but collectors have not flocked to the brand... Segue...I was perusing the Musician's Buy web site and was delighted to find three Guilds under their "Private Reserve" menu, a menu which represents a 70 guitar offering that includes the likes of a $20,000 Gibson J-250 and a $12,000 Martin D-28. These are all "new" guitars. The three Guilds included in their offering are a GSR D-50, GSR F-30, and GSR F-40, all priced well below $4,000. It certainly opens the floor for discussion regarding issues such as market perception, market reception, valuation, quality, legacy, selection of materials, etc. Guild, for all the well-known and oft-speculated reasons just doesn't get the same airplay as Martin, Gibson, Taylor, and others, but the Guilds are present, nonetheless.

I tend to lean toward West's pragmatism regarding the understanding of the purchase of a Guild as an "investment". I may be seen as an extremist (or just plain kooky), but I believe I have demonstrated my commitment to the brand by "re-investing" in my own guitar. When I spent $1800 with the Custom Shop renovating my 1976 F-512 30 plus years later I defined my understanding of the term "investment". I will likely never recover the sum total amount of my original purchase price, multiple trips to the luthier(s) over the years, and the re-birth of my favorite instrument, however...

I have most definitely "invested" in this particular guitar! I am convinced (subjectively, as well as financially) that the return value has more than benefitted me. Not to put words in West's mouth, but the measure of the reward of a Guild guitar *investment* may well be greater than simple monetary terms can express. Perhaps this is true for all brands, and perhaps it isn't. To state my position more clearly, I am intending to "re-invest" in my 1976 F-50 R NT.

Christopher

 

[Frosty]

I kinda have this feeling that as the boomers age and retire or whatever
else comes along with aging, the demand for "things" will decrease. Old
guitars, cars, houses... there were so many boomers that demand outpaced
supply and the price went up. That equation, at least in the US, is changing.
Add to that the fact that the "things with strings" that the boomers coveted
(Martin/Gibson/Guild) are not the iconic instruments of the newer generations.

My $.02.

 

[GardMan]

The only ay I view my Guilds as an "investment" is in my mental health...

OTHO... they probably are doing better than my TIAA/CREF and 401B these days.

 

[West R Lee]

I agree with Frosty, I don't think the things we value will be of much importance to the next generation. I think they mean so much to us because they were so special so many years ago......like "muscle cars" for example. Man, a beautiful SS396 or a Shelby Mustang.....awesome vehicles to us, but we remember them in their greatness, few of the next generation will. It's what makes these things valuable to us.

But I'm sure as these things fade away, others will become valuable.....and so on.

West

 

[Walking Man]

... but the measure of the reward of a Guild guitar *investment* may well be greater than simple monetary terms can express.

Christopher

Well done, sir. Well done! 8)

 

[Treem]

[quote="Christopher Cozad":k2xeutlw]

... but the measure of the reward of a Guild guitar *investment* may well be greater than simple monetary terms can express.

Christopher

Well done, sir. Well done! 8)[/quote:k2xeutlw]
I concur. 8)

 

[West R Lee]

Which is what I was saying in my first post on the topic.....that some will "invest with their personal enjoyment being the dividend".

West

 

[Christopher Cozad]

Which is what I was saying in my first post on the topic.....that some will "invest with their personal enjoyment being the dividend".

And I, for one Sir, couldn't agree more!

Christopher

 

[West R Lee]

[quote="West R Lee":lh0xk8hy]Which is what I was saying in my first post on the topic.....that some will "invest with their personal enjoyment being the dividend".

And I, for one Sir, couldn't agree more!

Christopher[/quote:lh0xk8hy]



West

 

[evenkeel]

Interesting thread. A couple of the guitar mags have had articles on the subject. Guitar Aficionado had an article that included a chart, much like a stock equity chart. And, just like the market for stocks, real estate, yachts, R.V.'s etc. the guitar market took a pretty good hit. Now some guitar buyers are back in looking for bargains. The article also mentioned that as the prices for the iconic instruments, 59 Les Paul, pre-war Martin and Gibson flat tops, pre CBS Fenders got out of sight, prices for the secondary brands started to increase. Now very early Taylor guitars are becoming "collectable". Will the guitar market get back to pre 2006 levels? Like the real estate market, hard to say, but there is a lot of inventory (again just like the real estate market) so prices will likely be under pressure for a while.

Re: value as the baby boomers exit the market. This might not effect the market as much as some might think. There was a seismic shift in music between my parents, the Big Band/"Greatest Generation" era and me, Boomer/rock and roll. Kids today do know the music of the rock and roll era and the instruments that helped define it. When up in Maryland I often played at a open mic/bar that had a very young crowd. I felt like the granddad of the scene some nights. These kids all knew the old Neil Young, Dylan, Townes van Zandt, etc., etc. tunes I played. And they had a pretty good idea about the guitars these musicians played. They went gaga over the 1969 F-212 I brought out one time.

 

[killdeer43]

If I bought guitars for monetary investment purposes, they'd stay in their cases and never get played, never open up, never grace the world with their incredible sounds....
The mental health investment, on the other hand, pays dividends every day!

Mine are, after all, made to be played! 8)

Just offering my .02 centavos,
Jose

 

[West R Lee]

Interesting thread. A couple of the guitar mags have had articles on the subject. Guitar Aficionado had an article that included a chart, much like a stock equity chart. And, just like the market for stocks, real estate, yachts, R.V.'s etc. the guitar market took a pretty good hit. Now some guitar buyers are back in looking for bargains. The article also mentioned that as the prices for the iconic instruments, 59 Les Paul, pre-war Martin and Gibson flat tops, pre CBS Fenders got out of sight, prices for the secondary brands started to increase. Now very early Taylor guitars are becoming "collectable". Will the guitar market get back to pre 2006 levels? Like the real estate market, hard to say, but there is a lot of inventory (again just like the real estate market) so prices will likely be under pressure for a while.

Re: value as the baby boomers exit the market. This might not effect the market as much as some might think. There was a seismic shift in music between my parents, the Big Band/"Greatest Generation" era and me, Boomer/rock and roll. Kids today do know the music of the rock and roll era and the instruments that helped define it. When up in Maryland I often played at a open mic/bar that had a very young crowd. I felt like the granddad of the scene some nights. These kids all knew the old Neil Young, Dylan, Townes van Zandt, etc., etc. tunes I played. And they had a pretty good idea about the guitars these musicians played. They went gaga over the 1969 F-212 I brought out one time.

Interesting, we'll see. My sons will tell you that they'll never again make music like the Allman Brothers, Lynard Skynard (Still at it) and the Marshall Tucker Band. We'll see if that translates into value of old Gibsons in 25 years or so.

West

 

[Los Angeles]

One of the absolute benefits (ok, side effects) of collecting for "investment" is preservation. The arts and antiquities markets and collectors eventually donated their works to museums, where they can be studied for generations. The finest, rarest and most historically significant instruments of the rock and roll era are bought for high prices, and anyone who pays a high price is going to protect it. Protecting the investment benefits us, our children and our children's children.