Notice from Kazushige Tsuruta

[Loco Al]

I wanted to post a follow-up to this thread which seems to have died. As I said in my first reply, I thought that this was a very interesting and provocative thread which might prompt other discussions. Potentially important topics such as this one seem to die all too quickly as members become easily distracted by newer and less consequential topics.

 

I mentioned that jlawson had made some good points. In his first post, he said: In addition, this hobby at its purest form is a very expensive proposition that exclude so many young people from become true students. Which causes them to buy without knowledge, get stung on a purchase, then swiftly exit front he hobby because they were "taken advantage of".

 

That statement alone could spin off an entirely new topic that I would rather not get entangled in at the moment, but it is food for thought.

 

Later on in the thread, jlawson said (in response to Steven M): Steven M, unfortunately your thoughts about the 15k sword are what I am talking about in regards to one of the barriers of entry in this hobby. Also just an FYI for you a 15k Juyo is probably one that you don't want to own. There are varying levels of quality even in Juyo swords and that is the bottom of the barrel so to speak.

 

Not so fast. One also has to consider whether a particular dealers items are reasonably priced (reflecting the present market's condition), or unreasonably overpriced. That 15K Juyo might not be so bad after all. Take into consideration what Mr. Tsuruta said in his letter. Presently, I believe that there are many Juyo swords being offered for sale in North America who's asking prices are well above what the market value would be in Japan. I understand that it is not difficult to get a Juyo Ichimonji in Japan presently for under $50K. I have had some very interesting discussions recently with a well respected nihonto expert.

 

This gentleman told me that Mr. Tsuruta's prices are actually quite reasonable (for the most part) for a couple of reasons. One is that most of his swords are sold on consignment and he is not unrealistic when he tells his consignors what they can reasonably expect to get for the sale of their sword. He won't offer them false hope. Many of his consignors may also be in need of money, so that also helps to reduce their expectations of receiving top dollar, or perhaps what they paid for it when the market was more robust. He might say, "I will (and can) sell it for you, but you have to be reasonable". Otherwise, they can consign it with someone else for a ridiculous asking price and it might never sell. The corollary of that is that one might assume that his swords are less desirable examples because they are going cheap. It has been said that the best swords are always in demand. If one expects that they should still fetch top dollar, then one must be prepared to wait a long time to sell them.

 

How do you know that a $20K sword listed on Mr. Tsuruta's website wouldn't be listed for half as much again, or even twice that, if it were for sale Stateside? I have good reason to suspect that it would be. Every dealer can find flaws (or find such-and-such wrong) with another dealer's swords, but does that always justify the double price that they are asking for their sword? Sure there are special swords (flawless, signed, etc.) which command a premium, but as jlawson said: you may "get stung".

 

Alan

 

P.S. That doesn't mean to say that I believe that all swords presently offered for sale on North American websites are overpriced. There are a couple of exceptional swords presently for sale that are possibly quite reasonably priced at the moment. Problem is, they are still very expensive Juyo swords. So it would be arbitrary to describe them as bargains.

[smicha6551]

I was wondering why his prices seemed far more reasonable than what I was seeing on other sites - his absolutely most expensive sword is 4.95MM yen - about $41K per the currency translator on the site. See: http://www.aoijapan.com/japanesesword/masterpiece I'm comparing that with a few US sites where their swords START at that. No matter since that's way outside of my price range but I'm wondering why would swords sell for more here than in Japan (where the concentration of serious purchasers would presumably be higher)?

[Brian]

Easy answer, because there are less of them for sale, and spread out a lot more in the USA.

In Japan, you have a lot of dealers, with a ton of swords, and all in a small space. There is no lack of choices and no lack of sellers. So the competitive market makes them cheaper.

In the USA, dealers are spread out, don't usually do that for a living exclusively, and you have to travel to see a sword. It's only logical swords will be cheaper in Japan to a certain extent.

 

Every dealer has their niche. There are dealers in Japan only selling swords above $50K.

Dealers like Aoi have chosen the low to mid range swords, and that is where they thrive. It is not that they are much cheaper than other shops, they just sell swords at that level. Fair prices of course. But the fact that they don't have anything over $41K is because that is where they position themselves, not because all their swords are cheap.

 

Brian

[Kronos]

I'd agree with Brian, Aoi while there are things I would consider cheap (A particular 2nd gen Yasutsugu springs to mind) a lot of their stock is accurately priced even if on the surface it looks like a bargain due to condition, blade characteristics etc

[cabowen]

Aoi serves the mid to lower end of the market. Most well known Japanese dealers cater to the mid to high end.

 

Aoi has long catered to the foreign market and does a great deal, perhaps most, of their business on line. Tsuruta san is a very astute business man; he doesn't have a large staff or a prestigious Ginza address. He prices his lower end swords to sell quickly and most of them go out the door in short order. Most dealers in Japan do not cater to the bottom of the market so he has little competition to start with, then low overhead. As mentioned, some base their business on low volume, high margin, top end items. A few others, including Aoi, low margin, high volume, lower end. We see the same thing in the West.

 

As for prices of Juyo in Japan versus the US, be aware that many lower end Juyo have made their way to the US over the last 20 years, many on consignment from Japanese dealers. We can find many overpriced swords on US dealer sites-some due to unbounded optimism, others, inexperience. The "status" among many Western collectors for Juyo papered swords tends in many cases to feed the often times ambitious pricing we see on Western dealer sites. To know if a Juyo price is "reasonable" or not requires a fair bit of research into what Juyo swords by the same smith/school have sold for previously and the ability to judge where the sword under consideration stands in relation to others by the smith/school in quality, condition, length, etc.

 

When we get to the upper mid/top end of the market, it is difficult to know if a price is reasonable or not as there are fewer and fewer substitutes and comparables; at the top, the seller can usually, within reason, set their own price and cross their fingers someone comes along before something similar pops up on the market (think Manchurian Railroad tachi for example)...

 

The simple economics of pricing is worth keeping in mind as well- with expensive swords, there is much larger range in the price for "error". For example, with a WWII era sword, by a well known smith, it might be fairly priced at $5000. At $4000 it might go quickly as a "good" buy. At $6000, it is over priced and sits for a year or more. A top Juto may be a "good" buy at $80,000, or "overpriced" at $120,000. With all those zeros, there is a much greater fudge range- with fewer to compare it with, it is much harder to make an objective determination. Good marketing and salesmanship becomes crucial to "sell" the item for maximum dollars. We can see this at play as well on dealer sites...

[jlawson]

Alan, as I said before there are varying levels of quality in Juyo swords. Your comment and example of buying Juyo Ichimonji blades in Japan for less than 50k, is a bit irrelevant. There are ones on US sites for less than 50k as well. You cannot assign a value to a blade purely based on the paper it has gotten. Even if we take the "juyo Ichimonji example" you gave, there are some that are worth 40k and some that are worth 200k. It all depends on the work, condition, and rarity.

In reference to your going back to my statement about the 15k juyo, that is absolutely the lower end of the spectrum in this hobby for juyo blades regardless of where they are being sold. There is a reason blades like this are priced as such, and the reason is that the market does not justify a higher price. You can bet that anyone especially a very successful dealer in Japan would not sell a sword that is worth 100k for 15k just to get the sale etc... Ask other folks that buy the higher class swords and they will tell you the same.

BTW I kind of hate that we have gotten off on a bit of a tangent regarding a notice by Tsuruta San as my comments are broader in nature to the overall market and all dealers, certainly not focused on his shop or merchandise.

[Loco Al]

Yes James, you are right. My post was perhaps only a lot of nonsense, and it was straying off topic.

 

I fully recognize that a Japanese dealer would not want to significantly discount a $100,000 blade. That would be ridiculous, for something that was exceptional (as I said before). I also recognize that Aoi Art does not represent such expensive items. Nor would those wishing to sell such expensive blades seek his services first.

 

However, I was also trying to make a point that there are some blades being offered in North America that are perhaps priced significantly above what they are actually worth. Tens of thousands of dollars over what they would be reasonably expected to net in Japan.

 

Alan

[Darcy]

Here is another example for you: Recently there were four Juyo swords listed for sale at the recent Bonham's auction in New York. I recognised these swords since they had been previously listed (for quite some time) on a dealer's website. They were all estimated at $35,000 to $45,000. I followed this auction and the results with interest. Only one of the four swords sold at this auction. The other three were passed over. Does that tell you something?

 

These were from my site. Another of those four has since sold.

 

I think if one draws simplistic inferences from one Bonham's or Christie's auction then it is trying to create a painting by connecting one or two dots. There's a combination of things going on.

 

1. Collector's median age is getting up there and a lot have backed off of buying, this has made a lot of them very price sensitive over being quality sensitive, though some are both. Some are out there who want a Juyo blade that is guaranteed to pass Tokubetsu Juyo, that is koto, zaimei, ubu and flawless, on its first polish and they are prepared to offer you 50% of what it cost to acquire it three months ago. Not involving expenses. It is a hard market to cater to ... anyway what this means in general is that this guy, who also has some experience, is looking immediately at a 20% or 25% auction house buyer's premium and rejecting the entire concept of buying at auction because he views this as a tax that is getting between him and the "real cost" of the blade. And fair enough, it is a tax.

 

2. Estimates don't mean anything at all. On those blades I set reserves, two were clients blades and two were mine. We discussed where we were prepared to sell them and put that to Bonham's who set the estimates without consulting me. So where they come from is pulled from thin air as far as I know. There were complaints with some buyers about not getting catalogs or information very far in advance of the sale. Traditional auction where someone is going to fly to New York to attend in person is going out the window with the advent of the internet and so I don't think we are ever going to see sword auctions at these houses be a big success again period, but this is not a function of a collapsing sword market, it is a reflection of a demographic change. That is, anyone new coming in is far more likely to review a sword online with a dealer than he is to fly to an auction and sit and buy a sword there. The older guys are less likely to go because they're getting older and also are content with what they have and don't like the buyer's premium. Especially as people are moving from the active phase of their employment into retirement.

 

3. If you want to sell something online or interest someone in something in 2014, you better have a good specialized photographer and not put out amateur work because it will not draw interest. The photos that have been used at the big auction house are surpassed by amateur photographers shooting their own collections for fun, which document the swords features and qualities far better than what is available in these catalogs and on the auction house sites at this point. People's expectations are higher. Even during the time that I've run my site I went from having 10 photos at 768x512 resolution to 100+ photos at 1680x1200 or higher resolution. Just what is possible with the power of people's computers and bandwidth has allowed much more, and that sets people's expectations. When I started doing nice formal Japanese style layouts there was not much like that online if anything. Now a lot of people have good photos of similar quality or close enough. And all of them are much better than what is available there, so the auction houses are not doing what is necessary to bring in new generation buyers. They are geared for 10-15 years ago and not geared for today. So the methods are not working to bring in buyers and that is reflected in attendance and interest and bidding.

 

4. Swords are never liquid, Juyo and higher Tokubetsu Hozon, things that cost as much as a car or a nice car, this is a heavy buying decision and the window of an auction is not enough time even to expose something to the market to get a gauge of value for an illiquid thing... a lot of people can make a buying decision in 10 minutes, and then 3 months later come back and say they're ready to sell, can you please get them some profit and charge your commission to the new buyer, and please hurry up and get this done by next week. There is a failure then to understand you can choose your price or you can choose your timeframe but you can't choose both. An auction with a reserve is an attempt to choose both. When I put stuff to auction I generally do not keep extremely high reserves but these swords came actually pretty close to going over it. I don't want to cut off my hands so I'm trying to do both timing and price with a bit of flexibility.

 

When I sold stuff at Christie's in 2007 or 2008 for instance, one sword went for about 70% more than what I paid for it. One could draw an inference about the health of the market from that one data point but it would probably be incorrect. One sold for the exact same price I paid. These are both before buyer's premiums... so one could take a different idea of the market from that. A third sword sold for about 60% of what I paid for it. Again, could draw an inference from that as well. In the end, what they are really reflecting is illiquid assets that are attracting random levels of interest over the short window that they are exposed to the market. The one that sold for cheap, maybe it would have done better if sold 4 months before or 4 months after. The one that really exceeded the cost, maybe that one six months earlier, those two guys do not show up who really wanted it and the price goes a lot less. Auctions are crapshoots and in the best of times, you can't draw much information from them. Even though the auction houses will want to trumpet their triumphs from on top of the mountain for all the world to hear... that is just marketing. And means nothing.

 

That said there *is* some softness in the middle of the market. Special blades, those with all the bells and whistles, "ultimate" blades like an ubu, signed Kamakura tachi by a top level smith, and stuff that can be bought for beer money, paraphrasing Chris above, these have and will continue to be fine because there will always be interested parties in the two extremes of the market. But the hardest type of thing to have is like a Chu-jo saku Shinto blade of 68.5cm, signature and no date that barely tripped over the line into Tokubetsu Hozon and has some flaws and nothing else of any merit. The only way to sell that is going to be by making it so cheap that someone thinks it's a great bargain. And fair enough this is maybe actually an adjustment to this blade finding its correct price. But that price may be 0 after factoring in the shirasaya and polish and papers and habaki. It's an interesting predicament. The benefit though to buyers is that there are some good deals to be had out there.

 

And I think it's just mostly the change in demographics and that the marketing engines have not adapted to this very well.

 

The sword societies in particular have failed in adapting to these changes. NBTHK makes only a token effort at getting materials available in english. The meeting old friends and socializing parts of sword shows seems to be the essential component there... the San Francisco sword show is sitting in the middle of a hotbed of wealthy young men who could and would embrace this hobby if they knew it existed and had access to proper information. The whole concept of physically printing and mailing out a magazine is simply antique and it is not going to cut it with young people.

 

You can't *search* a magazine and Google has made it pretty plain that being able to search is the key to harnessing the value of information. Otherwise if it is dead and buried in a book in a library that information is far, far less useful than if it can be summoned at the touch of a finger. This access to information is a substitute for years and decades of devoted study. And that is a good thing. The studier will always be on top of the pile but we still need this accessibility to information if we're going to embrace anyone growing up in a world where everything is accessible.

 

I mean you can find out more about a random restaurant on some side street in Bangkok online than you can about a lot of important swords or smiths. And people growing up in a world where this is possible are going to say, "no thanks" when they are forced to deal with buying $40,000 worth of books, in Japanese, to put on shelves and attempt to use them as references. Or where the single greatest resources are several times photocopied originally typewritten and physically mailed out newsletters from the 1960s... or a single run of 58 volumes from 20+ years ago of the NBTHK journal, rarely found and when found way too expensive for someone to think about buying if they are just entering into this hobby.

 

If you want to collect gemstones you don't need to spend $40,000 in books. Or if you want to collect coins or stamps. And it's all in English if you do want to spend this much.

 

We just have not crossed that gap to making this accessible to anyone but the brave and the crazy (and we are all a mix of the two I guess... maybe add in a bit of foolishness and hopefulness as well).

 

It's next to useless to have a library of 2,000 pounds of magazines and books. This is a technological concept that has not moved forward in about 1,800 years. Yet we have the tools available to us. Every time I read something interesting in a sword publication I think to myself, well I hope I remember that or at least where I read it so I can find it again. Because print is next to useless.

 

The weaknesses in the market are adjustments to the demographic changes going on out there. This is going to snap back once people with a more modern outlook on things take over in positions where they are able to make some changes.

 

The single best thing going on for the entire sword world right now is Markus Sesko. Singlehandledly making information available in English, and for purchase in PDF where you can store it on an iPad and bring it with you and quickly search it... this *is* the future and *one guy* is embracing it properly over the whole sword world. This is what is necessary to reverse the softness in the middle of the market, because this kind of thing makes swords more accessible.

 

Sitting at your table at another sword show that is 99% all the same swords that were there last year and 99% all the same guys, just older, greyer, fatter and balder than last year, is stagnation.

 

The first step is to stop killing trees and mailing out stacks of paper to people. The old and reluctant to change may moan about it but this is necessary. These should be emailed out in PDF and if you want to kill a tree, do so on your own printer. Otherwise get a tablet, download it, and sit by the fireplace this winter and page through on your tablet. This is how it should be done. Just conceptually, these changes need to be made.

 

Embracing the digital world is just a first step in changing the thinking. All of these things are just symptoms of the same thing, which is that the sword world is very reluctant and slow to change even in the face of it being necessary. It is too comfortable for people to continue doing the same things... even that Japanese dealers are so reluctant to make an english language website to me is beyond understanding. The only guy who really grasped it over in Japan was Tsuruta san and stuff flies off of his website. Mostly it is scratch-n-dent specials and of course you have to be careful with some of the quick and dirty oshigata stuff, but what is important is how he was thinking about the market. He saw an unexploited segment and he exploited it. Others would complain about the state of the sword market before following the innovators and innovate themselves.

 

And this is now where it brings us. Innovation is necessary. I have tried to continue to enhance what I do on my site and how I reach out to people with increasing the levels of information and photography when I am selling a blade. Markus as mentioned is probably going to have the biggest effect because he's making a wide range of information available very quickly.

 

I'm going to put my money where my mouth is on the PDF issue and make my book available as PDF download on Lulu as well.

 

This is the future, we have to embrace it or become dinosaurs. And the sword shows... they are dinosaurs. Nice to meet and socialize with everyone, and certainly some business is done, but it's a closed economy and players are being taken out via retirement and death. So there is a shelf life to that stuff. Like it or not, change is going to come.

 

Just my 10 cents. Turned into a bit of a ramble, but yes, there are changes going on out there and I think from the interest that I see and the people I talk to, that there are is a lot of potential interest that has not been addressed.

 

In closing, I met a guy through unrelated business and I told him that I sold swords. He said, oh, that's cool, swords are cool, sell me one. So I set him up with a good sword. Not Juyo but not junk and he spent $17,000. That took about 15 minutes.

 

These guys are out there.

 

We, this collecting world, are on an island with an island economy and the rest of the world is out there on the mainland.

 

It's for us to build a bridge to them. We're sitting on the island waiting for the occasional ship to blow into the harbor because of a storm and discover us. So we just get them and of course the few brave explorers and that's how we all got onto this island in the first place.

 

Then that just leaves the question, how best to build that bridge?

[Brian]

Very well said. Agree with all of it, but with the caveat that I think sword shows have a necessary and important role to play and the social aspect is important to keep people in this hooby. It is also a great place to get some hands on inspection time, and catch up with the market and community in general.

But I know you were not excluding shows, just pointing out we cannot survive on them alone.

Maybe some uncomfortable truths, but needed to be said.

 

Brian

[jason_mazzy]

Thank you Darcy. One of he best posts I have ever read on this or any site. Those are feelings long held by many of us and probably oppositely held by many more. Thank you for your post.

[cabowen]

The points made here regarding the weakness in the sword market and the dearth of new collectors entering have both been made here and elsewhere many times in the past; they were true then and are still true now. I agree with much of this, but now for some counterpoint.....

 

 

The weaknesses in the market are adjustments to the demographic changes going on out there. This is going to snap back once people with a more modern outlook on things take over in positions where they are able to make some changes.

 

There are both macro economic and micro economic factors at play. It is more than demographics. "Snap back"? To what I wonder....I have a much less optimistic view-perhaps because I have been around long enough to remember what collecting was like before the boom years. Or perhaps because I don't think technology is the fix. While easier access to information will certainly make entry into the field far less intimidating by flattening the slope of the learning curve, it doesn't really change the height of the peak in that there is still an immense body of knowledge required to digest for participation at anything other than the most basic of levels. I wish it weren't so....

 

Better pictures? More info? No doubt it helps but this is, in my mind, salesmanship and marketing. No doubt it will help but I don't think this is going to revitalize the hobby and get fresh blood interested.

 

More important than easy info is cash, plain and simple. If you have lots, you don't need to know much of anything. You just walk into any number of shops in Ginza and buy whatever has a Juyo or better tag. Or, do the same on line if you prefer to shop from home. I know those who do this...Not always at the $100,000+ level, but I know many that simply collect "saijo saku" smiths, or use some other rating gleaned from some sword authority. I know a gendai collector who collects only those smiths mentioned as "the top smiths" in the rear of the Shinshinto Taikan.

 

The golden days of Japanese sword collecting in the US occurred when the bubble economy in Japan was in full bloat. Similarly, collecting in the US has seen a rather constant withering since the bubble burst in Japan some 20+ years ago...Coincidence? I don't think so....

 

A variety of factors all contributed to the collecting boom in the West in the early 1980's: macro factors such as the media and entertainment which brought the martial arts and the samurai into the living room (Bruce Lee, Shogun, etc.) stimulated awareness and interest; the attention, and at first, interest in Japan that was rising like a phoenix-later to become fear as the Japanese started buying up prestige real estate and dominating industries in the West, contributed further. And, micro factors such as the huge disparity in knowledge and prices between Japan and the US which brought Japanese dealers to US sword shows, which brought waves of cash and profits to US sellers, drawing many "gun slicks" (always loved your term Peter Bleed!) and other "profit seekers" into the field. They made money. The Japanese made more money. Once that vein was mined, the profiteers have all mostly moved on to the next score.

 

When the party ended, just after the Compton sale (talk about perfect timing), there were some serious hang overs. When the dealers from Japan quit coming, the US shows lost the straws that stirred the drink. Then the internet came along and now people could shop from home. US sword shows have never recovered to their former glory of the early 1980's when people buyers were elbow to elbow in the aisles. Several shows simply stopped. Those that are still going have turned to education and shinsa to attract people outside of the dealers and quasi-dealers. As mentioned, it is largely a group of older men, getting older, and the same swords moving around the room. It is more of a social event than anything else for many. We need sword shows as they can become excellent learning venues. As we all know, ultimately, hands-on is a requirement for real learning no matter how nice pictures might be.

 

So, where are we now? Curiously, back to pre bubble realities I believe. Sword collecting in Japan, as I have said many times, has always been a past time for the rich- there were just many more "rich", interested buyers minted during the bubble in Japan when nationalist feelings were percolating back to the surface and money was easy and Ginza real estate was the most expensive in the world. These days, sword prices and interest in the hobby are nothing like 20 years ago and while there will always be interest in some corners, I doubt we will ever see in our lifetimes, or our children's, the boom in the hobby that was the bubble. The young in general have neither the interest nor the money. Interesting to note that in Japan they are turning to the media (recent anime tie-ins) in an effort to stimulate interest...Note that difficulties in learning and getting information is basically nonexistent for young Japanese- they simply have no interest in Jiji's toys or the money (the lost decade) to buy them. In truth, they really never did. It wasn't the young who were buying all the swords during the bubble years, it was middle aged men whose little companies started making lots of money. Of course, there were dealers like Jim Miller who took advantage of the price differences and renewed interest in Japan to make a fortune reimporting average or low grade swords bought cheaply in the US at shows and sold at Japanese prices out of a condo in Tokyo via a newsletter to a hungry, enriched middle class. Those days are past...

 

The situation in the West whereby middle class people could own swords above their pay grade was an anomaly of history. The number of "collectors" has dwindled along with the profit opportunities. Now, the field is much more level between Japan and the US as concerns pricing and (see Tsuruta san's message) we most likely will not see the Japanese back in the US stimulating our sword market. We have, in fact, seen swords sold on consignment in the US from Japanese dealers and swords leaving Japan for greener economic pastures (China, Russia, etc.). The best one can hope for, outside of that rare undiscovered Juyo from Ebay, is a good discount when the yen/dollar is in one's favor (and it is at present). With less undiscovered gold to be found, more fakes, more scammers, more alternatives, the middle class continuing to lose ground economically, I don't see much of an influx of new collectors regardless of info accessibility and marketing efforts.

 

We are in a global economy now. Shipping issues aside (and that is a big assumption), swords will move to where the money is. Those vibrant economies with disposable income will become players. Swords will move around the globe unlike any time since they all left Japan at the end of the war. Without interest and demand coming from these new, healthy economies, I don't think we will see anything but continued withering in the sword markets of Japan and the US. New demand will most likely come from these flush outside sources, not from the struggling young in Japan or the US.

 

The highest level and low level will continue on. Everything in the middle, I see it floundering at best. I wouldn't be putting my children's college money into Japanese swords...As someone in Japan once said to me, "Buying Japanese swords is soooo "80's..."

 

If you want to sell swords, I would suggest translating your web page into Chinese and Russian before worrying about the number of pixals in your photos. :lol:

[Pete Klein]

I agree with Brian, especially about the need for shows and meetings. You need a place where you can look and ask questions from those more experienced to efficiently learn in this field. They also make possible seeing items which you cannot afford or may choose not to purchase but still wish to study or just learn something of. With the study of fittings, a way to digitally photograph with full accuracy in fully rotational 3D would be a paradigm shift in learning for the field. Digital referencing as Darcy stated will be nexus to the field as a whole.

 

PS: I'll still collect books but that is because I'm also a book collector. They have their own beauty and, just remember what happened to the computer in 'Rollerball'... LOL

[cabowen]

...just remember what happened to the computer in 'Rollerball'... LOL

 

 

 

Or "2001: a Space Odyssey"...

[Brian]

Wonder if Tsuruta san knows the discussion he sparked with his comments? :lol:

I'm with Pete, I also still buy books because they have their own inherent beauty and value. We have seen many of our books go to 10x what we bought them for. In many cases, the books are a better investment than the swords. But for quick info, electronic is fast and easy, and searchable.

I think a heck of a lot can still be done with programs and electronic means...on portable systems such as tablets. That is something to push for and support. We haven't really even touched the surface there yet.

 

It is definitely true that the Arabic, Russian and Chinese markets are buying art at a crazy rate. They sometimes don't even know fully what they have, but are able to recognise art that is undervalued and they have money to burn.

 

Swords are not easy to ship internationally. Not politically correct in many countries. Therefore I think we will see a growth in fittings collecting. One small tsuba can be worth several thousand $'s, and is easy to transport and dispose of if at a certain level.

 

I don't think we are doomed in this hobby though. Look at fields like antique firearms. Antique Colts and Winchesters have gone through the same problems. Same ages of collectors, same politically incorrect attitudes. But they have survived and held their values.

I think we'll be ok, and embracing technology is inevitable.

 

Looking forward to being able to click that link and having an HD 3D hologram appear in front of me to view. Maybe not me though..maybe my kids or their kids. (k..your kids, I don't do kids myself :lol: )

But it will happen.

Let's hope Japan allows smiths to exist by then.

 

Brian

[Darcy]

Sitting at your table at another sword show that is 99% all the same swords that were there last year and 99% all the same guys, just older, greyer, fatter and balder than last year...

 

And just to be clear I am 100% including myself in that description lol....

 

I made my book available now in digital edition at about 2/3 of the price of the print edition.

 

http://www.lulu.com/shop/darcy-brockban ... 38907.html

[Darcy]

Better pictures? More info? No doubt it helps but this is, in my mind, salesmanship and marketing. No doubt it will help but I don't think this is going to revitalize the hobby and get fresh blood interested.

 

I think this was misunderstood, the pictures part is aimed at the auction sites and why they are failing. I'm saying is that the web shopping experience of buyers today has vastly improved. Vs. 15 years ago when they had a monopoly outside of maybe one or two websites, there is now a sea of websites with good to excellent photos and in general all of them are better than what the auction houses provide. Plus, no 25% tax.

 

So they have not kept pace, in terms of the real boom years you're talking about, these guys are still stuck in a model which worked fine then. Send out a teaser, bring people in the door, let them examine the goods and then bid away. But this is gone. Their model has not adapted yet. Now Christie's is trying to get involved in ebay-like auctions... but ebay already does that really well. And ebay doesn't charge a 25% premium. So this to me just looks like flailing around and is just not going to go anywhere. Christie's should be carving out a place where their specialty traditionally has been in art and such, on the top line. Trying to ebay style auction $300 tsubas... they have no clue.

 

So the auctions cannot compete anymore against the large numbers of websites, as the websites allow things to be on your schedule, in your pajamas, at home and keep you up to date over a good chunk of the market whenever you want to know about it. You don't have to fly to New York and if you have a good dealer you can return what you bought if it fails inspection. But with improved photos usually that does not happen. I don't see the auction houses continuing to be able to play in this field and I think that's what we're seeing in auction results. The game changed but they didn't change with it.

 

Tsuruta san has been extremely successful and is an example of one guy who went against the grain and did something non-traditional, and used technology to reach out into new markets and make his product available. Running a high cost shop with white glove service in Ginza is really nice, but ultimately a lot of collectors walk in and walk out saying prices too high I'll go buy online. You can't run the nice shop with lots of staff and white glove service and maintain a huge inventory catering to everyone's tastes and at the same time compete on price with Tsuruta san's scratch n dent specials which are available to you every morning while you are in your pajamas at home.

 

So he adapted and he broadened the reach of the market and that benefits everyone (if you own a sword you will or your family will one day sell a sword, so having a healthy market is important for everyone). 4 or 5 regional sword shows per year which are chiefly meetings of all the same guys as were in the previous show ... I don't see that as a model that will expand the market. It hasn't to date and I don't see that this is going to change.

 

The experience of new people at the sword shows anyway is not so great, they don't know what to do, everyone has their best swords under the table, everything else is in the scabbard and nobody knows what to do with that. I remember walking around and being too timid to ask to look at anything.

 

Things just need to be more accessible and the more accessible they are the healthier the market will be. There is a night and day difference if you put your swords on display on a table so people can see them vs. in the koshirae or under the table. The first way is open to newbies to look and begin their experience and the second way is for only those already in the know and comfortable. The second group is shrinking constantly and out reach needs to be made to the first group. And that just means changing how things are done or at the very least, better marketing of what already exists out there.

 

SF sword show as I mentioned is sitting in the largest nexus of wealthy young males in the world. That is probably the core demographic right there. But there is a disconnection. There should be a lot more interest coming in.

 

Here's one simple thing that could be thought about.

 

The shows are always held at airport hotels as these seem to be convenient for people coming in from out of town. But this is really catering to people who are already in the in crowd and have plans to make a special trip to get there. And once you're there this is all you are there for.

 

If you moved this kind of thing to a downtown core, maybe expenses will go up but at the same time you will attract more people from outside the in crowd. And those are the people that are very important to bring in.

 

One collector in Montreal set up his own museum exhibit and over a year I think he brought in 250,000 people to see samurai stuff. If you can have a 1% conversion rate on something like that then you can bring in a lot of new collectors. He was doing something on his own and thinking outside the box and had a ton of interest.

 

So, why not just consider what could change if the venue was moved. For one year. Put it right smack dab in the middle of nerd central and make sure that they all knew about it. And organize it with the thought and intention of this being a gateway to bringing new people into the fold. Not about we're going to display Kinko tsuba this year so come and learn about Kinko tsuba. That is really great for the in crowd but for a beginner or someone who is not in the fold yet, it is not going to do anything.

 

But really these shows I think need to be thought about as a step by step introduction to sword collecting as the motivating overarching theme.

 

What the shows need is a rethink from the standpoint of someone who is experienced in marketing. Because right now the navel gazing shows, the social get togethers of old friends, these are nice, but they do not exert effort at extending the hobby. The few brave explorers will always wash up on the shore of our island. But I still think we need to build a bridge.

[Mark]

I agree with most of the above. One thing I would mention regarding shows (please note I am not neutral as I manage the Chicago show) is the opportunity to see a large number of actual swords in one place. If you walk through one of the US shows you will see more swords than at any other place (within the US). You can ask questions, many dealers will take the time to educate newer collectors. The NBTHK (AB) usually puts on a great display and/or educational program. When I started I learned a lot more at shows than I could from books, I had the opportunity to use what I read in the real world. While I think it is a challenge to get a new generation interested in swords and the costs are difficult I do see young faces at the shows. For those of us sitting behind tables at shows we need to remember we need to encourage new collectors and take the time to nurture, or at least cut them some slack with the beginner questions. I was encouraged to see a number of new, young, faces at the last Chicago show and I (well my family really) try to make them feel welcome when they show up at the door. At every show Grey Doffin takes time from the show to put on an educational lecture for newer collectors. We should encourage that and contribute ourselves.

[Darcy]

Not so fast. One also has to consider whether a particular dealers items are reasonably priced (reflecting the present market's condition), or unreasonably overpriced. That 15K Juyo might not be so bad after all. Take into consideration what Mr. Tsuruta said in his letter. Presently, I believe that there are many Juyo swords being offered for sale in North America who's asking prices are well above what the market value would be in Japan. I understand that it is not difficult to get a Juyo Ichimonji in Japan presently for under $50K. I have had some very interesting discussions recently with a well respected nihonto expert.

 

Here is a Juyo Ichimonji at 3.8 million yen (not so hot quality, but cheap):

 

http://www.tsuruginoya.com/mn1_3/f00216.html

 

This today is about $31,200. So yes, this is dramatically true with the yen at 120 to the dollar. In 2012 at 77 yen to the dollar that same piece is $49,350 though. So times change and exchange rates do as well. We're living at a strange time right now where the yen is falling dramatically against a basket of currencies while the US dollar is increasing. CAD in the middle has improved vs. the yen and fallen vs. the dollar. I have been in this trap myself having bought things in 2006 with Canadian dollars converted to yen when the CAD was $1.60 to the USD. Some years later selling the item in USD and then converting back into CAD when the CAD was at part with the dollar, my CAD loss was large though the sword had pretty much held is value over that time if you wanted to look at it in yen.

 

If motivations are to buy below market price then the best way to do that is buying in volume, making trips to Japan, cultivating relationships and getting the back room deals. It's hard for people who present a retail profile to get that though.

 

But even so if the primary reasons are to buy as cheaply as possible and sell for maximum, currency markets are a risky element for everyone. Guys who bought when the euro was low then wanted their price back in euro when the euro was high, and would not budge ended up with items that were priced high on the market compared to a basket of currencies. So they either sucked up their euro loss or they kept their item. The item did not fluctuate much at all when you looked at it in yen. If this is a huge concern because of a lot of purchases then the way to deal with that is currency hedging instruments. Few of us are capable of doing that.

 

Currency movements will always be an issue, either creating losses like in my case above or could be gains in your own currency. Also gives nice moments to sweep in and buy as a lot of people took advantage of at the Dai Token Ichi. It ends up being a point of view thing, when things get cheap, celebrate and buy. When things get expensive, celebrate and sell. Alternatively one can be angry and sell when they're cheap and be angry and buy when they are expensive.

 

Or...

 

Just collect swords if you like them, and over time everything averages out.

[smicha6551]

My plan is to buy what I find appealing and affordable and let my heirs worry about what they can sell my things for.

 

Is the Florida show worth going to for a new collector? I don't know how it differs from the Chicago and California shows.

 

As for Tsuruta san's scratch n dent specials - how bad are we talking about - in stamp terms do you mean literally spacefillers with major issues or just not at the top level that seems to be more popular here?

[Darcy]

The scratch-n-dent specials... prices are good, some items are compromised, and some items are gems at a low price. It's like the bargain bin at the discount center, you dig through and dig through and maybe you pull an Armani suit out of there and pay next to nothing for it because someone was just liquidating it. But sometimes there are obvious issues and sometimes not so obvious issues and then things like oshigata that don't seem to match the sword which you need to look out for. So for all of this you need to be on high alert but it is kind of fun because you never know what you're going to see come up there tomorrow.

 

I have had good experiences with Tsuruta san.

[Brian]

Not to mention he was the only Japanese dealer out of many I contacted to bother even contributing a prize for the last raffle.

Which shows he cares about the Western market and understands the impact it can have on business.

Can't say the same for other Japanese dealers in general. Do many of them consider it a profitable inconvenience?

 

Brian

[paulb]

Or...

 

Just collect swords if you like them, and over time everything averages out.

 

I have read with great interest the analysis of current markets, collecting, exchange rates, profit and demographics (sorry if I missed a topic). As one of the groups Darcy so eloquently describes I thought I would add a personal perspective. It isn’t right or wrong or better than any other it’s just where I have ended up.

To my surprise recently I have realised that I am now one of the “older collectors” approaching retirement in the next few years. As I have said before I think I have reached the pinnacle of my own collecting capability and although I have seen many swords recently at the DTI and on various sites that I would still love to include in my diminished collection I can’t. Nor is it likely in retirement I ever will, So my opinions below are not based on any ambition to improve on what I have, to acquire great treasure or make a lot of money.

When embarking on this or any other interest that involves high expenditure you need to try and understand your motivation. Are you doing it because you are interested in the subject, enjoy researching and studying appreciate the aesthetics of the item concerned? Or are you hoping to use the acquisition of these pieces as a route to investment? Put simply is your motivation appreciation and interest or profit? ( it is of course possible to have both, but that can create many complications and great internal conflict)

I started collecting because I was fascinated by the structure, history and shape of the Japanese sword. It is unquestionably one of the finest hand weapons ever produced. Had I been interested only in profit I would doubtless have focussed on more commercial areas than I have.

I have only ever bought swords that I liked and with one or two minor exceptions always from reputable dealers at market price. As a result I have bought fewer than I otherwise might but am confident that what I have is what it claims to be.

I did not buy these in hope of making profit when I sell. I would be dishonest if I said I didn’t care, of course I do, but it wasn’t the prime motivation. Nor should it be. Prices in any field of collecting fluctuate dramatically and as Darcy describes there are so many factors that can affect price.

So it is possible, actually very likely, that at the point I come to sell my swords I will not make a profit, or even recover my investment to date. But I will get something back for them. In the meantime I have had immeasurable enjoyment from them, made numerous friends and shared great experiences for now more than 30 years. Therefore If I do not recover my costs the difference should be considered the fees for participating in a totally absorbing interest and hobby. I think on balance I will find that I obtained incredible value for money.

We can spend many hours, sleepless nights and give ourselves a great deal of heartache. But the bottom line in this is as quoted above from Darcy’s post

“collect what you like”

And appreciate the fact that you are able to enjoy a piece of history and art without parallel.

[Grey Doffin]

Hi Steven M.

Yes; the Florida show is well worth the effort; it is a very good show.

Grey

[cabowen]

I believe it was Prof. Frenzel , a professor of economics, in his monograph for an early publication of the JSS-US on the economics of sword collecting, who concluded some 30+ years ago, roughly, "for most, Japanese swords are not an appropriate investment vehicle".

 

I don't think this has changed, except it has become even truer today.

 

I agree wholeheartedly with Paul- there are non-financial returns to be had from the hobby and these need to be recognized as well as enjoyed.

 

This further underscores my original point- without considerable disposable income, one is either siphoning junior's college fund or not able to play at levels above the bottom. I don't mean to sound snobby or elitist, it is just the reality currently of this hobby.

 

Paul also brings up an important point- he is at the stage in his life when he is no longer actively adding to his collection. He is not alone. There are many at this stage now and this is the dark cloud for those on the sell side: there are huge numbers of swords sitting in collections now that in the near future will be coming to market. Fewer and fewer collectors entering coupled with a large supply can mean one thing: a great future for those looking to start a collection, but not so good for those looking to sell one....

[Kronos]

While I'd agree that Nihonto isn't a good investment, there is always money to be made otherwise dealers wouldn't exist. It's a double edged sword really in that knowledge is so fundamental; i believe someone once stated learning about Japanese swords you'd need the equivalent of a PHD, I personally think it may be a little harder than that

 

What I mean is, you could walk into a room and if you have more knowledge on the subject than everyone else in that room you can buy at a good price, take it into another room full of people equally as knowledgeable as yourself and sell for a tidy profit. On the flip side this is one of the many reasons why I believe new people aren't entering this world except the brave few as the learning curve is just so steep.

 

This reminds me of a guy I once heard about who wanted to own a painting by a very good artist, Monet or someone iirc. He was a normal working class man of little means who started out with a $50 painting he picked up at a garage sale and was intending to buy and sell making small profits on every step until he could afford the $250k or so it would cost to buy the painting of his dreams. I'm not sure how he's getting on but I like the idea and may have to attempt something similar as I've spent all I can afford and don't envisage sinking in any more money in the foreseeable future. It also comes with the added benefit of experiencing many swords in hand for extended periods which compounds ones knowledge infinitely.

[cabowen]

James, the key words in my post regarding nihon-to as investments, are "for most"...

 

There will always be a select few with the knowledge, funds, access, and time to root out undervalued items and profit from them on a consistent basis. For most, this is not realistic. Most will have a story or two about a great score, buying a $10,000 sword for $1000, but more frequently, ultimately, is that many learn the hard way that these outcomes are usually more about luck than anything else.

 

There was a tv program I watched a few months ago about a guy who started with $5000 or something to see if he could buy and sell his way up from some cheap junk car to a $100,000+ sports car....Obviously he knew a lot about cars and the market and was able to get quite close. Then again, it was tv so who knows how much was contrived...Given the knowledge necessary and a lot of luck, no doubt it could happen...

[Barrie B]

This thread has been very good reading, but I want to make one point about new collectors.. we all have to think about how we got started..

 

For some, I'm sure the hobby was introduced by a friend, but for me it was self initiated; it was a gunto purchase from an antique dealer in 1992.. I knew nothing about Nihonto or Tosogu at that time (some would argue I still don't) and had no idea that I could actually collect and own these things. So after that first purchase, I started doing some research, bought a book (Military Swords of Japan by Fuller and Gregory) and finally met some collectors in Sydney.. This was pre internet, but I was hooked because I had an interest… Its that interest we need to generate in new collectors… It wasn't easy to see or buy swords back then BTW, so I probably bought high a few times, but that is supply and demand; I stuck at it...

 

Barrie B.

[seattle1]

Hello:

In that Chris Bowen identified me as an economist who has written something about the sword market, perhaps I should clarify the issue of buying swords with a profit in mind. The article Chris referred to was published as one of the essays in The Book of the Sword, edited by Randolph B. Caldwell and published by the Token Kenkyu Kai in conjunction with the NBTHK shinsa held in Dallas in 1972. Peter Bleed, who is a regular contributor to the NMB also had a chapter in that book.

The market for Japanese swords has never been subjected to a thorough economic analysis. Such a study would not only consider, in a paper and pencil sense, all of the many determinants of the market subsumed under the headings of demand and supply, the determination of a market equilibrium in the short run, long run responses to that, and what we call the very long run, when a host of other factors, including demographic impacts as Darcy correctly pointed out, but it would also have to cope with a massive amount of empirical data that would have a market quantitative dimension. That would involve actual prices in many locations, quantities of swords bought and sold, exchange rates and the relative changes between them over time, to say nothing of differing taxes, transportation costs, linguistic impediments, business cycle impacts, etc.

My analysis, mentioned in the book above, was a micro economic analysis, hardly empirical in nature, of what I believed and believe is the fairly easy to demonstrate notion, at least theoretically, that when risk is fully taken into consideration, the monetary return on investing in swords (read any art object) will be less than the monetary return from a solely financial instrument, be that a stock or a bond. In equilibrium the return, in the long run, to the equally risky sword and financial vehicle will be identical in the sense that the lesser monetary reward for the art investor is compensated for by what economists call psychic income, the pleasure from the possession and enjoyment derived from the object. I believe Paul's comments captured that idea exactly.

Beyond that I do believe that the Japanese sword market has some really interesting market features. The huge pile of post-WWII bring backs have had many impacts, just as the large inflows into the West during Meiji times. We all know the effects of the internet, for good and ill; and we are just beginning to feel the spreading out of the interest in swords that has influenced militaria collectors and those interested in the martial arts. One factor that has not had enough attention is the character of all one of a kind art objects, as all swords must also be, namely their heterogeneous character. No two are alike!

That consideration is never present in the marketing of homogeneous products, where the successful marketer must create an imagine in the mind of the buyer that a difference exists where one does not (consider one brand of regular gas in comparison with another, or one "light" beer to another), or simply exploit differences among groups of buyers. With swords it is the product which differs sword to sword, and the buyers are what can be grouped by buying preferences. It is that difference in the product that should make for the continued vitality of the sword show. Buying through the opaque layers of the internet is never a substitute for the sort of pre-purchase scrutiny that a show offers.

Finally, it seems to me that the best functioning sword market in the world, even under current stresses, is that of Japan. The one feature that stands out, aside from the huge quantity of fine swords, is the highly organized dealer structure, that Chris Bowen's long residence in Japan has made him so familiar with. I am sure that every nook and cranny is within the marketing area of some dealer. In the US dealers are often maligned in one way or another, and unfairly so. It is dealers who really make the market as they stand ready not only to sell, but also to buy. They know who is looking for what, where things are to be had, and in general help to make markets function with some degree of efficiency. They often are at the center of holding shows, helping put on educational displays and instructional events. A good dealer, and there are quite a few of them in the US, have a real interest in bringing new collectors along, and because of their presence, are one very good reason for attending and supporting sword shows. It just seems to me that swords, as objects, are so unique, that without shows and an active dealer community, the internet alone would be a very destructive device, though of course I recognize that some dealers are only in the cyber world.

Enjoy our collective hobby and recognize that part of it, whatever else it might be, is your psychic income, the simple pleasure of possession.

Arnold F.