Buy High Sell Low; Items For Sale

[GARY WORTHAM]

Well, some really broad and diverse thoughts by several with experience in the matter.

 

Yet, this topic was started with 2 factions in mind. The new to the thought of study or purchase; and the wisdom of the experienced.

 

The Response has been solely from that of the old guard; hardened by the years of study, collection, and as some admitted, the sale's of loss.

 

However, the new to this culture, need the encouragement and direction; to feel that it is a positive purchase, and that a loss of value on their purchase is not to be expected.

 

A sword purchase is an investment in money. The knowledge of study is it's by product. I rarely, and I mean rarely sell any of my 20+ years of collecting,  and when I do; I certainly don't expect to sell at a loss.

[peterd]

To invest is to expect profit. I think most do not regard sword collecting as an investment. 

[Jussi Ekholm]

I thought writing to this topic earlier but my ideas came out too sharp and I think they were too discouraging for new collectors so I didn't want to write them up. However I must say that it seems that todays day & age people want instant results without putting in the hours. For those who just want a good sword fast I hope you have a strong wallet and you can just go and buy from good shops and not give much thoughts if you go that route. For those of us who need to do a lot of research and try to pick our purchases here are some tips.

 

1. DO NOT BUY ANYTHING

 

I had to make that in bold letters as that is the most important thing. If you buy something instantly you are most likely going to regret it. This is also probably one of the hardest things, as everyone getting into the hobby will want to own a sword. However I think that if you spend at first maybe a year or so just without actually buying swords, just doing research you are going to see what kind of things you like and they will act as a guideline on how to develop your collection. Of course it is only logical that people will fail this step (I did, and I bet most people too), as you get into a new hobby you want to get into it, not just researching as that will be boring to most.

 

2. Owning swords (and other stuff) is overrated

 

This is actually for study & research view. Yes you can learn lots of things by looking at your swords but there is a limitation. When you own a sword or two, yes you can learn things but it is more important in my opinion to see more swords. The broader field of swords you see the more you will learn. I will recommend travelling to sword meets, shows, shops all over the world above buying stuff. This will be actually my own main thing from now on. As I know my finances wont allow me to collect what I want I will just focus on travelling to Japan, NBTHK meetings etc. For example attending the NBTHK meeting with the theme being Gotō fittings I learned a ton more on Gotō than I would by owning one example of Gotō work. Being able to see lots of stuff with people who focus on the stuff giving guidance on them is much better than owning one piece.

 

3. Focus your collecting

 

I think we had a thread about different collecting focuses but that is very important so you have a focused collecting goal instead of just buying things. You can for example go for 5 traditions, focus on Yamashiro swords, collect various tanto sugata etc. etc. The better job you do on the "groundwork" the happier you will be on the long run. You wont figure out your collecting goals immidiately and they can change over time but it is important to have some guideline what you want to collect and why.

 

4. Plan your purchases

 

As was mentioned earlier I see many people have bought swords not knowing what they are. This is often due to not planning the purchases well ahead of time. Yes I've seen some very good deals pop up but I've skipped them as they wont fit to my own collecting goals. I recommend you will for example think what you aim to do on 1-5 year period and 5-10 year period. The planning will help you with future purchases and it will also make easier to realize your collecting focus. For example if you are aiming for something like good quality Mino katana within 5 years, then you should avoid buying a random cheap wakizashi every year and instead focus on saving up for the better sword.

 

5. Buy less

 

Ok this might not make me popular among dealers or those who sell a lot of stuff but I say avoid most of the stuff on the market. My own personal interests have narrowed quite a bit and I have very clear view on what I want and what I don't want. When I browse online I see lots and lots of stuff that I have basically 0 interest in owning, and some of these are really good swords, much above anything I might ever have but still those swords would not fit me as I wouldn't enjoy them fully. It is great to see good swords like that in sword meetings for example. And of course you will see lots of swords for sale that have very little historical or artistical merits. Avoid buying junk stuff.

 

Those above tips might have bit of an "elitist" approach and will most likely be too tough for new people entering the hobby as most would lose interest without buying anything. As Christian said earlier you need passion for this hobby but to be honest new people with passion are very hard to find. I have made the realization that I should be doing steps 1 and 2 for several upcoming years. I have decided a focus for my collecting but the unfortunate fact is I don't have the funds to make it reality, so I will avoid buying stuff and just focus on travelling to Japan & within Europe. For me just travelling and avoid buying will make me much happier than getting some low end stuff that does not really interest me. As for the buy high sell low or vice versa, I think that is extremely difficult for new collectors. I don't really think that should be a priority early on as it will takes many years to establish basic knowledge about the market, and even after years and years of looking it closely there are very often things that amaze me, why is sword X worth ??? of money etc. In the end swords & other antique items are worth as much as someone is willing to pay for them.

[Jean]

Splendid post, Jussi

[paulb]

I agree, I think Jussi's post is very helpful and well considered. I also admire your self discipline!

 

I have read many of the posts here with interest and while not agreeing with all it does demonstrate considerable variation in thinking and priorities. Ultimately collecting is a strange thing to do and everyone has their own motivation and values no-one is right or wrong but just different. Picking up on a couple of Gary's posts (if I have understood them correctly and comparing to my own expereince I would make the following points:

Gary mentions his 20+ years of collecting and in that time either not selling or only rarely selling pieces he has bought and never being prepared to sell at a loss.

My own collecting career now spans about 35 years although I prefer not to think about it as all it proves is I am getting old not  that I have any specific expertise.

As for most people over those years of collecting I have had limited funds to put in to the purchase of swords. Also like many others the more I learned the better the swords I wanted to collect. These two situations are incompatible.

Unless you have a high level of disposable income (if you do good luck to you) the only way you can improve your collection is by selling some of the pieces you have accumulated and learned from over the years. Alternatively and assuming you only have the same amount of funds available you continue to add pieces of the same quality and condition to your bulging grouping of swords.There are those that might consider this accumulation rather than collecting, but that is another topic.

If you opt to improve the collection by selling pieces to buy something better you have to take a decision "What is the piece I want to buy worth to me? Am I willing to make a loss on something I have previously purchased (accepting that ;loss as the cost of being able to hold and learn from it) to be able to buy something that gets me closer to my goal. If the answer is no then the new sword probably is not the blade of your dreams if yes you then have to decide how much hurt you would find acceptable to achieve your goal.

 

The one thing I don't believe you can do (I cant do) is buy something with the absolute certainty that I will either make a profit or even break even when I come to sell it. With respect no one can. There are so many external factors effecting pricing that it would be delusional to believe you could control the outcome in that way. 

As said above we all do this for different reasons and our motivation for a particular purchase is equally unique to the buyer. I have sold swords and made some profit in the process when necessary I have also taken a hit to achieve a particular goal. Overall I think I may since 1983 about broke even (so far). I have never bought swords as a financial investment believing I would gain a guaranteed profit, I think to do so is a mistake. I do believe that collecting swords as we have over the years is extremely rewarding and fulfilling and the relative cost for all the positive experience is very low.

I would also say that despite comments here and in other posts collecting now is no more difficult than it was 30 years ago. True the numbers are bigger but so is availability and income. 

[vajo]

Very good post Jussi,

 

but i had some other thoughts. 

If you start, you have no idea what you want. And if you know what you want, you want to buy it and see later something else, you want more.

The Nihonto Universum is very, very huge. All the time you travel around and look on hundred of swords you spent a lot of money. I bet you can't not remember all the things you have seen. I startet like many others with a gunto. Guntos are relative cheap and you can choose from a very big market. 

From that i came to Gendaito - the next step. I sold many of my Guntos making no less money with it and buy Nihonto.  For myself, i have a limitation in buying. I do not own a sword that cost more that i earn from work in a month. I know that is the lower range of swords, but - i can sell them easy, if i want because it is esier for me to find a collector who is limited in his pocket. After all the time i had many swords in hand all of my own and i didn't loosing much money. You can say now - that must be a scum collection. Maybe for others, not for me. 

[Jean]

Chris,

 

You must take into account that we will never reach the upper collectors circles, the ones who deal with Darcy and that you'll never see on NMB. In the same way, they will sell at a loss juyos to buy Tokuju or jubi. The market is not slack. It has tremendously developped with internet but be sure that you won't find the bulk of collectors on NMB

[Vermithrax16]

It's tough in this hobby, but patience is needed. I have had to pass on two swords in the last 4 months (one listed here on NMB) because I am sticking to my plan. It's very hard at times. 

[paulb]

Chris

you make a very important point. A collection is a very personal thing. I have seen people get incredibly excited over collectinng used food containers, package labels and many other, to me, strange things. The important factor is that these collections mean something to the collector and they devote time effort and emotional energy in pursuit of their interest.

Within this subject there is a huge range of focus and sometimes the differences can cause argument conflict. However there is no such thing as a "scum" collection if the collector values it. I think we can all learn from each other and each others collections. We just need to accept that people and tastes are different (thank goodness) It is this diversity that stimulates learning and understanding.

[Jean]

Concerning France, I think that no more than 5% of French Nihonto Collectors are on the Board... most are unknown...

[Surfson]

I do think that the folks that are on the board primarily are trying to increase their knowledge of nihonto - students of the art aspiring to become better.  I have encountered wealthy "collectors" who know nearly nothing about the amazing pieces that they have.  They hire experts (usually dealers) to help them choose what they buy.  On the other hand, I think that there are many high level collectors who worked their way up by gaining the knowledge that they needed and desired.  To me, appreciation of the art of nihonto is dramatically enhanced by understanding of the context of the artists, the schools, the historical settings and so many other things that require work to understand.  It really gets back again to Markus' fantastic work, as so much of that information has become more accessible.  But the NMB is in my view another fabulous way to ask questions of people who have astounding knowledge about nihonto in order to enhance our own understanding.  I know this post is a tangent from the main theme of this thread, which is the monetary issues associated with collecting, but the two are highly intertwined. 

[Gakusee]

I entirely support Jussi in his approach.

I have been interested in Japanese swords since childhood but began seriously studying Nihonto in the early 2000s. I started off by attending meetings of the ToKen Society of GB and arms fairs, reading books and browsing the Internet. I bought my first sword (NTHK papered blade and tsuba, great koshirae) from M Becerra at the end of 2009: so for 7-8 years I did not buy anything.

So, like Jussi, I persevered, saved, studied, introspectively deliberated about what I liked and did not like. My first sword was a great commercial package (papered signed ubu Shinto, visually pleasing koshirae and papered beatiful Edo tsuba). But in time, I realised I liked other things and also due to financial pressures I had to part with it. Luckily I broke even on it but the market was merciless ("the smith who made it is no one and only 10-15 pts in Hawley", "it is only NTHK papered" etc). If I could have kept it, I would have as it was delightful (quieter beauty described as "shibui"). But somehow the lesson taught me to be aware of what the market looks for in case I need to sell. I bear that in mind whenever I look to buy (even though the main prerogative is to buy what I like and can afford).

[vajo]

Hi Michael your post is that what i meant. You study, you learn and you look around and buy nothing to wait for the right sword over a long time. Then you bought one. You are pleased with it, study it and see another. You must sell it for buying better and take a loss because of the market. I can't do it in that way. That is for me the same as you want go to fly, reading books, go on airports and spent a lot of time in museums. You think as an pilot, you live as an pilot but you never go flying. I must have things in hand and around with me to understand it.

[Jean]

Guys,

 

If you choose the right picking, there won't be no loss..

[Vermithrax16]

Guys,

 

If you choose the right picking, there won't be no loss..

 

Then this would be me 

[Alan F]

Guys,

 

If you choose the right picking, there won't be no loss..

 

Double negative. I'm sure you meant to say: there won't be any loss. In erratum, might you be correct?

By this, do you mean to say that there won't be any loss (if you pick the right sword) because you should never have to consider selling it?

 

But what if you do decide to eventually sell it, or have to sell it for whatever reason (consider also illness or financial circumstances)? 

In a previous post, regarding "upper collectors circles", you said: they will sell at a loss juyos to buy Tokuju or jubi​.

​​Is this avoidable? I'm not so sure. Expensive juyo swords are not easy to sell, unless you happen to know someone living around the corner who fancies your sword. Otherwise, you might have to consign it with a dealer who expects a substantial commission. Or take it yourself to a sword show (such as in San Francisco) in the hopes of finding a buyer. That would incur considerable expense also. You can set your price, when it's a good juyo sword, but you may have to wait years to find the right buyer.

 

Alan   

[GARY WORTHAM]

Ok, I got a moment to describe a sale.

 

Bought a gendiato Amahide fully mounted, that needed a little work for $200., which I did at no cost, and sold it for $800.

 

A few years later, another who had bought it, found me to see a quick sale; where as I offered and got it for $200.

 

At the San Francisco show 2017, I just sold it for $1,300.

 

Do the math !! All involved we happy with their transaction, and I move forward to bigger and better quality purchases.

 

I don't expect or plan to lose money; and I do appreciate the study time of the purchase !!!

[paulb]

Gary 

I am not sure what conclusion to draw from your example. If you are saying that you always expect to make this sort of profit on every purchase and sale then I think you are either being very niave or you are incredibly astute. If you are capable of turning in this type of return regularly then I think your talents would be wasted doing anything else.

Most collectors over a long time can quote one or two good buys that have enabled them to make a considerable return. However the vast majority will also tell about those buys where they have taken a hit, or those they have been prepared to lose on to obtain something exceptional. To believe and claim that you will only sell at a profit is unrealistic, at least for most of us mere mortals.

[vajo]

Gary congratulations for this trade, but this is not the normality since internet exists.

[Shugyosha]

Ok, I got a moment to describe a sale.

 

Bought a gendiato Amahide fully mounted, that needed a little work for $200., which I did at no cost, and sold it for $800.

 

A few years later, another who had bought it, found me to see a quick sale; where as I offered and got it for $200.

 

At the San Francisco show 2017, I just sold it for $1,300.

 

Do the math !! All involved we happy with their transaction, and I move forward to bigger and better quality purchases.

 

I don't expect or plan to lose money; and I do appreciate the study time of the purchase !!!

 

 

Yay Gary, you're really great!!!

 

...but you are confusing good luck with acumen - anyone can turn a profit on a no brainer deal like that.

[Jean]

Now, I am going to tell you how I made profit. It was not with Nihonto but with Kodogu. I bought tsuba in the States mostly with Bungo or Curran and after studying them, I resold them in France the price I bought them but in € and not in $. It was a 20% mark up sometimes even more (upto 40% profit).....

[vajo]

Can i ask you if you buy with a later selling aspect or did you buy first because you want it in hands?

[GARY WORTHAM]

Chris, I bought it because it was a great deal as well as a very decent sword and with mounts.

 

I have never bought anything with the aspect that I will sell it later.

 

Just sold it to get the excess out of my inventory and to buy better quality mounted swords.

[Vermithrax16]

If I read your post correct this was the process:

- bought sword $200

- had "work" done for free

- sold for $800

- someone else wound up with same sword and sold to you for $200 again

- you sold it for $1300

 

If that is all correct seems like a lot of trading for a $200 sword.

[Gakusee]

Gentlemen

We seem to be delving into specifics here. I believe we should buy in order to enjoy our items, learn from them and if we manage to negotiate well - perhaps break even or make a profit. But for those of us who are not dealers, making a profit should not be the main prerogative, is my presumption, and should be only a fortuitous corollary.

 

Notwithstanding the aforementioned, I am also not in favour of selling at a loss and have never done it so far with blades (but suspect I might need to do it with a tsuba which I bought on the uneducated / amateur belief it was something but it was papered to another).

With my blades, I have been very rigorous and have luckily made a profit or broken even. But I wish to emphasise that I buy a blade once every two years or so after a lot of inward analysis (self introspection about what I like and also external analysis of market prices). The way I have managed is by:

- buying recognisable and quality items (so commercially viable) which suit my collecting interests

- having been lucky to have had reasonable sellers willing to give me good prices

- recognising the quality I am buying and managing to paper the items higher (this point goes to an extent hand in hand with the two points above - either the sellers deliberately left some value upside to me or I recognised that the item was under appreciated, or needed polishing, etc).

But sometimes it is luck, currency foreign exchange movements et al (eg, yen depreciating after the monetary easing in Japan and buying with expensive pounds, then selling with a cheap pound and expensive yen, making a profit). As others have said before - this is also akin to market speculation and could be done with other financial instruments (shares, bonds, ETFs). The main prerogative for me has always been to enjoy the item in question and derive gratification from its ownership.

[Jean]

Chris,

 

I bought them because I liked them and I knew there was no equivalent available in France. Collectors are greedy in France and ready to buy great tsuba for a good price. I sold them when I needed money. I like the objects I buy but they are, in fine, a reserve of money.

[seattle1]

Hello:

 The following story is not intended to be evidence of "buy high/sell low" and it is most certainly not the longitudinal empirical data we need to say anything useful about the notion of investing in art. It is just an n=1 interesting story which I stumbled on after this thread had been started and thought you might enjoy it.

 The first Haynes cataloged auction was in November of 1981, held at the Miyako Hotel, San Francisco. Lot 304 was Kokuho sword by Bishu Osafune Iyesuke, dated Oei 21 (1414) and it had received the National Treasure designation in 1920.It was taken from Japan during the Occupation after the war. There was a $100,000 reserve and it was not met. The same sword was sold at the Shinwa Art Auction, Japan, in October, 2013, for 25,000,000 JPY. The old National Treasure sword designations had been disestablished after the war and the blade had been redesignated as a Juyo Bunkazai (No. 1566), so the blade still carried a great deal of clout.

 What do we compare? There is no perfect way to assess the gain or loss over the 32 year period as there are two currencies and different inflationary experiences in the US and Japan, and many other variables that cannot be readily accounted for, including the  upkeep cost of the sword, to say nothing of the transaction costs of the sale for the seller. I do not know if the selling price included the buyer's premium. If we assume that the reserve in 1981 was the fair market price of the sword then, and converting the Japanese sale price (without further adjustment) into USD at the then 2013 prevailing rate of $1.00 US = 97.7 JPY, the selling price would be $255,885.36 which implies a nominal gain of 2.97% per year. Inflation in the US during the 1981-2013 period was, co-incidentally, 2.98% per year on average, resulting in a tiny purchasing power loss. During that same period the US Government 10 year, an extremely safe and highly liquid asset, would have yielded the $100,000 1981 amount, omitting tax considerations, a return of 6.52% per year.

 Alternatively we could value the sword in JPY which in November of 1981 was 223.1 to the USD, and the resultant nominal gain expressed in Yen would be 0.35% per year. Inflation in Japan ran at an average rate of 0.81%, 1981-2013, so the real return in purchasing power terms would be distinctly negative. The Yen has been a rather "managed" currency and factors other than inflation have played an important role in its nominal appreciation. Neither currency choice in the comparisons is necessarily better than the other. Draw whatever conclusions you wish.

 The story of the Iyesuke could be sliced and diced in other ways. We need much more comprehensive longitudinal data to begin to address the investing/return issue which always seems to be present between the lines. In the meantime lets enjoy these things for the wonderful objects they are!

 Arnold F.

[Surfson]

Nice post Arnold, and an interesting story.  Did you see that sword and wish you bought it?!  I also collect guitars, and there are buyer's guides that are published annually that give the range of value of certain guitars, depending on condition.  Do you think such a thing could ever be compiled for swords?  Now that there are so many on ebay, most coming from Japan, if one could capture the data it might be possible.  The problem, of course, is that guitars are made as commodities, with intent for them to be identical to each other for a certain model and make, while swords have more unique characteristics.  

[seattle1]

Hello Bob:

 Well I was at the auction and while $100,000 today might only seem like the price of an expensive car, in 1981 it would have been the equivalent of just short of $270,000 today, i.e., a lot of dough! Even so too much can't be read into that as all indexes, like the CPI, upon which such comparisons are made, omit all the reality of changes in relative prices, and thus consequences on our consuming behavior, at the same time that prices on average are rising so retroactive scenarios of past behavior are all fictitious to a degree.

 The more interesting issue is the guitar issue you raise. Such compilations are far short of what is needed for a comparison of returns over time. Swords are all heterogeneous and what is needed is not like a model number for such and such made in a given year, with its then price compared with the sale of a similar piece some years down the line. What is needed is initial full cost data for a wide compilation of swords bought most likely at different times by a given collector, what was paid for them, costs of maintenance, restoration, upkeep, real property taxes if any, insurance and storage costs,  and inflation of course, to mention only a few things. At the other end comes a sale date, hopefully all at the same time, and what would be needed such as all transactions costs of the sale, including possible foreign exchange issues, if sold at an auction the house cost imposed on the seller, such as catalog photography, printing and distribution, and of course the houses' take from the hammer price. Add to that taxes paid to local, state and federal authorities. That is only a short listing of considerations that would have to be known for a proper economic analysis. A study like that of the Compton was probably the last best chance.

 I doubt we will ever see enough data gathered for a serious study that carries credibility. I think our enjoyment of swords and tosogu should not be based on the premise of a speculative financial yield, as speculation and not "investment" would be the positive end product, and I doubt that a positive yield could generally exist across the board for swords or any other art object. Enjoy them for what they are: wonderful and fascinating works of art that open a sort of window of our imagination to a different world.

 Arnold F.

[Surfson]

Thanks Arnold.  Many of those factors that you list apply equally to vintage guitars.  I think that perhaps one of the biggest differences is that access to sales information is more difficult to gain in the sword world.  There are no longer that many auctions with realized price lists of middling to very good pieces and most sales are private affairs.  One could probably choose some makers that made a great many swords - say the Hizen makers descended from Tadayoshi, the Shimosaka makers, the Yasutsugu lineage and the Gassan lineage as four examples - and then follow realized prices for tanto, wakizashi and katana.  Or perhaps follow the asking prices at a number of select and reputable dealers.  Either way, one might be able to get enough information to know the mean and median prices and the changes of these values over time.  It's my impression that the swords that have appreciated the most over the last two to three decades are the NCO, Yasukuni, Minatogawa and other military swords.  In the mid 80s, the prices of shinto swords was not that different from what it is now.... Cheers, Bob