Options
Selling at a Loss - Market vs. Markup
Zoins
Posts: 33,900 ✭✭✭✭✭
A lot of people indicate that they try not to sell in a down market and hold on to their coins instead. This is a way of avoiding a realized loss.
A similar situation occurred to me with dealer markups. If a dealer buys a coin at auction and you buy it for a 100% markup, would you be reluctant to sell given that you may take a 50% loss before fees? Would you consider yourself to be buried in such a coin?
Tagged:
1
Comments
Not many coins of value carry a 100% markup unless the dealer got an upgrade.
Yeah, I didn't think so but I was surprised to find that a PCGS coin I purchased from a reputable dealer was marked up 100%. I'm telling myself I'm okay with it because it's rare, but I should do more research before I pull the trigger! Even if I knew the price history beforehand, I still may have purchased the coin anyway but I can't help but wonder if I'm buried now.
It depends on the coin, and those who refuse to accept a loss are missing the potential value of opportunity cost.
I attended a large, probably about 100 table, club sponsored show this past Sunday. The big name dealers were nowhere to be seen. These were typical Sunday bourse dealers. Raw coins abounded though there were plenty of slabbed coins as well, few of which had "stickers". Asking prices for the coins seemed high for such ordinary material. Many of these "dealers" were actually collectors trying to unload their "long term holds". Attendance at the show was strong. I wonder how successful they were at selling in this market?
This is the most important thing people fail to consider. Holding a coin for 20 years to get even is really 100% loss on the coin due to lost opportunity.
Sometimes you just have to move on...
While my online store easily makes target margin of 30 pct. Sort of like a passing shotgun offense 4WR, 1RB. Buy low / sell high.
At a show I am out to move the coin even if just making $5. Its like running an option offense sometimes yardage positive but not much but others good. This can be like I tight / student body left USC style off left hash isolate more blockers against say only 2 defenders. We are out to power over or around them whatever defense will give us. I don’t sell anything at loss. Sort of like Alabama getting down to business in SEC Conf play.
At recent show:
I rsold a ngc ms70 ASE for $40 I had $34 in. CDN bid $55, MV $80. It was lesser quality of 2 dups - blowout. I new the guy would not pay 60.
An ICG world mod MS 68 silver coin I had $32 in I sold for $50. Yea!
A world currency lot of 2 notes I had $6.50 I negotiated went for $15. Some BU coins I had $1.38 in from roll sold for $10. Paid for dinner.
A cc LS dime Pcgs VF 30 I had $73 in I moved for $80.
I purchased a nice MS 64 commem from dealer setup next to me for $95 cdn bid $100, CPG $130.
I also made $300 on $2000 Cert world gold coin lot. And about $500 on $1000 Cert US & WPM sales
The nite after the show in online auction (non eBay, well known auction house) won all 4 items from my watch list bidding late. 2 nice Pcgs Classic Commems at 77 pct CDN bid, 58 pct MV plus 2 ngc world gold coins at about 70 pct MV. I think I caught them napping.
@Zoins What you don't know is the chain of custody of the coin you bought. You could be at the end of a long sales chain between dealers so you can't assume you know what the dealer paid. Ultimately, rather than focus on what the dealer paid for the coin, you should have ideally known what general market value of the considered coin (and then make allowances for rarity, eye appeal, your desire to own, etc.) so you can make an informed decision before buying the coin.
I've not always done this and I think with all of the on-line resources at our fingertips, we can make better decisions or ones in which we are at least comfortable!
Without really knowing the entire circumstances, it's difficult to comment. If the coin was indeed upgraded and sold to you at market value, then you would have limited (if any) downside. If the coin was bought at auction say for $2000 and sold to you for $4000, then you might have downside. I've seen auction records where a coin in a certain grade has sold consistently in a "range", and all of the sudden the next one sells for 50-60% of all the other trades. This is usually an anomaly and you may be fine if you had to liquidate in the aftermarket. If it was a rarer coin and everyone else was asleep at the wheel during the auction well then...decision time for you.
I stagger my listings and list at .99 and let it ride.... or find a BIN somewhere in the middle of completed sales.
In my Ebay store, give me cash flow so I don't sweat losses.
IF I bought wrong then I endeavor to do better next time.
I will sell anything (albums, cards, pokemon, coins).
Get enough... cheap enough, so stuff will go for far more and some for far less than expected.
Rinse and repeat...
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
RCI Investment is risky.
There are situations where a loss unavoidable. I have held material 10 years before finally selling it at decent margin.
In down market replacement material cheaper - this absorbs hit if other material sold at loss.
Some material can turn quickly other takes awhile.
If inventory movement slows I shutdown buying unless something absolute super deal can flip make money instantly.
Eye appeal is value added...however, beauty is in the eye of the beholder/buyer.
BST transactions: dbldie55, jayPem, 78saen, UltraHighRelief, nibanny, liefgold, FallGuy, lkeigwin, mbogoman, Sandman70gt, keets, joeykoins, ianrussell (@GC), EagleEye, ThePennyLady, GRANDAM, Ilikecolor, Gluggo, okiedude, Voyageur, LJenkins11, fastfreddie, ms70, pursuitofliberty, ZoidMeister,Coin Finder, GotTheBug, edwardjulio, Coinnmore...
To me It also depends on purchasing power parity (sort of). I collect mostly pre-33 US gold, and the prices/values of these coins fluctuates with gold value. If I bought a coin when gold was higher, let's say a Classic Head for $800, and then when I wanted to sell the values were down to $700, I'm OK with that if that $700 will let me get something else of similar value that would have also been around $800 a few years ago but now selling at $700.
As an aside, at the last FUN show I was shopping for an MS66 Saint as a type among other things. You can buy MS66 common dates all day long at $2k. I found a dealer selling common date MS66 CAC for OVER $4k. Imagine? I told the dealer I liked his inventory but "100% markup for CAC (or whatever factor he was using to try to justify the absurd price) was a bit steep". That was me politely saying his prices were hilarious and there is NO WAY anyone would buy a common date MS66 CAC Saint for $4300. I found my keeper at the next table thankfully after I had looked at dozens of the same grade. Anyone can ask whatever price they want of course.
i usually only buy when a e bucks promo is going on and end up in the black over 90 percent of the time when it comes time to sell