How do dealers make money in a bad market?

Longacre

Let's face it. As much as people will deny it, I think that when the coin market is raging, virtually anyone can make a profit in coin sales. Even your very own Longacre, who could not sell water to a thirsty dromedary, made some profits on coin sales during the numismatic bull.

The trick, however, is to be able to make money in a bad market. Does anyone know the dealers' secrets to making money in bad markets? Let's try to keep this serious, and not say things like "rip off old widows even more", and things like that. I am honestly interested in how the markets work in bad times, and how easy (or difficult) it is to make money in a down market.

ColonialCoinUnion

I'd like to hear more about that dromedary.

Cladiator

Deal in quality, eye appealing material only.

coinkat

Tend bar, wait tables or sell suits (not shorts)

doh

Eye appealing coins of course, but I think a lot of money can be made on proof sets and silver eagles, etc when the market for rare coins takes a dip. That may not be as true with bullion the way it is...but most dealers still find a way. Cater to the very high end or the low end when the middle class guys have to pay mortgages instead of buying coins.

airplanenut

Buy lower, sell less lower

bidask

If dealers are entering a tougher market, the ones who will do better are the ones who have good customer relationships and have steadily stayed in contact with their customers.

I discussed the importance of customer contact ....

here

Is a dromedary a rare cow?

Barndog

sell half dimes that look like these:





(Brian Greer)







(Brian Greer)







(Brad Karoleff)







(Brad Karoleff)







(Gary Adkins)







(Brian Greer)







(David Lawrence)







(Harry Laibstain)







(Mark Feld)







(Sheridan Downey...yes, he sold a half dime at one time!)







(David Lawrence)







(Brian Greer)







(Brian Greer)




and a few more...






(Pinnacle)







(Heritage)







(David Hall)







(Legend)







(Legend)

sinin1

buy low

sell higher

quick turnover of inventory




market seldom drops 30% in 1 month



some dealers have a few million in widgets that are owned outright




how do real estate speculators/developers make money in a bad market?
how do day traders make money in a bad market?
..........
the list could go on forever

RYK

<< <i>I'd like to hear more about that dromedary. >>



I never thought I would read that word on this forum. It is actually is occasionally used in my profession, believe it or not.

Coin collectors will always have an appetite for coins and will try to buy them in good times and bad. In bad times, some of them will not have as much money to keep up with their habit, unless they forego food, shelter, Steeler games, and other necessities.

ricko

For coin dealers, the low end and widget market is bread and butter.. high end is gravy. I know this is not always true, however, in conversations I have had, they indicate that volume, low end sales keep the wolf away from the door in tight times. Cheers, RickO

TwoSides2aCoin

My dealer sells me coins any time. The hobby remains such.

291fifth

The coin market never dries up completely. Dealers, because they are in the market day in and day out, have an excellent chance to see subtle (or not so subtle) changes in the market and adjust their buying and selling practices accordingly.

Any sharp downturn in the coin market will clean out the poor businessmen among the dealers. Numismatic auction houses who extend payment terms to dealers could probably tell you who is likely to survive. They know who is late on their payments.

pennyannie

Income tax credit. I believe there is 2 kinds of dealers, you have the ones that hit the national show scene with huge stores and mail order and the local B & M that generally does not see many coins worth 5k. I would say the nationals will suffer more than the local B & M. The local B& M will move more toward a pawn shop mentaility in a down market and do just fine.

I hope they all SUFFER big time and coin collecting can return to being fun without getting ripped 4 times grey sheet for a slightly above average decent coin.

I have yet to see a real drop in coin prices, i collect proof shield, liberty v-nickels and proof buffalo nickels. Last heritage auction i paid the same for a pf65 cameo as i have paid the last 18 months for 65 cameos. No one collect nickels and to me they are high.

mrearlygold

I re-started my business after leaving Heritage in what was at the time the worst coin market since the collapse of 81. It was tough. You learn to pace yourself financially, roll with the punches, take care of and be truthful with your customers, or find something else to do. Many get blown out, never to be seen or heard from again and that's not just people in the trade, it's "collectors" and "investors" who didn't have the heart to be in this to begin with. No great loss there.

jdimmick

Some good points have already been mentioned. I for one stay atop of the market pulse, knowing when and where and how much to adjust buying prices as it comes in over the counter. Also, keep inventory moving, price with room and keep the buyers coming back. Have a lot of connections such as dealer to dealer and other ways to move stuff. I also dont keep dead inventory at all and stay in a good strong liquid cash flow. I expect to do fine during this time!

jim

eCoinquest

Get to know the collectors who have deep enough pockets that they can still buy the "big" coins. Then go to all of the others you know who have those coins and offer to buy them. Chances are someone will be feeling the market and will want to sell, often at a discount, then walla, you have yourself a profit.

Pretty neat system, huh?

keets

How do dealers make money in a bad market?

wow, is this really a serious question??? it can be answered very simply, they make money in a bad market the same way they make money in a good market---------------buy low and sell high. it's the same way dealers who buy/sell bullion make money with the spot price jumping all over the place. things average out over the long haul. while a guy might get slaughtered when the price drops $30, he makes up for it when the price rises $30. it's really very simple and i can't believe you can actually thinks it's got a complicated answer.

the guys that can't make it when the market slows and prices drop are the guys that don't know how to buy and sell "right" to keep the money flowing.

pheh

Buy.