Can coin dealers do well in a declining coin market?

RYK

While sales may be down, I think there is great opportunity for dealers with experience, a loyal following, good connections, and a niche in the marketplace to do well even in a declining coin market. A wise coin dealer told me in the frothy 2005-2007 coin market that he was rooting for a downturn to shake out some of the wannabes and posers (my words ). The point was that this dealer had experienced and thrived in both up and down markets of the past and would be able to do so again, whereas the less experienced and savvy would be forced out.

I expect that the number of occupied tables at some of the 2009 Baltimore show or 2010 FUN show may be fewer than in previous years, but many of the familiar names and faces will still be around for quite a while. What do you think?

Doogy

<< <i>While sales may be down, I think there is great opportunity for dealers with experience, a loyal following, good connections, and a niche in the marketplace to do well even in a declining coin market. A wise coin dealer told me in the frothy 2005-2007 coin market that he was rooting for a downturn to shake out some of the wannabes and posers (my words ). The point was that this dealer had experienced and thrived in both up and down markets of the past and would be able to do so again, whereas the less experienced and savvy would be forced out.

I expect that the number of occupied tables at some of the 2009 Baltimore show or 2010 FUN show may be fewer than in previous years, but many of the familiar names and faces will still be around for quite a while. What do you think? >>



I agree, 100%

lasvegasteddy

<<<I agree, 100%>>>

me too

coinkat

I think the declining markets separate dealers into those that have the knowledge to buy the right coins at the right time and park them with their following and those that seem to be not as skilled at buying but just attempting to sell coins that have something in common with yesterday's mashed potatos

rld14

That's the ability of a good dealer of any goods in any market.

This past summer I was making a tremendous amount of money on SUVs while many other dealers that I know were getting killed. There's a saying that my mother, a very successful realtor has...

"It's not the market, it's never been the market, it's how you handle the market that counts"

She's moving her listings in an average of 40 days, in this market.

So I am sure some coin dealers are about to get slaughtered, and I am sure that some will use this time to make a small fortune.

percyb

I'd say dealers with deep pockets will survive. They may not eat out as much though

SeaEagleCoins

<< <i>While sales may be down, I think there is great opportunity for dealers with experience, a loyal following, good connections, and a niche in the marketplace to do well even in a declining coin market. A wise coin dealer told me in the frothy 2005-2007 coin market that he was rooting for a downturn to shake out some of the wannabes and posers (my words ). The point was that this dealer had experienced and thrived in both up and down markets of the past and would be able to do so again, whereas the less experienced and savvy would be forced out.

I expect that the number of occupied tables at some of the 2009 Baltimore show or 2010 FUN show may be fewer than in previous years, but many of the familiar names and faces will still be around for quite a while. What do you think? >>




I think it depends...

buffalohunter

sure when they pay 50% of what its worth

Type2

Buy low sell high it's the norm, Just now they can say no one is buying so we will pay this. And hold for the collector that says I needed one like that $$$$.

JRocco

I agree 100% with what she said RYK.

SeaEagleCoins

OK...seriously...

When I first stepped into the "seller" category, I was given some good advice by a few folks who had been around a while...

They know I had a FT career and that the Coin Biz was more of a hobby...they told me emphatically that no matter how good the market looked (at that time...3-4 years ago) that I should NOT give up my career. I am glad I listened.



Unless the dealer has a loyal, "well-heeled" following and a nice nest egg put aside (or another means of support), a severe downturn could prove to not bode well for many. We may need to be willing to part with at least a portion of our inventory at possibly greatly reduced prices... but if one can be flexible and also buy new coins "right for the changed market place"... then they should be OK.

sinin1

it probably depends on amoount of debt on inventory, and fixed overhead

Bear

Seasoned Coin Dealers who are also good business people

will survive even in the worst of downturns. With solid customer

bases , good sources of material, sound control over expenses,

good inventory control and turnover, they will make it.


However, many smaller dealers, as well as those who overextend

their credit or are stuck with sluggish inventory are going to be crushed.

Some of these dealers may also be quite large, as well as poor business people.


Some auction houses will probably not make it, as well as a number of shows that

will be reduced in number to compensate for lower dealer / collector participation.

All things in life go in cycles and it is usually the best, hardest working and most

intuitive dealers that will survive.

RYK

<< <i>I agree 100% with what she said RYK. >>



It wasn't her.

Bear

As a collector that has successfully bought high and

sold low for many years, I will make it. Stupidity is its

own reward.

Coxe

Established, long-time and full-time dealers have weathered past market gyrations. They'll keep the lights on and food on the table once again probably. However, I do wonder if this time is truly different. The participation of the collector (retail) public in areas that were comfortably the exclusive domain of the dealer community may have changed this all a lot. The internet facilitated it all.

The downturn should certainly drive away the less dedicated paosers and wannabes. Part-time dealers who have leveraged the internet to their advantages, will not be largely hurt badly because of their very low overhead and the fact that a core fraction of them are, indeed, highly knowledgeable about coins. Some full-time guys will dismiss just about anyone who isn't "in the network" as a wannabe. The fact is that the ones that hold or express such views fail to understand that those others don't wannabe big dealers, don't wannabe in their network or pee in their bath water. It's more a matter of closer involvement in the hobby and an application of hard accumulated specialty knowledge. Since there shouldn't be any serious reliance on cashflow among those in the group, I don't see problems geting through. The parastic opportunists, the real wannabes, who thought this was an easy way to make money.....? Well, I think they'll take their toys and go home, perhaps sobbing privately in their personal disappoint ammid leveling charges of a manipulated and corrupt market.

saintguru

I don't agree with RYK because I didn't read what he posted.

Any thread that starts with "dealers" is an insty-neg.

shorecoll

I agree with Bear but state it differently. If dealers drank too much of their own Kool-aid and overextended they'll get killed. I've been told you can always predict downturns in the housing industry by watching builders. When builders start speculating with their own money you're near the top. It's probably the same with coin dealers.

edited for typo.

IrishMike

Tell me what you mean by do well.

Coxe

<< <i>Some auction houses will probably not make it, as well as a number of shows that

will be reduced in number to compensate for lower dealer / collector participation.

All things in life go in cycles and it is usually the best, hardest working and most

intuitive dealers that will survive. >>



Bear, I am surprised that a notable couple are still with us to be perfectly honest. To name a name, Heritage will surely get through it ok. In fact, their saturation of the market with 2 internet auctions weekly and a festival of auction at any show of moderate importance, is murdering the marketshares of their competition as the market dwindles especially. That they have managed to support the highest quality with few glitches throughout is a huge credit to their success. I could see DLRC scaling back but they really don't need to as they could cheply just keep the engine rolling with stale inventory as long as necessary. I really don't get Superior. No bad feelings or anything, but I can't see how they are going to manage to get great consiignments going forward versus Heritage. I'd like to see expanded competition; just don't see how and from where. Teletrade & Teletrade Premium (aka 'Bowers & Merena' sans Dave and Ray)? They have their niche that Heritage internet auctions didn't erode completely. The parent company's European woes worried me and I just have no idea if they'll survive and for how long. Certainly wouldn't be fast to bet against them.

Could see Long Beach eliminating the middle show and doing February (perhaps moved to March) and September. Likewise for Baltimore. ANA has their shows but maybe only one will remain as the big show, and the rest of a more modest stature. The medium-sized bourses that run on regular schedules have grown to a critical mass. They'll have to scale back. Bick's stuff? I just don't know; depends on the overhead and how many tables he can sell.

RYK

<< <i>Tell me what you mean by do well. >>



You know, maybe only visit Hawaii twice each year, sell one or two of the Italian sports cars, exchange the luxury box for club seats, and the rest of the usual stuff.

Making a comfortable living, by their own standard, would be doing well.

kranky

In the big picture I think it depends on what the dealer's regular customers do. If a dealer's client list is made up of people who aren't serious collectors and who got into coins as an investment, it's possible those clients might walk away and be very hard to replace. Smaller B&M stores might be OK even if the market isn't strong, as they could buy enough material from people who want/need to cash out due to personal economic hard times. Historically when the coin market sinks, the good material stays off the market waiting for the turnaround so dealers who need that kind of material to generate cash flow might be in for a drought.

To your point, RYK, the combination of experience and a loyal following is very important, but ultimately for dealers it is a business and they have to control expenses and create cash flow. Even if you have ready customers, you still need to find coins to buy at the right price. I think that's just as critical to survival.

timcoin

<< <i>The point was that this dealer had experienced and thrived in both up and down markets of the past and would be able to do so again, whereas the less experienced and savvy would be forced out. >>



That is an interesting theory, but I think it is more probable something entirely different would take place.

If the market were to slow substantially (and that is a big IF, imo), it seems logical to me that the largest companies with the most overhead would suffer the most, regardless of talent on hand. Assuming a "slow" market would decrease trading activity and inventory turnover, it is the larger companies, with the largest bills to pay, that are the most exposed. Take banks, for example. It has recently often been the largest banks that have suffered the most, while many smaller, local banks remain relatively healthy.

On the flip side, companies gifted with marketing talent (not technical talent, but marketing talent) and those with a strong sense of business, have the best chance of staying viable.

One other point to keep in mind. If the coin market were to slow down substantially, that would greatly impact supply. A large many of us have been buying during this "strong" market, and it is doubtful we would be willing to sell for any significant loss. That wouldn't be good for the auction companies, even those with lots of experience and savvy.

Bear

I am not a Coin Dealer,

but I stayed overnight

at a Howard JonSons?

TwoSides2aCoin

The better they are, the better they do.

percyb

<< <i>I agree with Bear but state it differently. If dealers drank too much of their own Kool-aid and overextended they'll get killed. I've been told you can always predict downturns in the housing industry by watching builders. When builders start speculating with their own money you're near the top. It's probably the same with coin dealers.

edited for typo. >>



My accountant told me yesterday that he's handling one bankruptcy after another and they're all home builders.

IrishMike

It wouldn't surprise me if the world's largest coin dealer doesn't have a good year. With banks threatening to cut credit card limits and not renew HELOC's (home equities) and those heavily leveraged in plastic the US mint could suffer.

BAJJERFAN

<< <i>

<< <i>I agree with Bear but state it differently. If dealers drank too much of their own Kool-aid and overextended they'll get killed. I've been told you can always predict downturns in the housing industry by watching builders. When builders start speculating with their own money you're near the top. It's probably the same with coin dealers.

edited for typo. >>



My accountant told me yesterday that he's handling one bankruptcy after another and they're all home builders. >>



I guess you wouldn't want to buy one of their houses then eh? Mite fall down while you were moving in.

291fifth

Sharp, WELL CAPITALIZED dealers will do very well. This is a great buying opportunity for them.

Dealers who live hand to mouth will be the ones who will be hurt.

JohnMaben

<< <i>Tell me what you mean by do well. >>



This statement really sums it up.

If you have a ton of experience, connections, and money, you can still do well in a down market.
Not as well as in a bull market, but A-OK.

Reducing overhead in the right places is also critical.

Competition subsides in a down market creating opportunities, but this is not a full offset to a rising market.

John

nicknut12

"Could see Long Beach eliminating the middle show and doing February (perhaps moved to March) and September. "

Well, you may be right in the relative
short term.

But don't forget the Liberal/Communists
just swept the elections.

It only took Jimmy Carter 2 and a half years
to destroy the economy.

I suspect this group of Liberal/Communists
are more virulent than the Carter bunch.

So give them one and half years to get
the misery index up past 35.

Coin dealers should do very very well
in that kind of environment.

Regards, Steve K.

cladking

Ya' can't sell high until after you've bought low in the coin hobby.

Downturns are the best time to buy low for most coins.

rld14

<< <i>"Could see Long Beach eliminating the middle show and doing February (perhaps moved to March) and September. "

Well, you may be right in the relative
short term.

But don't forget the Liberal/Communists
just swept the elections.

It only took Jimmy Carter 2 and a half years
to destroy the economy.

I suspect this group of Liberal/Communists
are more virulent than the Carter bunch.

So give them one and half years to get
the misery index up past 35.

Coin dealers should do very very well
in that kind of environment.

Regards, Steve K. >>



Let's see how long it takes for the Ether to wear off...