If coins are going to such a hot investment item for the future ...
291fifth
Posts: 24,284 ✭✭✭✭✭
... why would someone be so interested in selling what they have?
All glory is fleeting.
0
291fifth
Posts: 24,284 ✭✭✭✭✭
291fifth
Posts: 24,284 ✭✭✭✭✭
Comments
<< <i>... why would someone be so interested in selling what they have? >>
1. To reposition into coins that are better investments than the ones you have now
2. No one ever went broke taking a profit
3. Other financial obligations, unexpected or otherwise
4. Wife wants a new kitchen
Is he going to be able to restock such coins at prices that will allow him to flip them for a profit?
Why not just wait five years and cash out with an enormous profit?
<< <i>
<< <i>... why would someone be so interested in selling what they have? >>
1. To reposition into coins that are better investments than the ones you have now
2. No one ever went broke taking a profit
3. Other financial obligations, unexpected or otherwise
4. Wife wants a new kitchen >>
For many, another demonstration of the Biblical statement "the last shall be first".
<< <i>Let me rephrase it: Why would a dealer be so interested in selling the "investment grade" coins that he owns?
Is he going to be able to restock such coins at prices that will allow him to flip them for a profit?
Why not just wait five years and cash out with an enormous profit?
Then you actually become more of a collector than a dealer no?
PCGS Registries
Box of 20
SeaEagleCoins: 11/14/54-4/5/12. Miss you Larry!
<< <i>Let me rephrase it: Why would a dealer be so interested in selling the "investment grade" coins that he owns?
Is he going to be able to restock such coins at prices that will allow him to flip them for a profit?
Why not just wait five years and cash out with an enormous profit?
I suspect that was more of a gentle jab than a serious question. But either way, generally, successful dealers have a good turnover rate for their inventory. And, even at low margins, turning coins over quickly, can be more profitable than just sitting on them, waiting for them to appreciate.
But it does kind of remind me of the people who sell financial advice. My thought has always been "If you are so good at this, why are you having to sell advice?".
Mans gotta make a living.
John
Never view my other linked pages. They aren't coin related.
<< <i>Let me rephrase it: Why would a dealer be so interested in selling the "investment grade" coins that he owns?
Is he going to be able to restock such coins at prices that will allow him to flip them for a profit?
Why not just wait five years and cash out with an enormous profit?
Because he said the same thing 5 years ago from now, so now his time to hold is up and he needs to sell. Should he renew his pledge every 5 years or take the money and run. He could keep the profits and look for other coins to buy.
As for why the top investment managers don't retire, it takes a ton of money to have make enough from investments to retire. Most stock mutual managers would do almost anything to get a consistent 2% a year edge over their colleagues. To put some numbers on it, lets just say for this hypothetical, say the top tier money manager generates 8% after all expenses and the average fund manager 6%. If that top manager can maintain that edge for many years, he/she is worth his weight in gold to the fund, and to the investors in that fund. That kind of consistent edge over a long period of time would likely make the person top 10% or 20% in that profession. Even with that, unless that money manager inherited a ton of money, he/she isn't going to be able to retire anytime soon on 8% returns a year. I am talking slow and steady investors not gunslinging futures traders that make or lose 8% an hour. That top money manager is much better off working for a fund company, or if very successful, running their own fund, where that 2% increase in returns makes a huge dollar difference, vs. managing what is likely a small pile of their own money.
Anyway, I have seen a shift on the forum during my time here. Five years ago, I'd guess about half the responses to a thread, would defend coins as investments, 5% would do so vociferously. These days on the U. S. coin forum, I'd say about 66% voice strong disdain to those hawking coins as investments or linking coin investment articles filled with half-truths.
Collector of Early 20th Century U.S. Coinage.
ANA Member R-3147111
<< <i>Do coins really appreciate? Or just hopelessly languish until your dead?
For most, they just hopelessly languish, however we're supposed to get some kind of satisfaction and pride of ownership knowing that somewhere in some dark safe deposit box in some bank vault we have a bunch of coins sitting in plastic holders that we hardly ever see, and that's supposed to somehow make us happy I guess.
Member ANA, SPMC, SCNA, FUN, CONECA
<< <i>... why would someone be so interested in selling what they have? >>
Not only does he probably have overhead costs to think about, but think of it in investment terms... think of it as "dollar cost averaging." A good dealer buys and sells all the time (no matter what the coin and bullion market reports are saying) to limit his risk of loss. I would venture to guess that dealers who try to maximize their profits by trying to deduce when the best times to buy and sell are don't last very long in the business.
And now that I've said that, I'm sure one or two smartasses will provide an example or two of a dealer who bucks this trend.
<< <i>Let me rephrase it: Why would a dealer be so interested in selling the "investment grade" coins that he owns? >>
Let's say I have $10,000 to play with, and I have an opportunity to buy an "investment grade" coin for $10,000 that I can sell for $11,000 pretty easily. Furthermore, let's say I expect that coin to be worth $20,000 in two years (yes, doubling my money in two years since I'm so wildly optimistic about the future of the rare coin market in this hypothetical example).
All I need to do is "turn over" this kind of inventory 10 times (plus a little for overhead) with $1,000 profit per sale in two years (one sale every 10 weeks or so) to make flipping these coins as profitable as "buy and hold." And if I can sell one of these a month, I make $24,000 in profit in two years instead of the $10,000 I could make by holding the coin.
<< <i>Let me rephrase it: Why would a dealer be so interested in selling the "investment grade" coins that he owns?
Is he going to be able to restock such coins at prices that will allow him to flip them for a profit?
Why not just wait five years and cash out with an enormous profit?
As Mark wrote, smart dealers turn over their inventories regularly for a variety of reasons. One is that customers are constantly looking for fresh items and don't want to see the same stuff on their website or at show after show. There is also something to be said for several small mark-ups made from several turn-overs as opposed to holding out for "a killing" on one big sale.
I've seen dealers who tried to squeeze the last dollar out of some items. Very often these guys get the reputation of charging high prices which prompts many collectors to avoid looking at their stock completely. At the shows I can run down the names of a few dealers and know not to bother with them because their prices are very high general. It's better to known for good, but fair prices in the retail trade.
Finally there are almost no coins that are irreplaceable. Although some things might seem to impossibly rare to some of us, dealers who market such items know that they will crop up again somewhere down the line.
roadrunner
Many's the time I've heard a fellow dealer ruing his previous purchase of a great coin by stating balefully "I love this. I never thought I was going to be a collector when I bought it".
I can't count the number of times I've seen dealer #2 see Dealer #1 buy something in an auction and then offer dealer #1 an immediate profit. If it's not an agent, high-turn rate, or wantlist bid then a fast flip often makes excellent sense.
I sat next to Eureka in Auction '84 or 85' as he bought an 1884 $20 Ex: Eliasberg, Sconyers. 90 seconds later I had successfully manipulated him into selling me the coin for a paltry 4% over his cost. I paid him on day 27 so his check to the auction company could be deposited on day 30.
Clean deal, and pure profit for Eureka. I was greedy and didn't want to give it away at a 10% profit and sold it six months later for my own 6% profit. This continues to happen to me often.
Pretty shrewd that Andy!
In 6/85 I bought the Garrett 1804 S$1.
Previous history:
from J.W. Garrett (Bowers 3/80, XF) $400,000 hammer
through Pullen/Larry Hanks (agents)
for Sam Colavita {(dealer making money during 79/80 gold explosion who never ever ever dreamed he could own one (but he had a good month)}
to private investor (Pullen/Hanks auction ?/82) at maybe $185K hammer.
(1982 was a brutal year for the business. Dealers large and small were dropping like flies and nobody wanted anyone's checks. I was so depressed that I started sleeping with my ex-wife again and went back to computer software for 6 months. Then I went to the Boston ANA and some stock market rally blast from Dow 781 (that might be close) coincided with the showing catching afire on Day 3 after the Apostrophe Sale and NERCA offerings.
After discussing it with my darling I told her I was giving 30 days notice at the consulting gig. A week later she gave me two weeks notice she was throwing me out.
A rare win-win. BTW she's on her 4th.
TMI, but I'm chuckling as I type.)
Bowers (5/85) bought in at $165,000 hammer + 10% with Jessup as underbidder. On calculation, cojones and a promise from Ed Milas of financing at $125,000 at 1% per with me keeping possession.
to Jessup (doorway of the auction room of the St. Moritz within 5 minutes of the buyback) at $180,000.
.
3 other dealers asked for and were sold 20% shares at cost within the next 3 minutes. This process is universally appreciated by auction sluts as an exercise in the age-old process of "whoring in". This is nothing like "forming a ring" in restraint of trade. It is in no way planned
by Martin Paul (10% partner) (QDB told me he'll add me to pedigree list next edition) at $200,000
through Dan Drykerman (agent/broker)
to Laura Somers (coin now possibly NGC PF58)
I paid for the coin before the money was due.
The next year QDB let me handle each coin straight out of the original morocco leather box of the King of Siam set. Forget the S$1, it's the $10 that does it for me. King of Eagles suggests that the KoS $10 and the (Farish?) Baldenhoffer piece got mixed up in some way.
Wierd scenes inside the gold mine (tribute to Mom Longacre)
If you've got a math head it's really easy to figure how this works. But the occasional relapse can be indulged by those who have not yet met a 12-step group whose Satan's Bible is "How to be your own best customer".
My 12-step work in On-and-On-and-On-Anon continues.
There should be a few kernels of truth in here for some.