For the non-dealer types, this is a good exercise, and taking a look now and then is good way to keep ourselves in check.
For the average Joe like myself, if I was over about 10% to 12%, I might have to check myself at the door. Thankfully I could grow my collection a fair bit before I hit that kind of number.
As wealth climbs, I think the percentages can too, if that's what makes you happy. Making sure we have funded the real priorities and not counting on coins to fund our retirement is probably most prudent.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
. But it is important that other people recognize that it is not generally a good way to run a business.
You may think you are giving out business 101 advice. I guess that is for the amateurs.
When you get to the real world of advanced business concepts, then we can have that discussion.
I do not need your business 101 ill advice.
"Advanced business concepts" don't remove business 101 precepts. And, again, I'm not trying to give you business advice at all. You like to speculate on things. We know that. What did your financial guy tell you? You have a risk tolerance of 11 on a 10 scale.
Turnover is simple.
$1 million inventory. Monthly turnover at 10% gross margin results in $1.2 million in gross profit per year.
$1 million inventory. Annual turnover. You need 120% gross profit to achieve the same profit level.
Turnover is a measure of efficiency. It's not even arguable, even though you want to argue.
$100,000 inventory. Monthly turnover at 10% gross margin results in $120,000 in gross profit per year.
$1 million inventory. Annual turnover at 12% gross margin result sin $120,000 in gross profit per year.
Most people would rather have the $100,000 inventory than the million dollar inventory - especially if the market is flat or sliding. If inventory value decreases, the risks in $100,000 inventory are (obviously) one-tenth what they are on a $1 million inventory.
@Topdollarpaid said:
How do you know how much this crap is worth?
People do it different ways. Some people just value the collection at what they paid. Other people are constantly trying to determine current market value. It is tricky because it is rather hard to value anything except widgets.
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every coin is very liquid.
I think this is true, until you include price as a variable. You can easily sell any U.S. coin, but not at whatever price you want.
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every coin is very liquid.
I think this is true, until you include price as a variable. You can easily sell any U.S. coin, but not at whatever price you want.
The same is true about stocks, if you include price as a variable. You can easily sell any U.S. Stock, but not at whatever price you want.
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every coin is very liquid.
I think this is true, until you include price as a variable. You can easily sell any U.S. coin, but not at whatever price you want.
By that definition isn’t everything liquid except perhaps cryptos which are electronic tokens with no guarantee of being able to exchange them for anything in return?
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every coin is very liquid.
I think this is true, until you include price as a variable. You can easily sell any U.S. coin, but not at whatever price you want.
By that definition isn’t everything liquid except perhaps cryptos which are electronic tokens with no guarantee of being able to exchange them for anything in return?
Actually, I would include cryptos.
Liquidity is determined by the presence of a market. Cryptos have a market.
Most collectibles are illiquid because there isn't a fully developed market. Take art, for example. You have a Picasso print, there is no posted bid/ask spread for it. You can sell it, but not instantaneously with a phone call.
U.S. coins can be sold with a phone call. Most of them. There are posted bids for virtually every U.S. coin save those ultra rarities and some of the esoteric material. There are market makers in most segments, including errors. So they do have a high degree of liquidity.
But that isn't the same as a price guarantee. If the market were to skid, the bids would drop quickly. Silver and gold coins have a floor, of course, at bullion value. Error coins and "key date" coins have no real floor.
@cameonut2011 said:
Error coins and "key date" coins have no real floor.
"Error coins and "key date" coins have no real floor."
........
During the last downturn, I specifically asked Fred how error coins do in a down market.
His answer was, substantially better than the market.
In my experience through one downturn, Fred was correct. He speaks from experience. I will trust him over someone who knows nothing about the error coin market.
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
If I intend to retire into being a coin dealer, is it really that outlandish to have about half of my net worth tied up in a business venture?
I would guess most small business owners have a similar percentage tied up in their businesses, if not more. And to be honest, the people I am most interested in hearing from are vest dealer types as well as professional dealers.
I don't know if it is "outlandish". A lot of small business owners have a significant percentage of their net worth tied up in the business. It is, however, dangerous. And unless you are retiring this year, it is very dangerous because you are accumulating inventory that may be worth less when you actually want to sell it.
Inventory should turn over (EOC will be along shortly to argue the opposite). Accumulating inventory for a future dealer venture isn't really good business. Dealers do not have cases filled with life long accumulation. 90% of what's in a dealer's case should be less than a year in inventory.
You would be better served going into a new business with zero inventory and a pile of cash.
I think for me, the biggest thing is that my cost basis on most of the stuff is pretty low. Just selling it right now I would probably realize 200-300% of my invested capital. My mantra is to keep the best and sell the rest. As a general rule of hand, I keep approximately one out of every 20 or so coins that I buy. My actual inventory gets turned over 5 to 7 times a year. The profits on that pay for my "long-term inventory".
If I intend to retire into being a coin dealer, is it really that outlandish to have about half of my net worth tied up in a business venture?
I would guess most small business owners have a similar percentage tied up in their businesses, if not more. And to be honest, the people I am most interested in hearing from are vest dealer types as well as professional dealers.
It depends upon how much risk you are willing to take. It's your life.
Personally, even if I were a business owner, I would attempt to reduce my financial exposure to it as I aged if it represented 48% of my net worth or anywhere near it. I'm not a decamillionaire.
If I were in a position to retire with a transition to a coin dealership, I would only do it to the extent I could afford to lose most if not all of the investment without it impacting my future living standards.
I think this is good advice.
Margins on coins are very slim. If you are retiring with most of your assets in inventory, you are NOT retiring. You are transitioning to a new career that will have to make money. [Unless, of course, the gross numbers are huge. If you have a billion dollars and half a billion in coins, you can retire.]
Don't get me wrong, when I retire I am retiring. I'm not going to work 40+ hours a week as a dealer. The goal would be for dealing to account for maybe $20,000 a year in income. If you are familiar with the concept of FIRE (Financially Independent, Retired Early) and it's derivatives, coin dealing with transition me to a coastFI type situation. I'd only deal at a point where I just need my investments to grow for a few more years and I still have some moderate expenses to cover, but the big items like a mortgage payment are gone.
As a vest dealer, my margins are 21% on average. I see no reason I cannot sustain that given I carry those margins on low 6 figures in revenue per year right now.
Appreciate your insight and comments, thanks!!
Quoting to get your post back on topic.
Many of the long time folks and dealers here have borrowed money or used credit lines for coins. Perhaps over or near net worth. Your non borrowing plan seems to be working. Need to be confident of supply. Can always stop buying. Keep enough cash for business and personal surprises.
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
Why are you referring to yourself in the 3rd person? That’s weird.
@cameonut2011 said:
Error coins and "key date" coins have no real floor.
"Error coins and "key date" coins have no real floor."
........
During the last downturn, I specifically asked Fred how error coins do in a down market.
His answer was, substantially better than the market.
In my experience through one downturn, Fred was correct. He speaks from experience. I will trust him over someone who knows nothing about the error coin market.
I'm not sure what that has to do with what I said. Past performance is not indicative of future performance. The fact is that there is no floor under any collectible that lacks intrinsic value. It doesn't mean that the collectible has to slide into oblivion. It just means it could.
What's a Picasso worth during World War III or the Zombie Apocalypse?
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
Why are you referring to yourself in the 3rd person? That’s weird.
LOL. Simple narrative device. Perhaps it supports EOC's position that Joe's an idiot.
A dedicated serious collector to vest pocket to dealer thread would be helpful.
What I have learned from some on this forum over time.
From EOC... reinvested for years before jumping in
From Cougar... turnover and cash flow
From jmlanz... Cash is king
From MFeld... grading and education
I am looking into PM's, scrap jewelry, paper.
Five years until a PM/B&M/online collectibles business in a paid for building and substantial cash position.
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
@yspsales said:
A dedicated serious collector to vest pocket to dealer thread would be helpful.
What I have learned from some on this forum over time.
From EOC... reinvested for years before jumping in
From Cougar... turnover and cash flow
From jmlanz... Cash is king
From MFeld... grading and education
I am looking into PM's, scrap jewelry, paper.
Five years until a PM/B&M/online collectibles business in a paid for building and substantial cash position.
Actually, my position was essentially the same as Cougar. And I andi agree with @Mfeld
As wealth climbs, I think the percentages can too, if that's what makes you happy. Making sure we have funded the real priorities and not counting on coins to fund our retirement is probably most prudent.
True
There is a big difference between someone worth $10MM with a $5MM collection versus being worth $100K with a $50K collection.
As wealth climbs, I think the percentages can too, if that's what makes you happy. Making sure we have funded the real priorities and not counting on coins to fund our retirement is probably most prudent.
True
There is a big difference between someone worth $10MM with a $5MM collection versus being worth $100K with a $50K collection.
The first might have better cash flow and access to capital, but both are way overextended in numismatic holdings and risk losing their shirts.
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
You just had to say CAC, didn't you? LOL
Totally innocent question...
fack cac, lets keep the cac garbage out of at least one thread. Thanks!
Not sure if it really matters as a collector unless you're married, or have kids, or, have other obligations outside your interest that would be priority. If none, then whatever percentage you are happy with allocating to coins. I think I've struggled more asking myself if coin collecting was a problem in my life while enjoying a bowl of Ramen noodles....kidding!
@jmlanzaf said:
I'm not sure what that has to do with what I said. Past performance is not indicative of future performance. The fact is that there is no floor under any collectible that lacks intrinsic value. It doesn't mean that the collectible has to slide into oblivion. It just means it could.
System player in Vegas: "I've done "X" for "Y" years and I'm still winning." Kind of like the guy who jumped off the Empire State Building and, as he passed the third floor, says "I'm still okay". Nothing goes up in price forever.
Comments
For the non-dealer types, this is a good exercise, and taking a look now and then is good way to keep ourselves in check.
For the average Joe like myself, if I was over about 10% to 12%, I might have to check myself at the door. Thankfully I could grow my collection a fair bit before I hit that kind of number.
As wealth climbs, I think the percentages can too, if that's what makes you happy. Making sure we have funded the real priorities and not counting on coins to fund our retirement is probably most prudent.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
But it is important that other people recognize that it is not generally a good way to run a business.
You may think you are giving out business 101 advice. I guess that is for the amateurs.
When you get to the real world of advanced business concepts, then we can have that discussion.
I do not need your business 101 ill advice.
How do you know how much this crap is worth?
Www.killermarbles.com
Www.suncitycoin.com
"Advanced business concepts" don't remove business 101 precepts. And, again, I'm not trying to give you business advice at all. You like to speculate on things. We know that. What did your financial guy tell you? You have a risk tolerance of 11 on a 10 scale.
Turnover is simple.
$1 million inventory. Monthly turnover at 10% gross margin results in $1.2 million in gross profit per year.
$1 million inventory. Annual turnover. You need 120% gross profit to achieve the same profit level.
Turnover is a measure of efficiency. It's not even arguable, even though you want to argue.
$100,000 inventory. Monthly turnover at 10% gross margin results in $120,000 in gross profit per year.
$1 million inventory. Annual turnover at 12% gross margin result sin $120,000 in gross profit per year.
Most people would rather have the $100,000 inventory than the million dollar inventory - especially if the market is flat or sliding. If inventory value decreases, the risks in $100,000 inventory are (obviously) one-tenth what they are on a $1 million inventory.
https://www.investopedia.com/ask/answers/051915/which-industries-tend-have-most-inventory-turnover.asp
and, to be fair:
https://bizfluent.com/info-12137774-advantages-holding-large-amount-inventory.html
I hate math.
We had this discussion a year ago.
I went all-in on building inventory as I am not a flipper.
Building a high-end reputable business is my agenda.
Your numbers are funny.
I don't know. A few months ago someone asked the more uncomfortable question of how much your collection is actually worth.
In fairness to EOC, his coin holdings must be doing a lot better than his “crypto” portfolio lately.
@jmlanzaf
"high end reputable business" does not require high inventory costs and low turnover.
I absolutely love math, but not the JM new math
People do it different ways. Some people just value the collection at what they paid. Other people are constantly trying to determine current market value. It is tricky because it is rather hard to value anything except widgets.
LOL. Depends on when you jumped in. Crypto is still up for the year, just down over the last month.
Ever hear of very thin markets? To be a player, you need high-end inventory.
Inventory and turnover are not synonyms. If you are a market maker, you can have high-end inventory and reasonable turnover (something like 4 to 6).
And, thin markets also have increased risk which is why I framed the original argument in terms of risks not profitability.
Correct. But, I am watching the crypto market this weekend looking for a buy signal at about $32,500 BITC.
Got close yesterday, didn't it?
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every coin is very liquid.
You just had to say CAC, didn't you? LOL
I think this is true, until you include price as a variable. You can easily sell any U.S. coin, but not at whatever price you want.
The same is true about stocks, if you include price as a variable. You can easily sell any U.S. Stock, but not at whatever price you want.
Totally innocent question...
By that definition isn’t everything liquid except perhaps cryptos which are electronic tokens with no guarantee of being able to exchange them for anything in return?
I am selling of the majority of my collection to pay down the last of my minimal mortgage debt.
Mostly sports cards.
I have real estate income, some business income, and expect a couple of other income streams next year.
Cash will have its day again in due course.
Less than 5%
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
What percent is a positive asset value in an overall negative net worth😁
Actually, I would include cryptos.
Liquidity is determined by the presence of a market. Cryptos have a market.
Most collectibles are illiquid because there isn't a fully developed market. Take art, for example. You have a Picasso print, there is no posted bid/ask spread for it. You can sell it, but not instantaneously with a phone call.
U.S. coins can be sold with a phone call. Most of them. There are posted bids for virtually every U.S. coin save those ultra rarities and some of the esoteric material. There are market makers in most segments, including errors. So they do have a high degree of liquidity.
But that isn't the same as a price guarantee. If the market were to skid, the bids would drop quickly. Silver and gold coins have a floor, of course, at bullion value. Error coins and "key date" coins have no real floor.
N/A LOL.
This is a whole other discussion.
Please link to thread... would be educational.
You have been dropping hints over the months of problems finding errors and going into a different niche.
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
"Error coins and "key date" coins have no real floor."
........
During the last downturn, I specifically asked Fred how error coins do in a down market.
His answer was, substantially better than the market.
In my experience through one downturn, Fred was correct. He speaks from experience. I will trust him over someone who knows nothing about the error coin market.
Beanie Babies, DVDs and VHS tapes is where it's at!
Looking for Top Pop Mercury Dime Varieties & High Grade Mercury Dime Toners.
I think that discussion was pretty much a repeat of the one we currently just had.
Executive Summary:
Joe suggests minimizing inventory and maximizing turnover to limit risk and increase profit margins.
EOC believes in growing inventory and holding coins to maximize profits.
Joe says Business 101 supports his position on a risk-adjusted basis.
EOC says Business 101 doesn't apply to his particular market niche.
EOC says Joe's an idiot with bad advice.
Joe says EOC can do whatever he wants.
Quoting to get your post back on topic.
Many of the long time folks and dealers here have borrowed money or used credit lines for coins. Perhaps over or near net worth. Your non borrowing plan seems to be working. Need to be confident of supply. Can always stop buying. Keep enough cash for business and personal surprises.
Have fun!
My 1866 Philly Mint Set
Why are you referring to yourself in the 3rd person? That’s weird.
I'm not sure what that has to do with what I said. Past performance is not indicative of future performance. The fact is that there is no floor under any collectible that lacks intrinsic value. It doesn't mean that the collectible has to slide into oblivion. It just means it could.
What's a Picasso worth during World War III or the Zombie Apocalypse?
LOL. Simple narrative device. Perhaps it supports EOC's position that Joe's an idiot.
A dedicated serious collector to vest pocket to dealer thread would be helpful.
What I have learned from some on this forum over time.
From EOC... reinvested for years before jumping in
From Cougar... turnover and cash flow
From jmlanz... Cash is king
From MFeld... grading and education
I am looking into PM's, scrap jewelry, paper.
Five years until a PM/B&M/online collectibles business in a paid for building and substantial cash position.
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
Add: Keep the very best and sell the rest.
Actually, my position was essentially the same as Cougar. And I andi agree with @Mfeld
Turnover is a tricky word.
Education and Grading are essential.
Cash flow is a must.
Cash is KING.
Business 101 ...
@ErrorsOnCoins Love that movie!! There is a a lot truth there!!! LOL
“I may not believe in myself but I believe in what I’m doing” ~Jimmy Page~
My Full Walker Registry Set (1916-1947)
https://www.ngccoin.com/registry/competitive-sets/16292/
I hit the bar and this thread turns into a shit fest meanwhile my tab approaches .05% of my net worth
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
My wife keeps saying I'm worthless so I guess coins get 100% - LOL!
"When they can't find anything wrong with you, they create it!"
True
There is a big difference between someone worth $10MM with a $5MM collection versus being worth $100K with a $50K collection.
You can almost always find someone who thinks "it's different this time".
The first might have better cash flow and access to capital, but both are way overextended in numismatic holdings and risk losing their shirts.
fack cac, lets keep the cac garbage out of at least one thread. Thanks!
The whole worlds off its rocker, buy Gold™.
Not sure if it really matters as a collector unless you're married, or have kids, or, have other obligations outside your interest that would be priority. If none, then whatever percentage you are happy with allocating to coins. I think I've struggled more asking myself if coin collecting was a problem in my life while enjoying a bowl of Ramen noodles....kidding!
System player in Vegas: "I've done "X" for "Y" years and I'm still winning." Kind of like the guy who jumped off the Empire State Building and, as he passed the third floor, says "I'm still okay". Nothing goes up in price forever.