"The losses were more on the buy side than the sale side"--what does this mean?

Longacre · May 3, 2009 3:09AM

In another thread, someone wrote about how much of a bloodbath the Central States auctions were. As is typical, the boo-birds came out in force, and took cheap shots at the coin dealers. However, an excessively prominent board member here who is a voice of reason and who I have great respect for, made the following statement:

"The losses were more on the buy side than the sale side."

I am not sure what this means. Can someone please explain?

boiler78 · May 3, 2009 3:12AM

I take it to mean the consignor paid too much when he purchased the coins. Happens to me all the time!

STONE · May 3, 2009 3:21AM

I take it to mean, that if you had the money and didn't bid on what coin(s) you wanted for your set, you probably lost a great buying opportunity.

fc · May 3, 2009 3:26AM

<< <i>In another thread, someone wrote about how much of a bloodbath the Central States auctions were. As is typical, the boo-birds came out in force, and took cheap shots at the coin dealers. However, an excessively prominent board member here who is a voice of reason and who I have great respect for, made the following statement:

"The losses were more on the buy side than the sale side."

I am not sure what this means. Can someone please explain? >>

you paid too much back then and the coin was never worth it to begin with.

speety · May 3, 2009 3:44AM

What they said. Someone way overpaid for the coin and when the coin was sold later, it a fair price. However, a 'fair' price is lower than what the consignor paid before. AKA, the coin didn't sell that cheap the second time in the current market and thus, a weak sale price is not where the consignor 'lost money'.

pennyannie · May 3, 2009 3:54AM

This is just the start of what is going to follow. I am not a BOO BIRD, i look foreward to buying coins agin at realistic prices. I have never seen what i call a realistic price but hopefully....

Actually i think that most coins priced over 25k are the ones that will take the bath. A 500 dollar coin can only fall so far.

LindeDad · May 3, 2009 3:54AM

And maybe there was a case of registry madness at work when buying the coins. Sometimes TOP POP coins sell for inflated prices when two or more persons are fighting for the top slot.
At least that is what I think he ment.

tradedollarnut · May 3, 2009 4:01AM

Yup. You can't completely throw reality out the window when buying coins and not expect to lose your shirt when selling. It's one thing to pay a 25% premium over the norm to buy a high end specimen for the grade (been there, done that), it's quite another to pay $400k at auction for a coin that went unsold in dealer inventory at under $100k.

And - with regards to lesser quality for the grade coins - sometimes cheap ain't cheap enough!

TwoSides2aCoin · May 3, 2009 4:25AM

I was always of the understanding that an auction produced winners, not losers.

LindeDad · May 3, 2009 4:28AM

<< <i> was always of the understanding that an auction produced winners, not losers. >>

It does the Auction House.

roadrunner · May 3, 2009 6:15AM

Buy side or sale side is a hard thing to quantify. One could have bought many decent coins in the 1995-2007 period that would have been considered "good" buys at the time and been within 0-10% of current wholesale levels. In 2009, many of those "good" buys have suffered hits to reverse gradeflation, changing tastes, or just plain lack of liquidty/money/credit. To expect every buyer to somehow find the top 1 or 2 coins out of 20 that qualifies for top 5-10% is a lofty goal. Few ever really do it. Some dealers even claim to mainly sell such material (an even loftier goal if you know what I mean). If all this were true, then 90% of the coins on the market would just sit and never trade hands with everyone being so smart. Had Mr. Thomas sold those same coins in July of 2008 there would be no buy or sale side argument. There will never be enough coins in holders that meet the criteria to qualify for "sale side" hits rather than a combination of both. Maybe another way of putting it is that 90% of people that collect/invest in coins will lose money at it.

I think the coin auction market is comparable to the stock market. There are typically more losers than winners. And that has to be the case because the house is always their to take its cut and pay expenses.

Actually I think that most coins priced over 25k are the ones that will take the bath. A 500 dollar coin can only fall so far.

If you participated in the downturns of 1980-1982, 1990-1997 you would know that many coins priced under $500 took huge hits. In many cases falling to 20% or less of their previous value. I'd say it's more likely for a $500 coin to more closely approach zero than it is a $25K coin. The coin that got to $25K had to have something special to get it there (rarity, condition or both). The 1989 bull market lifted the price of many fairly common 20th century coins to lofty levels (from $50-$100 to $500). And when it was over they crashed because they were still common. Good examples would be semi-common date MS66 merc dimes in the 1940's. That comes to mind since some of the D mints went from $250 down to $50 coins in the post-1990 fall out. Columbian halves in 63-64 were a good example of many commens in that price range that collapsed. In many cases these newly made $500 coins were so common that as soon as weakness appeared in the market their prices collapsed to base collector levels.

But in the end, the 1990-1996 market fall out took both $500 and $25,000 coins and trounced them. It was not unusual for a $20,000 coin to have fallen to $7,000 or less. The same is true of a $500 coin falling to $150 or less.

roadrunner

rld14 · May 3, 2009 11:19AM

Well,

All bubbles do tend to burst. When you bring up the events of 1989, remember that those $500 MS65 Morgans were $100 coins a short time before that, it's not like they slowly worked their way up to those price levels.

There's a saying that closely relates to this that we use in the car business "You make your money when you buy" and that's really the truth. I know that I can sell Car Y for $X. If I buy 2 at the auction and one is $12,100 and the other is $10,700, they are both worth the same money retail, one will just make me $1,400 more, everything else being equal.

First, what TDN said was dead spot-on. I attend auctions once or twice a week to buy cars, and it's really not that different than coin and stamp auctions that I have attended. On Friday I watched two nitwits bid an 07 Camry LE with 40k on it past $15,000. For reference, that's about what I pay for 09s with half the miles. Does it take a genius to keep bidding? Nope, IMO, it takes wisdom to put your hand down. I get outbid on auction lots all the time, be it Cars, coins, stamps, what have you. Now, if you have the money, and if you just HAVE to have something, and if there's one other bidder out there who HAS to have it, you can pay stupid $$ but I can't imagine that the consignor didn't see this coming, clearly he or she had to realize that they paid a fortune to obtain these items and that they might not have high liquidity at these purchase prices. My assumption is that said purchaser bought said coins in competition with another collector with huge pockets and now the other collector has little competition for said lots and is gobbling them up with glee.

And another thing that come up today at the Parsippany show was that an awful lot of material was released all at once and perhaps it was more than the market could easily absorb at this juncture in time.

Just my rambling thoughts..

Fairlaneman · May 3, 2009 11:42AM

"Yup. You can't completely throw reality out the window when buying coins and not expect to lose your shirt when selling. It's one thing to pay a 25% premium over the norm to buy a high end specimen for the grade (been there, done that), it's quite another to pay $400k at auction for a coin that went unsold in dealer inventory at under $100k."

But,but,but that is not what a bunch of folks say on this board. Are some of them coming back to reality and missing part of their posterior?

Ken

"The losses were more on the buy side than the sale side"--what does this mean?

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&quot;The losses were more on the buy side than the sale side&quot;--what does this mean?

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"The losses were more on the buy side than the sale side"--what does this mean?