Guitars as True Investments

[Zaphod B]

Is there any future in it, I wonder?

When I look at the current prices of guitars that were pedestrian, standard production guitars back in the late '50s and early '60's, I know that there have to be some guitars being manufactured today that will appreciate, if for no other reason than attrition.

Let's say I had some money to play with. Which of today's guitars are tomorrow's gold mines? The 2007 chambered LP Standards? Run-of-the-mill American-made Strats and Teles? Or perhaps some of the more upscale models - PRS 10-tops, boutique guitars?

Whaddaya think?

[muttley600]

Obviously I know the answer to that, but if I told.....








































I'd have to kill you

[Zaphod B]

Hey, that's my line!

[Zaphod B]

It's kind of like the collector car conundrum.

You could buy a car that's a limited edition, for example a 2007 Ford Mustang Shelby GT500 convertible, and put it in environmentally controlled storage and never drive it or even remove the plastic from the interior surfaces, and in 30 years you could likely get 50 times its purchase value. But all that time you have to pay to maintain it in that environment, and your profit spread out over all those years isn't all that much.

Still, there is profit to be made if you live long enough.

With cars there are some pretty safe bets - convertible muscle cars that survive the years intact always bring good return.

Which guitars, though?

[muttley600]

Originally Posted by Zaphod B

Hey, that's my line!

Most sorry Mr Bond

[muttley600]

In truth if you want to try and predict what guitars are going to increase in value your gonna be hard pushed. The better way to look at it is to start from a point of view of which guitar is likely to hold its value. From that anything over and above is gravy. There really is no way to predict trends for the future. A lot of the so called investment guitars of yester year have had false values put on them by collectors/traders. A gullible public allows them to get away with it.

If I really wanted to know for investment purposes, which I don't there are safer places for my money, I'd look to find out what the large well known independent single outlet shops are selling and buying. There finger is nearly always on the pulse.

[Zaphod B]

If the past is any indication, then it would be medium- to medium-high spec guitars from major manufacturers, made in America. That way the entry price is not too high, there are enough made for them to acquire some history and desirability over time, and not so expensive that they need to appreciate like crazy to at least hold their value considering inflation.

Like you, I think there are better ways to invest.

[pohaku]

Some of that investment value is quite whimsical. A hot band or player can drive up the price of certain instruments for a while, but then when their popularity begins to fade, prices may deflate -- for example the Gretsch 6120 shot up in price when the Stray Cats were a hot group. As rockabilly and the Cats faded, the price on 6120s dropped as well. Vintage ukes shot up in price, at least in part, due to George Harrison publicly playing them. Prices for some models have since settled back down. Then there is the question of what happens when the baby boomers with lots of disposable income and who have boght many of the vintage instruments get older and then unload their collections/investments? Will there be a glut on the market, and falling prices, as lots of boomer instruments hit the market at about the same time?

I think buying an instrument for its collectible value is fine -- its a crap shoot however. While I do buy instruments that typically have some current collectible value, I only buy instruments that I can play and that actually do sound good. At least for me, playing a good instrument comes first. Future value is certainly a consideration, but not that much of one. In any event, a nice guitar is a lot more entertaining than a zero coupon bond.

[Zaphod B]

Originally Posted by pohaku

In any event, a nice guitar is a lot more entertaining than a zero coupon bond.

Indeed!

[Zaphod B]

The reason old Strats, Teles, and LPs can command so much money is that they were being played during the seminal days of rock and roll and are still being used today by rock and rollers. In fact, they have become the benchmarks against which many, many other guitars are judged. (Not necessarily the best, nor the worst, but they set the bar as no other electric guitars do.) So there is a direct link to the past.

I wonder if those models will have that staying power after another 40 years?

[jfrog]

jfrog's investment advice:

Investments: Stocks, Real Estate

Things to buy for fun: Guitars.

[Zaphod B]

I guess it will be up to my kids to see what my guitars are worth. I've learned my lesson about selling guitars. I always regret it eventually.

[pohaku]

Originally Posted by jfrog

jfrog's investment advice:

Investments: Stocks, Real Estate

Things to buy for fun: Guitars.

+1!!!!

That's prudent advice.

[pohaku]

Originally Posted by Zaphod B

I guess it will be up to my kids to see what my guitars are worth. I've learned my lesson about selling guitars. I always regret it eventually.

I agree. That's why I never sell mine.

[lpdeluxe]

I bought a 1963 Gretsch Chet Atkins Country Gentleman, all original with case, in 1982 for $425. In the '90s it was worth around $5K. By the time I sold it the value had dropped to $3K (I still made a profit).

Why? I think it's because the guys who collect guitars are after something from their youth, that they couldn't afford then. By the time I sold the Country Gent, everybody who wanted one pretty much had one, and the younger guys weren't interested. They were looking for something from THEIR past.

A friend has a restored '57 Chevrolet Bel Air convertible. At one time it was worth around $90K. Now it's maybe half that.

Why? The guys that wanted one either have one, or they are dead. It's a fact of life.

In other words, what's hot now, won't be hot in the future, except to hardcore collectors, and it'll be a buyer's market -- just as it was in 1982, when it was difficult to GIVE a Chet Atkins away.

Trying to hit the jackpot by outsmarting the market means you've got to be prepared to invest in a lot of stuff that'll never be worth what you paid for it.

So maybe you ought to buy superstrats from the '80s for all the kids who will be making big bucks in 2030.

Or, just maybe, you should do what I did, and buy a guitar you like, play it for a long time, and then pass it on to the next guy. Hopefully you won't lose money.

[Zaphod B]

Good points, lpdeluxe.

[Milnoque]

For what it's worth,

Guitars outperform the stock market and have done so for quite some time. Overall they have been a good long term investment since the early seventies.

People including vintage guitar dealers have been saying the bubble was going to burst for most of that time. It will probably happen, but when it does the instruments you have invested in will still have grown in value.

LPDeluxe hit the nail on the head when he talked about people buying what they lusted after when they were young.

The only strategy that makes any sense to me is to buy what appeals to you. If it appeals to you there's a kid out there who wishes he had one too. In the meantime you got to play it.

I would point out that '70s vintage Gibsons and Fenders command high prices and the '70s were not banner years for either company.

I'm thinking that special Ibanez and Eastwood instruments have potential. Europeans and Asians are having a greater effect on the market than they used to and they are less loyal to American products than in the past.

You might also look to American companies like Rickenbacker that have lower production numbers. Steer clear of models that were designed to be collectors guitars.

2 cents

[Zaphod B]

I should probably be buying warehouses full of Dean Warlocks for all the 12-year-old death metal kids, for when they turn 35.

[lpdeluxe]

More good points, Milnoque.

It affirms my own contention that it's quite a crapshoot. I wouldn't be surprised if there aren't quite a few people out there who are stockpiling what they think will be big 20-30 years from now.

But I'll also bet that the ones making the money off the 1940 Martin D28s and the rest right now, made it the old-fashioned way by seeking out sellers who didn't know what they were worth, or by trading with collectors for something they wanted. That strategy has the advantage that you don't have to predict the future, you just have to out-deal the competition.

But the idea of buying THE GUITAR now for profit later is a lot riskier. To spread the risk, you've got to put out some capital so the hits pay for the misses.

As far as a bubble: well, who knows, after all. Look at the current housing market, which is based on a commodity a hell of a lot more people want than some old guitar.

Nonetheless, I'm hoping my Les Paul Deluxe (from the Norlin days, NOT a collectible among the knowledgeable, even though it sounds and plays killer) makes a buck for my kids down the road.

Meanwhile, I bought it to play, so I'll play it.

[Zaphod B]

Originally Posted by lpdeluxe

Nonetheless, I'm hoping my Les Paul Deluxe (from the Norlin days, NOT a collectible among the knowledgeable, even though it sounds and plays killer) makes a buck for my kids down the road.

Meanwhile, I bought it to play, so I'll play it.

Tell me about your LP Deluxe. I have a Norlin-era 197?? LP Deluxe (I think that's what they called it) that is a reissue of a LP Special - Solid mahogany body, flat and uncarved, unbound body, bound neck, originally with two P-90s, with two volume and tone controls. I replaced the bridge P-90 with a DiMarzio SD years ago.

Anyhow, is that what yours is like, or is it more like a standard LP?

[lpdeluxe]

Mine is pictured in my avatar (pretty poor resolution, LOL).

It's a conventional mahogany/maple cap Les Paul, with a mahogany 3-piece neck and body binding. It's finished in gold on the top and natural on the sides and back and neck, which was the original LP finish.

It's from the era when Norlin was reissuing the Les Paul, but they couldn't figure out which version to market. The early reissues had P90 pickups, and right away the dealers told them that the humbucking versions were what Eric Clapton and Peter Green were playing, so Norlin was stuck with a lot of LPs that had already been routed for the small single-coils.

Along came some bright guy who noticed that the Epiphone (which Gibson had bought, lock, stock and barrel in the late 50s) mini-humbucker fit right into the rout for the P90.

Thus was born the Deluxe, a pretty much ordinary LP with mini-humbuckers instead of the full sized ones on the Standard, Custom and so on.

The sound is brighter than the full-size pickup models. In fact, I was never a fan of LPs until a friend bought this one in 1984. I played it and fell in love. Thirteen years later (!) he decided to sell it, so I got it in 1997.

The bridge pickup was dead, and I replaced both with Seymour Duncan SM-1 minis. They retain the sound of the stock ones, which was what I was after.

Other than that, everything is original. As I've noted, it's a boat anchor, but it sounds so sweet I can't give it up. It became my main gigging guitar (taking over from the Chet Atkins I talked about earlier) and is now my one and only electric, after a motley collection of Ric, Strat, Country Gent and too many pawn shop prizes to count.

At the moment, though, it resides in its case most of the time, since I'm currently playing bass in a working band.

I'd love to attach a pic, but I don't have one small enough -- other than the avatar. Let's see yours.

[Zaphod B]

That sounds like a very nice guitar, lpdeluxe.

I posted some pictures of mine a while back......lemme see...

Here they are. I plan on replacing the Schaller bridge with something more like the original (which I never had - it came with another aftermarket thing on it...)

http://homerecording.com/bbs/showthread.php?t=221338

[lpdeluxe]

Pm me with your email address and I'll send a better pic.

[Zaphod B]

Done.

Shall I post it here?

[starbuck26]

In my real job I work as a rare book dealer. People coming in trying to sell books all the time. Some of them are over 150 years old, in good condition. Know what? 99% of them ain't worth shit!

I don't know how the price structure of guitars works... but I expect if you check auction records, which is free information and open to the public (if you can find the shit, that is) you will find that most guitars that are not handmade in limited editions will be worth less and less over time, as their condition will invariably worsen, and there will be less and less ability to tell how many of those guitars were made.

Limited edition, handmade guitars will most likely become rare on the market, and their price may increase slowly in increments over time as they are sold, and sold, and sold again. I'm talking dealer to client prices, not regular joe selling regular bill his old guitar.

Really, though, you don't even want a single copy of the guitar you have to be on the market, as then you can set your price. Of course, in the guitar world, that's difficult. Basically what I'm saying is, you want a unique item that collectors will want. For example. Get some smelling salts and wake up the dead Nick Drake and have him play it for a while. Not possible?

Just become famous and play sold out shows in Madison Square Garden and incite modern hipsters to riot. Most of those hipsters will become alcoholic loafers, but a good deal of them will stop dying the hair, cut their fingernails, and get good respectable jobs with disposable incomes. They'll want to prove they're your biggest fan by buying your signed/limited les paul custom with your blood on the fretboard from when you ripped your fingernail off on your "odernized" cover of "incense and peppermints."

If that doesn't work you can always buy one of Clapton's guitars. He seems to be selling them at a pretty good clip. As long as you don't touch it, it will probably continue to increase in value.

Until, that is, the world realizes that Eric Clapton is an asshole.

But for real, the rules in the rare book world are as follows:

Is the book uniqe? if yes—CONDITION CONDITION CONDITION.



so yeah.