Collecting the Good Stuff

Collecting the Good Stuff – Business of Doing Business – The Journal of Antiques and Collectibles – January 2006
By Ed Welch
I write a lot about dealing in antiques. For the next two months, I will concentrate on the collector. The next two articles are not intended for the collector/dealer. Collector/dealers occupy a gray area that is neither dealer nor collector. They attempt to serve two masters, generally failing both.
One of the things that I find fascinating about the antique trade is the fact that collecting antiques can bring wealth and riches to the common work-a-day man or woman.
Today’s antique trade is to the middle class of American society what the stock market is to the wealthy and powerful. I am, of course, well aware that working class Americans do invest in the stock market. However, they do so at a disadvantage.
The odds of making serious money in the stock market are stacked in favor of the corporate traders and the “big boys.” You know that, and I know that. The New York Stock Exchange trades millions of shares worth billions of dollars every week. The average work-a-day investor with ten or twenty thousand dollars to invest has about as much impact on the stock market as a bug does on your automobile when you hit it at 65 miles per hour.
Scientifically, it may be possible to prove that the bug did in fact impede the forward progress of your automobile. However, for the car and driver, any impediment caused by the impact of the car and bug is negligible; on the other hand, for the bug, its impact with your car did make a big difference. Those of you who know me personally are well aware that I enjoy comparing the antique trade to the stock market. Both can make you rich; both can take your money. In the stock market, you must possess a certain amount of money and experience in order to play the game.
The same is true in the antique trade. However, because the value of antiques increases (and sometimes decreases) at a slower pace, the antique collecting game can be played effectively by a less experienced individual. It can be played effectively with less money invested. It can be played effectively with less attention paid to day-to-day fluctuations in price.
You can make thousands, even hundreds of thousands of dollars, collecting antiques. In order to do so, you need not be wealthy, but you must teach yourself about the antiques that you are collecting. As this article continues, I will explain how you can make big money collecting antiques. I will begin by explaining the difference between an antique collector and an antique dealer.
I am fully aware that many antique dealers are also antique collectors. However, to be successful at either or both of these pursuits, the one must be kept separate from the other.
This does not mean that a collector cannot deal in an item he or she collects, but, because different buying principles apply to merchandise for stock and to an item to be added to a collection, the buyer must at the time of purchase make the decision about whether this purchase will be collected for long term gain or sold for short term profit. Most collector/dealers fail to understand the above principle and do poorly as dealers and as collectors.
Antique dealers are individuals who derive all or part of their income from buying and selling antiques. They depend on a rapid turnover of merchandise and work on a relatively small profit margin of 30 to 300 percent.
Successful dealers must spend a lot of time studying the antique trade and the types of antiques in which they deal. They must know the market value of the antiques they carry and must constantly be on the lookout for trends that will affect the price or desirability of their merchandise.
If demands for the kinds of antiques they carry soften, they must adjust their buying habits and sell off, or dump, a part of their inventory. If they notice an item suddenly becoming “hot,” they must research that item and decide whether or not to buy in while the prices are still low.
Successful dealers subscribe to most all trade publications. They read the articles. They buy books about the kinds of antiques they carry. They pay attention to the prices that other dealers charge for the same type of antiques. They attend auctions and shows to keep up with changing price trends. A dealer who is successful in today’s antique marketplace is and must be hard working and knowledgeable.
By contrast, antique collectors need not pay attention to short term market fluctuations. Collectors are seeking long-term gain on their investment.
Keeping an antique for a long period of time gives to the collector advantages that no dealer can enjoy. A dealer must be very conscious of the price paid for any purchase. If a dealer pays too much for an item, he or she will have a hard time selling that item. Dealers cannot afford to have their working capital tied up in overpriced merchandise. A few bad buying decisions can put a dealer out of business. Collectors, on the other hand, can and often should disregard the price they pay to acquire a fine antique.
Collectors! Please reread the last sentence and carefully read this paragraph. If you only remember one bit of information from reading this article, I want that bit of information to be that you need not be intimidated by the selling price on any item that you intend to purchase and add to your collection. The price you pay today will represent a small percentage of the selling price in years to come.
In 1968, I purchased an item of furniture for the then outrageous price of $880. My fellow antique dealers joked and poked fun at me because I had bought an item that was, in their opinion, priced at three times its value. I paid the then outrageous price because this item was the best example of its kind I had ever seen and I intended to keep it for many years. Today, the very same dealers who poked fun at me for overpaying would gladly pay thousands and thousands of dollars to buy it. One truism that has always remained unchanged for as long as I have been active in the antique trade is that the “BEST” examples of any type of antique are always priced high. If you want the best, you must pay for it. This fact is a disadvantage to antique dealers who cannot overpay for every item in their stock. This same fact is and should be an advantage to collectors. Collectors should buy only the best examples of whatever it is they are collecting.
Folks, let’s stop right here and consider those of you who wish to own truly fine antiques, but do not have the desire or the time to gain the knowledge necessary to make sound buying decisions. If you do not yourself possess the necessary knowledge, then you must rely on the honesty and integrity of the dealers with whom you do business.
Fortunately, the vast majority of antique dealers are honest business people and are not out to cheat anyone. Still, as with any group of individuals, some dealers are better at what they do and are more knowledgeable than others. If you must depend on the judgment of others as you acquire your collection of fine antiques, you owe it to yourself to be certain that you are dealing with someone who knows what he or she is doing. It would be best for you to deal only with well know, long established dealers who guarantee in writing the authenticity of the antiques they sell.
Perhaps it is easier to understand the importance of dealing only with knowledgeable antique dealers if you associate buying antiques with buying stocks and bonds. If you know enough to make your own buying decisions, you can save money by utilizing the services of a discount broker. However, if you lack the knowledge to buy and sell stocks; i.e. play the stock market, you owe it to yourself to use the services of the best full service stock broker that you can find.
The value of your collection will depend on the knowledge you acquire. The more you learn about the item you collect, the more valuable your collection will become.
Next Month: How to buy the good stuff.

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