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A Collectible Market’s Evolution, Pt.4
by LARRY MEINERS
Phase 4 (2004-present)
The most powerful price appreciation the
vintage electric guitar market has seen
during the last 20 years is occurring during
Phase 4 (2004-present). Some rates
of appreciation have doubled those seen
in the last cycle for the best models in
excellent, original condition. With prices
ranging from $20,000 to $500,000 for the
best golden-era electric guitars, wealthy
individuals have become the primary buying
group in the market. Since most of
the world’s wealth is held by relatively
few people, a small amount of investment
funds funneled into old guitars can raise
prices significantly. Relatively few excellent
examples of key models exist, and a small
number seem to be available in the market
at any given time. Strong demand coupled
with a relatively small and fixed supply of
instruments has driven values into a price
range that only buyers with large sums of
discretionary funds can participate in.
Certainly, external financial factors have
exerted influence upon the vintage guitar
market. Extremely inexpensive money and
credit existed for the last half-dozen years
along with a wide availability of credit.
With the low cost of funds, some investors
looking for higher yields found smart
investments in the classic vintage guitar
market, based on historical returns. In this
environment, many dealers simply pay
more if they “must” to acquire a fine piece
and ask “more” than they paid. As long as
the market players pay higher prices, like
Steven Tyler from Aerosmith once sang,
“train kept-a-rolling,” and it has been the
operative theme since.
So, unlike stocks, the collectible guitar
market seems to act differently with
fewer “corrections” or “bear” periods. The
guitar market tasted a bit of “loss” with
Stratmania in the late 1980s. Recently,
it seems Les Paul Juniors and sunburst
Stratocasters (mid-to-late 1960s) have
moderated in price. The market may have
played a bit of Stratmania II over the last
twelve months. These models experienced
very high price increases during
the last three years, due to their fairly
low entry price that easily moved into
the five-figure range for the best early
models. Subsequently, due to the relatively
high number of units made (versus
golden-era classics like Les Paul Standards
and slab-board Strats), many owners
brought them to market to capture what
they viewed as high prices.
The Internet and new entrants to the market
are a few important factors in this market’s
evolution. The Internet, including eBay,
made market pricing more visible over
the globe. New buyers have entered the
market during this phase, with speculation
as a primary motive. Also, five-to-six figure
prices for fine guitars limit many aspiring
vintage guitar dealers’ market opportunities
while creating business for those positioned
to capitalize on these conditions.
Some international collectors and dealers
became reluctant sellers as demand in the
USA has been the strongest region so far
during this phase. Vintage guitars which
left these shores years ago were repatriated.
The Japanese were the strongest
international buyers in the 1980s and 1990s
– however, on average they began to buy
lower-priced models and sell some classic
instruments bought years earlier.
Another result born of higher prices is the
forgiving attitude of some buyers toward
refinished, repaired and changed parts
guitars. More than a few guitars exist with
parts, necks and finishes that weren’t part
of the instrument when it was produced
– some instruments were described as
100% original.
No one has a crystal ball to predict the
future prices of vintage guitars. This column
has discussed the markets, babyboomers
and some of the elements that
drive the market numerous times. What
happens tomorrow or next decade is
anybody’s guess. Many years have passed
since the last deep recession and old guitars
were much less expensive. How this
market will react during the next recession
is unknown. Since high net-worth individuals
are the prime buyers of classic guitars
today, it is possible that buying power
may not erode significantly. Maybe original
owners that are not wealthy will sell their
guitars, but my guess is that there are
relatively few original owners of golden-era
electric guitars left. Many purchases in the
future will come from collections.
Markets being markets, they are mostly
ruled by supply and demand. Therefore,
one must assume the possibility exists
that there are other directions for prices
besides “up” in the future.
Larry Meiners
Larry Meiners writes this column for Premier Guitar
and is the author of the Gibson Flying “V” and Gibson
Shipment Totals books as well as the audio CD book for
instrument collectors, Live! At The Guitar Show.
For more information please visit: www.flyingvintage.com
Email Larry at: flyingvintage@aol.com
Flying Vintage and The Serious Guitar Collector are trade
names of Larry Meiners. All content herein may not be
reproduced or copied whatsoever without written permission
of Larry Meiners. Copyright ©2007 Larry Meiners
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