Knife Collecting as an Investment

martentrapper

Active Member
Recently got in to collecting. With the economy at a low, must be a good time to buy.
Interested in others thoughts and ideas in what to purchase, what to look for, etc. High end (Randalls, etc.), new makers, who's destined to be famous in the knife world?
Have some ideas on a direction, but I'm new at this. Looking at a 10 year or longer time frame.
Thinking of using knives as another source of investing for the future.
MT
 

Mike Carter

Well-Known Member
A lot of people will tell you that knives are not a good investment tool but I have seen several do very well with them.

The cream of the crop in custom knives are the old school Moran, Scagel, Loveless, Bo Randall, Warenski. More recent would be Bose, Fisk, Ruana, Hibben, Ted Dowell, Stan Wilson, Gray Taylor and many others.

The problem is that most of these are already selling at premium prices so they are not likely to appreciate that much. It is a buyers market right now so deals can be found. When money gets tight collectables are often sold at bargain prices to raise quick cash.

Everybody would like to be able to read the crystal ball and tell who is going to be the next hot collectable maker. Some people come right out of the box doing outstanding work and getting good prices for it (Ron Best is a good example). There are a LOT of excellent newcomers out there. Will they stick with it? Will they be among the collectable names in the future? Who knows?

I hope that someday my name will be among the top but I also know that there are a lot of great knifemakers who have the same dream. If I develope a unique enough style and do top notch work, maybe. If the right people happen to take a liking to my work, maybe. If I get the exposure needed, maybe.

Most of the biggest names have put a lifetime of work into their craft. I didn't start until I was 49. I have had excellent teachers and I benefit from modern technology so I am on the fast track compared to a lot of makers from the past.

If you want the top end expensive stuff look at shows like the Art Knife Invitational, Knifemakers Guild Show or the Solvang Custom Knife Show and see who is selling what and for how much. For a melting pot of everything including the newcomers take in the Blade Show or any of a dozen other bigger knife shows. Also watch the better known custom knife dealers to see who and what is selling.

It's always a guessing game who and what will get hot and how long it will stay hot. Nessmuk knives first appeared in the 1800s. A few years ago they became very popular, everybody started making them, and they cooled off.

Antique Bowies, daggers and toothpicks seem to always be collectable and valuable but like any antique, you need to be able to tell the real thing from the fakes. Good luck.
 

Kevin Jones

Well-Known Member
Investing in custom knives is no different then investing in anything else. Success is determined by one's experience, effort and education on the investment instrument. The 3 "E"s of successful investing, I like to call it.

The collectors I know who maintain a positive ROI from their collections buy the 'right knives' from the 'right makers' enjoy them for 2-5 years then resell them at a profit. Often a handsome profit.

What is the 'right knife'?
Usually, a time proven classic design that stands out among the others (for a number of reasons) today and will most likely do so in 2-5 years.

Who is the 'right maker'?
Usually, a maker who not only makes well designed and well executed knives, but relentlessly promotes himself and his knives and knows how to run his business thus achieving a favorable and sustainable position in the market.

I don't recommend collectors try to pick the next Bob Loveless as that strategy is very risky at best in today's market.
 
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The Tourist

Guest
I'm about to find out--my personal collection is up for sale.

The conventional wisdom is that many items never lose money, even in The Great Depression. Those items were gold coins, women's cosmetics, firearms (and I would imagine knives in that category) and sometimes real estate and liquor. I've heard going to the movies has joined that list, but I do not know of any data.

The real problem was learned in the 1970s. It's called 'pent up demand.' I could have owned a liquor store next to a gunshop set upon prime land near an easily accessible highway, but if my targeted clients were all broke my investment did no good.

And like in any other scenario, if you cannot make more money, then you cut costs. For a while, that's my strategy.
 
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Larry B.

Guest
All sounds nice except for one main issue. I have learned in my 15 yrs or so of collecting and selling knives that certain people and certain people only have access to the investment knives and can turn a profit in a short while with them. I think we all know who some of these people are, at least I do.

Anyway I buy and sell customs because I love the hobby and I am not in it to make money. I appreciate the craftsmanship that goes into a custom knife and I am always looking for that perfect EDC.

I have gotten lucky and made some money selling. Example. I bought a few Ken Onion speed safes when he first stated to make them.

When it comes to buying an dealing knives for a profit, all I can say is buyer beware.
 

Kevin Jones

Well-Known Member
All sounds nice except for one main issue. I have learned in my 15 yrs or so of collecting and selling knives that certain people and certain people only have access to the investment knives and can turn a profit in a short while with them. I think we all know who some of these people are, at least I do.

Anyway I buy and sell customs because I love the hobby and I am not in it to make money. I appreciate the craftsmanship that goes into a custom knife and I am always looking for that perfect EDC.

I have gotten lucky and made some money selling. Example. I bought a few Ken Onion speed safes when he first stated to make them.

When it comes to buying an dealing knives for a profit, all I can say is buyer beware.
I agree.
And, I don't suggust buying knives for investment as there are better investments out there.

I'm just saying if a collector has the desire and studies the makers, knives and the market they can make a consistent and respectable ROI while doing something they enjoy.
 
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mwalx30123

Guest
If you enjoy knife collecting then do it, but there are other avenues of investing that are better options for future pay out.

Knives can loose value for a few different reasons. One intangible is the maker. If he gets hot his knives my apprciate in value quickly and then adjust as demand cools. A maker can ruin his reputation, which has happened on more than one occassion, and the value of his knives will drop.
 

martentrapper

Active Member
This is getting interesting.
The statement, "There are better forms of investing" I am sure is completely true. However, one of the rules of investing is diversity. I see knives as an area that holds promise. For the most part, I see knives that increase in value as a "tax free" investment.
I have a plan and a certain amount of money to spend each year. I plan to spend that amount each year for the next 10 years, maybe longer. Maybe not that long. However, as our economy recovers (if it recovers) the value of collectible items is likely to grow.

The question is not, "are knives a good investment"? I think the question is, "which knives are a good investment"?
One idea I had was to invest in knives of known makers who's age would make them likely to pass on in the next 10 or so years. The value of a known makers knives will likely increase noticeably once he passes on.
One question I have is how much will knives increase. I wonder if lower end customs will increase at a higher percentage than high end knives too valuable to actually be carried?
A high end 3000 dollar knife that increases 300 bucks only increases 10%. A low end user type knife that increases 300 bucks could be doubling in value.
Anyway, enjoying the dialog. Keep it coming!
MT
That is QUITE the collection, Mr. Jones. You have me thinking!
 

James Terrio

Well-Known Member
Interesting stuff here. I don't quite get this comparison, though...

A high end 3000 dollar knife that increases 300 bucks only increases 10%. A low end user type knife that increases 300 bucks could be doubling in value.
Doesn't $300 still equal $300? I think you're saying it would be better if you knew you could buy 10, $300 knives and have them double. But the chances of that happening seem mighty slim... huh1
 
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knifenut48

Guest
Who to buy?

I've been doing this for 24 years now. Made alot of money and lost some.
The idea of investing in knives for profit has become an addiction. Do lots of homework and know when to sell. Some knives I hold on to, taking a risk. Others I buy and sell as soon as I can.

The idea of hanging onto a makers death may seem morbid to some. I am doing that now. I know a few well known makers who are not doing to well with their health. I am buying their knives at a risk. I know from past deals, the time to sell these kind of knives is very soon after their death. You wait too long and the fire can go out.

The new hot makers are risky as well. I have a couple I am buying from and making good money turning the knives quickly, not holding onto them hoping for more down the road. Greed can loose alot of cash.

Who's knives to buy for investments sake. I always tell myself to buy the knives I like, cause if I like them it makes it easier to sell them. And if they don't sell, I have knives I like sitting around.

There are alot of collections for sale right now. Most of the guys want to sell the entire collection, no cherry picking. Others are selling piece by piece on the internet. I just bought a collection in Colorado this past weekend and am going to look at another in a week or so. When I buy entire collections, there are usually some dogs in it. I give no value at all to those. Pay for the good stuff and get the dogs for nothing. Let the grandkids dig in the dirt with em.

Very interesting thread, looking forward to what others have to say.
 
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knifenut48

Guest
$300 doubled is $600
$3000 goes up $300 is $3300
Less investment same profit
 

James Terrio

Well-Known Member
Yeah, I get that, Jim. But honestly, how often does a $300 user double in price? Versus, how often does a $3k full-bore custom go for $3,300? *shrug*

I have no dog in this "fight", I don't collect anything but tools and bills ;). I'm in the middle of getting rid of a couple inherited collections (not knives) right now, and frankly it's nearly more trouble than it's worth. Cherry-pickers will drive you out of your tree, and the folks who want the whole collection expect to pay the value of one piece and get the rest for nothing. If you're thinking of leaving something for your kids, buy stock or real estate. Just my experience, your mileage may vary, etc.
 
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Larry B.

Guest
Recently got in to collecting. With the economy at a low, must be a good time to buy.
Interested in others thoughts and ideas in what to purchase, what to look for, etc. High end (Randalls, etc.), new makers, who's destined to be famous in the knife world?
Have some ideas on a direction, but I'm new at this. Looking at a 10 year or longer time frame.
Thinking of using knives as another source of investing for the future.
MT
With a time frame of 10yrs or longer you would be better off investing in a proven mutual fund with a track record. The average knife hobbiest doesn't have the connections or the savvy to make any real money investing in knives. For the most part the inner circle of knife people have it all worked out and they wont share it with any outsiders, that's for sure. Ever go to a knife show and notice all the whispering by people selling knives. Five different prices for five different people.

Talke it another step. I was on a makers list for almost 4 yrs. I don't mind that as much as I mind that during that 4yrs I saw a collector purchase about 10 knives from that maker which he proudly displayed on a forum. A few months later he sold them for double what he paid for it while I waited for my knife. That's the worst part of this hobby for me anyway.
Anyway good luck with whatever you invest in. As for me I will keep this in perspective and continue to enjoy the hobby.
 

Les Robertson

Guru of Steel
Hi Marten,

If you are serious regarding investing in custom knives.

You can expect to spend thousands of hours and Tens of Thousands of Dollars in order for it to pay off.

No, you don't need to buy any of the makers listed here. But that is an easy starting place.

Most collectors make little or no money when they sell their knives. The main reason...they buy what they like.

Collecting and investing are two different mindsets.

Also, Return On Investment (ROI) is the name of this game. In conjunction with Time Value of Money (TVM) which is something that most of the "sage's" on the Internet either do not comprehend or ignore (for obvious reasons).

A 15% ROI is a 15% ROI doesn't matter if you make $25 or $2500.

Generally the longer you hold a knife.....the more the TVM is affected in a negative way. Tying up too much money in a particular knife that takes years to get a 15% ROI (to get the big $$$ Amount) will lead to increased opportunity costs. These of course eat into your overall/eventual annualized ROI. Don't forget about the 2 - 4% inflation each year.

The reason most will tell you that custom knives are not a good investment is because it takes long hours of "homework". If it was easy everyone would do it.

If you are going to do it. Stick with a category of knives you are interested in. Learn all you can about them. Once you have developed a level of expertise in a particular area of knives...it will become easier.
 
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knifenut48

Guest
Just for the sake of giving a little insider advice, Jody Muller is a maker I have been stearing alot of my customers to. He has come a long way from his beginnings. He used to be a jewler and watchmaker. Now he makes knives full time and is still a good buy for the money. He makes his own damascus, great engraver too and sole authorship means something to me. Buy direct from him, not the dealers and you will be happy with your results.

I order custom pieces one after the other. Skull engraved and Dragon engraved, both with gold inlays and they sold within a week of delivery.
Google his name and see what's out there.

Best of luck and remember to have fun with it.
 

Les Robertson

Guru of Steel
HI Marten,

With the economy at a low, must be a good time to buy.
The majority of knives that came up for sale were not what you would consider investment grade knives.

The biggest impacts the down economy had on custom knives across the board were:

1) People stopped paying stupidly high premiums.

2) Show attendance dropped (conversely Internet sales increased)

3) Many maker's who were getting overpaid for inferior work were exposed.

4) A lot of maker's waiting lists shorter.

Things started to turn around last October with the AKI which was followed up by one of the best NY Shows (last November) in several years.
 
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knifenut48

Guest
Investment Grade Knives???

Les,
Could you explain your view on what are investment grade knives and maybe some examples of makers that fit your view? I can't remember what your last article in Blade said. You always have solid advice for the collect/invest guys in your articles.
 

Les Robertson

Guru of Steel
HI Marten,

When I was in graduate school I took a Financial Management class. As a homework assignment we were given $100,000 (imaginary money) to invest over the time frame of the course.

Almost without exception everyone in the class lost money...some lost it all.

This across the board loss was due primarily to lack of knowledge.

Anyway, a good test of your investing acumen would be watch all of the Internet Knife for sale forums. Pick out several knives and try to figure out why they are not selling (most will have a "bump" somewhere in the thread).

There are primarily 3 or 4 reasons why...but there can be others.

Primarily what this does is increases your understanding of the custom knife market.

Doing this exercise on a regular basis will help out with custom knives in general.
 

Les Robertson

Guru of Steel
Hi Jim,

To me Investment grade knives can start at $100 (you buy one for $100 and sell it for $115... you just made a 15% ROI...most people on the forums don't feel this is a big enough dollar amount...the ROI is great but $15 would hardly be worth the effort).

For me it is simply a matter of knowing a maker's position in any given market.

It is a maker's position in a particular market that tells me if they are over priced, priced just right or under priced.

I believe in the short term as opposed to the long term. Yea everyone wants to find the next Loveless...they forget that he has been making knives 55 years.

That 24 years ago you could have picked up a Big Bear for $800 at the Blade Show. Ironically his knives didn't really go up in value until he stopped making them and brought in other makers to build his knives. Talk about odd?

Given the information available on the Internet today the "cycles" of custom knife trends has shortened...in some cases to 6 months. Which means a hot maker today may be "cooled" 6 months from now and you will be lucky to get your money back....let alone make money.

Any way, do your homework. Understand a makers position in the market and buy those who are under valued. In addition to my Maker Market Matrix, I developed 7 questions to ask makers to determine if they were going to be around long term or not.

At this point I can look at a maker's knives, talk to them for 10 minutes and decide if they are someone who's work will move forward in the future. If I feel that is the case I buy some knives from them....if not......

It is not just a makers skill that will make them successful in the future.

An example of a maker to buy...Get every Rick Hinderer XM-18 you can...directly from Rick. :D

Oh and Jim, thanks for asking...I know you weren't asking for yourself. You already know this stuff!
 
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