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To Tank or not to Tank

This photo is not totally relevant to the content but it’s such a cool picture, I thought I would show it again. I don’t think the guitars in this photo will go down in value.

Every year, in January, I write a year end post giving you my take on the market over the past year. Telling you where the market has been is easy. telling you where it’s going is something I’ve avoided and with good reason. Nobody can predict the future. If I had a crystal ball, I’d probably be living on a beach on my private island somewhere warm. I do not. So, in these difficult times, why would I go out on a limb and predict where the vintage guitar market is going? Because you asked. I’ve had a lot of emails and phone calls over the past month or so and that seems to be the compelling question. The economy is on hold. Is the market going to tank? I never took an economics course. I never took a business course. I don’t know Keynes from Fibonacci. I’m going to hypothesize based on what I do for a living.

I don’t know. That’s the simple answer, so take everything that follows as simple logic from the inside. I’m selling a lot of guitars. I dropped some prices-not so much because I think the market is in trouble but because I have no room for the gear. I moved out of my shop last month because my lease wasn’t renewed and I have to put my inventory somewhere. I will say that the current social distancing and the resultant diminished economy is going to be with us for a while yet. I don’t expect to open a new retail space for months going forward. But most of my business has always been online and that appears pretty healthy.

There are at least two important factors driving the current guitar market. One, folks are stuck at home with nothing to do and, for the guitar obsessed (like me), searching the internet for a “new” guitar is a fun, time consuming activity. (So are jigsaw puzzles but c’mon, what would you rather get delivered to your house?) Two, a lot of folks are out of work but even with that, the unemployment rate is “only” at 10%. Not a good recipe for a robust market but not lethal blow either. There will be folks who have to sell one or more of their guitars in order to meet their financial obligations (and to eat). But, I think that, in general, these aren’t the folks who were buying vintage and collector grade stuff in the first place. I believe the collector grade guitars will remain strong but will likely level off somewhat during the next few months. There will likely be some guitars hitting the market put there by sellers who really need to generate some cash. But they won’t list them at bargain basement prices. That’s human nature. This market is not one to tank over night. Look at 2008.

2008 is not the same as now; in many ways, it was worse. Yes, unemployment is worse now but long term prospects are better. But even as the economy tanked, the stock market sank and the housing market sagged, the guitar market held on for quite a few months before it started a relatively slow decline. That decline lasted a very long time and eventually took as much as 40% off the market but in 2008, that market was a bubble. The market today is the result of a slow, steady rise that, in many cases, still hasn’t reached 2008 levels.

I could go on for pages but I think I’ll just lay out my thoughts. The player market will, I think, drop. Possibly significantly. The high end market will level off. Because so many guitars are currently priced way ahead of the market (read as “overpriced”), the folks who need to sell will eventually cut prices probably down to where they should be. The one great truth in this business is that everybody (yes, everybody) thinks their guitar is worth more than it is. Does sitting on the market for months or even years deter those sellers? Nope. Not until they need to sell (for any reason-not just starvation).

So, if my opinion means anything, don’t worry about your guitars. Play them. If you’re in the market to buy, make offers that are fair and reasonable. If I’m wrong and the market tanks, you can tell me I’m an idiot but go back to paragraph two. Sentence one. That tells you everything you need to know.

This is our dog, Zoubi. She doesn’t know there’s a pandemic out there. She just knows I’m home all the time and that means more treats for doggies.

3 Responses to “To Tank or not to Tank”

  1. RAB says:

    Charlie, good insights as always. I’ve never considered my guitars as investments and have made and lost money on instruments over the decades. Hopefully, net, net I’ve broken even but I don’t really care one way or the other. I play my guitars at home and at gigs and cherish the musical and performance experience. (Misding it these days!) I’ve never considered my instruments to be part of an investment portfolio and frankly pity those that do. The thought of some beautiful classic era git languishing in a climate controlled vault pains me…best, RAB

  2. Nelson Checkoway says:

    What you say makes a lot of sense, Charlie. I heard one description of the pre-2008 bubble prices as analogous to the housing market–in addition to accommodating players and investors, the market was rife with speculators who were paying well over market and driving prices up like mad, because they believed they could quickly cash out for a profit, as prices would catch up within months and never go down (oops!). So in some ways, the recent steady, sustainable climb in values has exceeded the “real” 2008 market–and that should be a comfort.

  3. David Webster says:

    Dear all, I have absolutely no idea where the vintage guitar market is going and I’m not sure that I care too much… what I DO know is, there’s no guitar more beautiful on the eye than a vintage blonde Gibson ES345. A heartening sight and a great pic .

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