April 21, 2009

Prices remain schizophrenic

I admit it.

I am confused about the direction of prices for collectible stocks and bonds. Some prices are up. Many are down. Prices for some items should be down, but are actually up. And vice versa. As I said a few months ago, prices are wacky.

Mario Boone's auction a month ago in Antwerp (the next listing down) was very curious. Overall, Mario sold about 60% of the lots offered. That percentage was abnormally high for a European sale. Having said that, lots that featured North American railroads only sold half as well as the rest of the sale. In part, I think those low sales percentages reflected overly high owners' reserve amounts rather than market disinterest.

At the other end of the market, the number of certificates being sold on eBay is down substantially. Regardless of sellers' proclamations that their certificates are "rare", most certificates being sold on eBay right now are rather ordinary. And that is where it gets really interesting.

I am seeing that scarcer certificates are, by and large, establishing new lows. At the same time, prices for more common certificates – the certificates you see week in, week out – are moving up.

What the heck is going on ?!? Apparent trends just don't seem to be making a lot of sense.

A few years ago, MK&T certificates with Jay Gould's autograph routinely sold for $350-$400. Lately, some have broken the $175 barrier and are now challenging the $150 level. Certificates with rather common imprinted revenues have been selling for 50% to 100% more than they used to. Prices for very common certificates are up. Prices for medium common to medium scarce certificates are down.

Yes, we can certainly attribute some of this odd price behavior to the global downturn and a general feeling of caution, if not outright fear. It has always been the rule that when people need to liquidate, they sell for any price they can get.

However, if we go back to Mario Boone's sale, we can see that some sellers are apparently refusing to capitulate. Fortunately for those sellers, some collectors are behaving as if they believe this is a pefect time to buy. Boone's sale proves to me that some collectors are continuing to buy and are continuing to pay strong prices.

I'm back to where I began. I can't say whether prices are going to drop further, head higher, or stay schizophrenic. I am baffled.


Adam Tripp said...

As a British collector of US railroads I buy most of my stocks on ebay. Generally I see ebay prices being weak for all US RR stocks except for the odd rarity. The biggest problem I have is US sellers not shipping outside of the US and/or insisting on charging $20 to $30 for shipping when many of the US sellers I usually buy from only charge $3 to $5. Come on guys, think global!

Anonymous said...


I find that very little good material is available recently, whether on ebay or from the established US auction houses. Smythe auctions certainly don’t have as much after being bought by Spink. Maybe the Schingoethe sales of obsolete banknotes also kept them too busy.

I generally ignore the European auctions since their reserves are usually way out of line. That is, I have obtained many of my stocks/bonds in the US at fractions of their reserves. Their reserves seem more like retail prices to me.

Certainly the present state of the economy creates volatility not only in equity stocks, but also in the sale of collector’s stocks/bonds. However, could this also be enhanced by the small collector base? Do you have any idea how many advanced collectors there are? A small collector base combined with specialization could certainly account for the volatility.

Let me try to take a stab at estimating the number of advanced collectors. The April issue of Scripophily indicates that the 3 major US auction sales (Smythe, Stack’s, and Harmers) sold about $285,000 worth of stocks/bonds in the first quarter of 2009. This probably accounts for a significant fraction (maybe 50%?) of the better material changing hands. Some large fraction (let’s say 50%) probably went to dealers (for resale) instead of collectors. Let us say that an advanced collector might spend $1000 per quarter on stock/bonds. This would imply that there might be about 285,000/1000*2/2=285 advanced collectors in the US. This number is almost equal to the number of US members of the IBSS. Given all of the assumptions made above, this estimate could easily be off by a factor of a few. However, the number is still quite small (probably below 1000) and given that most advanced collectors are quite specialized, I can see why the prices for the better material are quite volatile. This is also substantiated by the fact that only a few collectors typically bid on any particular auction lot and that only about half of the lots sell.

I just looked at an older issue of Scripophily which indicated 4 major auctions in the 3rd and 4th quarter of 2007 that sold a total of $1,300,000. This is about twice the dollar value sold in the 1st quarter of 2009.


Anonymous said...

When I first started selling on ebay, I had no restrictions on foreign buyers because I figured that the larger bidder base should obtain higher prices. Unfortunately, 2 of 4 foreign sales turned into such horror stories that I decided not to sell to foreign buyers. One $30 sale (to the UK by the way) effectively shut me down (both buying and selling) for over a month because the buyer did not receive his item 3 days after close of the auction. Many message boards in the US indicate similar experiences by other US ebay sellers. Unfortunately this lowers our sales values and prevents foreign collectors from obtaining good material from the US.