October 26, 2010

Scripophily.com's 2011 calendar available

The 2011 stock and bond calendar from Scripophily.com is newly published and available.

As I mentioned last year, I applaud Bob Kerstein for preparing and printing his calendar far in advance of the new year. I enjoy the fact that Bob's calendars always include December of the current year so they can go up on the wall almost immediately.

Each month features a high-quality image of a stock or bond from a significant corporation. This year's rail industry contribution represents a scarce certificate from the Gagnier-Griffin Suspended Railway Bridge Company. The particular certificate illustrated was issued to Dr. G. H. Griffin, the company's co-founder and president, two months after incorporation. The company had promoted its concepts as early as 1892, but apparently did not incorporate until March, 1894. Before the end of the year, it had already built one system spanning the Tennessee River near Knoxville and the 1894 edition of the Street Railway Journal announced the company intended to span Niagara Falls. The novel bridge design was intended to convey single rail cars across rivers on suspended cables but had many other possible applications. 

Bob has compiled images of this scarce certificate and all other calendar pages in an Acrobat file that you can either view or download. Please contact Scripophily.com for your copy of the 2011 calendar. Single copies are available for $9.95 each. (Quantity pricing available.)

October 18, 2010

William Henry Vanderbilt article

I occasionally stumble across articles that might be of interest to my readers. This article appeared in The Daily Graphic published Monday evening, March 10, 1873 and accompanied its large cover page illustration that measured over eight inches high. I reproduce it here exactly as it appeared on page 3 of this short-lived daily newspaper. As typical of the era, the entire article was one long paragraph.

Personal Sketch

Mr. William H. Vanderbilt, whose portrait is given in to-day's issue, is the eldest son of Commodore Vanderbilt, and a shrewd, enterprising scion of a shrewd, enterprising house. Though born in the financial purple, he declined becoming a mere pensioner on his father’s reputation, and at an early age plunged into active business life. He was born, in 1821, at New Brunswick, N.J., the summer residence at that time of his father, and after receiving a sound practical education at the Columbia College Grammar School, entered in his eighteenth year, the financial house of Drew, Robinson & Co., where he exhibited so great executive abilities that, after two years of steady application and eminently successful operations, he was offered a partnership. Finding, however, that from rapid growth and close confinement, his health was being undermined, he determined to recuperate by farming, and set earnestly to work to clear seventy-five acres on Staten Island. Carrying the same energy into his agricultural pursuits, he soon had 350 acres under cultivation. At this time the Staten Island Railroad Company was in an embarrassed condition, but as soon as Mr. Vanderbilt and his uncle, Jacob Vanderbilt, ame into its management it improved rapidly. This experience gave him a taste for the railroad business, and having been elected in 1864 Vice-President of the New York and Harlem, and in 1865 of the Hudson River, he devoted his whole time and attention to their development, and proved himself worthy of becoming the executive and confidant of the Commodore. The Harlem, which was bankrupt when he became Vice-President, is now one of the best equipped roads in the country, and the Hudson River under his management, has trebled in value. The Commodore, having secured a controlling interest in New York Central in 1869, consolidated the Central with the Hudson River R. R., and now this magnificent organization, with 700 miles of track, a business of $25,000,000 per annum, and a capitalized value on $90,000,000, is under the management of Mr. William H. Vanderbilt, its Vice-President. He is engaged at present in making a thorough financial success of Western Union, and since the Vanderbilt party took hold of it two years ago, it has advanced fifty-five per cent. Lately much of his attention has been directed to the passage of a scheme through the Legislature to connect his different roads with the commercial centres of the metropolis by the proposed rapid transit plan. He was married in 1841 to Miss Kissam, and the eldest of their eight children, Cornelius Vanderbilt, Jr., holds the position of Treasurer of the Harlem. Mr. Vanderbilt yet remains practically, as well as theoretically, a farmer, and his knowledge of agriculture had been very serviceable in determining routes for roads and matters connected with the transportation of grain. Hale, bluff, and in the enjoyment of excellent health, he possesses a cheerful disposition, and though punctual and exacting in business is very considerate and liberal in charities. Having made several visits to the Old World, his mansion is filled with mementoes of his travels. Many valuable paintings of the old masters are hung side by side with those of native production, Mr. Vanderbilt being a liberal patron of American art.

October 10, 2010

Cox "Market Basket" price index updated

I recently updated my price index for collectible railroad certificates. Prices continue to slide, although the rate of decline has not worsened with the typical summer doldrums. Prices only dropped about a percent since April and I choose to take that as a good sign.

My price index is based on a "market basket" of 43 certificate varieties. You may read a long-winded description of the index on my special Price Index page. You may also see images of all certificates included in the index.

In short, the price index is a total value of what you could expect to pay if you bought all 43 varieties of certificates at prices averaged over the five most recent sales. These kinds of averages are called "5-sale moving averages." They are calculated by taking the last actual sale price, no matter where that sale occurred, and averaging it with the previous four sales. Each time a new sale occurs, it becomes part of the average and the oldest sale is dropped.

Certificate prices tend to be VERY "spikey". I commonly record a $50 price in one sale followed by $125 in the next, $35 in the next and so forth. Moving averages help smooth out big ups and downs so we can see underlying trends without getting confused by the "noise." I would like to use more sales and more varieties in the calculations, but there are simply too few sales. We have to play the hand we're dealt.

As I have mentioned elsewhere, the price index shows that prices were essentially flat from 1999 through 2002. Prices grew at an 8% to 9% rate in 2003, helped along by strong prices in Europe and a weak dollar/Euro conversion. Prices then dropped steeply thereafter. We can certainly blame part of the drop on the great shifting of purchases from big auction houses to eBay. I don't think anyone would suggest the global recession has helped collectibles, either.

Curiously, the rates of price decline decreased after 2007, even in the face of the deep and lingering recession. All things considered, it appears prices are almost 34% off the top of the market in 2003.

I am unconcerned whether these particular 43 varieties "represent" the full breadth of the collectible certificate market. After all, the Dow-Jones Industrial Index is a mere 30 heavily-traded companies that by no means represents the full breadth of the American stock market. We could argue whether a 3-sale or 4-sale moving average would show a different picture. We can wonder whether displaying the data by quarter would show more predictive behavior. We can bemoan the fact that we have no price contributions from dealers and very few from collectors. I'm not convinced it matters.

I've tried all sorts of adjustments and finally decided this picture is adequate for my needs. It tells me what I want to know about the health of the market and how I should adjust price estimates to match reality.

I will make a couple of final warnings.

Don't over-read or over-think this chart. It is simply designed to tell us whether the market is trending up or down. This chart represents the condition of the market based on 43 medium scarce North American railroad certificates. Charting more common and more scarce certificates WILL show different price behaviors. Charting certificate prices in different specialties WILL look different. Charting certificate prices from other countries WILL look different.

My crystal ball is in the shop, so I cannot possibly predict when prices will start trending up. No one is going to get me to say that certificate prices have hit bottom. However, I feel safe in suggesting that sellers hoping to unload certificates at 2003 levels will be sorely disappointed for several more years.