August 31, 2011

2012 Stock Certificate & Bond Show dates

Bob Schell's 2012 Northern Virginia Stock & Bond Show will take place at the Crowne Plaza Hotel-Dulles Airport next January 27 and 28. This will be Bob's 11th, well-respected show at this location. Prices will remain stable for dealers and collectors setting up tables. Admission to the show for collectors is $3.

Bob Schell
P.O. Box 222
St. Germain, WI 54558

The show site is only two miles from Washington Dulles Airport and there is a free shuttle for those arriving by air. Bob has negotiated an $89 room rate for those attending the show. (For special rates, mention 11th Annual National Stock and Bond Show and group code ENS.) To receive the special rates, be sure to make reservations prior to January 10. Call 1-800-227-6963.

Show times are 9am to 6pm on Friday Jan. 27 and 9am to 4pm on Saturday, Jan. 28. There will be a special breakfast for members of the International Bond and Share Society at 7:45am Saturday morning. If you are interested in setting up a table, please contact Bob for prices.
As always, don't diddle around in making reservations. Do it now. Four months goes by really, really quickly.

August 25, 2011

Price index updated

I record sales of railroad certificates every day, so I cannot help but notice price trends. While my database holds all sales prices, I still maintain a couple of special database fields where I manually track high and low prices. Yes, the database can always tell me those same record prices. However, manually recording new high and low prices lets me feel trends continually.

Sadly, I record twenty to thirty new record low prices for every new record high. In doing so, that gives me a very, very good feel for the direction of the market. Thankfully, it seems I am recording fewer and fewer record lows than I did in 2008 and 2009.

Having said that, I am still encountering extremely few new high prices. Generally, new highs appear only when there are new discoveries. (And there are more new discoveries than average collectors realize.)

While being close to prices on a daily basis certainly gives me a gut feel for the direction of the market, feelings can always be wrong. Feelings need confirmation. That can be gained only by stepping back and looking at prices in a more global manner.

A few years ago, I established my “market basket” price index to help clarify how the market was numerically behaving. My index tracks 43 certificate varieties that seem to be in the middle of the market. By that I mean that I used the database to identify railroad certificates that are neither too common nor too scarce and that typically sell a few times per year. By using a market basket of certificates, we can decrease the effects of sudden and unpredictable pricing quirks that can sometimes result from causes that have nothing to do with collecting, condition or rarity.

Yes, a typical collector who really wants to buy all 43 certificates would certainly stumble across some abnormally good deals in the process. On the other hand, that same collector would definitely make a few bad deals, too. Therefore, I decided to smooth out weird and non-rational price swings by basing index prices on averages of the last five sales prices for every certificate. I have a Price Index page on my web site that explains the rationale in more detail. That page also links to another that displays images of all 43 varieties.

Compared to the coin and stamp hobbies, our hobby is typified by very, very scarce collectibles. Market basket certificates are sufficiently scarce and sales sufficiently infrequent that I feel I can legitimately update the index only every six to twelve months.

By January, I will have thirteen full years of year-end prices. A few days ago, I updated the price index just to see where the market currently stands. As of this writing, the market is down 38% from its high in 2003.

Please understand that I do not like this price trend in the slightest. Oh sure, I know many advanced collectors are happy that they can get screaming deals on scarce and rare certificates. I understand. I really do! But I must warn them to temper their elation with the understanding that when it comes time for older collectors to sell, they are going to be selling into that very same, weakened market.

Dealers and collectors who think prices are still as high as they were in 2003 are seriously mistaken.

Few market watchers have crystal balls and all of their devices are very cloudy. No one knows when the market for collectible certificates is going to turn around. I genuinely hope it is tomorrow!

However, even if the market for railroad stocks and bonds turns around in the next 24 hours, I cannot help but wonder long will it take before prices recover to 2003 levels. Experienced observers know that typical market recovery takes substantially longer than periods of decline.

I hope our hobby is atypical.

August 10, 2011

Price history details improved

I recently changed a page on my web site to better report price history. You can find the page by locating any certificate of interest in the database. Then, simply click on any price estimate:

and a small new page will open.

That new page will show a summary of all recorded sales over periods of one, three, ten and twenty years.

This example shows a summary prices recorded for the well-known Blue Ridge Railroad bond from South Carolina. You can see that I have recorded sales for this certificate that have ranged from a low of $47 to a high of $125 during the last year. (Both were eBay sales) The average of all recorded sales was $96.

You can see that sale prices fell to as low as $8 in the last twenty years, probably representing a multi-item auction lot. Since that low price is older than ten years, you can surmise that it was an auction lot that predated eBay. (In fact, that price came from an old Smythe sale.)

You will also notice that one collector paid an extraordinarily high price ($256) between three and ten years ago. That price reflects a sale that took place in Germany. That high price included a 20% commission, further magnified by a period of extreme weakness of the U.S. dollar relative to the Euro.

My current price estimate is $75 to $100 and I last "touched" the price about four months ago. That means that I expect to that future sales will be about $75 to $100 whenever another Blue Ridge bond in average condition sells in the United States in a well-attended live auction.

Remember, I am offering a single price estimate, even though there are many separate markets. Each market displays different price behaviors.

For instance, if a sale of a Blue Ridge Railroad bond takes place in a well-attended, live German auction, I'd expect the sale price to be about 50 to 100 percent higher than my estimate. If a sale takes place on eBay, I'd imagine prices will be 25 to 40 percent lower than my estimate. If purchased from American dealers, prices for Blue Ridge bonds are likely to range from my lower estimate to maybe 25 percent above my high estimate. Prices for collectible certificates are highly flexible.

The point of showing this information is to let you see current trends in every certificate variety I record. Beware, however, that only about 7 percent (!) of all certificate varieties appear for public sale in any given year. While probably twice that many varieties appear for sale in shows and dealer offerings, there is no reliable method for collecting those prices. If individual collectors don't report their non-auction purchases, I never learn about them.