Investing in Vintage Basses

[smcd]

I don't know about markets, rate of returns, portfolios or any of that other financial stuff. But sometimes it's great just owning something awesome. If it doesn't lose value, all the better. What do you guys do with the precious metals you own? Do you keep it all in a big pile of coins in a room, occasionally diving into it and doing the backstroke like Scrooge McDuck? If you did, I could understand your enthusiasm. But more likely all that gold and silver is just a line on your 401K quarterly report. Where's the fun in that??

[mp40smg]

Originally Posted by GregC

Your example does not appear to be grounded in any sort of reality that I'm familiar with.

Investing with political blinders on is a bad idea, no matter where you fall on that spectrum. Take a look at the very long-term returns of gold and silver. As was stated above, they merely keep pace with inflation--that's far less than the returns of stocks. Yes, metals go through periods of massive price spikes, as they have in the last 5-10 years. They have also lost more than 50% of their value in a single calendar year.

I completely agree wrt "political blinders" or for that matter with out any regard to history, collapse of faith and/or the inevitability of hyper inflation.


Then I suppose I would have to ask you... What IS a dollar?

What makes a dollar worth a dollar? Could a dollar be worth more than a dollar? less than a dollar? If in 2008, a loaf of bread was a 1.30, and today, a loaf of bread is now 1.70. Has the bread increased, Or has the dollar decreased? Could, in 2 years a loaf of bread be $10?

So, if you "invest" that dollar and get back a 20% gain in 5yrs, but your $1.20 only buys .75. Have you won or lost?

The simple answer is that there is NOTHING backing the dollar( euro or any other paper currency) except faith. And if/ when that faith falters or fails, so too will the dollar.

And I will not go into Germany, any of the former soviet republics, Argentina, Brazil or any of the other countries where hyperinflation has rendered currencies meaningless..

But, a single silver dime will still get you a loaf of bread and carton of milk.

But the answer to the question actually is:
Legally a dollar is: 371.25 grains of Silver..

The Coinage Act of 1792
"the money of account of the United States shall be expressed in dollars or units … of the value [mass or weight] of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure … silver.

[beggar98]

Originally Posted by mp40smg

But the answer to the question actually is:
Legally a dollar is: 371.25 grains of Silver..

The Coinage Act of 1792
"the money of account of the United States shall be expressed in dollars or units … of the value [mass or weight] of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure … silver.

Kind of ignores a whole bunch of legislation since 1792...

[ChrisCassisi]

I say go for it man. Sounds like you worked hard and you want a vintage bass really bad. You can't take the money with you when you die so enjoy it while you can.

[BawanaRik]

In twenty years it will translate to approximately 50K + to spend with a bit of luck

Originally Posted by LuvMusic

Also, your 15k Roth IRA contribution does not convert to 15K to spend. If you don't contribute the funds to the IRA, they will be taxed.

[mjac28]

I retired early years ago and I didn't do it by investing in basses most of the prices you see today are because someone had a particular bass when they were younger and they want another one and are willing to pay for it and in twenty or thirty years there won't be many young who had a vintage bass and want another one they either lost or sold. I respect the opinions in this thread but you need to listen to your wife and really make some smart decisions about your future it paid off for me.

[GregC]

Originally Posted by mp40smg

I completely agree wrt "political blinders" or for that matter with out any regard to history, collapse of faith and/or the inevitability of hyper inflation.


Then I suppose I would have to ask you... What IS a dollar?

What makes a dollar worth a dollar? Could a dollar be worth more than a dollar? less than a dollar? If in 2008, a loaf of bread was a 1.30, and today, a loaf of bread is now 1.70. Has the bread increased, Or has the dollar decreased? Could, in 2 years a loaf of bread be $10?

So, if you "invest" that dollar and get back a 20% gain in 5yrs, but your $1.20 only buys .75. Have you won or lost?

The simple answer is that there is NOTHING backing the dollar( euro or any other paper currency) except faith. And if/ when that faith falters or fails, so too will the dollar.

And I will not go into Germany, any of the former soviet republics, Argentina, Brazil or any of the other countries where hyperinflation has rendered currencies meaningless..

But, a single silver dime will still get you a loaf of bread and carton of milk.

But the answer to the question actually is:
Legally a dollar is: 371.25 grains of Silver..

The Coinage Act of 1792
"the money of account of the United States shall be expressed in dollars or units … of the value [mass or weight] of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure … silver.

Currencies' worth is determined by supply and demand. The same is true for precious metals. The prices of the latter have been exponentially more volatile than the value of the U.S. dollar thus far.

A Roosevelt silver dime is worth $2.33 at melt value today: http://www.coinflation.com/coins/194...ime-Value.html
That better be some cheap bread and a small carton of milk.

And it's only worth that much because silver prices have spiked. If silver goes back to pre-2008 levels, that silver dime is worth less than a buck. http://silverprice.org/silver-price-history.html

[lfmn16]

Originally Posted by beggar98

What's the rate of return for DJIA over the same period? I think its a little over 8%, not including any dividend payouts. Gold had a nice run, but that party is over. The last 5 years or so saw unrealistic gains supported only by irrational fear. Doubtful that gold loses much value, but it will be flat (look at the last 12 months) for the foreseeable future.

My crystal ball is broken so I don't know what the future holds. The DJIA only tells the average for a handful of stocks, so when making a comparison, it's better to use the rate of return that you have made over the period in question.

I'm not arguing the merits of gold. I've never owned it and have no plans to start now. I'm just saying that the statement that gold has been flat is not correct. People have been saying for several years that gold has maxed out. If you say it long enough, eventually you'll be right.

[GBassNorth]

Originally Posted by mjac28

I retired early years ago and I didn't do it by investing in basses most of the prices you see today are because someone had a particular bass when they were younger and they want another one and are willing to pay for it and in twenty or thirty years there won't be many young who had a vintage bass and want another one they either lost or sold. I respect the opinions in this thread but you need to listen to your wife and really make some smart decisions about your future it paid off for me.

Exactly!
I'm an early retiree as well and as every investment advisor will tell you - it's important to diversify. So if the OP wants to take a small portion of his investment portfolio and focus it on tangible investments its probably ok but it should be a very small segment of his portfolio and he better know what he's buying.

I do have basses I've bought as investments but I've probably only spent a fraction of one percent of my annual investment outlay on them. Some of my basses and gear are now worth 2 and 3 times the prices I paid for them just a few years ago but there's no way I would ever consider using bass investing as my sole or even major investment strategy, too much risk, not enough historical trend data and too many sharks in the water looking for rookie vintage gear buyers.

On the other hand, apparently if I want a loaf of bread and carton of milk that would normally cost me about five bucks all I need to do is raid one tiny dime from my silver dime collection.

[GregC]

Originally Posted by lfmn16

My crystal ball is broken so I don't know what the future holds. The DJIA only tells the average for a handful of stocks, so when making a comparison, it's better to use the rate of return that you have made over the period in question.

I'm not arguing the merits of gold. I've never owned it and have no plans to start now. I'm just saying that the statement that gold has been flat is not correct. People have been saying for several years that gold has maxed out. If you say it long enough, eventually you'll be right.

He stated gold's long-term return has been flat when adjusted for inflation. That is correct over the very long term.

[2meterbassman]

André Kostolany gives you the perfect advice: buy a brandnew Fender - and wait 80 years.

Greetz

[beggar98]

Originally Posted by lfmn16

My crystal ball is broken so I don't know what the future holds. The DJIA only tells the average for a handful of stocks, so when making a comparison, it's better to use the rate of return that you have made over the period in question.

I'm not arguing the merits of gold. I've never owned it and have no plans to start now. I'm just saying that the statement that gold has been flat is not correct. People have been saying for several years that gold has maxed out. If you say it long enough, eventually you'll be right.

You're right, the Dow is a pretty narrow glimpse, even if it is the standard used when discussing the market as a whole. The S&P would be better, and since its 1978 peak of 106.79 has shown an annualized return of just under 8%, not including dividends, which still trounces gold's 6%.

I think it is very dangerous to look at an investment such as gold that has seen a completely irrational 350% increase over the last 6 years (after 20 years flat or negative growth) as any kind of buying opportunity. People who bought gold in 2002 probably feel great about it, but now is not the time to buy more. Sell and identify the next breakout sector.

For some historical perspective, the last time gold saw a run like this was 1970-1980, when it gained 1700%. People who bought in 1970 made out great. People who bought in 1980 saw their investment value cut in half over the next two years and couldn't sell at a profit until 2007. They would've been better off in US Bonds.

[lfmn16]

Originally Posted by GregC

He stated gold's long-term return has been flat when adjusted for inflation. That is correct over the very long term.

Here is what he originally said - 'Gold is also a terrible investment. Its long term real return is pretty close to zero.'

You are correct if you pick the right start and end dates. You also added very to long term. Yes, if you keep changing the argument eventually you'll be right.

[Kmonk]

Put the money into retirement. The only way the bass will be worth a lot in the future is if someone is willing to spend the money on it. If you put the money into retirement, you will always have access to cash if you need it. Even though you might have to pay a penalty to make a withdrawal, it will still be better than waiting for someone to buy the bass.

[lfmn16]

Originally Posted by beggar98

.
I think it is very dangerous to look at an investment such as gold that has seen a completely irrational 350% increase over the last 6 years (after 20 years flat or negative growth) as any kind of buying opportunity. People who bought gold in 2002 probably feel great about it, but now is not the time to buy more. Sell and identify the next breakout sector. .

I'm with you 100%

I doubt the people why are buying gold today will think they made a good deal 10 years from now.

[gurensan]

Originally Posted by 2meterbassman

André Kostolany gives you the perfect advice: buy a brandnew Fender - and wait 80 years.

Greetz

Start now!

[GregC]

Originally Posted by lfmn16

Here is what he originally said - 'Gold is also a terrible investment. Its long term real return is pretty close to zero.'

You are correct if you pick the right start and end dates. You also added very to long term. Yes, if you keep changing the argument eventually you'll be right.

Perhaps you are not aware that the phrase "real return" is another way of saying "adjusted for inflation".

As for the time periods, I added the qualifier "very" after seeing the poster's early 1980s starting point. Even 30 years isn't always a great barometer of historical asset-class returns--for example, bond returns are much higher over the past three decades than they have been historically. Measuring over increasingly longer periods can reduce start and endpoint bias. Go out further and further and the historical returns of gold more consistently track the inflation rate.

[Davo-London]

The only investment in the UK that has worked long term IMHO is property.

Well it's worked for me. All other investments have been dismal.

Davo

[A-Step-Towards]

I would maybe buy a mid 60's P bass, all original for 5k or a 70's P and 70's J , earlier 70's and clean original explains. Then put 10k in your IRA this year.

Seems win win to me and the basses probably will rise a bit, not as much at the extra 5k would but more then a savings account would and you will have fun with them.

[jasper383]

Originally Posted by Davo-London

The only investment in the UK that has worked long term IMHO is property.

Well it's worked for me. All other investments have been dismal.

Davo

Stocks look like the best bet in the UK over the long haul:

http://monevator.com/uk-historical-asset-class-returns/

Real estate can be a great investment, but it boils down to location, location, location. There are mill towns in New England that have been waiting 100 years for their values to return.