Buying jewelry is the same as buying the precious metals and gems they are made of. Jewelry that increases in value based on it’s rarity or beauty is not common. Precious metals and gems are a good way to invest like this because the costs of keeping them are low, the risk of them dropping in value is low, and individuals can acquire a lot without facing tax consequences. Otherwise buying something like 1970’s cookware is pure speculation, and I find it hard to believe that anyone who does so wouldn’t resell it the instant it’s had an increase in value.
“Increase in value” is in itself flexible, naturally, as famously as the word “value” is time and context derived.
If I’ve written off, mentally, my vintage pots and pans, and they’re still lying around, I might sell them for at least 20¢ on the dollar, and, disregarding the value of my use back then, is not profitable.
Unless we’re saying the same thing…
I’m very satisfied with my French copper cookware, from the turn of the century, great value for money.
Really? Metals trading is low risk; interesting. I would have thought it fluctuated and was often manipulated like any other commodity.
Seeds are a good investment, they grow faster than inflation and you can store them until you need them in very little space. The longer you store a growing plant the more valuable it can become within limits.
I can remember back in the nineties when people were buying baseball cards and comic books as investments. Their belief was that they were sure to go up in value because they could see that baseball cards and comic books from a few decades back had gone way up in value.
But I could see that they were missing the big picture. Those past cards and comics had become valuable because they were relatively scarce originally and because most of them had been disposed off - they were now valuable collectibles because people at the time hadn’t been collecting them.
However, people were now buying new cards and comics with the intent of holding them as investments. This meant the companies were issuing extra copies to supply this demand and it meant that a lot more of these items were being preserved. These collectors were essentially flooding their future marketplace. These items would never go up significantly in value because they would never be rare.
It is a commodity, and there are risks involved. But unlike other commodities there’s no risk of spoilage. The Hunt Bros. example was something I might have brought up eventually, but that case, like other price fixing schemes is not the same situation as in the OP. No one is going to corner the Saran Wrap market hoping to artificially raise the price. Precious metals are almost always in limited supply and won’t readily lose value, and even when they do drop in price they won’t become worthless.
But the antique dealers aren’t holding back a warehouse full of dueling pistols or Louis XIV furniture. They put their stuff out on the floor, where somebody might not think the price is “ridiculous” or where they can trade it to another antique dealer for some other item they think they can sell. If all else fails, they can cut the price or put the item up for auction. That’s a lot different than the “buy and wait for the price to go up” strategy the OP asked about.
I’m talking more about someone like you see on American Pickers, not you Antiques Roadshow type high end expert. They buy up stuff and just sit on it, not caring if they sell it today or not. Not your typical antique business but still a dealer. They might buy up old signage when they see and throw it in a barn. Or dishes or iron works, or car parts. These types of people kind of fall in to the model the OP describes. Just because it’s not new product doesn’t mean it’s not a commodity.
When I was a teenager i had a Saturday job for a while helping out in an antique shop owned by a friend of my mother.
I learned that most dealers sail pretty close to the wind legally and that some items can change hands a dozen times before they are sold to a punter. The antiques in that shop did not have prices, just a label with a code. The code indicated the bare minimum price it could be sold for, and it was usual to multiply that by three (four for Americans). A 20% discount would often make the sale.
The biggest racket was the auctions we went to. What would happen is that the dealers would get together and agree not to bid against each other. After the auction, in the pub, they would have a mini auction and split the difference. Totally illegal but hard to detect.
Some of the bigger pieces of furniture in that shop had been there for years.
Then they will announce that due to hopefully temporary economic conditions, they have been forced to reduce the staffing of certain lower level positions to preserve funds to help the Executive Team chart the company’s new ten-year recovery and growth plan. Disgruntled ex-employees will call it “Aluminumcan Sacked”.
The Efficient Markets theory states that the price of a commodity such as Saran Wrap reflects all current public information about the value and availability of the commodity. EMT is not true but it is close enough to true that it should usually be treated as such. If someone has non-public information on what the market for Saran Wrap will be in one year than it would be possible to use that information to make money in the way described by the OP.
If you don’t have non-public information it is possible to make money that way by being lucky. However, generally Las Vegas would be a much more fun way of losing your money.
Gold peaked at $1825/oz in August 2011. It is now at $1168 and expected to continue falling due to BoJ actions, oil prices, etc.
That’s a 36% drop in value folks. Thirty six percent in 3 years and 2 months! That’s not an investment, that’s taking a bath.
You would have had to bought in 2009 to be breaking even now.
Gaming highly volatile, irrational, markets like gold is a good way to lose money. I’d rather go with Saran Wrap.
Since the mods allowed this political jab (a two-step jab, but one nonetheless), and the derailment, such as it was, was civilized, I am hoping they will tolerate one more from the offender, this time directed at self.
I’ve been thinking about it off and on, and though I’ll always defend shrewd financial players to be shrewd, as should all businessmen, the free hand of the market in certain situations needs the slap down of the state. “Cornering the market” seems to me, at least, a fuzzy term. Anyone have better info besides this junky Wikion it?
I look at it as creating an artificial monopoly. If the supply of a good can’t be changed very quickly (say, Picassos or gold or futures contracts for crops already planted), and someone buys up all the available goods trading on the market, then they become a monopolist in the short term. If you want or need it now, the only way to get it is from them, and the market-cornerer can change a higher price in the short term. Although, this isn’t an area that calls for regulation–it’s uniquely self-regulating because people who try it almost always fail and lose a ton of their money.
Let’s say someone tries to corner the market on Picassos (Picassos are the classic example of a good whose supply is fixed–there is an exact amount of them, and the amount cannot be increased). Our would-be market cornerer starts buying up all the Picassos at the current market price, which lets assume is 10,000. He wants to take some works off the market, which will raise the price to 50,000 and then sell at that price, but because he doesn’t have millions of dollars floating around, he has to take out a lot of short term loans to gain the capital he needs. But as the price of a Picasso rises, so does the amount of people willing to sell them–say someone is willing to sell for 20,000 but not 10,000–and the cornerer has to buy up all of these as well. What usually happens is that other people realize what’s happening, and decide to wait the cornerer out–let’s say they postpone all their Picasso purchasing by a month. But the cornerer can’t wait that long, because his loans are short term and are due soon, and there are are very few sales happening at 50,000. So he puts everything on the market at the last second, driving the price back down to 10,000. At this point, he loses money via interest on his loans, plus everything he bought above the market price.
Most modern market cornering attempts are more sophisticated than this. For example, Goldman didn’t need to buy up a large amount of aluminum. To reduce the market supply and raise prices, they only needed to buy up a small quantity and then keep shipping it around the warehouse, preventing other people from getting their goods to market.
Hope this helped. I’m not great at explaining things.
One could potentially corner the market on Picassos by buying them up slowly over time as they go up for sale. To hinder people from finding out that you are the one buying them all, you could use shell companies, straw purchasers, nominees, attorneys, bearer stock, etc. to make each purchase or two appear to have been made by a different purchaser. So maybe Guernica ends up being bought by your Cayman Islands Offshore Holding Corporation which is a wholly-owned subsidiary of Cool, Ltd., a Bermuda corporation whose shares have been issued in bearer form and deposited at Credit Suisse in a safe deposit box registered to a Vanuatu trust holding assets on behalf of a Bahamas corporation that is registered in the name of your Luxembourg broker.
It is commonly illegal to conceal large-scale purchases of publicly traded stock in this manner, so you might be at risk of getting in trouble if you were to try to buy, say, IBM this way. But I don’t think that Picassos are regulated by the SEC or any similar regulatory agency in a security-like manner.
I haven’t seen anyone on this thread try to tackle the shear volume we are talking about here.
I own a fairly large retail store and I order a pallet of Saran Wrap about once a quarter.
A pallet is 100 cases of 24 so 2400 rolls.
I assume a truck would be 26 pallet spots double stacked so 52 pallets. So 124,800 rolls per truck
Times 10 = 1.248 million pieces.
I think the OP was off on the discount you could accrue with that kind of order, my guess is factory direct would be well under $1 per roll.
If you get a pole barn for storage, not climate controlled or anything you could probably store it for $5,000 per year. So $25K per the OPs scenario
Your adding right around $0.02 per roll to the cost.
In conclusion, as a business owner, this looks like a really
sweet deal on paper, but probably a nightmare in real life.
Possible but not practical
- off to look up “pole barn” *
ETA: * back. Waddya know. *
Hey Mrdeals, welcome. Stay around. We (I) need people like you around here, where things can get a little ivory towerish.
off to look up ivory towerish
Thanks!
I do know my way around retail, wholesale and manufacturing…hopefully I’ll be able to become a valued member!
A 53’ tractor trailer holds around 4,000 cubic feet. 10 of them would of course be 40,000 cubic feet. A 2,500 cubic foot unheated storage facility would cost me $120 a month. He would need 16 of them at a cost of $23,000 a year for 40,000 cubic feet. Obviously, bigger is going to be less expensive, but $5,000 a year is wildly optimistic, as is the assumption in the OP that trend line pricing for Saran Wrap will result in the price nearly quadrupling in just 5 years, not to mention the fact that he assumes he’s going to sell a million units, which is as much as your fairly large retail store sells in 130 years, and he’s going to sell them at full retail price. What, out of the back of his pole barn? Does that seem to be a sweet deal even on paper? It seems like a terrible deal on paper, and probably even worse in real life.
If you’re lucky the Saran Wrap you buy wholesale for $0.80 right now will be wholesaling for $1.10 in five years and retailing for $2.29 in five years, but you won’t get retail price in the quantities you need to sell. Plus, does Saran Wrap in an non-climate controlled facility degrade? Plasticizers do off gas, what happens if your million units of plastic wrap turn into a billion homogeneous blobs of polymer? Hell, I suppose you could wrap them in plastic to try to preserve them, but how would you know when to stop unwrapping?
Now commodities make money buying and selling oil, but most of them don’t ever take delivery any more than traders in pork bellies handle pig carcasses. A tanker of oil may change hands half a dozen times between leaving the production facility and arriving at its destination. That’s how you make money at this, not by owning a warehouse full of crap for 5 years, you buy a contract to have the stuff delivered to you six weeks or six months or five years from now.