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Purchasing less due to poor stock market results
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93 posts in this topic

On 9/16/2022 at 11:41 AM, malvin said:

does that mean your budget/purchase plans will change if the stock market recovers within 2022?

Malvin

Stock market recovery predictions are quite grim. Bloomberg News (streaming) said yesterday it's going to take a decade to bounce back. That might be "the sky is falling" attitude, but from a business standpoint - we're definitely seeing the problems that could contribute to a decade-long recovery. On the flipside, things that were locked up in collections might find their way out in the next few years?

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On 9/21/2022 at 9:24 AM, Dr. Balls said:

Stock market recovery predictions are quite grim. Bloomberg News (streaming) said yesterday it's going to take a decade to bounce back.

The media is uncannily accurate in predicting the stock market.  From Aug. 13, 1979:

It's been 40 years since our cover declared "The death of equities" /  Twitter

By the way, BusinessWeek is now owned by Bloomberg! 

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On 9/20/2022 at 9:24 PM, Dr. Balls said:

Stock market recovery predictions are quite grim. Bloomberg News (streaming) said yesterday it's going to take a decade to bounce back. That might be "the sky is falling" attitude, but from a business standpoint - we're definitely seeing the problems that could contribute to a decade-long recovery. On the flipside, things that were locked up in collections might find their way out in the next few years?

The media makes its living being grim, and I frankly don’t see anything which justifies that. People are still buying. Job markets are still tight. Housing is still high, even if no longer effervescent. To me, it looks like the injection of so much money into the money supply due to the pandemic, and continuing deficit spending, are the primary causes of inflation, although poor harvests aren’t helping. Furthermore, the market already assumed a 3/4 point increase in the discount rate, and the Fed is well aware that we are at a tipping point of turning the current technical recession (2 quarters, small negative growth) into a real one. It is going to be real careful before it increase the rate further. People have been tightening their belts and trading down a bit, which should also slow down inflation. By Spring, I think the markets are more likely to turn bullish (“Whew, soft landing”). I don’t think it is a coincidence that the 65 day moving averages on the 3 major exchanges has been fairly stable the past 3 months, even while daily prices keep shooting up and down. People are hoping the other shoe won’t drop, but know it hasn’t happened.

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On 9/19/2022 at 9:17 PM, Garf said:

That's pretty much how I see things too. If you look at the lower end you will get people with the least disposable income feeling the oncoming squeeze the most.

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I didn’t really want to get back into this, but it’s 3:00 AM, and I am wide awake. So, just a little… 

In broad terms, yes there is market compression. But if you watch someone playing a real accordion, there are times the folds at the top, for example, are very small, almost nonexistent, but the ones at the bottom are really big. Same with markets. To me, a lot of collectors at the bottom buy things from spare cash (like me) as compared to dipping into their investment portfolio to swap for different investments. So, they are more likely to be strapped by inflation than a stock market drop—which can be hurt by inflation, but not necessarily or to the same extent. Lower priced pieces also have less “profit” built into them by dealers because they are cheaper. They can’t go too low ( and I don’t see dealers selling things at a loss, at least in this environment). As such, I see lower end pieces holding up on price, but sales totals may drop. If someone is good at picking “winners” in OA, they may make more money in the long run by buying inexpensive art now, as dealers may be a bit hungry, and waiting for the markets to correct later. 

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On 9/21/2022 at 12:20 AM, Rick2you2 said:

Lower priced pieces also have less “profit” built into them by dealers because they are cheaper. They can’t go too low ( and I don’t see dealers selling things at a loss, at least in this environment). As such, I see lower end pieces holding up on price, but sales totals may drop

I would disagree with the specific idea that dealers won't sell at a loss.  Auction prices typically dictate market values more than the dealers purchase prices.  But I agree with the general idea that lower end will hold up better.  Lower end typically has a broader base of support.  High end prices can often be determined by just 2 bidders while low end is likely to have several potential buyers interested at or near the selling price. 

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On 9/21/2022 at 3:51 AM, Nick Furious said:

I would disagree with the specific idea that dealers won't sell at a loss.  Auction prices typically dictate market values more than the dealers purchase prices.  But I agree with the general idea that lower end will hold up better.  Lower end typically has a broader base of support.  High end prices can often be determined by just 2 bidders while low end is likely to have several potential buyers interested at or near the selling price. 

They can sell at a loss, but I’ve seen what dealers have paid for low level stuff (often bought in bulk). The percentage mark-up can be pretty high. Things would have to be pretty bad, or their buys would have to have been really bad, to get into loss territory.

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On 9/21/2022 at 3:51 AM, Nick Furious said:

Auction prices typically dictate market values more than the dealers purchase prices.

That's a good point, there's been a loop there tho where some dealers are vacuuming up from auction houses then reselling with large increases. And also shilling their own stuff up.

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On 9/21/2022 at 9:18 AM, Twanj said:

That's a good point, there's been a loop there tho where some dealers are vacuuming up from auction houses then reselling with large increases. And also shilling their own stuff up.

Yeah.    I'm not sure it really works for them all that well though.    They are just trying to stay relevant and keep inventory up somehow, but buying at heritage and selling privately is a tough model.     I could be wrong but after fees and hassle and the capital tied up...   I'm not sure its all that effective, which I think is why we see more and more of the market share going to the auction houses.

Edited by Bronty
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On 9/21/2022 at 9:45 AM, Bronty said:

Yeah.    I'm not sure it really works for them all that well though.    They are just trying to stay relevant and keep inventory up somehow, but buying at heritage and selling privately is a tough model.     I could be wrong but after fees and hassle and the capital tied up...   I'm not sure its all that effective, which I think is why we see more and more of the market share going to the auction houses.

It can work out very well on higher dollar items of $50K+.

HA gives you three months to pay interest free via real dollars cash, charge, account balance).

after purchasing a piece from an auction, the dealer may re-price the item at whatever markup they decide, but several of them offer you interest free time payment for an extended duration, and they may also be willing to do partial trade.  So, if you’ve been sitting on some art for a while, and the dealer is willing to ‘deal’ in some trade, then they OA purchase from the dealer may be more in reach than an outright purchase from HA.

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On 9/16/2022 at 11:11 PM, grapeape said:

I was gonna diversify into sports cards until I heard these words.

“Do ya dip Daniel?”

 

I can’t read that and not hear his southern drawl accent in my mind. I still have no idea why the hell he swapped out that pack, like wtf could have been in an 81 Topps BK pack worth blowing your self up over?!

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On 9/22/2022 at 11:27 AM, KirbyCollector said:

Have noticed considerably less buying on the weekly DD shows over the past few 2 months. Reasons: Not the right art on offer, too much desirable art on auction siphoning off funds, or less money to spend? Tough to tell... don't think the picture will be clear until early next year

Boredom.

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Just an update for those who either don't pay attention to their 401K or don't have one, but the market took another huge hit this past week (in normal times it would have dominated headlines, but it has been buried for some bizarre reason). The heavy debate inside financial circles I belong to is: Is the bull market dead (i.e., peaked in Jan this year)? If so, it may become grim for any assets other than bonds over the next two years. I'm not fully in that camp yet, but right now there are very few market technicals which indicate an immediate positive outcome is on hand.

Edited by KirbyCollector
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I have to add that yes, I did see the $90,000 Jim Lee Batman: Hush 20th Anniversary piece that Albert put up for sale yesterday is already on hold... so the $5M+ net worth guys are obviously doing fine LOL. What I worry about is what happens when these market losses hit the wallets of those of us who provide the buying floor for the sub-$20K space in the hobby...

Edited by KirbyCollector
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On 9/24/2022 at 6:56 AM, KirbyCollector said:

Just an update for those who either don't pay attention to their 401K or don't have one, but the market took another huge hit this past week (in normal times it would have dominated headlines, but it has been buried for some bizarre reason). The heavy debate inside financial circles I belong to is: Is the bull market dead (i.e., peaked in Jan this year)? If so, it may become grim for any assets other than bonds over the next two years. I'm not fully in that camp yet, but right now there are very few market technicals which indicate an immediate positive outcome is on hand.

There is very little reason why the drop in the Dow isn’t reversed in the next few months other than an overly concerned Fed and “scaredy cat” investors. One of them involves poor harvests driving up prices of grain and fruit. As far as Europe goes, well, that what happens when you hitch your ride to  a Russian pipeline and have too much of your economy tied to selling high priced goods. But for the rest of us poor slobs, people are still buying, and spending, but buying less quantity due to high prices, and at least in the supermarket and restaurants, trading down. There is still a high level of employment. And, the stock market, I have read, has already assumed another 3/4 point increase in the Discount Rate at the next meeting. I think that adds up to cautious increases until the end of the year (unless the next crop of economic indicators changes radically). 

 

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