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by Alan Buchalter  |  Dec 26, 2012

OKAY... we may be poised to go over the Fiscal Cliff and its possible the economy may get worse before it gets better. Investing in the stock market is difficult these days due to high-frequency trading and wide-spread market manipulation in commodities and precious metals. But this is not a blog about the manipulation of markets by evil forces operating under the radar ... I am really interested in discussing the wisdom of putting your hard earned money or savings into guitars and other collectible instruments (mandos, vintage amps, etc.) right now.

FACT: If you had started investing in certain ďvintageĒ acoustic and electric guitars and amps in the Ď70s and Ď80s...chances are you would have enjoyed huge increases in value...select items purchased for hundreds could now be worth tens of thousands...not bad! For those of you who had the foresight...congratulations! For those of us who have came to the party too late...hmmm...the question is: Is there still money to be made?

FACT: While the steep gains in value have leveled off during the past few years, certain premium vintage instruments do continue to increase in value, although at a slower pace. For most of us, the real premium vintage pieces are out of our reach and in the hands of a select group of extremely wealthy highest end collectors...and these guys often sell to each other...so those of us in the real world never get a shot at these jewels. Iíve heard there are some collectors in Japan who have collections worth as much as $200 Million. But, even these guys are being more cautious nowadays and may limit their purchases to those rare opportunities when something really special becomes available.

FACT: The market in higher-end vintage Strats, Teles and Les Pauls seems to have softened considerably during the past few years. Iím talking about $30K-$125K items. I just donít think these types of vintage pieces are appreciating at the rate they were 5-10 years ago. In fact, there may even be a leak in the bubble in that range of vintage instruments with some deflation of value. Most of us are not involved in this end of the market anyway...

FACT: Iíve found that good quality vintage Martin and Gibson acoustics have increased in value about 10% annually over the past 5-10 years...but these rates of appreciation have slowed. There is still a very active market in these desirable instruments, particularly in the $3K-$20K range.

FACT: Certain non-vintage, limited edition, high-end and/or hand-made guitars are always in demand and there is still an active market for these high quality instruments among serious performers and collectors. For example, hand-made guitars made by Bill Collings, Dana Bourgeois, James Goodall, George Lowden, Kim Walker, Kevin Ryan, Jim Olsen, Bill Tippin, John Greven (add your favorites to this list) are always in demand and seem to retain their value. They are not as likely to appreciate in value (at least while the builders are still alive and producing more instruments)...but they are retaining their value and there is a market for their used instruments as well. More importantly, these instruments are a rare and true pleasure to own and play and this greatly increases the value of ownership to the afficionado. The same applies to some other higher-end larger production builders such as Fender Custom Shop Masterbuilt, Gibson Custom Shop, Martin Custom Shop, Paul Reed Smith (again add your favorites to this list). The inherent aesthetic qualities and creative usefulness of these unique masterpieces of luthiery make them sound investments even in todayís dismal economy.

CONCLUSION: So... is it still a good investment in our struggling economy to buy vintage, limited edition, custom shop and hand-made instruments? In my humble opinion...Yes!!! I say these rare and high-quality instruments are indeed still a good investment. I believe that quality and the inherent beauty and musical value of such instruments...to the maximum extent possible under current economic conditions...trump the downward market trend and represent reasonably safe and intelligent investments in an uncertain world. Am I guaranteeing anything by stating my opinion? Obviously not! (I can barely control myself...let alone market forces.) However, my experience in the guitar business has made me confident that rare, vintage and high-quality instruments will, in the long run, retain their value and probably increase in value...because of their intrinsic beauty and power to create beautiful music and soulful vibrations. After all...can you sit down and create beautiful music and express your human spirit with any of your stock certificates? GOOD LUCK IN 2013!!!

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Alan Buchalter is the manager of Exceptional Guitars. He has been buying, selling and trading guitars for over 30 years.
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