Investing in Custom Knives: Part 4 of 5
4. Aftermarket Demand and Performance
Selling for a profit has its own set of nuances. As a custom knife collector, you need to first and foremost buy the knife at the right price. This is vital. Just as important is to know when it is time to sell the knife. The primary market is when you purchased directly from the maker. Where as, the aftermarket is when you purchase a previously owned custom knife. The aftermarket is also where you will sell your knife. This is why it is essential to utilize the information available in the aftermarket. This information is most readily available on the internet.
In the beginning of the century, knife forums started to appear on the internet. Primarily a place to discuss custom knives and their makers, bandwidth was made available to members to sell their custom knives. Visiting those sales forums many times each day I was able to start tracking not just trends, but which knives sold quickly and which ones did not.
In the past a sale was more of a private matter, now the particulars of the transactions were public. Today the internet is an excellent place for anyone to track trends and identify strong performers. Internet sites are best used to identify knives and makers for a short-term ROI (return on investment); however, searches allow you to go back for years. You can track how makers did with previous styles of knives over the years helping you analyze not only the demand for particular knives, but which of their knives sold the best. This is the type of knowledge that can literally pay off big when working in niche markets.
What you will have to determine is what percentage you want as your ROI? There is room for both short term and long-term gains among your knives. What we witnessed over the last 8 years were people buying knives from makers knowing they had the knife already sold. That is referred to as an arbitrage – good work if you can get it. With the help of the forums and social media many were inclined to post the photo on their favorite forum or sub-forum and let the bidding begin. Today, a popular outlet for this is Instagram.
Short term investing is an easier proposition. As trends of the day move it can be easier to “cherry pick” the more in demand makers or knives. Buy them at what you feel is a good price and flip the knife for a profit. A friend of mine introduced me to the phrase, “a quick nickel or a slow dime.” In investment circles this is referred to as the “time value of money.” Getting your initial investment and a smaller profit, allows you to reinvest quickly and hopefully with the same results.
Long term investment is usually what you hear about. The stories are out there for all to see or read about. The person who bought the “famous maker’s knife” when he was new. The maker became a legend and their custom knives now sell for X amount of times over what they paid for it. Generally, these custom knives have been held for 30 or 40 years. (talk about a slow dime) Having set your ROI percentage, could you have sold these knives and continued to buy more as the opportunity presented itself? Over those 30 – 40 years would you have made more money? It is interesting to contemplate which would have been the better investment strategy.
Robertson’s Custom Cutlery is your source for custom knives from today’s leading custom knife makers. We only feature the highest quality knives at value prices. Our custom fixed and folding knife selection includes tactical fixed and folding knives, presentation fixed and folding knives, bowies, hunters and skinners, and a large selection of forged blades. Les Robertson, author and owner of Robertson’s Custom Cutlery, is also a Field Editor for Blade Magazine and an instructor at Blade University. If you have questions about the content in this article or about any knife or maker on our website, you can contact Les directly at email@example.com or (706) 650-0252.