Don't buy collectibles like Bernie Madoff
Saturday, November 14, 2009 at 8:16PM It appears that Bernie Madoff had other problems besides the Ponzi scam he ran. He had a bad habit of over spending on luxury items. It’s not the items themselves that are good or bad, for, when bought at the right price, they could have been worthwhile investments.
Stupidly purchasing out of greed, is like gambling on a risky stock, you’ll usually lose money.
You may think, “well there’s no chance of me ever spending that kind of money on those kinds of items, I can’t afford them.” True, most of us never will. But it IS possible to let greed blind you into buying a fake Wallace Nutting, Sawyer or Davidson print.
It is very possible to be enticed with the thought of an easy profit when auction fever sets in. Look, the bid for that item is at pennies on the dollar! Oops, you didn’t preview the auction and that Grueby vase has a big crack.
What about that gem there? You just read that one sold for $500 on eBay, it’s only selling for $50! Buy it! Doh! The one on eBay sold for so much because it had important documented provenance. The one you purchased for $50 is worth $25. It turns out it was owned by a dirt farmer who said it came from the Titanic,… but can’t prove it.
You can avoid being a Bernie Madoff when buying collectibles by learning a few things from the examples below.
Let’s begin with the last paragraph in an article about the subject at hand:
“If Mr. Madoff were to cry over anything on this day, though, it would be that his most expensive item — the “Monoblocco” chronograph wristwatch — sold for only $65,000, nearly $20,000 less than its value” rest of NY Times story here.
Now the premise of this statement is automatically wrong. Because if the item brought $45,000 at an advertised auction with an apt amount of competition in the room, then $45,000 IS the value, not $65,000. Call me crazy, but I believe that the market sets the price of an item.
Next, let’s look at some of the other “buys” at this auction, which by the way, was held in the NY Sheraton ballroom. (Do you think it’s possible that people may overpay a bit when they’re in that type of setting?) You can bet your fake Rolex on it!
A Mets jacket that Bernie once owned sold for $14,500, which one could argue is the value of that garment at the time. How much do you think the buyer will get for it in the future when the hype has dwindled? If you buy like that, please remove yourself from my mailing list if you’re a subscriber, but be sure to attend every auction I hold!
Lot #201, a pair of Art Deco earrings by Cartier had a pre-auction estimate of $6,500 -$10,000 hammered at $70,000. Will anyone care that your sweetheart is wearing Cartier bling that was owned by Bernies wife?
Will they care $60,000 worth? Does the phrase, “more money than brains” mean anything? If you’re going to buy something like this, you want to be the next buyer who gets them in a liquidation sale because THIS buyer went broke from foolish spending habits.
“But wait” you say, “Bernie went under and all this stuff is bringing more than expected.” No, not all, in fact many lots sold for far less than expected, for example:
A 1945 Rolex “prisoner watch” was valued at almost $90,000, it sold for $55,000. The auction house passed a 1935 Rolex valued at over $50,000, because it did not meet a reserve bid.
(I’m curious to know why a US Marshall auction of seized assets should have a reserved bid.)
All in all, there were about 200 lots offered, give or take a few. Some people bought like Bernie and some were more cautious. Had I been there, the only thing I would have walked away with would have been a plate of free hor d’oeuvres, I don’t like losing money.
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