Prices/Value Discussion.

[Lapa]

Eric,

Someone told me a long time ago that anything non-essential is only worth what sombody is willing to pay for it.

I can put a sticker price of $1,000 on my Type 3 Order of the Red Star and raise it by $500 each month, I doubt if it will ever sell since its perceived value will never be anywhere near what I'll be asking. Yes, we are collecting unusual and rare items, but even these have a price. Look at exclusive items that are offered for sale once in a while, like rare coins for instance. They are rare; most of them are unique (1933 US $20 coin for instance). Yet, they do not always sell, or in an auction, the bidding will stop at some point. Why? Because the asked price is higher than their perceived value, despite the fact that you may never see that coin available for sale. The Homo Economicus must arbitrate between his desire to own that piece, and the economic reality (eg: economic growth or recession, investment opportunities, physical needs, etc). Basically, only the Sultan of Brunei and Bill Gates can probably disregard these consideration. The rest of humanity, including the rich ones, must deal with it in one form or another.

Marc

[rboomsma]

Unforunatley it puts a lot of collectors out of the market, or buying a piece they really can't afford and they stop collecting. Creating a much smaller market for the medals. There are many orders I would have bought 1-2 years ago that I won't even look at now, I think dealers will find at some point they won't be able to sell high end stuff anymore, or have to wait a long time.

Originally Posted by ericlida

It is simple. When collectors see that the prices are the same (or go down), they don’t buy, waiting for better deal. When prices are going up collectors are afraid that they will be higher tomorrow and buy the order or medal. If you need a Star of Hero of USSR, not too many dealers have it; you probably would buy it now for $3500.00 (blaming your self for not buying for $2900.00) but the same time being afraid that it will be $4500.00 tomorrow. I think this is the main reason of raising prices today.

Eric.

[ericlida]

Rboomsma, Marc I agree with both of you, however I still think that dealers would like to sell their staff ASAP, and raising the prices (again it's only my opinion) help them to sell faster.
Of course, not everybody can pay few thousands for the medal or order. When I started collecting I had problems paying even $50.00-100.00 for the medal. Paying $25.00 was a big deal for me and my family (my wife). It was not because I did not have $100.00, mostly it was a psychological barrier. People that collect Soviet Orders and Medals are not wealthy as Bill Gates (who is?), but they have some extra money to spend on their hobby. I will probably repeat my self: it's only psychological factor. If you are ready to spend $2900.00 on the Star (and of course have this much $$), you WILL SPEND $3500.00 too. It just takes a little of time. I am not saying you will sell your house or kidney to buy an Order (I hope), but you will find the resource. Two years ago I was offered Kutuzov 2, Suvorov 2, Khmelnitsky 2 for $1500.00-1800.00 each. I thought it's crazy. I would pay for these orders this price without any doubt today. It's not becouse I have more money today than I had 2 years ago. I am just ready to do it.

Eric.

[Dolf]

Eric,

I believe you score two points with both your last posts here!
You're most probably right in both statements!

I feel from my own experience (not a year yet that I collect Soviet Awards but quicly became an "addict" ) that I have a tendency to buy now what I don't know if I can buy tomorrow, even if I find some items overpriced (and more expensive than a year ago) mostly because of the increasing prices and therefore fearing such items will be sold at out of reach prices in the near future!...

I also agree that I probably feel readier now than a year ago to pay higher prices for some Awards!... (not that I find this a real positive "evolution" , but that's just a fact!)

Best,

Dolf

[ericlida]

Dolf,

I am going through the same process. Probably not only two of us are "in these shoes". Comparing the collecting hobby (not only Soviet Medals - any) to an "addiction" is absolutely correct. BTW, I know the treatment - it's your wife .

Eric.

[Dolf]

Eric,


"Probably not only two of us are "in these shoes"."

I guess not!

"Comparing the collecting hobby to an "addiction" is absolutely correct."

Yes, I know

"BTW, I know the treatment - it's your wife"

I also agree with you.
Perhaps one of the reasons some of us prefer to remain single
On the other hand it's sometimes very useful to have someone to hold the reins for us "poor addict"

Best,

Dolf

[Lapa]

Eric,

The problem I have with your theory is that prices will keep increasing indefinitely, which is unrealistic. The economy and the markets are cyclic. Even though they may have different cycle-lengths, they nevertheless remain cyclic. The most obvious illustration of this remains the real-estate market (see previous posts in this thread from Dave, for instance).

Marc

[ericlida]

Marc,

I think that comparing Real estate with collecting Soviet Awards is not accurate.

How many people are interested in buying homes and property? 99.99% of the US population would like to own, not everybody can afford it. This is why the prices on real estate are going up. Not because of limited sale market, because of high interest and big number of buyers.

How many people would like to buy Soviet award and spend $1000.00 or more on Soviet Order? Not too many. Raising prices helps to increase the collector's anxiety and make them buy.

Another issue. Talking about expensive awards. I would prefer to buy rare and expensive awards from a reputable dealer instead of buying ot on eBay or somewhere else. In this case I am ready to pay more, but be sure that I did not buy fake. How many reputable dealers do you know? 3-4-5 - who have rare orders / medals? We have a monopoly here, which gives the dealer an opportunity to raise the price.

Eric

[Lapa]

Originally Posted by ericlida

Another issue. Talking about expensive awards. I would prefer to buy rare and expensive awards from a reputable dealer instead of buying ot on eBay or somewhere else. In this case I am ready to pay more, but be sure that I did not buy fake. How many reputable dealers do you know? 3-4-5 - who have rare orders / medals? We have a monopoly here, which gives the dealer an opportunity to raise the price.

Eric,
That is until such a point where they push beyond their clients' limits, whether actual (financial) or psychological. You said earlier that they need to move their inventory; I can't agree more wholeheatedly with you on that point, yet it was also mentioned that they keep raising prices on orders they have held for a couple of years. That is pretty slow inventory turnover in my book.
Bottom line is, if dealers do not sell, they cannot buy (and probably will also have some down to earth problems, such as paying for their bills). If they don't buy, they loose their possibility to generate income. Once again, this cannot be perpetual increase trend.

Marc

[rboomsma]

I agree with Marc

If dealers are not careful they eliminate their market to a few rich people.
The majority of us collecting I believe are not rich people. Also they will just increase the cost of buying medals and orders for themselves as I am sure even in remote places in eastern europe they find out what dealers are selling these medals for and want more for them. Just becomes a vicious cycle of price increases.

I agree with the concept of keep raising prices forces us to buy now, but it eventually will eliminate most of us as collectors, or we will just buy one piece ocassionally, slowing the market down. Which is the opposite of what the dealers want.





[QUOTE=Lapa]Eric,
That is until such a point where they push beyond their clients' limits, whether actual (financial) or psychological. You said earlier that they need to move their inventory; I can't agree more wholeheatedly with you on that point, yet it was also mentioned that they keep raising prices on orders they have held for a couple of years. That is pretty slow inventory turnover in my book.
Bottom line is, if dealers do not sell, they cannot buy (and probably will also have some down to earth problems, such as paying for their bills). If they don't buy, they loose their possibility to generate income. Once again, this cannot be perpetual increase trend.