Violins as Capital Investment?

July 3, 2007 at 06:16 PM · Maybe two decades ago Niccolo Gagliano (just to name one example) was regarded as a kind of Italian maker for those who could not afford a big name fiddle. Those days are over and one wonders if the market will continue to develop as before.

I am not talking of named mint condtion Strads but rather names which seemed to be affordable in terms of making a choice between buying a house or ones dream fiddle.

Any market is driven by demand and supply and it is the question whether the largest buying group on the market, musicians, thinks it worthwhile to do the investment on an instrument or not.

This leads automatically to the question of sound. Do the expensive instruments really sound better or are we just getting fooled by those dealers selling the expensive stuff?

Replies (19)

July 3, 2007 at 07:07 PM · The most troubling issue here is more of will the violin be recognized as what it was when you purchased it?

Many occurences of violins with papers from reputable shops recieve dissenting opinions. If you buy a Scarampella or a Storioni now, what might someone attribute it when you are ready to sell it? "Fresh eyes" can kill your investment very easily.

As far getting fooled - the violinist is not trained to know what characteristics make up a Ceruti, Gagliano, or Pressenda. It is the sound that might prompt them to pay too much for an instrument with questionable attribution.

I don't see that these instruments will devalue if they are what they claim to be. But as an investment - it's very risky - particularly in this price range.

This, of course, is my opinion (and experience - with a bow that is no longer what I purchased with papers from a VERY reputable shop.)

July 3, 2007 at 07:29 PM · i think it's a dangerous trend to turn prized violins into investment vehicles.

violins are meant to be played, which means depreciation enters the financial picture. the only way to remove depreciation is to remove the violin from active performance and store it in a museum. that is a bad development for performers, unless current and recent past makers' models can rise to a level of esteem to replace the oldest models. such a turn would allow the strads of the world to be 'retired' to the stock market without loss to the great players of the world.

at least i hope so...i'm not much of an investor and don't understand market forces.

July 3, 2007 at 07:55 PM · Joel wrote: "What investment funds are gaining territory in the purchase of violins? Musicians do not constitute an investment fund."

I'm going to duck debate on this whole issue, except to answer Joel's question... as 've seen this subject discussed a number of times on this board and elsewhere... with the end result being a cheering section for each point of view (non-productive). Sorry if that view upsets anyone... but it's an honest expression of what I believe I've seen (read).

Joel; There are several "Hedge Funds" being developed with the focus on orchestral stringed instruments. The one that's received the most press recently is based in London (11 mil pledged presently, goal of 55 mil), but I know of a few others (both in Europe and the States). Hedge Funds with a focus on specific collectables isn't a new thing... and have already had a significant effect on the fine artwork market, for example. The "new thing" as I understand it, is that regulations have recently been addopted that allow individuals to invest with a lower "entry" amount...

Jeffrey

J. S. Holmes Fine Violins

July 3, 2007 at 07:46 PM · Christopher, your point about authenticity sholdn't be an issue if you have a violin with a certificate by a known and respected appraiser like Moennig, Warren, B&F, or others.

The two big problems with instruments as investment are 1. liquidity and 2. transaction costs, which are far and above what a good index fund from Vangard or Fidelty would cost you. There is also the possibility of deterioration or natural disaster, or even just tripping on a light cord and putting a crack in the back. Kind of like a race horse--just one gopher hole in the pasture and....

Are the days over when one could have made a killing on an instrument? I have two teachers that bought great old Italians in the 60s for less than $7000, and which are now worth upwards of $1million. Is that still possible? It's hard to believe, partly because instruments have appreciated while real wages have stagnated. Also, more and more modern violins are being used instead, even in the last 10 years.

So who knows?

July 3, 2007 at 09:58 PM · to me, with the exception of your house, for an average person, to put down more than 5% of your net worth in one vehicle of investment for the purpose of investment, is a little too risky. you may be overdiversified, but you minimize the chance of losing your shirt in one transaction which may takes years to recover, if ever.

imo, if you do not need the violin for performance purpose, and if you plan to put down 2ook for a violin, you'd better have 4 mil net worth:)

i think jeffery's hedge fund idea is interesting. it is a better approach in terms of risk management to own 5% of a 4 mil strad than 100% of a 2ook violin. that 5% is like a mutual fund, that 100% is like one single stock. not to mention, a strad is a strad.

it will be interesting to know if those hedgies have disclosed if they have actually made any purchases.

if this trend is to continue with the hedgies, i think it will be great to the very high end market. there may be more transparancy and liquidity.

and less funny businesses:)

here is someone who struck gold with a high risk venture, sorry not violin:)

http://www.thestreet.com/funds/followmoney/10358370.html

July 3, 2007 at 10:53 PM · Seeing as successful hedge funds look for well over 15% a year (which they do by shorting and other market trickery), no violin fund would ever get taken seriously.

A violin is an investment in that it costs money, but most of them will just appreciate with inflation... there's been 5 million discussions about this between dealers and other types of people and frankly there's never been compelling evidence that a violin will outperform the S&P500 or any index fund for that matter. The very best instruments can't be a bad investment, to be fair. In fact, anything that gives you satisfaction is a good investment. But if you're worried about the money aspect, there's better out there.

I wouldn't pledge to an instrument hedge fund.

July 4, 2007 at 01:34 AM · Scott,

I'm afraid that simply is not true. My papers on my bow are in fact from one the shops that you listed - and it is not what they say it is. It is dangerous to assume that any one shop will share the same opinion as another. This makes resale a very risky procedure. The bow I purchased almost 10 yrs ago would currently be a very collectable bow if the papers were accurate, but they are not. If it happened to me, it can happen to anyone.

With respect to the shop involved in my unresolved situation, I won't go into details publicly. If you would like more information on my experience you may email me privately at burndrett@hotmailREMOVE.com (remove REMOVE)

July 4, 2007 at 02:45 AM · Chris:

Sorry to hear your story. But it illustrates one of the big pitfalls of a market that is notoriously inefficient (in the economic sense). I believe that the returns from an investment in instruments should be higher than for, say, stocks, becuase of the increased risk due to the opacity of the market and the general lack of liquidity. These are on top of relatively high transaction costs and also non-trivial carrying costs.

Kevin

July 4, 2007 at 02:40 AM · Christopher,

Also sorry to hear your instrument turned out that way. I think most people who buy big-name instruments from big-name shops don't have that experience, but it can be a problem. Then again,

a hedge fund can blow up, or a manager can run off with his accounts to Tahiti. Witness the Savings and Loan debacle a few years back. These days it's not easy to figure out where to park money.

July 4, 2007 at 02:55 AM · Certificates are a huge scandal in the violin market. Is it unknown for one dealer to deny a violin;s authenticity when it is presented to him, buy it for a cheap price and then offer it with a certificate of authenticity when earlier they denied the certificate to the original seller?

My advice, unless it is an example published ina book and agreed upon by several makers as the real deal don't accept it as authentic. If you want an instrument at a lower price that you want to get a certificate for then buy a modern violin from the maker himself and insist on his certificate of authenticity.

July 4, 2007 at 10:24 AM · I think the violin as a pure investment does not make sense. The major problem here is the lack of liquidity.

It can take years to sell an instrument and sometimes you cannot sell it at all for the return you expect to see.

Just remember the value of an instrument is what somebody is prepared to pay for it. If you try to sell a top name italian violin for 3 years without success what is then the value?

July 4, 2007 at 02:33 PM · What investors need is a robust market that could provide liquidity and mechanisms for risk transfer. For example, dealers making markets in Montagnanas, Guarneri short sales, Zygmuntowicz futures, swaps on reference portfolios of 18th century Italian instruments, principal protected portfolios of "semi-modern" Italians, etc.

July 4, 2007 at 03:16 PM · One more thought: isn't there a big capital gains for profit on a musical instrument? And what about insurance?

July 4, 2007 at 03:44 PM · I'd rather invest in land and play a 10K violin.

July 4, 2007 at 06:51 PM · Amen, Robert.

July 12, 2007 at 10:01 AM · When it comes to the investment/collecting market of fine antique Italian instruments there is very little difference to that of the visual art market. There will always be some person willing to buy the 'creme de la creme' regardless of price increase. The market has very little (to nothing) to do with sound or perfomance when it comes to price and appreciation. Personally I am not a great fan of Van Gogh's work but look at the prices over the years...I mean it's just a painting ...or how about the Picasso purchased by a previous client years ago for half a million that he just sold for over 20.....ridiculous to someone like me who considers the works of my five year old niece much more interesting. There is a huge difference between purchasing an instrument for sound or that of investment and this has nothing to do with music. If I had the available cash to buy, lets say, the Kriesler del Gesu I'd do it in a heart beat and hold on to it for at least a decade and preverably two. I absolutely believe that the long term investment would be sound.....but even as a musician I would do it as a cold blooded investor and not the idealistic musician I truly believe myself to be. In 1989 I was helping a friend find a violin to be bought by a sponsor. She had a budget of about US250K and at the time Joseph filius Guarneri, JB Guad, Montagnana and some others were in that range. We thought it highway robbery, much too expensive for what they were. As one in the business of buying and selling I saw some of those same exact instruments come though the shop and sell for more than double what we had been asked to pay less than five years before. Do you know what a good, well documented, great provinance Turin Guad goes for today? And, yes, there are people out there willing to buy them and the demographic of the kind of wealth willing to drop a couple of million on a wooden box is changing dramatically.

I agree that any 'high' purchase of the like should be infalable....or as close as possible...and would only purchase those with multiple certificates both old and new but sometimes you have to look at the past to predict the future.....of course 'past success does not guarantee future performance' but a world war, global depression and a couple of 'police actions' (not necessarily in that order) haven't been able to topple the house of cards so?

As for capital gains, yes that can get messy. Thankfully I live in a country which doesn't have that (yet) so it is the last of my worries.

A violin (cello, viola whatever) is just a tool....the better the tool the easier the job but you still have to be a master and if you are, in the end, the monument will still be built to perfection regardless....it just may take a little more time and effort:)

Chris

July 21, 2007 at 06:57 AM · The total return on buying a Strad or Guarneri (or a good modern violin) 20 years ago would be peanuts compared with putting your money in the share market at that time.

Share prices have gone up much more than violin prices, and morever violins don't pay half-yearly dividends (they just soak up insurance premiums).

Moral: buy a violin because you want to play it, or you just love it, but don't kid yourself it's a good investment.

July 21, 2007 at 09:09 PM · Violins might not be a very good investment unless you consider them in relation to other work tools.

To take an almost worst case scenario, a violinist might make a living for 50 years, and still recover the cost of equipment.

How much is your five year old computer worth? What's the depreciation on used brass and woodwind instruments?

I've argued both sides, so I don't have an agenda. Purely as an investment, violins overall haven't done as well as some other investments. With a "for profit" musician, the picture can look different from typical investment models.

July 21, 2007 at 09:53 PM · I agree with your comments David. For a working musician (for whom violins are really intended), it's nice to have an asset that over an extended period goes up in value.

I'm one of those people who are polygamous with violins, and for me any additional violin purchased is a foregone investment opportunity!

This discussion has been archived and is no longer accepting responses.

Facebook Twitter YouTube Instagram Email

Violinist.com is made possible by...

Shar Music
Shar Music

Yamaha Violin Finder
Yamaha Violin Finder

Corilon Violins
Corilon Violins

Pirastro Strings
Pirastro Strings

Shanghai Isaac Stern International Violin Competition
Shanghai Isaac Stern International Violin Competition

Dimitri Musafia, Master Maker of Violin and Viola Cases
Dimitri Musafia, Master Maker of Violin and Viola Cases

Elmar Oliveira International Violin Competition
Elmar Oliveira International Violin Competition

Gliga Violins
Gliga Violins

Bay Fine Strings Violin Shop

Bobelock Cases

Fiddlerman.com

Fiddlershop

Los Angeles Violin Shop

Nazareth Gevorkian Violins

Potter Violins

Pro-Am Strings

Violin Lab

Wangbow Violin Bow Workshop

Subscribe