Collectible Stocks and Bonds from North American Railroads     by Terry Cox

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Cox's Corner
April, 2014



This article appeared in:
Scripophily, Apr, 2014

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The funny thing about valuing collectibles

I have a musician friend who also tracks values and writes about collectibles. Although we only live about 25 miles apart and know many of the same people, our paths seldom cross more often than once a year. During our time together, we always compare notes on what we perceive happening in our separate specialties and any trends we've noticed recently. We met up again last month, and our conversation revolved around collector's perceptions of values. Although we deal with different collectibles and different collectors and have almost no probability of overlap, our experiences are remarkably similar.

One of the things we marveled at was the degree to which collectors' opinions of values shift between the times when they're thinking about buying things and the times when the actually own them. And in this respect, we are not eliminating ourselves. We all do it.

When we're considering items for purchase, we all want to pay as little as possible. No surprise there. Depending on our personalities, we may or may not try to "beat down" prices, but our body language will always speak volumes to sellers if we are dealing face to face. One of the curious things is the number of internal arguments that take place inside of us.

Most of us want to make sure we find and assess every flaw. We might hem and haw, Uhmmm…I don't know. I like it but… The funny thing is, we actually DON'T know whether we should buy and we actually DO like it. Make no mistake, we generally do want to buy, but most of us have doubt. Maybe I should wait a bit.

Sellers know this. They're not surprised. They've all seen it a thousand times and have heard the self-arguments even more. Some try to step in and help the decision process along, but truth be told, there's not a lot they can help us with. Overly pushy sellers can easily kill sales as much as they can close them. On the other hand, some of the best sellers are masters of negative marketing and, when properly done, can close more sales by merely suggesting, Yeah, this item might not be right for you. Why don't you think it over for a while? Come back in an hour or so and see if I still have it.

Regardless of venue or sales ploys, we collectors end up with items. After all, we would not be "shopping" if we did not want to buy. Quite literally, we desperately want to find something we cannot live without. And we have all sorts of opportunities to buy. Flea markets and yard sales. Bourses and shows. Telephone calls and emails. Online and physical catalogs. Live auctions and eBay auctions. Our purchasing processes will vary, but our desires and our internal arguments remain similar.

But, then a funny thing takes place when we actually do buy. For some weird reason, we get amnesia about our previous, well-analyzed valuation. Some of us get "cold feet," meaning we suddenly regret our decisions. "Why did I think this thing was worth that much? How could I have missed this obvious flaw? I wonder if the seller will give me my money back."

And then other times, we suddenly perceive the value to be much higher than our previous valuation. Sometimes, rarity miraculously increases in our minds and our theoretical valuations double. Just because we are the new owners!

Wait a minute. How can that be? Which perception is true? The opinion of value before buying or after buying? Valuing collectibles is a "funny" thing because we can never be sure.

My musician/collector friend and I constantly deal with questions of how we estimate values compared to how other people estimate values. When a collector sends a picture of a certificate I have never seen before, I always ask him for some kind of price guidance. However, I ask the question in a certain way. I do not want a collector to predict what someone else might pay at some unknown time in the future. Instead, I ask, "If something happened to your certificate today, how much would YOU pay to acquire another?"

Most collectors want to predict what another buyer might pay five, ten or twenty years into the future. That is not helpful. We can't even predict what collectors will next week! If a collector sends me an image of a certificate, I am only interested in what he would willingly pay to buy another example of the same item right now. Why is his opinion so important? Because he is a collector and I am a cataloger. I am more interested in acquiring information and he is more interested in acquiring collectibles. I reason that the next buyer to come along, whenever that is, will be more like a collector and less like me.

Like I said earlier, valuing collectibles is a "funny" thing.

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