By Andrew Takla
I work part time as a music teacher, where I have the privilege of teaching people of all ages and all walks of life how to play the piano and the violin. That being said, those who know me will understand how much I love shopping for bargains.
One day, I was scrolling through Facebook Marketplace, looking for a quality pre-loved violin for one of my students, and I came across what I perceived to be a beautiful antique violin. The violin was on sale for $200, and I thought the price of the violin was too good to be true!
So, I went to inspect and play the violin. It was in excellent condition and produced an amazing sound and thus, I proceeded with the purchase. I drove home that day with such a big grin on my face, wondering about the true cost of the violin. A few days later, I took the violin to my local luthier to get his opinion on the violin’s value.
After spending an extra $400 to restore it, I was astounded to hear that the violin with the accompanying bow and case was valued at $5000! “I’ve won the lotto” I thought to myself. From that moment, I knew that I was onto something. My love and passion for collecting antique violins was born!
This will be a three-part series that will reflect upon my own personal experiences collecting antique violins, and the lessons I have learnt. When I started collecting antique violins, I realised there were some crossovers between the principles I applied in investing and collecting antique violins. Some of these principles include demand and supply, health and liquidity.
I look forward to discussing these principles through my series, and hopefully even start a conversation surrounding investment outside the typical financial markets we all know and engage with.
Demand and Supply
Just like with any physical or financial asset, its fair value will be determined by the demand for and supply of that asset, i.e. how many people want to buy that asset, and the abundance of the asset. For instance, a violin which is mass-produced in a factory utilising inferior materials will not fetch a price anywhere near as a high as an original hand-made 1720 Antonius Stradivarius violin, made with premium materials in pristine condition.
A low-quality factory-made violin could be sold on Amazon for as low as $50 AUD, but an original 300-year-old Antonius Stradivarius violin could sell for as much as $19,000,000 AUD. Therefore, it is my aim as an antique violin collector to source rare antique violins with quality materials, excellent craftmanship and excellent health as these violins are most sought after.
Some of you may be familiar from the application of demand and supply models that mass-producing factor-made violins will increase the supply of the instrument and thus decrease its price. However, how do you determine the price of an antique violin if each individual violin is so unique?
Whilst antique violins are not homogenous products (i.e. they are not identical), some of the factors which can dictate the demand for an antique on a violin are the label on the violin, the origin of the violin, the age of the violin, the condition of the violin, as well as the quality of the craftmanship which has taken place. In combination with this, the rarity of a violin which has each of these factors in its favour can fetch a high market price.
It should also be mentioned that whilst the intrinsic value of a company’s stock price can be somewhat determined utilising various valuation models, the same cannot be said for antique violins.
Note: For those who are wondering what I mean by intrinsic value vs market value, market value can be understood as what people are willing to pay, whereas intrinsic value is how much something is worth.
I believe that there is no actual way of determining an antique violin’s intrinsic value since the attractiveness of the violin’s cosmetic appearance and the quality of sound produced by the violin is determined by the player and is rather subjective.
I see antique violins in the same way that I see people. In the way that people have different characters and different personalities, and are perceived differently from one to another, antique violins can be understood in the same manner. This is in terms of their cosmetic appearance as well as both the physical appearance of the violin and the tone of sound produced from the violin.
When a violin player purchases an antique violin, they are often making a comparison between one violin and another to determine which violin they prefer. This is in the same way that an investor compares data between companies on the stock market to determine which company to invest in.
Violins can be compared by the quality of the wood, the maker, age of the violin and appearance of the violin (unique designs, varnishes or finishes). Whilst some violins are clearly superior than others due to favourable characteristics and are reflected in their respective pricing, determining whether one violin is superior compared to another is often subjective. As a result, the value of those violins can vary in accordance with what a buyer is willing to pay.
It must be noted that whilst I am not an accredited valuer of violins (I will leave that to my luthier 😉 ), generally speaking, valuers of violin instruments will take into consideration all the factors I have mentioned above, but they also have access to historical data such as selling prices of similar violins sold at auction houses. Whilst these violins are not identical, they can at the very least provide some guidance as to their worth.
I hope the first part to this three-part series has provided a valuable insight into the lessons I have learned from collecting antique violins. Please stay tuned next week as I enter the second part of this series and talk about health.
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