Holding Value?

It seems to me that we should all be happy that the value of used trains are going down!  

Cheaper trains should help alleviated the problem  we all seem to be so concerned with - 

more folks should now be able to afford,  join in and enjoy O trains.

There seems to be a good and bad side to any scenario.

Actually, how many hobbies leave any residual monetary value after you are done with it?

Maybe we should just enjoy our trains and and stop worrying about their monetary value.

Don

 Every time I talk with my financial adviser I never seem to be encouraged to explore the world of ...."Hobbies"...when it comes to my 'balanced portfolio'.  Hmmmmmm.....I wonder why? 


I don't think people should expect life coaching from their financial adviser.

Rocky Mountaineer posted:

ogaugeguy posted:

Rocky Mountaineer posted:

"...I've always been puzzled as well to watch enthusiasts literally trip over themselves to buy something the day the LHS receives it...."  

David

There will always be folks like that, David, with the mentality that the "newest" is synonymous with the best and will trip all over themselves to be the first to get  a new item. A prime example is those Apple fans (atics) who camp outside Apple stores to get the first release of an Apple product.

Agreed, and I don't doubt that one bit.  But just to be clear, that's not what I found puzzling.  My sense of bewilderment came with the part of the quote that you didn't excerpt... Namely those SAME folks are sometimes the very ones who will love to dicker/haggle over prices and free shipping when buying here on the forum.    Just another one of life's little ironies I guess.  

Sometimes, you just gotta let it go, 'cause there's no rhyme or reason to it.  

David

Yes, I've also experienced that type, David. Only explanation I have is that their mindset and emotional need to acquire the newest, and to them the best, extends itself for those folks to also needing to have the best pricewise on items.

dkdkrd posted:

 

ve been working behind the counter at our local hobby shop for about 18 years since retiring from a corporation.  This issue of the hobby's "value"....wherein "Value"= Financial Return...has always amused me.  Every time I talk with my financial adviser I never seem to be encouraged to explore the world of ...."Hobbies"...when it comes to my 'balanced portfolio'.  Hmmmmmm.....I wonder why? 

And, yet, back in the days of the first releases in the Joshua Lionel Cowen series of engines....the ones in the black boxes...there was this natilly dressed customer who came through the door.  None of us had seen him before.

He was most interested in the JLC series of engines just announced.  He expressed a strong determination to pre-order one.  But 'Which one?', was his dilemma.  We talked.  He asked a lot of questions, most of which seemed rather strange for someone actually in the O3R hobby.  After about half an hour he asked me the '$64,000 Question': "Which of these engines do YOU think will increase in value the most in the future?"  I said, 'None of them, probably.'  To which he left.  Never have seen him since.

Value of this hobby, or any item thereof?....fun, enjoyment, escape, relaxation, friendships, et al.  

Period.

Just MHO, mind you.

KD

This, and many others, are great posts!  The logic is sound and I mostly agree.  For purposes of this thread, however, this (and some others) are on a bit of detour.  The point isn't to lament the decreasing value of our toy trains as the years roll by.  The point is to try and understand the stark difference between, basically, MSRP new sales from dealers and what the same basic group of hobbyists is willing to pay for these same - new - items a short time later when offered in the secondary market.  

Some of the posts are very on-point, referring to an oversaturated market (which I don't think entirely explains it) or the "must have it new" crowd.  But the fact is, the hobby seems to be bifurcated into the "I will gladly spend $2k or more for that new item" and the "I won't pay more than 1/2 MSRP for that new item and can get it at that price in 6 months from eBay," camps.  And this makes me wonder how long the manufacturers can sustain this model of selling at what many believe to be hyper-inflated prices, when the hobby, en masse (other than those who buy new products from dealers) is unwilling to pay anywhere near MSRP/street price for the overwhelming majority of this stuff?   

Peter

PJB posted:

  The point isn't to lament the decreasing value of our toy trains as the years roll by.  The point is to try and understand the stark difference between, basically, MSRP new sales from dealers and what the same basic group of hobbyists is willing to pay for these same - new - items a short time later when offered in the secondary market.  

Peter

 

Pretty easy to figure out.   Most who shop newer production in the secondary market these days know the dealer system well and average out expected depreciation and are unwilling to pay normal dealer markups above 25%.   So this group of savvy bottom feeders shop the secondary market in earnest where dealer markups have usually been written off.   By then, most sellers are desperate and happy  just to recoup cost.. 

joe

So this group of savvy bottom feeders shop the secondary market in earnest where dealer markups have usually been written off.

There is that name calling again.
Without those "savvy bottom feeders" there would be no secondary market at all.

PJB posted:

 

Some of the posts are very on-point, referring to an oversaturated market (which I don't think entirely explains it) or the "must have it new" crowd.  But the fact is, the hobby seems to be bifurcated into the "I will gladly spend $2k or more for that new item" and the "I won't pay more than 1/2 MSRP for that new item and can get it at that price in 6 months from eBay," camps.  And this makes me wonder how long the manufacturers can sustain this model of selling at what many believe to be hyper-inflated prices, when the hobby, en masse (other than those who buy new products from dealers) is unwilling to pay anywhere near MSRP/street price for the overwhelming majority of this stuff?   

Peter

 

Consider it like the used car market. 

Remember the old adage that the car loses x% of the price you paid for it the minute you drive it off the lot?

Similar thing.  Even if "unused", its not really the same as new from a dealer if it doesn't carry the benefits one gets when ordering from an authorized dealer.  (as many have already mentioned, the warranty doesn't transfer for 99% of items, so if you don't buy it from an authorized dealer, you are out the repair cost if it needs fixing.)

-Dave

When I purchase a new train it is one that rarely if ever show up on the secondary market and when they do, there isn't much of a discount.    For the large production items, the secondary market works well.

Secret to investing ad train collecting using Linux bash:

#!/bin/bash
#

while :

do

   Buy(low)

    Sell(high)

done

Larry

C W Burfle posted:

 Every time I talk with my financial adviser I never seem to be encouraged to explore the world of ...."Hobbies"...when it comes to my 'balanced portfolio'.  Hmmmmmm.....I wonder why? 


I don't think people should expect life coaching from their financial adviser.

Hmmm... maybe you should consider changing financial advisors, or expanding your horizons. There are myriad hobbies with investment opportunities.  

As but one example, I've been collecting vintage comic books for over 30 years. The steady rate of annual appreciation in that time has been unmatched by, presumably, the things you and your investment advisor consider to be more traditional.  With some basic understanding of the comic book market,  you could have invested $10-15k in 1999 and be sitting on at least $500k - $750k now.   In extreme cases,  much more.  But I digress - this thread isn't about buying toy trains as an investment, but you know that .... 

Dave45681 posted:

PJB posted:

 

Some of the posts are very on-point, referring to an oversaturated market (which I don't think entirely explains it) or the "must have it new" crowd.  But the fact is, the hobby seems to be bifurcated into the "I will gladly spend $2k or more for that new item" and the "I won't pay more than 1/2 MSRP for that new item and can get it at that price in 6 months from eBay," camps.  And this makes me wonder how long the manufacturers can sustain this model of selling at what many believe to be hyper-inflated prices, when the hobby, en masse (other than those who buy new products from dealers) is unwilling to pay anywhere near MSRP/street price for the overwhelming majority of this stuff?   

Peter

 

Consider it like the used car market. 

Remember the old adage that the car loses x% of the price you paid for it the minute you drive it off the lot?

Similar thing.  Even if "unused", its not really the same as new from a dealer if it doesn't carry the benefits one gets when ordering from an authorized dealer.  (as many have already mentioned, the warranty doesn't transfer for 99% of items, so if you don't buy it from an authorized dealer, you are out the repair cost if it needs fixing.)

-Dave

Dave - the car market is not analogous. Very, very different animal and conversation.

Besides, if I were to buy a $35k brand new car from the dealer and then flatbed it to a climate controlled garage and sell it 6 months later in the exact same condition with all the original protective wrapping and having never driven it, should I expect it to sell for at most $17,500?  If so, let me know where these cars are located so I can start buying them and quit my job.    

I am not going to quibble about things that I have no knowledge or understanding (comics and cars) but with model trains I expect the hard realities of the market are in play.  There is an aging consumer base that will purchase at full retail because a. they have to have it  b. they have the income to spend on it c. you can't take it with you.  Now comes the second part, once those folks have satisfied their desires the rest of the world is responding with a collective yawn.  That is why we are seeing the deep discount off of MSRP.  Yes the new stuff is cool, yes they have more features than anything manufactured previously and soon we may even have little live figures in the cab, however, the magic we all felt watching a train go by in our youth is not shared by the next generation.  To be sure there are some but we cannot force the experiences of someone who grew up in the 50's and early 60's onto someone who grew up in the 70's and 80's.  Technology and newer toys are driving those interests.  The current consumer base will eventually age out, they will pass on, they will need funds for long term care, their estates will look on these things and wonder why grandpa felt so strongly and attempt to move them out of the attic or basement because the house will have to be sold.  Advice offered often on this forum is to buy what you enjoy and not to expect a run up in value.  That sounds like good advice to me.  For those who pay full retail, enjoy your purchases.  Just be sure to let your heirs know recovering that money is unlikely.  

As but one example, I've been collecting vintage comic books for over 30 years. The steady rate of annual appreciation in that time has been unmatched by, presumably, the things you and your investment advisor consider to be more traditional.  With some basic understanding of the comic book market,  you could have invested $10-15k in 1999 and be sitting on at least $500k - $750k now.   In extreme cases,  much more.  But I digress - this thread isn't about buying toy trains as an investment, but you know that ....

Eventually the comic book market will tank too.

leapinlarry posted:

Value, truly is in the Eye of the Beholder, such as, A Legacy 3751 ATSF Steamer, Yes, I paid within $100 Of BTO Pricing from a Friend, a month ago, Wow, they are hard to find in New Condition....I feel no Pain.  Yes, sometimes Emotion gets Intertwined with our Mind, and We pay for our Weaknesses, Thus, the Addiction. I know You all Understand....Enjoy.

 

Buying what we like at a price we can live with and then enjoying it is what the hobby is all about!! 

I know several folks who make a good living buying and selling trains.    They buy estates and at shows. They sell to friends, at shows and on auction sites.  I buy a lot of trains from these guys.  I save money because the trains are often at a deep discount from retail.

These folks are successful because they know the market and don't overpay for items.  They are often able to get double to triple the amount that they paid for an item.  The estate and the initial seller takes a loss but they do recover some money.  Frankly, it is a win / win situation if an estate can offload a $20K collection for $5K and then the buyer sells it for between $8 and $12K.  The buyer has to do a lot of work to resell a collection by taking it to shows or selling it on an auction site.

People like me who buy trains to run and enjoy them expect that we are not going to get what we paid for our trains back.  It is better than sports season tickets.  At least with trains we are going to get some money back.  You can't put a dollar value on the fellowship of other train hobbyists.  I am not into trains to make money but rather to have fun.

NH Joe

C W Burfle posted:

So this group of savvy bottom feeders shop the secondary market in earnest where dealer markups have usually been written off.

There is that name calling again.
Without those "savvy bottom feeders" there would be no secondary market at all.

OMG!  I just realized that I'm not merely "Deplorable", but A Deplorable Savvy Bottom Feeder"!!!!!

And an Ol' Phart, to boot!!

Not bad for an O3R septuagenarian!!!

That custom tee shirt is going to be a humdinger at this rate!  Proudly worn!!

KD

PJB posted:

Dave45681 posted: 

Consider it like the used car market. 

Remember the old adage that the car loses x% of the price you paid for it the minute you drive it off the lot?

Similar thing.  Even if "unused", its not really the same as new from a dealer if it doesn't carry the benefits one gets when ordering from an authorized dealer.  (as many have already mentioned, the warranty doesn't transfer for 99% of items, so if you don't buy it from an authorized dealer, you are out the repair cost if it needs fixing.)

-Dave

Dave - the car market is not analogous. Very, very different animal and conversation.

Besides, if I were to buy a $35k brand new car from the dealer and then flatbed it to a climate controlled garage and sell it 6 months later in the exact same condition with all the original protective wrapping and having never driven it, should I expect it to sell for at most $17,500?  If so, let me know where these cars are located so I can start buying them and quit my job.    

 

Pete,

I would say the carmarket is VERY analagous if you consider some additional factors.  True, a one year car is not going to be half price, but it will be significantly less in price (usually at least 25-30% off) and it will likely come with at least a year's worth of waranty.

As an example, my current vehicle would have been around $25-27k new. A year and a half later and only 24k miles on it and I bought it for $16k. From purchase date I got about 8 months of bumper-to-bumper on it and another couple of years on the powertrain.  You'll find similar drops in value for most recreational vehicles, hobby items, etc. 

I think you've already got a pretty convincing answer/explaination to your initial question.  You simply have one segment of the market that is willing to pay top dollar for a new item with a warranty and a different segment of the market that has decided that a used item (even one in great condition) with no warranty is simply not worth more than 60% of the original cost.  

Seems like a perfectly understandable set of market choices to me.

DGJONES posted:

 

Actually, how many hobbies leave any residual monetary value after you are done with it?

Maybe we should just enjoy our trains and and stop worrying about their monetary value.

Don

Indeed, how much is that game of golf worth after you are finished playing? Just the enjoyment (or aggravation) you had while playing and the memory. I have a few friends that play multiple times per week and that can really add up.

As for train values, I have never bought an engine with the monetary value in mind, other than scraping together the money to pay for the original purchase (which I prefer to be new from my LHS). I am not a collector, I only get what I like and can afford, then I run it and enjoy it. 

Another bottom feeder checking in here.

If I don't feed off the bottom, I don't eat.  I can't afford MSRP or anything close to it, so I shop used or old or a combination of both until I can afford what I want.  I paid about 2/3 retail once; 1/4 is more my style.  I eagerly cheer on the folks who have to have the latest-and-greatest and therefore need to sell last decade's models in order to get what they want.  That gives me a chance to buy what I want.

If that makes me a bottom-feeder in anybody's eyes, so be it, but I am not responsible for anyone else's drive to buy the New-and-Improved, and I do not pretend to be responsible for the financial health of any manufacturer, importer, or previous buyer.  But I also don't demand anything of them, either.

PJB posted:

As but one example, I've been collecting vintage comic books for over 30 years. The steady rate of annual appreciation in that time has been unmatched by, presumably, the things you and your investment advisor consider to be more traditional.  With some basic understanding of the comic book market,  you could have invested $10-15k in 1999 and be sitting on at least $500k - $750k now.   In extreme cases,  much more.  But I digress - this thread isn't about buying toy trains as an investment, but you know that .... 

Yo, Peter!...  If the  current Hollywood movie and the TV sitcom industry would glorify choo choo trains the way they do comic book heroes of yore, and more, I imagine our 'investments' in VL, BTO, Premier, 3rd Rail, etc., etc. would garner even a modest financial return.....beyond the annual decline of the dollar's value.  Then there's the plethora of 'Comicons' here, there, EVERYWHERE!!   There's the video game industry celebrating those comic heroes.  The costume industry is in full swing for Halloween and other events of debauchery celebrating those same heroes.   Even the advertising industry can better sell soap and bug spray with support from a Captain America or The Flash or Superwoman!!!  

Yepper, if the same could be said for our choo choo's....a ubiquitous presence of celebration and glorification of railroading and the heroes of the same...we might at least break even on our hobby investment.

Probably not, though.

If only The Flash could be remembered for having his hand on the throttle of a Big Boy as it charged DOWN Sherman Hill!!  Oh, wait......that never happened, did it?

Again, just MHO....

KD

dkdkrd posted:

Yo, Peter!...  If the  current Hollywood movie and the TV sitcom industry would glorify choo choo trains the way they do comic book heroes of yore, and more, I imagine our 'investments' in VL, BTO, Premier, 3rd Rail, etc., etc. would garner even a modest financial return.....beyond the annual decline of the dollar's value.  Then there's the plethora of 'Comicons' here, there, EVERYWHERE!!   There's the video game industry celebrating those comic heroes.  The costume industry is in full swing for Halloween and other events of debauchery celebrating those same heroes.   Even the advertising industry can better sell soap and bug spray with support from a Captain America or The Flash or Superwoman!!!  

Yepper, if the same could be said for our choo choo's....a ubiquitous presence of celebration and glorification of railroading and the heroes of the same...we might at least break even on our hobby investment.

Probably not, though.

If only The Flash could be remembered for having his hand on the throttle of a Big Boy as it charged DOWN Sherman Hill!!  Oh, wait......that never happened, did it?

Again, just MHO....

 

Then again, maybe if POTUS ran a VL BigBoy under the White House Christmas tree we'd all be rich by next summer.  

joe

dkdkrd posted:

PJB posted:

As but one example, I've been collecting vintage comic books for over 30 years. The steady rate of annual appreciation in that time has been unmatched by, presumably, the things you and your investment advisor consider to be more traditional.  With some basic understanding of the comic book market,  you could have invested $10-15k in 1999 and be sitting on at least $500k - $750k now.   In extreme cases,  much more.  But I digress - this thread isn't about buying toy trains as an investment, but you know that .... 

Yo, Peter!...  If the  current Hollywood movie and the TV sitcom industry would glorify choo choo trains the way they do comic book heroes of yore, and more, I imagine our 'investments' in VL, BTO, Premier, 3rd Rail, etc., etc. would garner even a modest financial return.....beyond the annual decline of the dollar's value.  Then there's the plethora of 'Comicons' here, there, EVERYWHERE!!   There's the video game industry celebrating those comic heroes.  The costume industry is in full swing for Halloween and other events of debauchery celebrating those same heroes.   Even the advertising industry can better sell soap and bug spray with support from a Captain America or The Flash or Superwoman!!!  

Yepper, if the same could be said for our choo choo's....a ubiquitous presence of celebration and glorification of railroading and the heroes of the same...we might at least break even on our hobby investment.

Probably not, though.

If only The Flash could be remembered for having his hand on the throttle of a Big Boy as it charged DOWN Sherman Hill!!  Oh, wait......that never happened, did it?

Again, just MHO....

KD

KD - this is a great post!  I laughed out loud when I read this - thank you sir.  

I think it's a little of the chicken and the egg.  Putting the films aside for a second, the comic book hobby has been growing for the past 60 plus years. The number of hobbyists - and non-hobbyists - has steadily increased. People buy comic books for nostalgia or the artwork or as an investment.  And, in the past 60 plus years, the value of the overwhelming majority of material has not only grown, but is growing more rapidly as demand continues to escalate. The conventions, which really took off in earnest in 1964, are an effect of the demand. 

 And, yes - the film studios are certainly helping to make a lot of it more mainstream and bringing the genre to a larger audience. But if it wasn't something that was in demand, or that resulted in a big box office return, it would have never happened or had staying power. 

Again, this isn't a "toy trains versus comic books" discussion.  I only brought it up, as but one example, when someone scoffed at anyone considering a hobby to also offer investment potential. I don't buy toy trains for investment. My sons and I play with them. Better for the blood pressure (when they run right) than watching fish.  It was just shocking to me to see how they depreciate. In fact, "depreciate" isn't even accurate. It's more like the vast majority of items aren't valued by the greater hobby at their initial asking pricing. 

Thnaks again for the great post! 

Peter

Holding value to me means nothing. If I can sell an item for 25 cents on the dollar then I'm happy. I'd rather see someone else enjoy an item rather than sitting in a box under my layout. I never got into this hobby to get rich. I don't have the expertise or desire for that.

Rod Miller

As a youngster during the 1950s. I was fascinated by trains - model and full size, and that is why I am in the hobby today. I got back into O gauge in 1997 after a lapse of forty years and now have two layouts and a large collection of scale-sized locomotives and rolling stock made by MTH Premier, Atlas O, Weaver (brass and die-cast), K-Line and Sunset-3rd Rail, all purchased new. No Lionel because I feel it is too expensive compared to the other brands. All my trains are on the layouts or displayed on shelves and cabinets throughout the house so that I can admire and enjoy them every day. I still own and like every item I that I have purchased and have no intention of selling anything.  Certainly, I have spent a considerable sum of money on my trains, but I never would have done so unless I intended to keep and enjoy whatever I had bought. I prefer to buy new to avoid problems or defects with used items and have been willing to pay for that benefit. I have never considered my trains to be an investment, although they clearly have monetary value. As with other things, it seems that many peoples' activities in the hobby are motivated by buying, selling and perceived value. I won't let that kind of thinking detract from my enjoyment of the items I own. I'm now retired and still buying some new offerings, but there is not much that I don't already have, and I do think that the prices of Lionel high-end products have gotten out of line.

MELGAR