A Burst as a legitimate investment.

JPP-1 · May 25, 2017

Tom Wittrock said:
I guess my post was not written well. Let me try again.

Please define investment. What do you consider an "investment".
What do you expect from an investment?
Investing for the future growth in dollar value?
Saving money from depreciation?
Other?

At least they pay dividends, even if their market value drops to zero. :ganz

Yes they do provide a very nice dividend just for enrolling that sure beats a toaster any day of the week. lol

I look at an investment as really anything where you allocate capital with the expectation of appreciation or at the very least preservation over time.

Whether viewing a burst as an investment is good or bad, I can't say but I do think it is a reality. Anyone buying a guitar for 300,000, 400,000 or more, unless they are incredibly wealthy, would have to take into consideration the financial implications of such a decision.

In a hyper low interest rate environment such as the current one we are in, a reasonable investment might be one with a very low beta and a rate of return greater than the rate of inflation or the 10 year treasury yield.

Sure, markets be it for real estate, securities, cars or guitars can always change. But it seems to me given the current environment there are worse places to park some money.

lewis_grey · May 25, 2017

Put it this way...I may be wrong but I don't see rich investors who have zero interest in the guitar as an instrument or icon/symbol that their music hero played etc. buying these up purely for capitol gain. My gut feeling is most guys who buy bursts/high end vintage guitars see them as a reasonably safe place to put their money that they can also enjoy playing and owning a slice of history rather than just having the money sitting in the bank.

This brings the well heeled debate over whether there will continue to be such a strong market for these guitars as the years progress. I'm 26 and consider myself extremely lucky to own 2 wonderful player grade Gibsons from the golden era (a Special and a 335), but these aren't even in the same universe financially speaking to a Burst. I own and play these much more from a players stand point as I feel they give me a little something extra I don't get from new guitars but I'm under no illusions...I could get by just fine with newer guitars that cost 4 or 5 times less and I really couldn't see myself having any use whatsoever for a guitar worth as much as my house. The collector/investment aspect is secondary to me, I feel I can justify owning them because they hold their money, it's not THE reason I own them. I will say most guitar players of my generation are genuinely very interested when I rock up to gigs with a vintage Gibson and will always ask me questions about them but in a world where most struggle to even get on the property ladder the thought of spending £4-5k on an entry level golden era Gibson is beyond insane to them.

It's an interesting debate and I guess only time will tell!

slammintone · May 25, 2017

If you can afford one I would think buying a Burst is at least a safe investment. The ratio of people who would love to have a Burst vs the small number of Bursts in existence would seem to guarantee it. The rarity and exclusivity of Burst ownership seems to be a main driver in their increasing values.

F-Hole · May 25, 2017

Having run large investment banking businesses for over two decades, I can tell you that for the overwhelming majority of mum/dad type investors, the largest single factor in determining investment returns is luck.....hense the expression, "I'd rather be lucky than smart".

:salude

ourmaninthenorth · May 25, 2017

Tom Wittrock said:
I guess my post was not written well. Let me try again.

At least they pay dividends, even if their market value drops to zero. :ganz

Must disagree Tom, seems perfectly well written to me.

:salude

bern1 · May 25, 2017

Sure the debate comes and goes but I always enjoy it.

In this case, the op is comparing art, a car and a musical instrument as investments. While any person who is not blind can appreciate a painting and anybody who can use a clutch and a manual transmission can drive a 250 GTO, the potential market for any musical instrument is much smaller. As John has mentioned, people who buy original sunburst Les Paul's play them.

57Strat777 · May 25, 2017

It is unlikely I'll ever be able to afford a burst, but one concern I would have is theft. When the word gets out you own a burst, I imagine there are plenty of people scheming on how to steal it from you. I would not want to be known as the guy with the $300K guitar in my house. That seems like a dangerous position to be in in this day and time.

ourmaninthenorth · May 26, 2017

57Strat777 said:
It is unlikely I'll ever be able to afford a burst, but one concern I would have is theft. When the word gets out you own a burst, I imagine there are plenty of people scheming on how to steal it from you. I would not want to be known as the guy with the $300K guitar in my house. That seems like a dangerous position to be in in this day and time.

Didn't you know that these 'Burst owners have their own private armies...? it's in the rules....allegedly. :laugh2::laugh2:

Bouldergold · May 26, 2017

We have been in an up cycle since November for real estate, stocks, and mutual funds.
Look at the previous 8 years. A major Down cycle.
My prediction is to follow Washington for Burst Values.

F-Hole · May 26, 2017

bern1 said:
While any person who is not blind can appreciate a painting and anybody who can use a clutch and a manual transmission can drive a 250 GTO, the potential market for any musical instrument is much smaller. As John has mentioned, people who buy original sunburst Les Paul's play them.

I know two people with GTO's, both drive them.

And I'd suggest that the market for 'bursts is very much larger than the market for GTO's.....at least at current prices.

Trainkeptarolling · May 26, 2017

Simple supply and demand...No more no less. 9 or 10 bursts on Reverb right now...which is why I took mine off. Let all the one's with replaced necks, filled in Jimmy Page Mods, filled in Bigsby holes, etc. get gobbled up and then when there are 3 or 4 on there...time to relist.

I do believe the Burst market is correlated to the stock market somewhat, which is why it's typically a good time to sell when the market is at an all time high.

The analogy of investing in a collector car is interesting...probably a bigger market for cars as opposed to Bursts (as I think most buyers are guitar players/lovers...hell, everyone drives), but I can store 20 vintage guitars in a temp/humidity controlled vault as compared to one car.

The market will always have pull backs and when the prices drop, I'll find and buy the best one I can. When the market runs up to crazy levels and the number offered is just a few, then it's time to sell. I believe if the Burst is 100% original, it has the best potential for upside.

F-Hole · May 26, 2017

Trainkeptarolling said:
I believe if the Burst is 100% original, with solid provenance, it has the best potential for upside.

Fixed, no charge.

sws1 · May 26, 2017

Bouldergold said:
We have been in an up cycle since November for real estate, stocks, and mutual funds.
Look at the previous 8 years. A major Down cycle.
My prediction is to follow Washington for Burst Values.

US real estate (national average) has been on an up cycle since 2011 (6 years). Stocks have been on a steady increase since Feb 2009 (8 years). These trends didn't start in November. I suggest you don't follow your own advice about following Washington with respect to your own investments.

abalonevintage · May 26, 2017

sws1 said:
US real estate (national average) has been on an up cycle since 2011 (6 years).

It had nowhere to go but up....since it was in the toilet....

Triburst · May 26, 2017

Well, personally, it wouldn't work for me as an "investment."

In order to realize any gains while I'm alive, I'd have to sell the guitar. THAT would be tough. However, my heirs might be very happy with that decision.

:salude

Ed A · May 27, 2017

If we are very simply talking about will bursts through time go up or down in value... I believe they eventually will go down... To me you can not compare them to art... You have to ask yourself why are bursts so valuable?.... Obviously because they are great guitars and there were not many of them made... But I dare say another BIG reason is because so many of us in our fifties, sixties and seventies, grew up with our heroes playing these things... There is a HUGE emotional attachment to them... They represent a time gone by, they represent the music of our heroes.... But there are plenty of great guitars out there that are way less expensive... So what happens 10, 20, 30 years from now... Sure there will always be young people aware of and interested in bursts, but I believe there will be a lot less of them out there, do we really think that 30 years from now there will be just as many that crave these guitars like we do for the reasons we do?.... Less buyers, less demand... THEN, what happens when many burst owners get deep in their retirement age and decide this is a good time to part with their burst, use the money for something else... More may become available..... Supply and demand... Just my opinion but what do I know!!!... And I want them to come down so I can get one!... Still never gonna happen.... :##

Thundermtn · May 27, 2017

That analysis is interesting for sure. My generation was the last that grew up with guitar music, and EDM or Rap have dominated the charts for nearly twenty years at this point. Bursts will always be rare, but I believe the demand for them will not grow in proportion to the general 1st world population. Model A Fords are pretty rare too, but they're typically not bringing Hemi Dodge money b/c the people that grew up lusting after a car like that are gone.

Younger Gen Xers and Millennials for the most part don't and probably won't have the buying power of their parents generation. Most have little savings or disposable money if they made it through the recession and slow to stagnant recovery. They will always be desirable but I think their value could diminish as speculators follow trends that will evolve with the market. if I'm remembering correctly guitars sales peaked in about '72 and since then it's been downhill and new players just aren't out there. Even if you reduce it to affordable beginner level gear spots like Guitar Centers, when I go there, there haven't been lots of teens and twenty something people in noodling on stuff, and the DJ's pretty much own clubs and bars now.

The global market may preserve their value though it's hard to say for sure, but I suspect as real rock stars vanish from the public's consciousness the value of vintage gear in general will correspond.

deytookerjaabs · May 27, 2017

You guys underestimate the staying power of some of the music made by a few 'burst slingers IMO. There's 13 year old kids right now with Zeppelin t-shirts, only a few of them have to major in finance and go on to managing hedge funds or code the next big social media upstart or even just plain old inheritance etc etc. There's just not very many 'bursts and there's a LOT of people who can afford them as it is. Only a small portion of those folks need to be interested and it's a worldwide market at that.

Just watch a really high end auction for collectible goods, if you're like me 90% of the stuff you're not interested in at all but mass interest doesn't need to be there when things are rare. Let's pretend there are 1500 'bursts just for kicks, all you'd need is 150 collectors owning 10 a piece, maybe spread that out to anywhere from 150 to 500 collectors. Small potatoes. Guys were saying decades ago that "any day now" their values would crash due to the generation gap, still not seeing it.

Thundermtn · May 27, 2017

That generation gap hasn't happened yet though. The people that know what those guitars are and sound like are still around in abundance. Who knows though, they may end up as an electric Stradivarius.

Bouldergold · May 27, 2017

sws1 said:
US real estate (national average) has been on an up cycle since 2011 (6 years). Stocks have been on a steady increase since Feb 2009 (8 years). These trends didn't start in November. I suggest you don't follow your own advice about following Washington with respect to your own investments.

Look at the stock market spike since November.
Look at consumer confidence since November.
Look at real estate demand since November.
Look at guitar prices since November.
Be honest with yourself, always the best, my friend.

A Burst as a legitimate investment.

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