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| For anyone interested, Dr. Kathryn Graddy (Brandeis University) and I have just completed a new draft of our study on the historical performance of investing in antique violins. You can can access the paper here: http://issuu.com/cozio/docs/fiddling-with-value-draft-2 We're open to comments so fire away...
- Phil Margolis
Cozio Publishing
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Hey Phil,
I have to admit that I did not read the whole report until now but I bookmarked it and if I am more fresh and can take me some time for it i will read it carefully.
I just wanted to post now what came into my head, if you think it is not appropriate please tell me!
Just I think that the development of the pricing of (old/italian) violins goes in a big bubble at the moment. The value and prizes are increasing and there seems to be no stop as the amount of instruments is not increasing and a lot of musicians want to play them.
You write in your report that most of the foundations provide their instruments for talented and professional musicians, but unfortunately this is not always the case. There are also lots of collectors that only have more violins that they could ever play in their houses and just simply do not play them or let them play by others. Of course there are also foundations and collectors that are really nice and even pay the insurances etc. and provide their instruments.
I think the only way to go out of that growing "bubble" is that a violin building method is introduced that provides a similar or better sound than the appreciated masterpieces do.
Furthermore I think that investing in things like violins is nothing in the pure state of an investment. The problem is that there is getting lost the value of the thing and only the market rules get the prize. An investment should provide money for good ideas that later the people that invest, if the idea was good, earn money and the creator of the idea can live from his idea. I know, that is a bit to simple, but a hedgefond buying instruments, violins, like annonced some weeks ago is not the right way at the moment. (They want to buy violins for about 30m $ if I remember right, and want to resell them after 10 or 20 years). Already now it is next to impossible for a musician to buy e.g. a Strad for the money he would earn in his whole life of musician. Instruments are here to be played - so what will come out - how much will you need to pay in 10 / 20 years for an old piece of wood, varnished and put together some hundred years ago? (Sorry for my sarcasm! *g*)
Some important economists said that the market regulates himself and if there are errors (like in stock market) they will be naturally resolved.
The market with violin seems to be an exception, however. Since the violins were built, with some exeptions (e.g. Stainer) the value of violins only increased. I think that makes the whole thing complicated and unique...
Some thoughts, as far as that. I am waiting for some more postings and will think about mine 
Best,
pharus
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| Hi Pharus, You raise some good points. I think that just about everyone in the field -- dealers included -- are concerned that the prices of many old Italian instruments are now beyond the resources of most musicians. But I wouldn't call it a "bubble" since the increase in prices has been very steady for more than 150 years. I think it's simply following the laws of supply and demand. The supply of old Italian instruments has remained constant while the demand (as measured by the number of professional musicians) has increased many times. As long as musicians continue to prefer old Italian instruments, the rise in prices is inevitable. I do think, however, that the market is slowly reacting to the situation. In our study, we found that over the last 30 years the prices of modern Italian instruments had increased more quickly than the prices of old Italian instruments. I think this is because many old Italian instruments have priced themseleves out of the market -- e.g., they're no longer affordable by most musicians. As a result, many musicians have begun looking for more affordable alternatives, and there is a growing consensus that the tonal difference between an old Italian instrument and modern Italian (or a contemporary instrument, for that matter) just isn't big enough (if it exists at all) to justify the price differential.
- Phil Margolis
Cozio Publishing
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