Daryle Lambert’s 31 Club Blog
Whenever you make a great buy, how much profit should you hold out for? No one can tell you the answer to that question on every purchase, but I can give you some suggestions.
It has been over a year since I started working with a person to sell two Andy Warhol prints: a Howdy Doody and a Witch. About that time it looked like they were pretty much sold, the party wanted to raise the asking price. Since they belonged to that person, they had every right to do it, but was it wise?
Let’s examine the facts. When we first offered these, the bid price was $20,000 for the Howdy and $15,000 for the Witch. I suggested that we price them at $27,000 and $22,000. You see, the market was going up, and it wasn’t time to sell them at the bid. It wasn’t long before I got a call saying that the prices on the prints were going up more, and we should raise the price on them. Tell me something new. So we raised them to $28,500 for the one and $35,000 for the other. The Witch traded places with the Howdy, and surpassed it in price. This price increase in prints was caused by auction prices for some of Warhol’s paintings, such as the Cars that sold for $71,000,000. This had very little to do with the prints, however, and I was sure that their prices would start to decline in a short period of time..
Thinking that the market was being artificially raised, my suggestion was to sell them at the next offer. That was when I received a call from California from a gentleman that offered almost $40,000 for the Witch, which I gleefully presented to the seller. Much to my surprise the selling party now wanted to raise the price to near $60,000 for the one and $45,000 for the other. I no longer represent the selling party on the prints, but today I found out that the prices were dropping and now approaching the initial price we started at.
There are at least two reasons why the choice not to sell made no sense. First they where prints, and prints are faddish. Their value, more than likely, wouldn’tt pass the test of time. Second, what could the seller have done with the money if the prints had been sold? That money might have doubled or tripled by now had it been invested in other items. The old saying in the stock market is “Bulls make money and Bears make money, but Pigs go broke.” You always sell into a rising market, and the best time to buy is when everyone else says don’t buy now because everything is going to zero.
The game we are playing is buy and sell, and we do this over and over again. We are not looking for appreciation, because in our plan anything we purchase should be worth several times what was paid at the time of purchase. This means our money is active, and the risk is almost nil.
Don’t get caught up in the excitement of the market place and forget the purpose of our plan.
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