The reality of the current used guitar/gear market

Discussion in 'Guitars in General' started by Traintrack, Mar 22, 2020 at 1:07 PM.

  1. beeswax75

    beeswax75 Member

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    Yeah. Everyone has their own idea of value. What makes you think they are decent value now, though? Is it just that they at one time dropped from 30%? They were actually about 30% overvalued then. So right now they'd be fair value but based on the past earnings, which we don't know, other than they will be worse. This suggests they are actually more overvalued than before the drop. i.e. if stocks were 30% overvalued when we knew earnings, and now are only 15% cheaper when we don't know earnings, they're even more overvalued unless earnings only drop 16%, which is extremely unlikely. They are actually more expensive despite the drop. April earnings will prove this.

    I think what is confusing people is they see a 30% drop and think "value", but if they were 30% overvalued then you're even, and if the future is 30% worse than you overpaid 30%. People don't seem to get this. It's best to learn how to read a balance sheet (current ratio, debt to equity, etc) and understand credit markets, etc. IMO after looking at all that stocks are still 30% at minimum too expensive. Though, I do get the interest rate discount and the 6 tril will distort those. So figure 20%. All that said, I am also dollar averaging down just because...in case I'm wrong, but only 1/4 of the dry power going in at any given time because of the overvaluation. There's for sure another leg down if stocks are to find true value. 16000 is where Dow should be.
     
    Last edited: Mar 25, 2020 at 7:17 PM
  2. poppunk

    poppunk Member

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    Hope you make it on the other side okay, but it sounds like you have a lot of fall back options regardless.
     
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  3. Whittlez

    Whittlez Member

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    there is a hell of a lot more to valuation than just P/E... but this could be a verrrrrrrry long discussion..
     
  4. beeswax75

    beeswax75 Member

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    Hence why I added "current ratio, debt to equity, etc"....

    More overvalued now than before Corona on all metrics, despite the price drop. That's the irony.
     
  5. manimal

    manimal Member

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    If this shutdown lasts thru the summer.....oh boy EVERYTHING is going to tank, maybe ultimately the housing market too. If we’re back up and running by June, I think we’ll bounce back and the country will be kicking ass again.
     
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  6. Will Chen

    Will Chen Member

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    Southern hemisphere is in the fall not the summer. I've read articles which say heat and humidity have and don't have an effect. So....hopefully we see the rate of infection slow in the summer.
     
  7. friend33

    friend33 Silver Supporting Member

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    There is a long-running, successful tradition here, backed up by the feedback system (and most often by PayPal as well). :cool:
     
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  8. cutaway

    cutaway Supporting Member

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    The prices that we're seeing haven't felt the impact of this yet. Give it some time. I hate that it's coming down, but it is. I have some gear too that I'd like to sell, but now, ugh, no way.

    The jobs report is going to send this market into the twilight zone.
     
  9. mtmartin71

    mtmartin71 Silver Supporting Member

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    Alright...uneducated buyer work?
     
  10. Whittlez

    Whittlez Member

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    I think the evidence is very strong that heat and humidity have a positive effect
     
  11. Airoz

    Airoz Member

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    I’m thinking that good ole wealth distribution will have a deep impact, those who are staying home are definitely going to be bored out of their minds and try to indulge if they have the means, guitar in itself is not THAT expensive of a hobby, I predict the 1k market will see a small impact, the super boutique hand made ultra $$$ will see a harsher reality as those have always had a low liquidity. It’s funny to think about, but guitar is mainly recreational for most, the only people that I see selling their gear are touring musicians like me, who have suddenly found themselves without their main income for the foreseeable future, but we make up the smallest population for gear buyers/anyways.

    Amp makers will probably struggle, while things like modelers and the Yamaha thr will sell nicely

    So I think GC, Sweetwater etc will probably stay, Reverb will be more than ok, software companies like vts’s and plug ins will probably stay the same or might even go up, mom and pops without internet persona will probably go down, and specialized touring gear like IEM makers or stores like tour supply will probably struggle to get by. I might be overly optimistic, but I think session musicians and crew members who find a way to get by, will probably come back to a healthier industry (Less overpopulated, and hungry to make up for lost time will mean more intense touring with less people in the running/quarantine records waiting to be pressed ASAP)
     
  12. Alter

    Alter Member

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    Well, regardless of the economy, I don't see people getting together to play/watch music anytime soon, so..
     
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  13. Krausewitz

    Krausewitz Member

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    I don’t really get why people will get ‘bored’ staying at home. You’ve got guitars, books, movies....THE INTERNET. You can pick up a bunch of new skills (I’ve made Chinese dumplings from scratch and cut my own hair for the first time so far during the lockdown....loads more new skills to come, I’m sure).

    I guess I’m something of an introvert but my biggest difficulty thus far is not having enough time alone! My girlfriend and house guest are literally stuck here with me, which is nice in the grand scheme of things, but gets old fast when it is 24/7....
     
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  14. Wucan

    Wucan Member

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    New and vintage guitars will by far be the hardest hit segments. With COVID being a "boomer remover", expect a ton of prized instruments to flood the market - whether to make ends meet or clear out a deceased's attic. And for quite a few guitar companies to go bankrupt.

    The impact on the used market will also be negative. People will simply have less cash to throw around. Some models may hold their value for being utilitarian, and there may be a net uptick in demand for used as players avoid new/vintage buys. But the purchasing power will be substantially lower while supply will increase from people selling gear to pay bills.
     
  15. stratplexi

    stratplexi Member

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    I cant see this happening. This is going to be the shorest recession in recent history...if we even have a recession. It takes 2 quarters of negative growth to have a recession and if we do, it will only be two. I dont see Boomers scrambling around and having a fire sale over this...most boomers are fine financially. This short blip is mostly going to affect folks young in their career or in the service industry. That’s my prediction but of course I am only speculating and don’t make any claims of my thoughts having their origin in the mind of greatness.
     
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  16. shredmiyagi

    shredmiyagi Member

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    A lot of companies are not going to survive this. And as such, more jobs are going to hit the can. Impossible to predict the short and long-term given all the x-factors at play right now, but pretty much every industry in the world is going to contract down after this. Of course the ones that survive will shoot back up eventually, but the question is 'when?' - which quarter, or are we looking at next year?

    The damage is already done - the reality simply hasn't hit peoples' bank accounts yet because we are barely over 2 weeks into this thing (May 9 was really the first hard drop on Wall St, the C-19 alert level wasn't really there until NBA shut down their season and the rest followed). Besides for the waiters working tips, most the service sector hasn't even "missed" a pay cycle yet, and yes the stimulus checks are coming, but a lot of the jobs sure as hell are not. Guesstimating here but I think at least 1 in 10 of us are gonna be looking for new work by June as every company looks for ways to save money after a 2-3 month freeze (hint: salaries cost a lot, and most salary jobs are basically performance based, where all the glut is cut when the investments recede)- freeze new hires, cut down on staff.

    I'd be more worried about the guitar companies than the used market. A lot will have to lay off folks, new guitar sale numbers are going to crater (they already have been stagnating). I dunno how Gibson gets through this one (haven't they already been putting out fires all decade long?).

    But barre a complete depression (god forbid 1 more environmental x-factor or bad policy decision emerges), the used market will always be there unless you have something that nobody in the world wants (a custom guitar with your name written on it in jewels , for example). You just need to be prepared to look at the new margins: 50-75% off retail, vs. the luxurious 75-90% we've been dealing with the previous 4 years. At the peak of the good times (2016-17ish as Reverb's user base really grew), I remember people asking $1000+ for their old American Standards. Right - well, you're gonna be seeing a lot for $600 in the next 4 months, IMO.

    Right now I just really hope they put ALL their resources into relieving/shortening the C-19 situation... and freezing the economy Germany/Denmark style. It will be very bad if this lack of coordinated effort continues between the federal and local governments and companies. They need to all get on the same page and figure it out, and press the "pause" button on non-essential industry. If some states try to rush back into "having the American people work" , and another outbreak happens, it will be a disaster. Note how China sealed it off to pretty much one province, while all 50 states have cases with an unpredictable curve ahead of them. Very poorly managed situation.
     
    Last edited: Mar 26, 2020 at 4:12 PM
  17. daacrusher2001

    daacrusher2001 Silver Supporting Member

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    I was just having this discussion with someone today. I think it's a mental thing (duh, I know, Captain Obvious) - because I have to stay here I don't want to...LOL - I also have stuff I can do but I can't seem to get motivated to do it.

    I am working from home tho'...and will be for awhile it appears.

    Regarding Markets:
    I've been investing since 1980. I'm not claiming to be an expert, or to know more than anyone else, but I think you are sadly mistaken if you think we've hit a bottom and stocks/indices are fairly priced or value priced. I won't make any prediction other than to say the global impact is going to last for awhile and we haven't seen the low point yet.
     
  18. stratplexi

    stratplexi Member

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    If prices soften as some suggest, I am ready to buy. I sold off both my Historic 58 Les Pauls because of neck size. I made money on both too. I would like a R9 or R0 with a slimmer neck. I will probably pick up another Strat too...something with a maple fretboard and more vintage specs. Who knows, I might grab a Firebird too.
     
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  19. Toby Krebs

    Toby Krebs Member

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    The folks who stock piled TP and hand sanitizer etc...will have fun trying to return all that crap to Target and then try to buy used guitars with all that money they did not get price gouging lol!
     
  20. COYS

    COYS Supporting Member

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    There's a lot of doom and gloom here and it makes sense, that's what the media is trafficking in to generate clicks and ratings. But there are a whole range of possibilities here, most of which don't involve another Great Depression. We could be back to work at the end of April and people will come out with money to spend, things will turn around in a few months, and it looks like a V-shaped recession. It could be that the rest of the country escapes what New York is seeing and it's under control soon due to the brave decisions being made to be proactive instead of reactive. We don't really know at all right now.
     
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