Vintage Guitars as Investments

The Hollywood Vintage room, LA. Most of the guitars on this wall were priced in the range $8,000-$80,000 (Aug 2008)

Why do people collect guitars? They are usually guitarists, of course, but not always. For some, the guitar is art: displayed on walls, or free-standing  as scultpure. For others, it is an exercise in preservation, or museum curation. But increasingly, people are buying guitars primarily as a financial investments.

Vintage guitars made by the likes of Martin, Gibson and Fender, can make great investments, with the right guitars gaining in value more than many stocks and bonds. The guitar investment market is subject to very different forces than the stock market, and investment companies are reportedly turning to instruments as part of a balanced portfolio.

The most desired acoustic guitars are those produced before WWII, while electric guitars peaked in quality, collectability and value in the 1950s and 1960s. Owners of these instruments are often pleasantly surprised when they come to sell them.

When the electric guitar really caught on, in the 1960s and 1970s, manufacturers churned out masses of lower-end models, and some of these guitars  are collectable in their own right. Their abundance means they will never command the prices of older, rarer guitars, but nonetheless they can make a great investment if picked up for the right price.

So it isn’t just the quality of the instrument that determines it’s future collectability; guitars that have been instrumental in defining popular culture go for the best money. Think of Jimi Hendrix, Eric Clapton or Buddy Holly: all famous for their Stratocasters. Or Jimmy Page, Peter Green and Slash: all famous for their Les Pauls. Guitars associated with a certain sound will always be desirable – as long as people know and love that sound. The skilled workmanship involved in making, say, a Gibson ES-175 Jazz guitar, was way above that of, a solid-body Fender Telecaster for example, but early sixties examples of each are in a similar price bracket.

Depending on the model and its condition, some guitars have appreciated 1000 percent. For example, only a few thousand Gibson Les Paul models were made in the 1950s, selling for several hundred dollars at the time. 1959 Les Paul standards in good condition have been known to fetch between $200,000 and $500,000.

Fender Stratocasters can also be great investments, if you know which particular years to look for. Fifties strats can go for tens or even hundreds of thousands of dollars. Guitars owned by celebrity musicians are worth even more; Eric Clapton’s favorite Stratocaster sold for about $1 million in 2004.

Of course we can’t all just go out and buy a fifties strat… in terms of making money, how do you know which instruments to invest in? Which one will be worth many times what it cost, in not too many years?

What guitars will bring the highest returns? Unusual and interesting models. Guitars with a reputation as great players. Guitars particularly associated with a highly inflential musician. Guitars with limited production runs.  Guitars unlikely to be reissued. With the shortage of affordable 50s and 60s models, certain 70s and 80s guitars are gaining in price, with no sign of stopping DESPITE the current financial situation.

There is a lot of overpricing in the market, at the higher end. What they are offered at is not what they sell at. Auctions give a better indication of what something is worth. Fifties and early sixties Fenders and Gibsons are well worth investing in, if the price is right, although some models rise in value far more sharply than others. There is an investment guitar to suit almost any budget … something that you can enjoy playing and at least get your money back on, usually more.

Brand new guitars will typically take 25 years to even start increasing in value beyond their sale price, and as such are not really worth purchasing for investment purposes.

Make sure you know what you are buying. The guitar world is awash with fakes, some badly done, some done so well even an expert would struggle to tell the difference. Luckily this is most prevalent in really expensive guitars; a typical $1000 instrument probably won’t be worth faking. When a truly special instrument comes up, it is best to check it’s provenance: is there any documentation from the time it was bought? Has the (trusted) owner had it for years, with photographs documenting it’s playing history. And so on. If in doubt, only buy these special instruments from a reputable dealer.

One problem that occurs in cheaper instruments is to simply rebadge something. Since the 1950s, manufacturers have been copying each others designs, and just about every quality guitar ever made has been copied somewhere along the line. And people regularly take some identifying feature – usually a decal, from the original article, and apply it to the copy. Know what you are buying!

Another thing to look out for, and something vintage dealers have been accused of, is the reprehensible practise of replacing hardware for non-original equivalents. With a really expensive guitar, you should research what you are buying and request detailed images of pickups and associated electronics, before any decision is made. Luckily there are very many great books, websites and discussion forums, that deal specifically with such questions.  Or you can get the images check by a vintage guitar appraiser.

Don’t overpay. As an investor, you are ultimately attempting to make a profit. Be patient. Get a ballpark figure from a book of vintage guitar values. Don’t rush out and buy the first example of a guitar you see. Watch for similar models in guitar stores and on ebay. Search the various forums. Don’t just see what they are listed at, watch what they actually sell for. Get to know what an example of that guitar is worth in various conditions. Many of the overpriced guitars in vintage guitar stores and on ebay are there at those prices because occasionally one will sell. But never to an informed buyer.

Protect your asset. The great thing about a guitar over a share certificate is it’s tactile nature. You can touch it, use it as an ornament, or best of all play it. But  don’t drop it! Vintage instruments are often fragile, keep it in a secure place without strong sunlight (this can fade the finish). And don’t play it wearing a belt. Metal buckles and buttons tend to scratch and dent the backs of guitars (known collectively as buckle rash).

Don’t undersell. Eventually, to realize your investment, you will need to sell an investment guitar. There are several places to sell, each with problems, and advantages. Classified advertisements are often free, and website adverts can also include images. Have a look at Vintage Guitar Classifieds. Auction sites, such as ebay, are an excellent way to sell, especially if you want a quick sale, and don’t mind paying for the privilege. Ebay has a feedback system and some levels of  cover, in the event of things going wrong. Be sure to set a reserve if you start bidding much lower than your expected sale price. the last place to sell is through a vintage guitar store. They may offer to buy directly from you (always at below the market value) or offer to sell the item for you, on consignment. They will take their percentage, but if selling a really valuable guitar, this may be the only way to find the right buyer. As always, only deal with reputable stores.

Remember ALL markets go up as well as down. People that paid a premium for the most expensive guitars in the mid to late 2000s will not make a profit on those investments for some time (and maybe not at all in some cases). As with ALL investments, never invest what you can not afford to lose.

Check out these great vintage guitar resources

• Vintage guitar information
• Vintage guitar classifieds
• Vintage guitar price guides

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Vintage Guitars as Investments