Value Of The Instrument
The stringed instrument prices have not experienced the spectacular increases or falls of the stock market. On the contrary, their value has increased very steadily for decades.
Until the late 1970´s the annual value increase of fine stringed instruments used to be between 5% and 10%. However the demand for these instruments has been steadily growing with the baby boom generation and the increasing popularity of classical music. Far East clients were willing to spend much more on fine stringed instruments than Americans or buyers on the old continent.
The steadily increasing demand for rare stringed instruments worldwide speeds up the growth of the annual percentage of appreciation of these instruments and it currently revolves between 10% and 15%.
The value of rare stringed instruments depends not only on the supply-demand ratio. When valuating a fine stringed instrument, also the period, the physical condition and the provenance or the history of the instrument has to be taken into account.
Financial Returns
Investment in rare stringed instruments is not closely correlated with stocks and bonds and makes perfect alternative investment for any portfolio. It enables diversification without compromising financial results. In 1999 Kristin Suess, an M.B.A. candidate at the University
of Cincinnati, conducted an independent academic study. She compared prices of fine Italian violins from the 18th century with the US stock market’s DJIA, S&P 500, as well as US treasury bonds. Hypothetical US$ 5 000 were invested in all the above-mentioned
investment vehicles for the period from 1960 to 1996. The study then compared the development of prices. The rare violins significantly outperformed all the other investment vehicles explored in the study (see the following graphs).
The violin prices for the study were based on the very conservative violin price valuations published yearly in the “Taxe der Streichinstrumente” by Albert Fuchs. Stock market information was retrieved from the published indexes. Treasury Bond information was retrieved from statistics as released by the Federal Board of Governors.
The conclusion of the study is evident. Rare violins as an investment have performed far better than all other investments explored in the study. However the top priced violins made by Antonio Stradivari and Giuseppe Guarneri del Gesù were excluded from the study because only very little data was available on the sales of those instruments to be of any use for statistical purposes.
