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Vintage guitars as investments: A bump in the road or the beginning of the end?

Disclaimer #1: I have no background in finance or experience with investing.

Disclaimer #2: Other than my "players grade" D-18, I'm not invested in vintage guitars at all, although I'd love to be in a financial position to get into this game.

I'm just thinking out loud here, and admittedly am not considering all of the relevant points involved. But I've been thinking recently about the idea of vintage guitars as an investment. I'm not sure if this is rationalization and wishful thinking (as if I ever could), or just a confluence of two interests of mine (guitars, obviously, along with retiring from working). If you follow guitar discussion boards and classified, eBay, and vintage guitar dealers, through the nineties, and up until about five years ago, vintage guitar prices were steadily climbing. I love the idea of the "42 Guitar Index" which tracks the value of 42 classic vintage instruments on the collectors' market.

But with the financial downturn, prices of vintage guitars have taken a tumble. Is this a blip? Will prices start climbing again when the economy picks back up? Rather than thinking about this from a financial perspective, I wonder whether it makes sense returning these instruments to their intended purpose...How do they represent buyers' interest in the music that these guitars make?

Here's the idea: The demand for vintage guitars is being driven by baby boomers who love classic rock and folk music  of the 60s an 70s (i.e., the music that was built on Fenders, Gibsons, Martins, etc.). Boomers are a large demographic and are now to a point where they have discretionary funds to revisit their youthful obsessions. Their desire and ability to acquire vintage instruments is what fueled the skyrocketing prices. The recession hit their retirement funds and their discretionary income, and thus the subsequent dip in values. So, once things bounce back and there's more money for luxury goods like vintage guitars, will prices rebound? Here's the argument for why they won't (which I admit is not my own...I ran across it on an online guitar forum):

It's a morbid thought, but boomers won't be around forever. As they age and "fade away", the demand for vintage guitars should lessen. At the very least, the market for these guitars can't keep growing, but could conceivably shrink, depending on the musical preferences of subsequent generations (my fellow Gen-Xers). For those of us who grew up musically in the 1980's, give or take a few years, will we covet vintage guitars? I know my personal answer to that question, but what about the rest of my generation? If our musical interests are split between folk/rock/alternative and genres that are less guitar oriented (rap, electronic, pop), and we're a smaller cohort to begin with, will the demand for Les Pauls, Strats, Teles, and Martin Ds lessen?

I love vintage guitars, but if I had a lot of money tied up in them, I wouldn't be that confident that they'll bounce back. That's bad news for their wallets, but good news for people like me that want to play these beautiful instruments.

Update: See here for my post on tracking guitar trends.

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