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Musical instruments make for good assets

Musical instruments make for good assets
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First Published: Wed, Oct 29 2008. 10 45 PM IST

Updated: Wed, Oct 29 2008. 10 45 PM IST
Stocks, bonds, oil and perhaps even paintings are proving unreliable investments. Fine violins, violas and cellos, including those made by Antonio Stradivari, could be worth a look from investors searching for new ideas. And there’s a rare opportunity to start now.
Click herefor breakingviews.com
That chance is the public auction this week of a Stradivari cello made in 1717. It belonged to the British cellist Amaryllis Fleming, who died in 1999, and it’s one of only about 60 Stradivari cellos that have survived.
The upper estimate set by specialist online auctioneer Tarisio is nearly $2 million (Rs9.96 crore). That’s discounted for a mid-18th century repair—more perfect Strads sell for multiples of that.
Rarity is part of the investment case for the creations of Stradivari and his most skilled contemporaries. There’s no new supply—and instruments can occasionally be lost. One borrowed Strad cello, stolen from its absent-minded custodian’s porch in 2004, narrowly escaped reconfiguration as a CD rack after being discovered in a Los Angeles trash bin.
Sound investment: A file photo of ”The Penny,” a violin crafted circa 1700 by Antonio Stradivari. The violin sold for $1.3 million during the Christie’s New York Fine Musical Instruments auction on 4 April. Bloomberg
Desirable goods in finite supply should gain in value as the world becomes richer. It’s hard, though, to find public data to test that theory for stringed instruments—most are bought and sold privately through dealers.
A study on Stradivari Invest’s website does, however, make some kind of case for returns that handsomely beat stock and bond markets over the long term.
The data also reveals one investment drawback—individual instruments are rarely traded. They can remain in one player’s hands for decades. Fleming, for example, bought hers in the 1950s. As with fine paintings, therefore, owners of rare musical instruments need to appreciate rewards beyond the purely financial.
One is the centuries-old craftsmanship. A second is the enticing tales attached to the instruments: The Duport Strad, played by legendary Russian cellist Mstislav Rostropovich until his death last year, supposedly carries a dent made by Napoleon in 1812.
Still another is lending instruments out (insured, of course) to talented performers—who help keep their value up, because they need to be played.
So while illiquidity is a problem, musical instruments are alternative assets with returns that go well beyond the financial. In markets such as those prevailing now, that could be a real consolation.
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First Published: Wed, Oct 29 2008. 10 45 PM IST