Probably silly, but I want to buy one of those huge collections/hoards which sometimes are for sale on Ebay, to try to resell them. If there are any point in doing it? If yes, what % can you make after all those fees?
I have looked at some of those, and after estimating each coin's value, like $4 for a silver half, $2.00 /quarter,I add them up and usually I come out 10 -20 less than their starting bid. As for the lots that you can't see, they have already figured in the profit, so there is not really any way to make money, you will lose money . Possibly, if there is a group of coins that starts very low and doesn't get many bids, but those are very rare.
Vlad: Keep you money in your pocket, instead, buy some nice coins for your collection. If it was so easy to make money on those deals we would all do it.
Yes, there is big money is selling hoards and huge collections but you don't buy them off ebay. The trick is to find them before they get to ebay. If you find the hoard or collection on your own ...ebay is how you sell it. Spend the weekends driving around to estate sales, flea markets ..do some research and hunt them down. Buying hoards off ebay just makes the seller rich ...not you.
I suppose due to the exciting possibility (remote) that there is something hot in the bunch. And if the regular collector has money and time. People shell out 10K in Vegas for the excitment of remote possibilities as well, and it is entertaining for only a bare fraction of the time. Or perhaps they just like to hoard coins.
I doubt that it's a "regular collector" although that's a pretty broad term. Might be someone thinking of flipping it, or perhaps someone who hasn't done the proper amount of homework before bidding. I think there just isn't the opportunity for "arbitrage" in coins as there might be in other hobbies where there is less easily accessible information. Further, the "Antiques Roadshow" mentality says that everything I have is valuable and should command premium prices, which even lessens the chance of hitting an opportunity at a yard sale et al. I have yet to find anything at a yard sale that I'd be willing to take a chance on flipping, figuring in not only the fees but the value of my time. ("We throw out better stuff than they're selling" is one of my mom's favorite expressions.)
I have a freind who became a collector, because his wife drug him to estate sales all the time because she loves antiques. And he has gotten some incredible deals on coins.
To use a little economics terminology, in a market with perfect information known by those involved, arbitrage opportunities will not exist, meaning the market will be "efficient". For example, most of us know the prices that common silver will bring in relation to the melt value of silver. Because of this information, common silver will be bid up to a fairly consistent value by multiple bidders. The only potential profit margin will be a markup involved with the effort to resell the coins. Always remember that the time someone puts into selling something has a value (an opportunity cost because that time could be spent earning other income). Therefore, the best way to make money selling coins is to take advantage of information that you may have, but many in the rest of the marketplace do not. This allows for cherrypicking, in the same manner of VAM and other variety collectors. For example, auctions often have a number of uncirculated silver dollars that look "similar.'' Collectors can often cherrypick coins of premium quality grades at an auction for less than the market price, as less skilled collectors do not have the information to pinpoint minor grading differences that more advanced collectors can easily detect. Sorry for the long rant, but maybe someone will find this useful.
Not a long rant at all... very nice summarization is what I'd say. Relatively speaking, I think there is "more perfect information" (in an economic sense) with coins than with other less mainstream hobbies, or hobbies where true "collecting" is not as much in the mainstream. My principal hobby, model railroading, comes to mind here. There are collectors of Lionel, American Flyer and to a lesser extent other brands. There are price guides as well (same caveats as with coins i.e. age of data). But for many it's not the main purpose of model railroading, it's building and running trains. So you not only have to do your homework, but you also have to find the right sub-market.
umtrr-author, I completely agree with you on your assesment of the coin market having much better information than other less mainstream hobbies. I think at least part of this has to do with the fact that the coin hobby has a fairly well-established wholesale market, with buy prices readily available (either from posted dealer want lists or from greysheet bid prices). This allows even beginning collectors to know a valuation basis for their coins. For example, at any auction I attend, I know that if I buy a coin for a certain price, a dealer will always pay me X dollars wholesale at a minimum. This limits arbitrage opportunities, as most other people know what I know and will bid on the coins as well. I guess I have to keep getting better at my variety attribution and grading to improve my information advantage and make some money!!
