DP6583 Fiddling with Value: Violins as an Investment?

Author(s): Kathryn Graddy, Philip Margolis
Publication Date: November 2007
Keyword(s): Auctions, Investment, Repeat Sales, Violins
JEL(s): D44, G11, L82
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6583

This paper measures the returns to investing in violins using two different datasets. One dataset includes 75 observations on repeat sales of the same violins at auction starting in the mid-19th century and another dataset includes over 2000 observations on individual violin sales at auction since 1980. Overall real returns for the dataset on repeat sales for the period 1850-2006 have been approximately 3.5%. Real returns to the overall portfolio of individual sales since 1980 have been nearly 4%. While this return is lower than other standard investments, the price path has been stable with a slight negative correlation to stocks and bonds.