BIDDINGTON'S GALLERY & SHOPPING BIDDINGTON'S
APPRAISALS & VALUATIONS
How to Bid on Fine Jewelry at Auction
Last week over Havanas and a bottle of '61 Taylor port (still slightly young), I talked with a very successful, former equity fund manager about the arduous life of the young and retired. This fellow now sits on a few boards and manages his own portfolio. It sounded pleasant enough, but I was wondering what he was doing for an adrenaline rush. He confessed that he had become obsessive about bidding on fine jewelry at auction. What follows are his comments and advice on the topic.
"You know, Jake, I was always a value investor. My stock selection process began with an analysis of the company's current market valuation as compared to building that company from scratch at today's prices. To that fundamental valuation, I'd add (or subtract) for management, growth prospects and so forth. You can see why I stepped away from the market: At current levels there are few stocks to buy based on that kind of assessment. But I find that I can evaluate fine jewelry using my old stock analysis techniques--and I have a lot of fun doing it.
"Let's say a piece catches my eye. I check the auction estimate for the piece. If the estimate is a lot higher than my gut-feel says that it should be, I walk away. Sometimes an item is very fashionable for one reason or another. At the moment, Verdura jewelry is hot and priced expensively versus the general market. Verdura makes wonderful pieces that may well increase in price; but as a value investor, such items don't interest me. However, if the piece has a reasonable or a low estimate, then I will look harder at it.
"First, I look at the materials: Breaking the piece into its components, I assign a dollar value to the metal (gold or platinum) and to the precious or semi-precious stones. I tend to avoid or under-estimate the value of diamonds, because I believe it's a rigged market.
"Next, I consider the maker. There is a market value to the major names. While I will sometimes buy an unsigned piece by an unknown maker, I will pay only the materials' value for it. Signed pieces have a trading value in the marketplace beyond the components' value.
"Then, if the piece is relatively modern, I check its retail price in the store. I go--or send an elegant woman--to Bulgari, Van Cleef or wherever for comparison shopping. Many fine jewelry manufacturers continue to produce the same design for years.
"I've seen people bid at auction more than the piece is retail-priced, new in the store. By the same token, sometimes I pay at auction half the retail price. People are remarkably lazy about doing their homework.
"For an older piece, I try to look at recent prices on similar pieces. Such information is only moderately helpful, because auction records don't carry enough specific data.
"Then, I combine these bits of information and decide how much I am willing to bid. As in picking a stock, the final evaluation is part arithmetic and part art. Of course, I hope that other bidders are asleep when my quarry is on the block. And, I'm willing to let a piece trade away--unless my wife really, really likes it."
Jake Biddington's Collecting Series:
What's It Worth? Appraisals and Valuations
Investment Grade Contemporary Art
MORE Jake on Investing in Tangibles:
PPP Test: Judging Quality in Contemporary Art
Art, Time and Technology
American vs. European Paintings
Jake Biddington's Art as Entertainment
Jake Biddington's Vetted Antiques & Art Shows
Jake Biddington's Patent Numbers as a Dating Tool
Jake Biddington's Hard Assets as Portfolio
Jake Biddington's Buying Fine Jewelry at Auction
Jake Biddington's Long Term Investing
Jake Biddington's Short-Term Investing
Jake Biddington's The Craft of Art
Jake Biddington's BENTLEY Connoisseurs' Travel Series:
Art Tourism New York City 2005: Christo's Gates
Art Museums, Neighborhoods & Dining in Buenos Aires
Art and Touring along Italy's Amalfi Coast
Art Museums & Restaurants in Amsterdam
Cultural Touring along Spain's Costa del Sol
Art Touring in Lisbon
Art Touring in Milan
Art Touring in Antwerp
Art Touring in Barcelona
I-80 Park City to New York City Art & Antiques
Art Tourism New York City 2003 (Archive)
Art Tourism New York City 2002 (Archive)
Art & Wine in the Finger Lakes of New York State
Art & Antiques in Hudson, New York (Columbia County)
Art & Restaurants in Rome 2002 Update
Hartford & Wilton, Connecticut
San Francisco Jackson Square
New Hampshire Route 1A
Morris County, New Jersey
Jake ABOUT THIS FEATURE
Jake Biddington works on The Street and is responsible for the
opinions & information in INVESTING. Young Jake, as he is known
within the virtual BIDDINGTON clan, views tangibles such as fine art, antiques and jewelry as stores of value as viable as stocks or foreign currencies. He sees these
items as another asset class in which to place one's money. To that
end he keeps price histories and charting information on various
categories of objects. He views some items as long term investments,
others as items for a quick trade--and he even sees some as short
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