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Model Railways As A Financial Investment? by
Florian Schmidt

There's a myth, which has been existing for quite a long time: it's often daid that the worth of locos which aren't produced anymore would rise.

Experts know this problem with this old story very well, every body who reads the entries in the special interent forums regulary knows that this question is being discussed again and again - always with the same result: in nearly all cases, the myth is being disproved! Meanwhile, many of you are certainly very tired about this topic an can't hear it anymore - alway the same old stories, where the value of old locos is higher than the value of a new model which is far better detailed and has a better driving system. This article adresses all those who don't know already all about, and those who really want to deal critically with the topic.

Model Railroaders And Collectors - And Other Groups Interested In Model Railway

There are various ways for occupation with model railways. Most common are certainly model railway freinds with an own layout, to run their trains on it. Some of them are content with a less detailed layout, others put much emphasis on fine detailing. The layout's size can also vary very much, depending on the place one has for his layout. Then there are also others who don't have any layout, but who are specialized on collecting of models. Most often, they only collect models of one special manufacturer. However, many collelctors have even to be more specialized on certain fields today - for example steam locos. Most manufacturers produce such wide assortments today that it simply isn't possible to collect the complete assortment. All those groups have one common: they are doing their hobby for fun, they are really interested in model trains and their prototypes.

Unluckily, there a also various guys who are collecting model railways for only one reason - the "value". They see model trains as a financial investment. The most exciting thing for these guys is to posess a certain loco, not to run it on a layout (which they don't have, of course).

Please note: if I speak of "collectors" in the following paragraphs, I only mean those who are collectiong model trains for value. Those who are collecting trains maily for fun are not accosted with this report!

Price Catalogues

For a long time now, there are "Collector's Catalogues" which list the programe a certain manufacturer produced in a certain gauge, togehter with a description of every model and its single versions. For every model - even for every single version - a "current price". Most often, the publishers describe how they got their prices - by colelcting the prices which are paid on markets and auctions.

First, this sounbds very clear, but regarding it more precisely, you will soon find some critical points. Who counts all the markets which took place all over the year? Don't forget those many auctions - there, supply and demand play a much more important role, there are much more extremly high or extremly low prices than elsethere.

It's certainly impossible to create an complete overview for the second hand market (well, many are saying "collectors' market" and won't like the term I use), also because of the large number of models (don't forget that often for every single version an own price is quoted!) - not on every market, every model is offered!

To be honest, one time, I also purchased such a catalogue. It was many years ago when I became interested also in models which hadn't been produced anymore for a longer time. To get an overview especially over the locos püroduced by Märklin, I bought such a publication. I can only say that I still regret having paid about 100 DM for it! It simply wasn't worth its price! Its quality couldn't be called "up to date" in any way. Most pictures were cheap black-and-white pictures, the descritpions of the models weren't very exact - many details were simply missing, for example the different motor types. The pricipal aim of that catalogue was its function as a price list - allready the name told that....

A catalogue which lists all models a manufacturer produced in a a gauge, with all its versions and differences, is certainly a quite good thing, because it offers a real overview. But as soon as prices are quoted, especially for no longer produced models which are only available second hand, it has to be seen very critcally!

Models Produced In Large Numbers

When a model's "value" is really rising, it must be a very rare model which has only been produced in very small numbers. However, most models have been produced over many years (sometimes even decades!), so also in a very large number. From economical sight, this is necessary for a manufacturer, the development of a new model has to be profitable. Also the many special editions normally reach large numbers - allthough they are produced only for a short time. Especially in former times many models were offered over a very long period of time, many of them also in start sets, whioch also promoted a wide distribution.

Models whose "value" is rising are limited editions (like the Märklin "Northlander" or "Amtrak ICE") or models which vanished from the catalogues very quickly because they didn't sell very well or so. Regarding limited editions you will soon realize that the high price (it has to be so high in order to be still profitable for the manufacturer - he also wants to earn something!) is detering normal model railway friends, whereas in the eyes of colelctors it's still a quite good price. There aren't such limited editions very often, the largest part of the model railway assortments represents "mass production" - models which are produced in large numbers. Please note: "mass poduction" only means the numbers which are produced, not the quality - the quality of most of our manufacturers is outstanding!

Professional Second Hand Dealers And Financially Strong Collectors?

Unluckily you find on model railway markets more and more dealers which are doing their business quite professional - on the other hand the number of those who are selling used model railway items more as a hobby really disolving their layout or collection and so are lookings for buyers for the items they don't need any longer - is declining.more and more. The professional dealers are buying complete layouts or collections for a cheap price - and resselling the single items very expensive. Nonetehless, there seem to be enough of those collectors, who like to pay high their eyes, there's nothing which is too expensive. Even mass-produced locos like the Märklin E 10 and E 40 (#3039 and #3040) are offered as "collectors' models" - without any discussion about the price they pay 50 Euro more bacuase the loco is lettered as an "E 10" and not as an "110". Even for old catalogues (!!!!!) and old empty train boxes (!!!!!) they are paying lot of money. Not only for outsiders, but also for real model railway enthusiasts, it simply isn't understandable. One first has to earn the money he spends for such old waste paper!

So, it's no wonder that many of us think collectors must be quite rich people! The normal model railway freind, however, who is still looking for a certain version of a model which still can't be found in manufacturers' catalogues, can only feel angry if that model has already been declared a "collector's model". So, he only can goning on to look still he finds that model for a realistic price, or he has to wait until the manufacturer decides for a new edition. It's not possible to discuss about the price with those professional second hand dealers, most often, they only refer to the price quotation of the "Collectors' Catalogues".

Though, it has to be pointed out that many town or community councils oblige a certain number of commercial dealers. But I'm not criticizing commercial dealers at all; but the way in which many of them are practicing their business. Luckily there are enough honest second hand dealers. They sell their items for a reasonable price, and they also give you their adress when buying a loco without having to ask them for it - for the case that something should be wrong with the model.

The Results

However, we have forgotten an important aspect. Because of the rising prices on thje second hand sector, beginners have a more difficult start into their hobby. An old Märklin BR 01 or BR 44 is certainly a great loco with its inimitable "metal look" - I admit to be a friend of such locos - but such a loco is certainly not worth a price of more than 125 Euro! Personally I wouldn't pay for an old version of a BR 44 or BR 50 more than for a new model of the same loco whicht represents the actual stand of detailing, even if the old model still is as good as new and still has its original box.

So it's no wonder when potential beginners are being frustrated. many of them think it's better to purchase some used material for the start, but when they go to a railway market where he determined that old models which don't represent the current stand of detailing and driving systems anymore (for aexample, the old Märklin crocodile #3015 - at least the versions from 1960 on - isn't a rare model at all, more a very common loco) are offered for a much higher price than regular dealer demand for new models. Many beginners already have thrown in the towel because of this. We all should note that every potential beginner who is thorwing the towel - for whatever reason - is one too much who is doing that! Luckily this isn't the case on all railway markets, but especially second-hand dealers which are specialized on used Märkln items are often overselling.

It's simply a fact - as a financial investment, model railways are a bad investment. Everybody who has done such a wrong investment, shouldn't try to sell his models to get the money he spent on it - he should by tracks, transformers, signals and the other parts - build a layout and run the trains on it. He will soon realize the fun and pleasure he didin't have over all these years when he was only "collecting" trains. And he will realize that the models are much too pity to go seed in a display case or a bank locker (there really are such people!)!

And what to do with the collectors' catalogue? Aren't their any containers for waste paper?

Florian Schmidt (Florian's Railway Page)

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