So, there’s this thing, you don’t know anything about it but you’re a gambling man and you’re pretty smart. So you buy it. You’re buying it because you’re going to sell it later to someone else who doesn’t want to buy it now at $X, however that guy later will buy it for $X + $Y and that $Y is going to be your profit. This will take six months. You think this is reasonable. 

To the bold go the spoils. Don’t worry about studying or knowing what you’re doing. Just jump in. 


Well, that describes bitcoin, it describes the Tulip Bubble of  1637, the 2008 housing and financial crisis various stock market crashes and related asset bubbles like the dot com bubble.

It’s not like we don’t have a past history to show us the futility of greed when people don’t bother to learn anything about the subject matter, and even when they learn, they still fall victim to greed.

It’s not like humanity doesn’t specialize in building monuments to greed

But people keep thinking this time it will be different.

They just keep doing it, over and over again, and someone eventually holds the bag. There is no end to the speculation. The more speculation pushes asset bubbles around the world in 2017, the more people look for undiscovered territory in which to speculate. 

Swords are not an investment with a set return

I apologize to the people who have told me these things but they are important to note because they illustrate how you get into trouble by letting greed make your decisions for you.

I will buy a sword from you, I don’t care which one, I just want to be able to sell it in six months for a 20% return.

That is a collector who needs bitcoin. Bitcoin at this point is a speculative investment and many people are piling in, like with any other bubble. It has its proponents and detractors and we will know which is right in about 20 years. 

But that’s what it is there for. It’s a speculative investment though this was not the founding vision of this product.

There are many ways to speculate and lose all your money in the world. Swords have benefits which include being hard assets and they don’t tend to fluctuate a lot in value, that’s a feature of them. My Nortel stock went to zero. A Soshu Yukimitsu will never go to zero. That’s a feature. If you buy the best you can see appreciation over time, but not all will appreciate. Most will go flat and some will go down. The longer your time horizon is, the better your chances are. 

Why can’t I get 20% return on a sword with a six month time horizon?

Well, if this were easy or true, swords would be bitcoin. The asset would explode in value and people would rush in and every year value would go up 50%. This is not what we see in the price of swords in the market. They are not doubling every 18 months, so looking at the past, it tells you it won’t happen in the future. It doesn’t say the why but it tells you for the love of god be realistic.

Swords are just not a speculative investment, they are a niche art market that may or may not one day increase in interest levels. There are new Chinese collectors entering the market and also other Asian collectors are making their impact felt. In the past Russian collectors and so on have also come in. All of these new collectors tend to aim for high quality items replicating knowledge from other art markets, and bypass the vast middle ground that is available for the standard working Joe. That vast middle ground has a lot, and I mean a lot, of mediocre quality items. Those items were basically utilitarian weapons, the Chrysler minivans of their day.

They got the job done, killed you just good, and didn’t force you to sell everything you owned to buy one.

Today they are nice antiques and worthy to own, but some websites dump these on the market like it’s a waterfall of swords and people snatch them up thinking this is a bargain. That waterfall of swords represents a nearly endless supply, and if you wonder why swords are not going up 50% per year, you need to simply look at supply and demand.

By sticking with rare and important pieces, you basically keep yourself on the top of a mountain with few, or any peers and almost nobody above you. Sometimes those that are above you are locked out of export by government regulations (like Kokuho blades) which basically remove them from the supply part of the curve. By staying with the best quality you can get, you increase rarity and are more likely to be on the beneficial side of supply and demand as supply is always going to be constrained a lot more than with mediocre grade things.


The reality of it as well, is that collectors depend on dealers to make a market for them. These dealers have expenses. In Tokyo, a dealer who has 5 staffers, a monthly magazine, an expensive shop in a trendy area, and high quality goods, well… the value of all of that is built into the items he sells. 

What does a diamond really cost? If you’re digging it out of the ground, almost nothing. But if you want to cut it, sort it, sell it to middlemen, who sell it to jewelers who design jewelry and mount it and maintain storefronts and market it and pay sales staff to stand there and smile while you try stuff on and say no, no, no not this one, too expensive, too ugly, too whatever… all of that has cost and it goes into the price of the item when you buy it.

If the dealer cannot recover his costs from the sale of the items, this is like 3rd grade logic, the dealer goes under or never bothers to enter the market.

Collectors though are shocked, shocked when they cannot turn around a piece for a 20% profit in six months.

They don’t market it.

They don’t research it.

They don’t photograph it.

They don’t have an expensive storefront in Ginza.

They don’t have staff to support.

They don’t have their own salary to think about.

They don’t want to open a book and learn about the subject. 

They just want that 20% profit in six months without any of the above. 

It’s not realistic. People have to stop expecting it and stop being shocked when it doesn’t happen for them. It can happen but the chances of it happening are greater if you are the miner out there digging than if you are the person in the shop trying on the jewelry. The miner tends to know what he’s doing and the person in the shop is consuming the product.

But the miner also bears risks, and expenses and such that the consumer doesn’t.

Here’s how it’s supposed to work

There are service providers who make this a business. There are consumers who take advantage of the market produced by the service providers. The consumers have the chance to choose, and the luxury to show up and point and acquire. Or even sit on their couch and point and acquire. The service providers work and take on risk and try to make a living off of it. The results of those business investments generate them some profit.

The consumer is supposed to be enjoying what he owns, that’s why he bought it. He is supposed to be learning, fascinated by history, enjoying being a part of the chain of custodianship of an art object. He may show it to friends, exhibit it, write articles or books on it.

He is supposed to enjoy what he bought. That pleasure is the dividend of owning the item. If there is no pleasure in the ownership, that person should not be buying the art item. That person should be investing in stocks, bonds or bitcoin or even going to Vegas.

All of those activities can make or lose you money but they are primarily speculative. And again, the more you learn, the better your chances are of making money than losing money. They can also be fun, in and of themselves. People though recognize when they go to Vegas they can lose money. You can lose money on a sword too, especially if you picked one that is not very marketable or is mediocre quality. But people are not so ready to accept that reality when buying. 

What do you mean I can’t sell it six months later for 100% of what I bought? You’re telling me it’s not worth what I paid?

I’ve been told this too. And that’s the wrong way of looking at it. You paid for the sword plus the cost of delivering the sword to your door. You can’t cross out the second part and think that everyone else is doing all of this, somehow magically absorbing all of the costs along the way.

This negates the fact that there is an industry sitting there, maintaining inventory, giving you, a consumer, choice in buying items. The items are not doubling every two years, we know this, so the math tells us that the dealer’s expense has to come from somewhere.

Sometimes we’re lucky and can find something almost for free (like a rusty sword on eBay ending up being a Kamakura sword). Often times not: if you want to go buy a daimyo blade with history that is already Tokubetsu Juyo, well, they do not give those away for free in Tokyo. So dealers have their cut in there in order to maintain their operations.

If you turn around and flip your acquisition six months later into the same market that it was just in, it does two things:

  1. everyone who was already exposed to the item didn’t buy it the first time, you did, so you’re expecting a magic fairy to show up and buy it for 20% more just because you own it now, and that is not fair to expect.
  2. the market is smart, and has memory, and when you push something right back into the market that you just bought, the market assumes something is wrong.

The market is a skittish deer who has their ears up and eyes scanning around. It is easy to scare and run off. The market doesn’t like uncertainty and it doesn’t like open questions. It assumes the worst. 

Also, most of the operators in the market, when they make a mistake they do not eat the mistake. I have multiple times because I don’t want to live with myself telling lies to sell a piece of junk to someone who trusts me. 

But most people when forced to choose between greed and doing the right thing, choose greed.

I have bought items with fake signatures and they failed to get papers. Those I put in public and said, “These signatures are fake, I can get a return with the dealer because I got a guarantee, if you want them for what I paid you can have them.”

In one case I did this with some fittings for $2,000 and they sold fairly quickly. Those went straight to a big auction house and were sold as legitimate, the buyer basically took my statement as one opinion and got another from the auction house and sold them for four or five times what he bought them from me for. I still think the signature is no good but obviously other people think it’s ok. Who is right? I don’t know. But I thought I had a mistake on my hands and I would not push it onto someone else. I informed them.

This is not what people do in general because people are greedy.

Because of that, when you shove an item right back into the same market, you make everyone assume you’re doing the same thing. You discovered something wrong with it now you’re pawning it off on another sucker. 

Collect, don’t speculate

If you just buy to own, buy good things and don’t speculate, then your goal should be to educate yourself, to enjoy what you have, keep your collection small but good and interesting and it will pay you back every day with pleasure.

That’s why you should collect. 

And if you need to jam it back into the market, you need to expect to take a hit. You need to pay the person marketing it for you. Everyone thinks, I won’t take the hit, I will get my profit and make the next guy pay the commission and the marketing costs. Well, if this were true and the next guy always paid then things would spiral up quickly forever every six months as people churned the market.

That’s what makes a speculative bubble in commodities or real estate or stocks. 

You can’t rush to the conclusion that if you can’t get the same price you got screwed: you screw yourself by jamming it right back into the market. As well, you discount the fact that there is basically an industry there that needs to extract some of the dollar price of what you have bought and this is normal.

If you collect with a long time horizon, when the item returns to the market eventually it will do so fresh without freaking anyone out. It will find its price, whatever the price is, in the new market.

What you paid is not one of the factors in deciding what the price is now. Even though this is the number one thing quoted by people when they decide on their price.

Well, I paid this, so I want that.

That’s not how supply and demand work. Recently, Norishige and Muramasa blades have been appreciating quite a bit. I saw a Juyo Norishige that I thought was not Tokuju quality being asked at 20 million yen at the Dai Token Ichi. This is normally a price associated with a top level blade by this smith. This one may have deserved Juyo but I think would not cross into Tokuju.

The seller was bold though. 

Also the seller knows that the supply of Norishige is drying up. So naturally the price increases. Muramasa too, everyone knows Muramasa, outside the sword world even this is a famous name. People who don’t collect swords will maybe buy one to just have a piece of history in an extended art collection. 

The result then is shown by supply going down and demand going up.

Old timers bristle, “When I started, you used to be able to buy a Muramasa for $10k!” 

Yeah, and when you started you could also buy a ticket to the Superbowl for $20. Now you can’t. The price today is what the price is today, the price yesterday is what it was yesterday, and what it will be tomorrow, we don’t know.

You sold that for more than you paid for it.

Yeah, that’s what dealers attempt to do but it’s not always successful. Prices are negotiable and often times I lose by misjudging the market. I try to find pieces that don’t have the whole story told and maybe they can upgrade, or maybe there is history that was not known by the seller, or it is particularly rare.

I try to find mispriced masterpieces. They get mispriced because someone didn’t do their research right before it got to me.

But this isn’t always successful. Sometimes I am the one who misprices it and then I am the one left holding the bag, and adjusting down until the market agrees with me that it’s worth exchanging dollars for a tangible asset at this valuation.

That agreement is good for one day. After it changes hands, who knows about the future? Up or down we don’t know. Maybe someone who really wanted it never had a chance to see it. I’ve had collectors ask me to find the owner of something I sold many times and paid a premium to pry it out of that guy’s hands. 

This is not a predictable process.

For me, at least I want to cover costs. I do a lot of work on my site, more than other people do. Many western dealers make the trip to Japan, flights are expensive, hotels are expensive, we pound the pavement looking for treasures. Sometimes we buy right, sometimes wrong.

When I list an item, I try to describe all the ups and downs, more than others do. I try to not set up traps while other people may not care about that. Sometimes I sell stuff for a loss, sometimes I don’t. My photography is better than most so sometimes it’s just that the previous seller took some bad photos and so people assumed the item was bad because they can’t separate out that something in your hands looks a lot different than what a 5 year old Samsung phone with an LED front facing flash makes it look like. When this process is done, the item is listed, and then the market decides. That process can take a long time. Years. Not everyone will see my site. Not everyone will see the item they want before it’s sold. Sometimes they want the item but don’t have money and miss it. Sometimes they have the money but they don’t see the item they want. 

It’s not predictable.

Time horizons

But what I paid or what you paid, has no impact on what the price is the next time it’s sold: the market decides that, especially if we can uncover new information or upgrade its status. 

In the art world it’s common and people expect it. That is what brings speculators to our field. In our field it’s a bit tougher and old timers bristle when the price of an object they want to buy is not the same as it was 10, 20 or 30 years ago. The best reality is one of slow, cautious appreciation, where there are no speculative bubbles and there is no complete stasis. There is no churn but people have long enough time horizons for a piece to re-enter the market and be re-evaluated in a new environment. 

Time horizons mean patience sometimes since none of this is predictable. If you’re selling and you have something rare, you can set the market, but also you may have to wait. I know a guy with a 350,000 euro sword that is unlike almost any other sword. He can ask that price but the market may not come up to him. He has no competition. One day someone will take it or he will come down a bit and they will negotiate. But he has a long time horizon so he can wait. But also, some people don’t know the blade so they can’t enter in and try to buy it. So who knows, maybe the time is now? 

One thing you can’t do though is, as is the thrust of this article, not do your homework, buy and sell fast, expect a high percentage profit, and also dictate time of sale with a short time horizon. None of that computes. Fast sale means bargain price to attract buyers. Buying mediocre commercial grade stuff means facing a lot of competition, the same competition that forced the price to be attractive to you as a buyer stops you from getting an attractive price as a seller. That is, if you bought that 10 year old minivan when you sell it, you sell it as a 10 year old minivan. It does not become a Ferrari because you are special and you own it. A lot of people think it does. 

The trick is to buy the Ferrari in the first place. Then you can sell it as a Ferrari. It might take longer but there will always be people who want it and it’s better to have something that people want but have trouble affording rather than having something that everyone can afford but nobody wants.

And when it comes time to sell, just remember, you can choose the time or you can choose the amount. You can’t choose both. Auction is an extreme example of choosing the time. You say now, market says how much. My contact with the 350,000 euro sword is the other end. He says how much and the market says when. Ideally you pick a number that the market agrees to within a time horizon you find is acceptable. There will always be a problem in that what those reasonable parameters are is difficult to know. The only sure things are that you can set a price at which nobody will buy it, and you can auction it today and get what it gets. Otherwise: wait. It will go when it goes. When you are buying you need to be aware of this and comfortable with it. If you are not, either buy to keep or don’t buy.

Leveling up

Juyo shinsa results just came out. My clients submitted some swords bought from me. Two of those passed (Norishige and Kagemitsu). The others failed. Those I submitted for myself failed.

People experiencing failure very often tend to rush to the market and want to sell their piece. They think something is wrong with it. They think that they missed their chance to speculate for a higher value. They think that they got scammed. Whatever.

Not everyone can get Juyo or Tokuju. Everyone who submits a set gets one or two through and the rest fails. The successes are spread out over everyone. If 800 blades are submitted, 100 submissions probably are foolish submissions, the “Class C” blades that have no chance (in the future they might, but not now). The rest fight over a limited number of slots and those slots are likely smartly distributed over everyone with worthy candidates.

If you don’t want to be grouped in with my submissions maybe your chances increase because you are on your own: get an NBTHK membership. This means you submit in your own name and also you get learning materials and you can actually learn something about this field you want to participate in. Who’d have thunk.

Because something does not pass this time, does not mean necessarily it won’t pass the next time. Sometimes it takes up to 3 consecutive submissions. A friend of mine failed Tokuju once 8 years ago and submitted in the recent shinsa and passed. Past failure does not mean future failure as long as you bought rare, high quality items. Nor should you care so much and obsess about getting the higher level paper. People do this because they want the immediate gratification, the fun of winning, these are good reasons actually… some others just want to increase the value of their item so they can dump it. That’s valid, but not the best reason, especially if you treat it like it’s radioactive because it failed.

At the end of the day, not every piece can pass, there are not enough slots for the worthy blades and also, it’s smart to share it around so no few large players can dominate the results. Because if that were possible, they would try to do that. And they would succeed, everyone else would be shut out, everyone would complain and the hobby would be highly damaged and we’d have a scandal. 

The price we pay then is simply that achieving perfect success rates is difficult to impossible and we have to live with failure.

Rules of acquisition

This is how I think about it, based on my experience as a collector and a filthy dirty dealer as some might put it. One of those people who goes out and takes the risks, digs stuff up, tries to document it and present it and hopefully but not always sell it for more than I paid for it… at the very least hoping to cover my costs. The same rules apply for everyone. They are rules as much as they can be rules because in reality there are none: that would mean that everything is predictable as clockwork and it isn’t.

So, make them rules of thumb.

  1. Quality never goes out of style. Someone will always buy a high quality item by a high level maker even in the darkest economic days, though you may not get a premium, you will still find a buyer.
  2. Mediocre stuff will coast and go down over time because the supply seems to have almost no limits.
  3. Bad stuff will never go down because it has nowhere to go down. If you bought it dirt cheap someone will buy it from you for dirt cheap. Beer money bought, beer money sold.
  4. If you churn your stuff in and out of the market you play Russian roulette. If your plan is to play Russian roulette, you need to understand you can get Russian roulette results.
  5. The less you know about how to use a gun, the more likely you are to shoot yourself instead of your target. Education is your first level of self defense and if you refuse to learn anything, you will get random (to poor) results from your collecting experience same as a target shooter will get the first time they touch a gun.
  6. There is a tax, expect to pay it. This tax is your ticket for the ride. Don’t want to pay the tax, don’t get on the ride. The tax is real in places (governments) and the tax otherwise is built into the price (dealer costs and need to profit). If you reject that concept, that dealers need to make something for their work, you reject reality. If you think that this tax should not exist, then there is no way for dealers to exist to show you stuff for you to pick and choose from and ultimately buy. After all in your field of work, you want to get paid for the work you do, and so do dealers. They are not leeches, they are providing a marketplace for you to pick and choose. They are competing and in that competition they are making a buffer on the price. This keeps the market more fluid and products available for you to buy hopefully at prices you want to buy them at.
  7. If you don’t want to deal with dealers, then you have to educate yourself highly, and you have to go to the sources, and you have to dig through the dirt and you have to get your hands dirty and you have to take the chances and you have to get the blades polished and you have to get them papered and you have to pull your hair out when they all come back Shimada and you have to take the loss when you can’t recover your costs and you then have to deal with marketing them and you have to deal with fussy buyers and you have to deal with people bringing you returns and so on. Or you can just keep what you find. This is a form of collecting that is valid, but it requires work and education. If you want to be successful at it, you need to do the work and most of the above. If you don’t want to do any of that, then you pay the dealer tax and you sit on your couch and click a button and the thing you want will arrive at your door. That’s luxury. That costs you. So, choose: dig and work, or sit on the couch and click and let someone wait on you. You don’t get both.
  8. The main dividend of owning art is the pleasure it brings you. You will probably get better results unless it goes all tulip on you. Relax, and have fun. Don’t spend money you don’t have. Don’t buy things you need to sell in six months because your dog needs a new roof on the doghouse. Don’t buy it primarily because of the price. You have to enjoy what you own. You need to find a mix of the right price, a good item of high quality, and something you like. That’s the triple threat. But ultimately, Iif art does not bring you pleasure and you’re just speculating for profit, buy bitcoin.