As most of us know, the economy has been and continues to be in the tank. It seems like every day I awake looking for a light at the end of the tunnel only to find out that today is still yet another day plugged with bad news on virtually every financial front. There are many days where I look at a personal portfolio of a good friend that is selling his NFA items just to try and recoup a little cash. When you see that friend’s portfolio is down over 40% from just a few years ago you can easily understand why you often see the sometime panic sales. If I look at the larger auction companies and the results of sales, I often wished I paid closer attention to the bidding. But let’s face the facts, none of us has the disposable income we had three years ago and times are tough. So if you are feeling ashamed that you might have to thin out a portion or all of your collection, don’t feel bad at all. In fact, if you want to feel better about your own personal financial situation take a good hard look at your 401K or the other financial investments that you made in the last ten years and you’ll get goose bumps in a hurry, especially compared to your NFA investments. It is true that the NFA financial picture has changed considerably during the last two years but if you make a comparison to your financials, there is no comparison.
I want to remind all of you that NFA items, especially machine guns, are limited to not only availability but in pure numbers. In November of 2007 the NFA Branch performed a count on the number of transferable machine guns that were available and that number totaled 182,619. I am saddened by the fact that number is even lower today than in 2007 for a variety of reasons. I remind you of the story of the widow who called ATF and asked that her late husband’s collection be destroyed. Sad to think this could be true but this was a real event from 2009. Add this story onto the number of confiscations for various illegal activities and the numbers continue to decrease. Yes I know that the prices for this market in 2007 had reached a point that few could afford a soon to be worth $20,000 MP5. Most of us turned our attention to owning Short Barreled Rifles (SBR), Short Barreled Shotguns (SBS), and suppressors to wet our appetite, and to continue to grow our collections. They are more affordable at this stage of the game and we figure we can hold on to what cash we have, especially in the case of an emergency.
Here’s where the story starts to get a little complicated. With a limited number of machine guns available since May 19, 1986 and with the numbers available continuing to dwindle, you would think that prices would continue to rise. Quite the contrary. The state of the economy has made a drastic impact on the pricing on most of what you see for sale. In many instances you will find attractive deals that are just hard to pass up. Many of you may reflect the housing market three years ago compared to what we see today. A simple “leveling off” of prices has occurred and things are much more affordable than they were five years ago. Like the machine gun market, buyers of new houses are sporadic simply for the preservation of cash. Everyone is conserving these days “just in case.”
The most important point to realize with this entire story is simple. This is a limited market and pricing is not what it was five years ago: buying a machine gun is, has been, and will always be one of the best financial investments you will ever make. Like buying a house, it still isn’t cheap, but once again, take a look at your stock portfolio, and compare. Limited numbers and limited availability make way for all the laws of supply and demand. What has happened with our economy has provided buyers with an opportunity that you will never see again. Price leveling is a good thing. It helps cleanse the market and makes for lots of new opportunities for investment. With the advent of the fall and with the price leveling that has occurred in the machine gun market, the buyer’s market has never been better. Like the stock market, buy low and invest now.
As we are now knee deep into early winter there will be many opportunities to buy and sell in this new market. As most of you know there are many deals that continue to surface. As the economy starts its slow rehabilitation process you will slowly see the price of that S&W 76 go from the $5400 that you bought it for, upwards again to the numbers you will be proud of. As in 2005, you could almost count on your investment giving you a yield of an easy 5-10% per year. We as Americans are resilient at every angle in our history and this downturn will be no different from any other time we have seen or read about in the history books. Our creativity and our willingness to stand in the face of all diversity will insure things will bounce back. This fall will offer opportunities in the NFA world that we will likely never see again. Look hard, buy smart and most importantly enjoy your hobby.
As you enjoy the events of the fall, come see us at our booth at any of the larger shows, or better yet come join us now at www.NFATCA.org. It is our pleasure to serve the industry.
|This article first appeared in Small Arms Review V14N3 (December 2010)|