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Ed, this is absolutely true. And I generally find that the rebuilt S&Ss sound better than the new ones, so it's a great value all the way around!

I love it when people use charts from the 20th century to try to predict future financial performance. Those days are gone, and aren't going to happen here (the USA) for a while. We'll be lucky if we can maintain our living standards and not spiral into a deflationary environment which the Feds have been fighting since the financial crisis.

Also reminds me of people who invest in wines. Supposedly it beat the market by a hair if you look at the past 25 years. And it has similar issues with storage and cooling. I think someone spun up a Bordeaux ETF.

Anyways, I prefer to drink my wines and play my piano, in that order.

A great value for everyone....except Steinway!

Piano Dad - apologies for slow reply. I don't check in as often as I used to. Yes, I have been to Steinway Hall a few times in the last couple of years. From my perspective I found it old fashioned and unattractive and if anything a drag on the brand, that kept S&S too anchored in the past. This is of course a very personal perspective (as I like cutting edge architecture) and others will have different, equally valid, views. As it happens I also find Steinway's facility in London to be beige, gloomy and old fashioned too!

However, for me, whilst the sales building may or may not attract me as a customer, it doesn't have much impact on the rational appreciation or otherwise of the pianos versus competing instruments from the likes of Fazioli and Steingraeber. Not that I am in the market anymore.

Adrian

Steve,

The exclamation point reveals your rather snide attitude toward Steinway. Pity.

You might consider an alteration to your signature line, such as:

"My postings, unless stated otherwise, are my personal opinions, not those of my clients, or of Larry Fine and the publication I represent."

As an investment, loaves of bread would likely prove even more problematic than Steinways with respect to cost of climate-controlled storage and deterioration in condition over the span of 125 years...

A loaf of bread is one of the commodities used to determine inflation rates.

Geez, and all this time I thought it improved with age, just like a piano …

Steve My Dear,

Value is always held only in the eye of the buyer.

All your comment really means is that "Steinway", whoever they are at the moment, should learn from their own history (but has not). Amazing how this is a lesson most everybody in business skips over, including yourself obviously (that you can say out loud, anyway).

The mourners are coming in a good fortnight. I've collected enough ashes, now that the weather has turned. All we lack is enough sackcloth and perhaps, by then, I can...

Hello Piano dad,

I appreciate you entertaining the question. It is clear that that there are better investment vehicles, the exercise was just to see if it was a 'bad' or unviable one.

A couple comments though, some in my original comments, others not.

Storage Environment. It is of course much more viable if if your natural environment around your storage is favorable enough. I can say my 1933 piano, original, works good, and it has not seen anything close to an ideal environment.

Can it be sold as new: As I mentioned, you have to subtract out the dealer costs. But dealers have pianos sitting around for years that they sell as new. I have often wondered about the Estonia, which has been rising fast in value as its reputation has come up. Has it been worth while for dealers just to hold them in anticipation of a better price the following year or so?

Art case (or not): Indeed a special but timeless design that distinguishes it from a commodity item should certainly be favorable.

Opportunity costs of the space: Yes, the unused pingpong table in the insulated but unfinished part of the basement has to go, or maybe that ugly wet bar that the previous owner made in the 70's. With a simple unistrut rack, I could probably store 3-4 high. In all seriousness though, I am guessing a Ferrari or Aston Martin would be better investment use of the space. Obviously this concept only works as an incremental cost within an existing infrastructure. If you have to build a building, well.

Incremental percentage rate of gain over inflation: I actually think my way of quantifying it was easier to evaluate. 75/24 or 3.2x multiple on inflation (or subtract one, 220% of inflation, as a percentage) over the long term. It is hard to see the effect of a delta in percentages compounded over the long term.

Insurance: I definitely forgot this one, the capital investment must be protected from impairment. I happened to call my insurance agent today for some other business, and what do you know, my default personal belongings allowance as it is will cover one new big S&S. Now, I am wondering conversely, how much would it cost insurance-wise to make sure that any retirement capital I have placed in the stock market will also be there when I retire. That cost would have to be subtracted as a quantification of the risk. Yes, I know I am lumping market risk into the pot. If people don't want pianos any more (god forbid) the basement piano is also impaired. Well you can still play it!

>you wrote:The ground is not covered in $20 bills for us to find with no effort. There is a reason for this. Even if the federal reserve periodically dropped money by helicopter all over the streets, it would tend to get picked up pretty quickly. Point: obvious profit opportunities don't tend to last. People pick up the bills. How many Steinways are sitting unused in perfect climate-controlled storage in order to beat the crap out of financial markets 30-40 … 100 years in the future. Not many, I'll warrant. No bills waiting to be picked up.

Yes, this rarity could potentially lead to the item being of unusually high value.

Forgive me for wasting everyone's time (and darn I have wasted mine). I have no forseeable intention of doing this. I hope at least this provided some entertainment value, and possibly better ideas than mine will develop.

Best wishes-

Hello Mr. Galassini,

In all seriousness, I would compare the these figures with the cost of capital, and then see if there is any upside to think about.

Best regards-

Hi phake,

One thing you've forgotten is the cost of renovation/rebuilding in your estimates. Well, not only you, but everyone who's commented on the actuarial analysis.

After >25 years, the instrument will require some kind restoration or other, even if it has not been played at all. How much? What kind? This is not an insignificant cost and can easily undermine any calculation of long-term worth. We're probably talking about, what, $20K US at a minimum? What about sound board failure in this time frame, even if it is in the minority of instruments? Suddenly, the cost is not so small.

Please, let me/us know what you think!

Last year, the factory owned gallery here did a presentation for the PTG chapter on appraising the Steinway piano. If my memory is correct, the presenter said that the cost of their Restoration Center rebuilds are 85% of what a new comparable instrument would cost. Other non OEM rebuilders can cost from 70%-80%, or more. Anything less than this will likely yield sub-par work.

Greetings, Mr. Greg.

As for soundboard, how about loosening the string in storage to remove load on the board? As for the action parts, I think keeping the critters out would be a prime consideration. I am interested myself in how the hammers might change with time, if at all. There is no upside for sure if you have to rebuild it.

Best wishes-

Retail estimates I know of, in US dollars,

replace hammers- $3-6,000
replace strings- $5-7,000
replace soundboard- $10-15,000
remake custom keyboard- Jeepers, anybody have a price on that?
refinish case- $5-10,000
fancy stuff with the scale geometry- ? Oy!
reshaping the capo bar- ? (I can't even guess)
custom action work- anybody care to comment?

Felts harden/deteriorate over time even if you don't play them.
Soundboards crack more because of changes in atmospheric conditions than anything else.
Strings rust whether you play them or not.
You might want some obvious things improved a bit by a master rebuilder e.g. the capo bar, etc., if it will make a big difference in the end.

So even if you store the instrument perfectly over 25+ years, you are still talking a significant capital investment over time in maintenance and upkeep. Heck, 30 years from now you might want to try one of the new-fangled actions in your old Steinway. How much will that cost?

Hi Mr. Greg,
This is still alive? OK.
You wrote: After >25 years, the instrument will require some kind restoration or other, even if it has not been played at all.

Let's use that 25 y lifetime and assume that is at 25 C and 50% RH. Degradation processes are usually Arrhenius in nature, and can be approximated with a factor of 2 increase degradation rate with a 10 C increase of Temperature. If we take that to the basement in the new mexico mountains where the ground temperature is less than 50F(10C), and maintain the piano for most of the year at 10C or less, that factor change in degradation rate is 0.36. 25 years/.36 = 70 years.

Now, the influence of RH is less cut and dry, but on average it seems that a 10% RH increase leads to a 1.5 increase in degradation rate. If we can maintain the RH in the desert basement at around 20 % RH (The meter I saw in Steinway Hall in NY around x-mas time said 17%RH), the change in degradation rate factor goes from .36 to .11. So, 25 years/.11 = 227 years before rebuild is necessary. I hope I got the math right, but it definitely gives the general idea.

> Heck, 30 years from now you might want to try one of the new-fangled actions in your old Steinway.

Something like this is actually the very biggest risk that I see. However, S&S has been very consistent in their model designations. I think this has helped the rebuild business and the value of old S&S pianos. Yamaha, Kawai makes nice pianos, but when their old model is replace by a new model, the prices of the old models go down.

If I got wind that Steinway were to buy out WNG, and such components were to become the new norm incompatible with the old ones, or some major change like that, I would immediately try to liquidate this hypothetical inventory before it did.

When Kohlberg groups bid for S&S, it looked like it was in the Kohlberg DNA to make complementary acquisitions. I wouldn't have been surprised if they would have moved to make such major changes.

All the best-

OK, nevermind. I guess I'll just buy a mutual fund at T.Rowe Price.

Challenging Steinway's statements that a piano is an "investment" in the very strict financial sense (and not meaning its an investment in your quality of life, intellectual development, etc) is completely fair. It's really hard to imagine that anyone would seriously consider a piano a financial investment (with rare exceptions for historically significant instruments.)

It's odd that Steinway's primary pitch is investment and prestige value, and not as a musical instrument.

And you wonder if the brand will continue to go this way. I'd bet that you'd start seeing some "Boston" and "Essex" models start to use the Steinway brand as their primary designator.

This is not really possible with a compression crowned board. The load is part of what keeps it intact in the first place.

Hi Marty.

You misinterpreted my position. Used Steinway sales and the prices that they sell for benefit buyers, rebuilders, and dealers. However, they are the major competition for new Steinways.

That point was overlooked in the post I commented on.