Are RE LE purchases as investments set to fail?

[99call]

With Davidoff, Dunhills and Pre-Embargo offerings starting to dry up, or enter into collections that have no interest in ever selling them, is the picture of cigars as investments starting to change?

With the 2017 crop on the horizon,  will the clever money edge their bets either side of the the age of the RE LE boom,  i.e 1990-2000 stock, and post 2017 stock

I'm sure the likes of Dip Bushidos, and RA 898's will be bulletproof in time , but will the soft underbelly of the special releases be out performed by standard catalogue habanos?. Once all the 1970's 1980s stuff is gone, surely the likes of a box of 1997 Punch Double Coronas (recently sold for £400) will be seen as far more valuable than a box of Behike £800-1000.

To me, for smoking, its a no brainer, but will the market follow?. Ultimately a box of cigars has it's end price, not how many were made blah blah or it's re-sale value. what is the value to the person who is going to smoke them?   Ultimately in another 5yrs, I think we are going to see an upturn of 1990-2000 standard catalogue prices, and a downturn in flabby RE LE release prices.

What do FOH think?

[oliverdst]

Suply/demand.

I may be wrong but after 2012 lots of people stocking up EL and ER to profit in the future so they will not be as hard to get as pre-2012 boxes, with excpetions, of course.

 

 

 

[99call]

2 minutes ago, oliverdst said:

Suply/demand.

I may be wrong but after 2012 lots of people stocking up EL and ER to profit in the future so they will not be as hard to get as pre-2012 boxes, with excpetions, of course.

 

 

 

Supply and demand, is my point I guess. If these RE LE (as you pointed out) are being held by collectors. surely at the point of 'turnaround' they're looking for i.e 5-10 years (to my a 300% profit) the market will be flooded. and it will all seem a bit silly. 

I guess my point is when a 50 cab of Punch Churchills from 1998 'feels' a great deal rarer than a box of Behikes, the market will start to change and de-value the RE LE's? in comparison. Critically I think all the Dunhills, Davidoffs, and Pre-Embargo stuff will have to dry up, before this happens.

 

[mk05]

1 hour ago, 99call said:

I guess my point is when a 50 cab of Punch Churchills from 1998 'feels' a great deal rarer than a box of Behikes...

When did 50 cabs of 1998 Punch Churchills start feeling a great deal rarer? Because I think you're on to something here.

[Philc2001]

Some nice aged stock is quite cheap by contrast to some of the current RE/LE stock, so I think I see where you are coming from.

These are fickle markets, and frankly I'm neither a collector nor reseller, so I'm lousy at the demand/supply equation - if that is what is driving it. When I see aged stock come up for sale on the secondary market, I can't for the life of me figure out the logic behind the pricing. I've seen aged boxes of regular production smokes with 10-20 years of age at near $9-$12/cigar, whereas 1-5 year old RE/LE stock goes from $20-$30/cigar. There are a few exceptions like Punch SS1, Bolivar Inmensas, Partagas SdC, LGC/ERDM Tainos selling at $20+, but most are still shy of RE/LE pricing. 

As much as I would love some more aged 90s and early 2K stock, I'm finding some decent regular production to keep me satisfied, so while I'm willing to pay up for some of my favorites, I seldom bite on the aged stock. Now, if recent RE/LE pricing starts to tank, I would think they would drag the rest of the market down with them, but as I said above - I don't understand the pricing, so I'm probably wrong.  

[Lotusguy]

I'd say there is more speculation in the LE/RE market. People have seen a fast return which in turn drives them to stock up on those new releases without any regard for actual quality. IMO, the regular production market is more driven by actual smokers than speculators. Exceptions do exist, of course.

[99call]

Just now, Lotusguy said:

I'd say there is more speculation in the LE/RE market. People have seen a fast return which in turn drives them to stock up on those new releases without any regard for actual quality. IMO, the regular production market is more driven by actual smokers than speculators. Exceptions do exist, of course.

Yep definitely agree with this.  It illustrates where I think the bottom may fall out. The box has to have an 'end purchase' if the buyer is a smoker, they likely don't care less about value. Rarity will be a factor for them, sure..... but they are likely investing in the experience. If that experience has a bad return, I forsee a painful static situation of RE-LE investors essentially start selling to one another, for small increments. 

 

[garbandz]

I would consider a box from the 90s a good investment.

not so much the LE and specialty cigars.Type of tobacco and rarity of the 90s stock should appreciate more strongly.

Extra bands are no basis for the cost of most of these specialty cigars to me.

and so many are an uncomfortable size............

The Asian Regional cigars I have tried do represent good value.

[99call]

30 minutes ago, garbandz said:

The Asian Regional cigars I have tried do represent good value.

Yep, the loss of David Tang is a sorry loss to the cigar community in so many ways.  

[NSXCIGAR]

Most cigars are a very poor investment from an ROI standpoint. The best performing cigars of the modern era are the Gran Reservas, followed by Cohiba and Monte ELs. The only ERs that have performed in that league to this point are the Edmundo Dante 109 and the La Escepcion SF.

Anyway, the numbers have been broken down to show that after all is said and done you'll be lucky to make 5-7% per year on cigars made after 2000. In addition, no one knows how these cigars will perform after 15-20 years. If all the cigars made after 2000 start to go bland as hell at 20 years the bottom could fall out of the "modern vintage" market. 

Special or true vintage is a different story but again, you have to know exactly what you're buying. Obviously a pristine, complete 1492 humidor for example is a different animal entirely from an ER or EL and may yield different results.

[El Presidente]

6 hours ago, 99call said:

With Davidoff, Dunhills and Pre-Embargo offerings starting to dry up, or enter into collections that have no interest in ever selling them, is the picture of cigars as investments starting to change?

With the 2017 crop on the horizon,  will the clever money edge their bets either side of the the age of the RE LE boom,  i.e 1990-2000 stock, and post 2017 stock

I'm sure the likes of Dip Bushidos, and RA 898's will be bulletproof in time , but will the soft underbelly of the special releases be out performed by standard catalogue habanos?. Once all the 1970's 1980s stuff is gone, surely the likes of a box of 1997 Punch Double Coronas (recently sold for £400) will be seen as far more valuable than a box of Behike £800-1000.

To me, for smoking, its a no brainer, but will the market follow?. Ultimately a box of cigars has it's end price, not how many were made blah blah or it's re-sale value. what is the value to the person who is going to smoke them?   Ultimately in another 5yrs, I think we are going to see an upturn of 1990-2000 standard catalogue prices, and a downturn in flabby RE LE release prices.

What do FOH think?

Firstly, the concept of Habanos as an Investment is purely consumer driven. 

Once all the 1970's 1980s stuff is gone, surely the likes of a box of 1997 Punch Double Coronas (recently sold for £400) will be seen as far more valuable than a box of Behike £800-1000.

Secondly there is no "Surely"

It makes sense but DC's are not as popular in the whole market as are Behike.  How big is the investment flipper market?  2% of the whole?  Shooting from the hip that means that the Behike may appeal to 30% of the market while the aged DC 2-5%.   Supply and demand. 

I can see the investment flipper market increasing for a decade where more people buy 4 boxes instead of 2, put 2 away 5 years + and sell them to partially fund their cigar hobby. Part time flippers will come to dominate the secondary market as opposed to full time flipper/investors. 

 

 

[JohnS]

47 minutes ago, NSXCIGAR said:

Most cigars are a very poor investment from an ROI standpoint. The best performing cigars of the modern era are the Gran Reservas, followed by Cohiba and Monte ELs. 

True. I've had discussions with cigar enthusiasts whose eyes 'light up' when mentioning recent Cohiba 1966 EL and Cohiba Robustos Supremos EL, but not for Partagas Seleccion Privada or Bolivar Super Coronas EL's. That's why you'd think the upcoming Cohiba Talisman will still sell very well, after all, we are all talking about it currently on the forum. Who's been talking about the upcoming Punch Regios de Punch and Partagas Serie No.1 2017 EL's lately?

[99call]

5 minutes ago, El Presidente said:

It makes sense but DC's are not as popular in the whole market as are Behike.

Hands down I agree with the current state of play, but surely that can change. I guess all I was suggesting was that if the current most sought after cigars could be divided like this:

1-  Davidoffs, Dunhills Pre-Embargo 60s 70s

2-  Genuine special releases/production. Gran Reserva's, Aged Cohibas

3-  RE/LE

4-  1980-90- early 2000 stock

That once that top tier vanishes is may look more like this:

1- Genuine special releases/production. Gran Reserva's, Aged Cohibas

2- 1980-90- early 2000 stock

3- RE/LE

[El Presidente]

Perhaps. 

I will bet on aged regular production stock being the better (and safer) performer.  Cohiba, Monte, Partagas, Upmann, R&J. 

You may get a bigger return on the special releases but you will have 1000's more buyers for quality, aged, regular production in vitolas that people want. 

China/Asian/Eastern European/USA  expanding markets will see to generations of new cuban buyers seeking an "affordable" aged experience. 

7% ROI per annum? Decent return for no risk on a product you can smoke should you wish. Certainly better than a bank deposit rate. 

If you have the moola and the motivation to have a small side play, no harm. if you want to be a semi professional cigar trader then you need specialist knowledge and an understanding of what is a relatively risky and unstructured market.  

[earthson]

Fascinating discussion thus far. To me, there is a difference between somebody selling off something for this reason or that, and a Flipper (note the capital letter). Flippers race to snort up all of the rare cigars and whiskeys, or otherwise clean up here at clearance prices and wander over to other places to sell for sometimes 50% or more markup. If all of the EL/RE don't age well, I'd imagine the secondary market will enter territory much different than what I see now.

As a smoker and proud anti-Flipper, I see a question being distilled here: are recent production cigars going to age well?. For the first time ever, while stocking up on HUPC, I identified and marked 2 boxes of beautiful, well constructed sticks, with an eye towards possibly maturing them and selling in 10-15 years time after they (ostensibly) are no longer available. Risk? None. Even if we enter Great Depression 2 and the luxury market tanks, i'll have 2 additional boxes of one of my top 3 smokes. And if they're going for £250+ by that time? Well....

[Romka]

A humble advice from a poor soul living in a city of 20 million. Buy land if you want to invest and smoke all your cigars. Land is limited and population is increasing exponentially.

[Lotusguy]

One additional point - the marketplace in US is highly dependent on the status of the embargo and regulations regarding importation. Reselling is still illegal and Facebook could decide to shut down the various trading groups tomorrow (as they did two years ago or so). This makes the US market highly risky.

 

This doesn't even take into account the general progression of anti-smoking regulations.

[polarbear]

If anyone here is into comic books, they might be familiar with the "speculator bubble" that occurred in the late 90's
People were buying multiple copies of special edition book in the hopes of flipping them for "Action Comics #1" size returns
The comic companies responded to this by releasing more and more special editions, flooding the market until it collapsed under its own weight, nearly taking the comic book industry with it.

Same thing is kinda happening with HSA now. More and more REs, special bands, jar releases and humidors are being released every year along with the standard GR, LEs and Collection Habanos books, and people are going deep on some REs in the interest of flipping them.
If you have access to a certain market and can turn a small profit flipping REs to someone in a different market, that's probably not a bad little deal, but buying 4 or 5 boxes of every RA RE that you can find is setting you up to fail

Even Cohiba LEs don't fetch what they once did. 3 years ago a box of 1966's could fetch around $1500aud on the aussie secondary market. Now you'd be lucky to get $1000.
I think this has a lot to do with the fact that Cohiba has had 3 LEs in the last 6 years and if the trend continues, even Cohiba LEs will find themselves devalued heavily as people will just wait 12 months and buy the next LE rather than pay a premium for a 2 year old one.

"In order for something to be worth something, it must first be worth nothing", rings true with RE's. For the most part, the only RE's that are in highest demand are the ones that no-body gave a crap about until they were 3 or 4 years old and started smoking REALLY well. But, by then most of them had been sold and smoked (I'm looking at you, RACF) 

[joeypots]

This blew me away. I hope it's OK to post it. From the middle of last July and they sold immediately. The source is beyond reproach. The 520 is a great cigar and is smoking the house down at the 5 year mark.  I agree that the Monte Cristo Els are worth the initial price, but wow, $540 is more than double in 5 years.
MONTECRISTO 520 LE
ALT NOV 12
ROBUSTO EXTRA
USD $540 AUD $913  

  

[earthson]

3 hours ago, Romka said:

A humble advice from a poor soul living in a city of 20 million. Buy land if you want to invest and smoke all your cigars. Land is limited and population is increasing exponentially.

 

F'n this! They're perpetually coming out with "new blends" and new bands and EL/RE have gotten just silly. But they're not making any more land! P.S.: Don't buy the next Love Canal - Phase 1/2 Site assessments are WAY worth it.

 

55 minutes ago, polarbear said:

If anyone here is into comic books, they might be familiar with the "speculator bubble" that occurred in the late 90's
People were buying multiple copies of special edition book in the hopes of flipping them for "Action Comics #1" size returns
The comic companies responded to this by releasing more and more special editions, flooding the market until it collapsed under its own weight, nearly taking the comic book industry with it.

 

 

Oh, yeah! I remember quoting the Sherman Anti-trust Act to some vendor at a Comic Con in '94/95 or so who was mandating people buy not one, not 2, but 3 copies of the LE chromium cover edition before he would allow them the privilege of buying a copy of the gold leaf cover edition, which had a few extra pages of art. He made no money off of me and I was escorted away from the booth by security (but was not thrown out!). It was some no-name publisher that probably went under a year or 2 later and I can only hope he is busy short-order-cooking eggs tomorrow morning, wondering where his art career went.

[Fuzz]

1 hour ago, polarbear said:

If anyone here is into comic books, they might be familiar with the "speculator bubble" that occurred in the late 90's
People were buying multiple copies of special edition book in the hopes of flipping them for "Action Comics #1" size returns
The comic companies responded to this by releasing more and more special editions, flooding the market until it collapsed under its own weight, nearly taking the comic book industry with it.

 

Ah, yes! I do remember the craze of the special editions! I have all 4 of the variant covers of X-Men #1, plus the special gate fold edition combining all 4 variant covers (pretty sure I got Jim Lee to sign them at Oz Comic-Con). Then there were the embossed foil cover editions (Bloodshot #1 being the first), the hologram cover for Superman Forever, Wolverine #50 die cut cover (remember that one @jay8354), the poly bagged "Death of Superman", glow in the dark covers, and then came the ridiculous "blank" comic book covers.

edit: And I forgot the 30th Anniversary hologram edition of The Amazing Spiderman!

[NSXCIGAR]

2 hours ago, joeypots said:

I agree that the Monte Cristo Els are worth the initial price, but wow, $540 is more than double in 5 years

The doubling of asking price after about 5 years is about standard for all of the top "flipping" cigars including Cohiba Robustos, Esplendidos and Lanceros. But when storage costs and selling/auction fees are taken into consideration, again, the numbers break down to a about a 5% ROI at best.

Here are the two best threads discussing all aspects of investing in cigars:

 

[polarbear]

53 minutes ago, Fuzz said:

Ah, yes! I do remember the craze of the special editions! I have all 4 of the variant covers of X-Men #1, plus the special gate fold edition combining all 4 variant covers (pretty sure I got Jim Lee to sign them at Oz Comic-Con). Then there were the embossed foil cover editions (Bloodshot #1 being the first), the hologram cover for Superman Forever, Wolverine #50 die cut cover (remember that one @jay8354), the poly bagged "Death of Superman", glow in the dark covers, and then came the ridiculous "blank" comic book covers.

edit: And I forgot the 30th Anniversary hologram edition of The Amazing Spiderman!

I remember picking up a few #1's signed by the Artist and Author that were graded and sealed at a garage sale when I was a kid
I stashed them in a shoe box in my closet and forgot about them for close to 15 years.

When I found them again I decided to check what they were worth, turns out a signed, mint condition issue of Turok #1 (with cert of Auth) had doubled in value in 15 years.
I paid $20, its now worth $40
Likewise most of the Imagine Comics #1s I grabbed when the publisher launched. Most are barely worth double RRP but Spawn #1 gained a bit of value over the last 15 years. Last one I saw that actually sold on ebay went for a couple of hundred dollars in mint condition.
Not a bad ROI, but not exactly Detective Comics #1 money

A good mate of mine who went deep during the boom in 90's actually had all his Special Editions and Variant covers that he'd bagged and boarded graded and valued a couple of years ago (for insurance)
Turns out the entire collection was worth only slightly more than it cost to have it graded.
 

[Fuzz]

Don't doubt that, PB. As you said, flooding the market killed it completely. Stuff that I had in the 90's that was worth quite a fair bit, has now become barely worth what it initially cost.

However, my statue collection has gone up in value by a huge margin. Bought this Silver Surfer comiquette for USD$450 (incl shipping) about 7 years ago.

Last time it sold on eBay, it went for nearly USD$2000. Not a bad mark up... but I'll never sell.

[99call]

Personally If I invest to sell, I only ever buy stuff between 1930-1990 as thats the stuff I would want to own, if for whatever reason I didn't make the price I was after. 

Also it's a pleasure to own and learn from whilst it's my possession. Boxes from the 30-50s are like little works of art.