The Marketplace:
How to Shop for a Fine Instrument or Bow, Part 1

Entering into any market as an uninformed consumer can be a scary proposition. The string instrument business is no exception.
The esoteric and arcane nature of the objects, the clubishness of the dealers, and the stories of fraud and deception in the business all combine to give the impression of peril waiting at every turn for the would-be buyer.

Say what you will about the string instrument business, it's all true! But it is possible to understand and manage the downside risk involved in buying string instruments. By following certain guidelines, consumers can make informed decisions.
Be clear about your motivations before shopping. Ask yourself, "do I really 'need' this?" The best reason for buying an expensive instrument or bow is because you will enjoy owning it. All other motivations pale by comparison to this, even the notion of career need.

Many would-be consumers of musical instruments form the idea that they should buy the most expensive instrument that they can possibly afford because they "need" such an instrument to forward their performing career and instruments are such a "good investment."

More about string instruments as investment vehicles later, but before deciding to purchase an expensive instrument or bow consider this perspective: A good player usually sounds good on whatever instrument is played, a poor player sounds poor no matter what instrument is played.

Having said that, it is true that a fine instrument will greatly enhance a performer's ability to project color and nuance. A fine instrument will have a good basic quality of sound. With the very greatest violins this effect can be transcendental.

But the esteem in which we hold a fabulous del Gesu or Stradivari, tonally, is tied as much to the superb artists who have made careers on these instruments as it is to the violins themselves.  Still, it is a uniquely inspiring experience to behold and to play on a fine instrument or bow. That is why these objects continue to captivate collectors and musicians, driving prices for the most desirable examples ever higher.

Understanding the Risks...What Can Possibly Go Wrong?
Despite substantial inflation (and virtually no historical period of depreciation,) in the fine string instrument market, the marketplace is not without its risks. Risk factors in this market include the following:

1.) Illiquidity-
String instruments and bows are highly illiquid. Liquidation of these objects at a retail level requires a period of years. Anyone spending a large sum on a fine musical instrument or bow should face the reality of the illiquidity issue up front.
A good instrument or bow, appropriately priced, and in view of potential buyers will eventually sell. But in the fine arts market in general, there is no way to accurately predict when a given piece will sell to a retail consumer.
If an owner needs money in the meantime, the price of achieving liquidity may bring the seller's net to below 50% of the retail value. Consequently as with real estate it is difficult to buy and then sell an instrument or bow within a relatively short period of time and avoid losing money.                                                                             
2.) Effect of Commissions-
The fine string instrument market is largely made by the dealers who transact business in the market. It is normally necessary to pay commissions to these dealers in order to access the market. Such commissions can be substantial. Consequently, as with real estate it is difficult to buy and sell an instrument or bow within a relatively short period of time and avoid losing money.

3.) Authenticity-
Problems of authenticity with a specific piece can affect the value and liquidity of that piece. Expertise in this area is to some extent, subjective. There are no absolutes with this problem but there is a whole range of risk. Generally it is better to avoid items around which there is likely to be controversy.

4.) New Data-
Ongoing historical research periodically unveils information which negatively (and positively) affects the value of fine arts antiques. 
This has happened on a large scale with the paintings of Rembrandt, and on a smaller scale within the world fine string instruments. Further historical revelations should be expected. The effect of such revelations on the string instrument market in general, or on specific makers works is unknown, but it can be expected to diminish (or enhance)  the value of specific pieces from time to time.

5.) Inherent Vice-
Unforeseen problems of condition with a specific piece could affect overall appreciation and liquidity of that piece. Issues of inherent vice are specifically not covered by insurance so it is difficult to protect oneself  from these issues.                                                                                                                       
                                                                                               Cont'd