Has tulip mania happened with guitars?

How do I know tulip mania is happening with guitars?

I've been seeing this coming for a while now.

Right now, certain guitar companies are trying to convince you that $4,000 is a "normal price", $6,500 is "better", and $10,000 is "best".

No, I am not talking about the vintage collectible stuff. I am talking about new guitars here.

These certain guitar companies are trying to normalize high-four-figure and five-figure prices for electric guitars that literally are not worth more than $500.

And you know what? They're succeeding - for now. At the moment, there are people outright stupid enough to pay those prices. Granted, the majority of who purchases this stuff first are flippers, who then mark up the insanely high price and pass that on to the second idiot. It's the second idiot who's always the real loser.

What's happening right now is the same thing that happened with those boutique effect pedals. Market saturation. Unlike what happened with the pedals, the peak hasn't happened yet, but it will. When the market gets flooded with too many of these "custom shop" guitars, their value will drop like a stone.

The crash-and-burn moment will occur when the flippers are unable to flip their overpriced guitars. When that happens, flippers will stop buying. And when they stop buying, the party's over.

The party is still on, but there's a huge red flag in plain sight...

Published 2020 Nov 10