The Value of a Pen

(Apologies for the recent lack of posts. Haven’t abandoned the blog, just busy!)

Recently, I’ve been considering the purchase of a new pen. There’s nothing unusual in that, except that this particular pen is what you might consider an ultra high-end purchase and easily worth more than the rest of my collection combined. There isn’t much discussion about the buying considerations for something like this, so although I haven’t made a final decision just yet, I thought it would be interesting to explore what has been on my mind over the last few weeks. 

The pen itself is a Montblanc Blue Hour Skeleton, which I recently learned has been discontinued (though it is still available, for now, through retailers and boutiques). The list price is €7700 in Europe and $9000 in the US so you can see why it hasn’t exactly been an impulse buy. 

The Aesthetic Consideration

This pen has been a major draw for at least a year — maybe two — and the main reason for that is its appearance. It is stunning. As you may have heard, I’ve got my issues with Montblanc but they have nothing to do with their pen designs. Their designers have some serious talent and that’s amply demonstrated in this particular pen. It is beautiful in a way that stirs me quite deeply. The Hemingway has inspired dreams of a pen that I could own, cherish, and enjoy well into old age but the Skeleton is a pen that I want and need to possess right now. Is it love? I don’t think so. Is it lust? Most definitely!

The Skeleton was completely off my radar until the end of June, which is the end of the Australian financial year. Living in Manila for four months was seriously cheap and having my partner stay there for a further four months without me meant that we weren’t going out to restaurants, to the movies, or on weekend escapes, and those savings all added up. The extra free time also meant I could take on some more consulting work, so spending was substantially lower and income substantially higher. Suddenly, the price of the Skeleton wasn’t such a barrier. It was in play. 

Soon therefore, someone (possibly Dennis or a member of Fountain Pens Australia) suggested the Visconti Watermark as an affordable alternative. There were obvious similarities: both were oversize demonstrators (although the Skeleton was blue and the Watermark clear) with an overlay (platinum for the Montblanc and silver for the Visconti) but one clear difference: the Watermark retails for €1500, a fifth of the Skeleton. The photos looked seriously good and it seemed like an ideal solution. 

The reality was entirely and unfortunately different. While the Skeleton was a thing of undeniable beauty, the Watermark was anything but. The colours and design of the Skeleton featured contrasts which were neatly balanced — the blue and the silver; the random, curved overlay with the sharp, diamond-pattern of the nib and piston — the simple design elements of the Watermark dominated and screamed out for attention. The repeated Visconti logo through the overlay design (hence the name) seemed unnecessarily ostentatious. Try as I might, I also couldn’t let go of the disappointing experiences which Visconti has offered to myself and countless others: dodgy quality control and unreliable nibs. The cheaper product felt a lot riskier, which isn’t ideal when you’re considering even a €1500 purchase. 

Despite the price difference, my heart still yearned for the Skeleton: an object of genuine beauty instead of a showy, garish pretender. I hunted around in vain for something else which might satisfy that longing and examined the ranges offered by Montblanc, Caran d’Ache, ST Dupont, Aurora, Montegrappa, and anyone else who might’ve had something uniquely appealing, either as a production line item or a limited edition from the past or present, but ultimately came up empty. Nothing else had the same appeal and so I progressed to giving serious thought to the financial implications. 

The Financial Consideration

Most pen purchases are considered in simple, cashflow terms: if you spend $140 to acquire a new Vanishing Point, you have $140 less in cash than you once had. Even though you might resell the pen someday, it’s not an investment and it’s not worth thinking about in those terms. When you’re looking to spend a much greater number, however, it almost becomes necessary to consider the cashflow as well as the effect on your overall balance sheet. 

A balance sheet approach is where that same transaction results in $140 less cash but the addition of an asset worth $140. So your overall financial position doesn't necessarily change, you're just exchanging one kind of asset for another. But while cash retains its value over time, the asset value of a pen can diminish as it goes from mint condition to a used, well-loved pen. For cheaper pens, the asset value diminishes tremendously once they are used. Frequently to the point where it's not even worth reselling them, and so the asset value is $0. Once you’re in the territory of pens worth $500 (or more) when new — say, a Montblanc 146 or a low-end Nakaya — it does start to enter into the calculation. 

As long as a pen is still available in the primary market (ie, new and from a retailer) there is a ceiling on how much it will fetch in the secondary market and therefore the asset value. Even a sealed, mint condition Skeleton is not going to fetch the same price on eBay as the retail price — buyers would simply choose to purchase from a retailer and enjoy the benefits only a retailer can provide. Once the seal is broken and the pen is inked, the resale price diminishes further. 

That price diminishes even more if the pen is used regularly and begins to show some the usual marks and micro-scratches associated with use — but it diminishes at a slower rate. At a guess, breaking the seal and inking up might lead to a 25% decline in price while careful but regular use over a period of one or two years might only lead to a further 5-10% decline. Nonetheless, that decline is extremely costly: if our starting point is €7700, the pen might only be worth €5000 after two years. While the cashflow effect is a loss of €7700 in cash, the actual balance sheet effect is smaller, at €2700. 

(This analysis makes two somewhat unrealistic assumptions: first, that the 21% VAT (sales tax) applies for a non-European like me. And second, that the secondary market price is based off the European retail price, when it is more likely based off the higher US retail price. In reality, both factors work in favour of an Australian buyer, to the point where a used pen could conceivably be sold at a price greater than the original purchase price.) 

A further consideration is what happens to secondary market prices once the pen is no longer available in the primary (retail) market. Although there are quite a few in the community who want to think of their FPs as investments, that attitude is probably closer to hope than experience. A very small selection of FPs will increase in value — especially once you account for inflation or the potential return from much less risky investments — but they are effectively random.

An example of this is the Montblanc Writers Edition, an annual release of pens including the Hemingway, Agatha Christie, and Marcel Proust*. Those three are probably the only models to have considerably increased in value; some have lost a bit of value in absolute terms and are now cheaper to purchase than they were on release. The majority are somewhere in the middle and my guess is the value of the average pen is just about breaking even in real, inflation-adjusted terms. The Dostoevsky might command a higher price than it did on debut in 1997 but it’s worth less once you account for inflation, and therefore would have made a pretty terrible investment. I don’t think anyone can tell in advance which models will appreciate and make an investor wealthier, all of which should be a strong signal not to think of FPs as investments. This is without thinking about what happens when you try to sell, particularly the time it takes to shift an ultra-niche product (or the discount that is necessary to sell in a hurry). 

Nonetheless, it’s hard to think about a major purchase without considering what might happen to its value. The Blue Hour Skeleton is quite similar to a 90th Anniversary Skeleton (which bore a grey demonstrator body and ruthenium overlay) and they retailed for the same price. I’ve only been able to find three examples of Anniversary Skeletons selling: all were sealed, one was worth more than retail, one about the same as retail, and one lower than retail. Not the most useful signal of future value. 

The apparent scarcity of Anniversary Skeletons was a slightly positive signal, however. For anyone keen on a MB Skeleton, these are much cheaper than any other models (which command prices in the tens of thousands) but apparently not any more common on the secondary market. That provides some comfort that the price isn’t going to fall through the floor but it’s not something I would want to bank on. Particularly since my gut is also saying the Blue Hour is far more attractive and therefore more likely to pique the interest of potential buyers, a thought that is based on nothing more than personal taste (and hope). 

All up, the financial side of this tells me that I would lose some amount of value once the pen was used but not a great deal — maybe 10-20% — and that the chance of an increase in second market prices is ever so slightly greater than a decrease. A sensible approach might be to think of a worst-case scenario, like a 50% devaluation off the retail price. That would mean a balance sheet loss of almost €4000. A painful number, and one which a buyer would need to be comfortable bearing before they could commit to a purchase. 

The Partner Consideration

While aesthetics make me want to buy the pen and the financials make me understand the cost and risk involved, the most important consideration is, without a doubt, my partner’s views. We don’t share bank accounts but we do involve each other in financial decisions, big and small. Sometimes we’ll even discuss a Twsbi before the trigger gets pulled. While she’s not hostile to me indulging in new purchases — even to the extent of approving the Hemingway acquisition — her inclination is definitely to save as much as possible, regardless of how much is already saved. And so the possibility of a Skeleton was a cause of concern and uncertainty. 

While I’m hardly a relationship expert — you may be shocked to learn that economists aren’t necessarily the best at dealing with other people’s emotions! — my approach has been honesty and openness and trying to achieve consensus. She knows about my financial position, about the price I would be paying, about my desires and reasons, and about the uncertainties which one naturally feels when making a large purchase. This seems to be effective for a few reasons. It creates trust and the ability to make these decisions together. Her advice has been helpful in raising issues which I hadn’t considered and to explore other issues in more depth.

Most importantly, it’s a useful way for me to test out my internal cost-benefit analysis and see if all of the claims make sense. If I can’t convince her that a purchase is a reasonable thing to do — perhaps because it’s expensive and the benefits aren’t worthwhile, it’s too similar to something else in the collection, or it’s a really risky purchase — then it’s a clear signal that the purchase decision needs to be reconsidered. Ultimately, the purchase is my decision and my responsibility but having that input is invaluable. Especially when all of my good pen friends are hopeless enablers. 

Not everyone in the community shares this approach. A good friend in the Philippines has said that his wife only knows about a third of the pens he owns — and the cheapest third at that. He moves around funds, disguises purchases, and keeps pens at the office to avoid being caught. I’m sure that isn’t unusual amongst some pen folk and to each their own. It’s just not an approach which works for me.

When it comes to the Skeleton, her concerns are not groundbreaking but they are important: she struggles with the price (and it is incredibly expensive) and the fact it comes only a few months after another major purchase in the Hemingway. Which I may have said would be the last major purchase in a while, and clearly this was not the case. So, not surprisingly, she’s also concerned about what comes next. I’d like to say that this will be the last purchase for a while, but who’s to say something just as beautiful won’t pop up in the near future? (I hear the new MB Miles Davis is a real stunner!) Frankly, these concerns can’t be easily dismissed and are the main reason I haven’t committed to the Skeleton just yet. 

Conclusion

When it comes to a high end purchase, there’s a whole lot that needs to be considered. Some of the issues are more easily addressed than others and full consideration doesn’t necessarily lead to the purchase decision that, deep down, we all want to make. The added pressure of knowing a pen has been discontinued really doesn’t make things any easier. This post has been an overview of my thinking but it's certainly not the only way this kind of decision gets made. 

For now, we’ve decided to visit a boutique together and get a better feeling for whether we think it’s worthwhile. That won’t be an option for at least a couple of weeks, so hopefully the pen is still available when it happens. Even if it is, there’s no way we will commit to a purchase unless we’re both certain that this is worth doing, and that’s the biggest hurdle. I have no idea if we will commit to a purchase or not but I’m glad to be in a position where its a possibility, to have have my partner along for the ride, and to have such passion for a hobby where this can all, somehow, make sense.

*Thanks to Kai for pointing out that the Proust has also appreciated in value.