Investing In Your Stamps

Sitting here, I have been mulling over the current financial issues that have been driving the world stock markets and investment strategies and the relationship with stamp collecting. As I see things, and I think most will agree, there are two basic forms of collecting and a hybridized middle ground. The largest group is the hobby collector; the hobby collector's motivation is an art and beauty of the stamps obtained and their relationship in history. Perhaps the smallest group is the investment collector, the investment collectors are looking for the long term financial gain coupled with a secure place to shelter wealth. Obviously, the hybridized group is setting in the middle and wanting the best of both worlds. In the next few paragraphs I would like to share my and solicit your thoughts on the financial impact we will all be facing as stamp collectors.
As a collector and dealer I am witnessing trends in the sales of stamps. For the hobbyist I foresee a two sided coin. In the current trend I see the sales value of less then prime quality stamps falling. As an example of this look at ebay sales. Two to three years ago you would have been very hard pressed to find a space filler Scott US#72 for less than $150.00 now you can find them in the $75.00 to $90.00 range. This drastic devaluation is not necessarily a bad thing for the hobby collector as value is not their primary motive for buying a stamp. Also, if the hobby collector continues to add to their collection at a steady pace, and is held long enough, the value will eventually come back through dollar averaging.
Now looking at the investment collector I can see nothing but good times ahead. Over the last few years the prime collectable stamps have enjoyed a slow but steady increase in market value. I see it this growth rate as just the normal market turn over of collections and doing business. What I see happening within the next few years or less, governments will not be able to artificially keep interest rates down and inflation is going to kick in. My prediction is at that point due to investor collectors flipping stamps you will see the market value of prime collectible stamps out pace inflation by 8% to 10%.
These are just my thoughts and all comments are welcome.
Always
Ron

Nicely written, thanks for sharing your thoughts.

I had a stray thought or two about the cost of transportation being increased by the cost of fuel and metals (and coffee ) and what impact this would have on the shipping price of stamps purchased online or through distant dealers.

But then, we may have Star Trek transporters by then too.

Stamps and Investing do not compute for me I remember the 1980's and the zepps selling for 8 thousand dollars even though there was no shortage of them...its not easy to combine pleasure and business !

That is my experience as well. Very well put.

If we have Star Trek transporters, we will have Star Trek replicators first. And what a problem that will be.

Maybe there will be a tax to use the transporter and thus a stamp!

Marquee stamps will always hold there value and be a long term investment option for those who wish to diversify their investment holdings but from a collector point of view it is great to see the heat come out of the market and the generally collected items being much more realistically priced

I 'm definitely a hobby collector this time around. Thirty years ago I collected classic U.S.- and sold for a nice profit then. :-) Now I just want to have fun with classic era WW collecting. If you are correct about the two tier stamp market, I should see little or no rise in price for non elite stamps the next twenty years, and that would suit me fine. Of course my non elite general collection will be sold eventually "as is" on ebay for liitle or nothing, but that is O.K. too. Because I'm getting "paid" now. ;-)

Jim Jackson

On thing that I did not mention in my thoughts, but it does hold absolutely true to every collector. While some my say the financial aspect should not be taken into account, this fact flies in the face of those that denounce it. It is my belief that all stamp collectors are truly treasure hunters at heart and are always willing to brag about the their latest and greatest find.
Beam me up Scotty
Ron

I have no idea of market trends, past or future, for US stamps, but I can say that for the Indian States stamps I collect, the trajectory has been pretty uniformly one way: up.

I'm essentially a collector only, for now at least. (I do very occasionally dispose of stamps, but only when they don't fit into my collection.) Nevertheless, I have quite a considerable amount of money tied up in my collection, so I like to know where it's going. I've been tracking Gibbons' catalogue prices for items in my collection listed at £10 or more annually for the last 10 years, and I see a steady 5% or so increase each year overall. Some of the Indian States have been doing rather better - some periods of Cochin come to mind.

My point is, though, that just as in the wider world of economics and politics, so in the world of stamps: the centre of gravity is shifting to Asia. And don't forget that the current financial crisis is a Europe and USA crisis. Asia has barely felt it. The Chinese stamp market may be experiencing a speculative bubble in some areas, but even after the bubble bursts, I think prices will still be well ahead of where they were 10 years ago. The Indian market is also strong, as are markets in many of the developing Asian countries.

There isn't just a two-tier market in collecting practices - there's also a two-tier market geographically. I just thank whatever presiding philatelic deity it was that turned my attention to the Indian States 50 years ago.

I must admit that I have not been following other philatelic markets that closely, but it does not surprise me to hear your report on the growth pattern. I do know the China stamp market has been booming over the last few years.
Ron

Ron
I told my wealthy friend 4 years ago to start investing in gold instead of buying stock but he like so much trading that he didn't listen to me. It's the same for me, all those years I bought stamps instead of gold. My degree in economics was of good advice but my love for stamps was irresistible. Even if I had allot of money I wouldn't consider valuable stamps as a the best investment you can have for your money. I don't have enough knowledge of classical stamps, the variety, the counterfeit to be 100% sure of what I buy. Finally I think the real value of stamp or a collection is what you get when you sell it. Some fantasize about the cat. value of their collection but if one day they have to sell they end up with a long face when they see the return. Daniel

I agree with Ron that every collector is a treasure hunter. But it's not necessarily monetary/catalog value that turns an item a treasure worth bragging. For example I value "bizarre" stuff (such as postally used Mongolian, North Korean and Albanian stamps from any era) much higher than classic US/world stamps I could buy any day from dealers/online auctions.

IMHO the biggest difference between investor and collector is how they treat their collections. Investor has no trouble departing from items if there's profit to be made; collectors (like me) keep everything till death due us apart / complete lack of interest strikes.

Just my 2 cents of worth...

Scb, I am with you...there is duplication and bulk that will be around forever..i drain off and trade or sell or donate a small fraction of it...i can almost relate to the "hoarder" shows on T.V. !

To paraphrase some definitions:

Valuable = what price I can sell something for
Value = what something is worth to me

The former is monetary and the latter is subjective. I have happily paid $2.00 for a stamp that has a catalogue price of 25 cents because I haven't found it anywhere else and it has that value to me. And it works the other way of course when I shake my head at some auction price that I think is ridiculously too high - at least relative to the value I put on it.

At times I think we would all be better off without catalogue prices because it may make dictate whether we buy something we truly value or not.

I think it is better to think of stamps as value and if sometime they become valuable - all the better. Less stress.

I think any investment in my stamps is my time. Any monetary value is gravy.

I think this topic has some excellent comments but feel like a very important point has been left out ...

The effect online auctions have had on the philatelic market.

I think we can all agree that online auctions had a major impact on the price of stamps (Read: ebay). I would argue (without citing any hard data) that ebay, et al, is responsible for the failure of more store-front stamp businesses over the past 15 years than at any other time in the history of philately.

For most collectors, this was a godsend. Stamps that were rarely (or never) available to us were suddenly available at the click of a mouse. No more were collectors held hostage by hoarders and unscrupulous dealers. The inevitable result: prices went down.

Fast forward to today. The traditional stamp market has been stable for some years. I feel confident that if I paid xx dollars for an item last year, I can sell that same item for xx dollars. Because of the online auction market, I am confident in my ability to sell my collection at fair market value in a quick and safe manner.

Before ebay, that was rarely possible; if you were in a hurry, you were at the mercy of the storefront dealers.

This brings me to Ron's point about the "hybrid" collector. I fall into that category, only because I feel secure in that knowledge that I won't take a big hit should I have to sell my collection. Additionally, I feel that after 15 years of online sales, the market is secure enough not to tank as it did in years past.

Only time will tell if my strategy rings true. If nothing else, I still have my pension :)

Brian