Cringeworthy Question: "Which Stamps Are Best Investment?"

Sure it can be done, but why reinvent the wheel? The current "system" of discounts off Scott (and Michel, et. al.) is familiar to most collectors, and few collectors but the very greenest ones look at catalog prices as gospel. To your point, I would personally prefer catalog prices to be realistic retail values for "average"* (F/FV) stamps. It would be nice to look in a book and see a price listed that is actually pretty close to what I can expect to pay for an average example of a given stamp. Even better would be a spreadsheet-like listing of values in every conceivable combination of grade and condition. That would, indeed take some of the guesswork out of it. But even if said catalog materialized tomorrow, many sellers would immediately begin touting their discounts off catalog. There would still be many collectors just looking to get rid of a few duplicates who wouldn't care about getting full catalog, etc. You can try to make cat values as realistic as possible, but the market is going to keep on following its own rules just as it does today.


*In this case I mean average to mean "middle of the pack", not the grade of average, which is, of course not average, but horrible.

I think this question makes sense only within the confines of the hobby itself. Acquiring the best quality available (or that you can afford) is the best investment with regard to future resale (most likely at a bottom-line loss anyway). Compared with other opportunities, however, stamps make no sense as an investment.

As a new collector, I have noticed that stamp prices, even on ebay, seem to be based on a percentage of cv. Revenuecollector makes a great point about all the variables, but we can look at certain stamps where many of those variables dont come into play. In those cases, and just from what I perceive, bids tend to follow a percentage of cv. Of course you also have to remember human behavior in the form of bidding wars and so on, but Don makes a good point. Aggregate data, absent catalogs to alter perception, would give you the best idea of real worth. Whether that is obtainable is, as mentioned, still unknown.

If there were no catalog prices to alter our perceptions, I think realized prices would change, some drastically.

When we include the cost of expertizing / certifying every stamp - which seems to be the new normal - are the catalog prices so different than the *total* cost of acquisition?

The number of variables is not a problem for modern data analytics systems. The same number of variables exists for analyzing stocks, once you go beyond historic prices and look at the internals of company financials, market trends, regulatory issues, competition, executive talent, and all the other variables that affect whether to buy now, at market price or using some other instrument. We have analytics tools to deal with this and the Big Data input. The problem for stamps is data availability because there is no market ecosystem, like the NYSE and all its ancillary players, who make item, condition, and transaction data available from a substantial body of transactions in a structured or even unstructured data repository. There is also insufficient economic incentive to gather that data based on the size of the investor audience, the potential return over time and the time horizon. If we had the data, and a profit motive for someone to build out the analytics, it would happen. It is not a technical problem.

This may be true to a limited extent, but the market is ultimately driven by supply and demand. It IS true that there are some collectors who will never go over a certain % of catalog, but there are usually enough other collectors out there who don't operate by those rules. I try to stay under 40% myself, and I'd guess I can find acceptable copies of 80-90% of the stamps on my want list for that. This is because there is enough supply (relative to demand) in the marketplace where prices don't have to go any higher. But I have and will continue to bid higher than that for that 10-20% of stamps that just can't be bought for 40% of CV or less. That's because the supply (relative to demand) of those issues is small enough that the demand causes the price to rise above that level. The market drives catalog pricing as much as catalog pricing drives the market.

Likewise there are probably some dealers who always sell at a certain% of CV. However, unless they adjust up or down from a certain baseline as conditions dictate, they're not really following good business practices. There are enough other dealers in the marketplace that price each stamp according to market conditions, marking up hot items, marking down slow movers, etc.

While catalog values are generally not realistic for most stamps, they're not all that far off the mark if all the conditions for for catalog pricing are met: a single stamp, with VF centering and no faults, sold by a full-service dealer. If a stamp with a $200 CV regularly sells for $100, that's not that big of a deal and the catalog pricing is still valuable as a point of reference. We're not talking orders of magnitude. If that same $200 stamp regularly sells for $5 or $10, that's a different story. The fact that most "average" stamps consistently sell within a certain range of CV% tells me that the catalog editors are doing a fairly decent job. The "won't buy/won't sell above/below a certain % of Scott" crowd isn't big enough to depress prices if there's enough demand to drive the price higher, or keep them from falling lower if there's no demand.