Investing In Canadian Stamps

Hey I am someone new to stamps but my father has been collecting for 60 years. He recently has begun writing articles on Forbes.com about investing in stamps. I was interested in what other collectors thought so I could give him the feedback for future articles he plans to write.

http://www.forbes.com/sites/richard...ions-canada/

I have noticed on another forum that using the word investing and stamps in the same sentence seems to outrage some people. If you do not like thinking of stamps as an investment, then the article is not for you. If you do, I would greatly appreciate and positive or negative feedback you have that I could pass on to my father. He is a contributor and regular columnist at Forbes Magazine and has written articles for the ASDA Magazine in the past. Thank you in advance to anyone that takes the time to read the article and has constructive feedback to share.

I don't think coupling the words "stamps" and "investment" outrages people. But many of us would instead couple "stamps" and "gamble".

I don't buy expensive, individual stamps, but I felt that the article perhaps made too much of pricing differences between catalogues. I suspect that most of those buying rarer stamps would make an appropriate judgment on the individual catalogue, and how much to discount (or raise) that price when doing their purchasing. There's probably more to be gained from the currency shifts that the article mentions than any pricing discrepancy between catalogues that in themselves have different functions (eg sales prices for Gibbons and Yvert, dealer prices for Scott and Michel).

What would, I think, be another interesting topic for an article in the series would be examination of some of the rises and falls in "values" over the last forty years, including some of the bubbles. Done before, but worth doing again in any "investment" context.

Geoff

Reminds me of this old newspaper article.

Hi rich711. Currency fluctuations do matter and the strength of the USD vs CAD means many collectors in U.S. can make advantaged purchases from Canada. In that regard, those who built collections during a weaker dollar period may see their investment stagnate until catalogs adjust prices upward to compensate.

I do remember the Graf Zeppelin issue in an article once showing virtually little real return over a 40 year period. Scott C13-15. High demand but high supply as well.

Rich711: There are some Canadian early classic and modern error stamps that over time have increased in value. However, it usually requires one to put down some money for them since one usually gets what one puts into them. In other words, don't expect a cheap stamp to make any returns unless it is a misidentified or discovered variety or find that increases its value accordingly. Saskatoon stamp center is a Canadian stamp dealer that mostly specializes in early classics and modern errors. See www.saskatoonstamp.com

Enjoyed the article, thank you.
Last time I spent time looking at stamps as an investment it turned out that the original Dennison stamp hinges (up over 4000% since 1960) far exceeded anything else in philately.
Don

Don

I fear the posthumous sale of my collection may refer to a voluminous collection of Lighthouse and other binders, Hawid mounts and some paper of little value!

Geoff

Geoff,
Indeed, I share your sentiment. I assume that others are like myself in that I have to pry a crow bar in my wallet anytime I buy philatelic supplies. I always think…'gee, I'd rather be spending this money on stamps!'
Don

I assume we can leave some comments here, rather than setting up a login there.

Nice article -- actually about investing too, rather than a silly article on speculation. Kudos for the hard numbers.

It's always easier to pick stamps based on past catalog/sales history -- but as they always say, past performance does not guarantee the same future performance.

It's not just the stamp, but often the condition/grade of the stamp will have a significant impact on the buying/selling price. Of course, there are some stamps that will consistently appreciate in value. Getting your hands on a very high quality stamp is not always as easy as it sounds. On most stamps, anything that is less than XF will likely not even come close to catalog value. Just a quick glance at auction house prices realized will reveal that many VF sound stamps routinely sell for less 50% of catalog, even less than 25% sometimes. In other words, there's a significant time commitment in buying a "specific" stamp, not just having a copy of the catalog number stamp.

One cannot disregard the auction house commission involved in buying/selling stamps. This commission rate far exceeds fund manager fees. Commission rates have only gone up over the years. You can typically expect to lose roughly 25% from the combined commission of when you bought the stamp and then later when you sell the stamp at a major auction house. Too overcome this problem, one typically holds onto the stamp for an extended period of time (e.g., 5-10 years+). You can always find an example of a stamp that was quickly "flipped", but investing in a large batch of stamps and have the entire batch "flip" quickly is not the norm.

There's no guarantee that ALL your investment stamps will sell at a good price. A lot depends on the current demand for that specific stamp (i.e., luck of the draw sometimes). And if you have to quickly sell, you may get taken to the cleaners. It's not like precious metals, for which you can get a half-decent price from your coin dealer. If you are in a rush to sell a premium stamp (unless it is a true rarity), expect to take a heavy hit (we're talking 10%-50% depending on the stamp and dealer) on your original investment. Of course, if they had been marginally premium or common stamps, the buy offer would be even less.

And of course, there's always going to be some debate on whether or not expert certificates would be useful or just another expense...

I'm not now and never plan to be an investor in stamps, but I hadn't considered the angle of keeping an eye on currency fluctuations and buying from foreign sources where the exchange rate is the most favorable. Due to the small size and tiny weight of stamps, shipping costs are much less of a consideration than almost any other type of collectible, making any location in the world a viable potential source of material. For some types of collectibles, the cost of international shipping would far outweigh any potential savings one would receive through favorable exchange rates.

Reply to GeoffHa
Thanks for your informative reply. We are preparing a database of all investment grade stamps and this will go back as far as forty years.

Reply to jogil
Stamp investing is about buying something that has proved over time it has investment potential. Hence, we look only at stamps issued before 1950 which catalog at least $25. Buying something for $1 in hopes it will be worth $5 or $10 if you just hold on is not investing. It's a great rate of return, but involves way to much labor for little total return.

Reply to khj
All you say is true, but note, the investment recommendations are based on appreciation history. The price you pay will be a fraction of catalog, but since that ratio to catalog is fairly constant, the appreciation percentage is the same. Yes, selling is tenuous and you want to invest in higher priced items so that auction is a viable sales outlet. There are some rules about selling at auction, see the forbes.com website and search for Richard Lehmann columns. There's one on auction selling

The ArtfulHinger
Stamp investing is not for the cheap stuff. Stick to searching for $100+ items or you will spend a lot of time in fruitless searching. But then, collectors seem to enjoy the chase as much as the catch.

khj

You're right about commission, and your estimates are, alarmingly, probably conservative by UK standards. I posted elsewhere a thread on two Chinese covers that recently sold for a total of £37,000. Buyer's commission on those two items @18% adds a further £7,000. The seller's commission at the same house is also 18%, so (barring a specific negotiation around commission, which would doubtless take place for high-value items) the cumulative service cost if you disposed of the item would be amazingly high.

Geoff

Canada Stamp Finder is a website that sells rare Canada stamps. See: http://canada(170403) Not Allowed - Auto-Removed/

jhk

I think you forgot to add the 20% VAT to those commission charges.

By my calculation for a £37,000 lot the buyer would pay £37,000 + £6,660 + £ 1332 a total of £44992. Of which the seller would get £37,000 - £6660 - £1332 = £29,008. The auction house gets £13,320 = 46% of what the seller gets.

To invest in stamps own an auction business ????

AQ

During the stamp boom of the late 1970s and early 1980s a number of firms made up "investment" folios of Canadian and US stamps for investors. These were sold through stock brokers, not stamp dealers. The material was first rate quality, but heavily overpriced. I bought an investment folio a few years ago for $200. The original invoice was included showing that the "investor" paid $1200 for the stock book.

Only 2 rules for investing.

1. Buy low
2. Sell high

So yes, one can invest in stamps and make money.