Can Collecting Be A Great Investment As Well As A Great Interest?

Chasa makes a great point about the transaction costs of "investments" in stamps vs. securities. I had never thought about it but pretty obvious now that he highlights the buy-sell spread!

While I concur with Chasa's point about investments, it does assume that the stamp collecting hobby is shrinking due to demographic attrition.

While there is little doubt that there has been a decline in stamp hobby organization memberships and the number of brick and mortar stamp stores; this is not conclusive evidence that the hobby itself is in decline. Many others believe the hobby has simply been greatly transformed by the internet and is quite healthy.

Until someone comes up with a way to measure the health of our hobby that is inclusive of the online activity none of us can really prove whether it is a state of decline or growth.
Don

If you had bought Google stocks 10 years ago you would of made
a 400%+ profit.The people who knew and held on made the money.
For rare stamps on cover from ""Dead countries"" (No country is really dead) they are selling quiet well I find.
Finding lot's of rarer stamps cheap is quiet difficult today,so your initial investment must be high and alone a risk.
Just a few examples of things that sell at high prices:
Japan first issues on cover;mint,blocks
Suez Canal on cover,multiple frankings.
All Central America first stamps on cover
Many British Colonies first stamps on cover(HongKong)
Early Hawaii !

and the list can go on...

I can share my experience for whatever it's worth. I started collecting at age 8, and had a more or less break in the teen years, until I was 28 or so (15 years ago). By that time, I actually had some income that I could begin buying some of the things I never could before. That said, I was something of a bargain hunter, but would insist on quality. I therefore only bought things at a pretty slow rate, but began to accumulate nice pieces at bargain prices. I also eventually got into the habit of sending many of the items in for certification and/or grading. I started selling some of my duplicates and even some of the more valuabe items that were "too good" for my own collection at auction, or putting them on consignment with full time dealers. Over the past 10 years or so, I have made a profit doing this, and built my own collection at the same time. It's been tedious, but actually fun, and something of a release for me, as the rest of life is busy (I'm 43 and married and in the middle of raising 3 daughters).

Matt

Is buying stamps as an investment a good idea? That, like any other investment strategy, will depend upon how committed you are to learning everything you can about the stamps you are wanting to collect.

Several others have advised to collect stamps as a hobby, and for someone just starting out, that is certainly very sound advice. The intrinsic value in a stamp is definitely in the eye of the beholder.

Now, can you make money with stamps? Yes, but it takes the knowledge gained from careful study and a willingness to look for them, then not spend more on acquiring them than what you could sell them for in the short term. This means you are not going to acquire a lot of valuable stamps in a short period. Over time, perhaps.

A few members talked about the viability of the stamp collecting hobby as a whole. I very strongly disagree with their assessment that the hobby may not exist in another generation.

What is happening is a paradigm change in the way the hobby is evolving. The cost of brick and mortar stamp stores has become prohibitive and few new stores are opening. Most dealers now work via the internet as the overhead is greatly reduced and the number of customers greatly increased. The same holds true for stamp bourses and shows.

It is easy to assume the hobby is dying, as the majority of collectors do tend to be in their 50's and up. There are reasons for that. As life circumstances change, with children finished with college and becoming established in their own lives, people in the older age brackets tend to have more time and disposable income. They are also often looking for something which is mentally stimulating and which is not as physically demanding. You can peruse stamp periodicals for the last 100 years and find knowledge and respected collectors and dealers talking about how the hobby is dying. I don't believe it at all, but it is changing.

For example, look at ebay. On any given day, there are just under 1,000,000 U.S. stamps for sale, and many days, over that. If only 10% are in an auction format (and that is grossly understated), that means there's almost 100,000 stamps changing hands every 7-10 days. If we extrapolate that figure to a daily basis, and use the ten day term, that would mean 10,000 stamps per day or 3,650,000 stamps and collections changing hands yearly - and that is only for U.S. stamps based upon ONE site, albeit it might be the largest. When you add in worldwide stamps and collections, the number becomes even higher. It doesn't seem to me that this would be indicative of a dying hobby.

There are quite evidently millions of collectors and accumulators who purchase stamps via the internet, while never belonging to organized philately (members of local or national clubs and organizations). Does that mean they don't exist? Absolutely not, but the hobby is just now beginning to grapple with what this paradigm shift means to it. I am routinely outbid on many, many lots I'm interested in and am amazed at some of the prices collectors are willing to pay for the stamps they are buying.

Again, it becomes a matter of knowledge, and I believe everyone here would agree with me that the more you learn about what you are collecting, the greater the probability you will have a collection of value at the end of the road.

The other thing you have to keep in mind is what happens when it comes time to sell. If you have the time and wherewithal to list the stamps individually or as sets on ebay (or another site with a large collector base, such as Hipstamp or Delcampe) you could probably maximize what you are obtaining. If you, or your heirs, decide to sell it to a dealer or collector, then understand - especially for dealers, that you may only receive 30-50% of catalogue value, and that value will normally be based upon the value of the more expensive stamps in the collection while a great bulk of most collections doesn't come into the consideration of the offer. If all you collect are better stamps, with higher catalogue values and have no interest in completing a collection, you would probably receive a higher return on your money.

At the end of the day, I believe that this is wonderful hobby, but it is a hobby. As collectors, we all have some residual value from the stamps we've enjoyed and the hours of pleasure adding them to our collections. Our heirs stand a chance at recouping some of what we spent, unlike Franklin Mint ceramic plates.

Hope this helps.

If one compares the rate of return on stamps to other investments, in most cases stamps stack up poorly. If one compares the rate of return on stamps to other hobbies, diversions and pastimes, stamps actually do pretty well, extremely well, in fact. How much does someone get monetarily for a lifetime of golfing, boating, or traveling, etc? Don't get me wrong, those things are worthwhile pursuits in their own right, but nobody expects to get anything monetarily for those experiences when they're done with them. One can spend a lifetime collecting stamps and a collector will, in fact, have a monetary asset of some degree. He (or his heirs) might not get back what he paid for it, but percentage-wise they'll get a lot more back than the guy who went golfing twice a week. That's really the comparison that should be made. 99.9% of stamps are lousy investments when purchased as an investment. When purchased as a part of a hobby, it's a better "investment" than most other hobbies.

After 25 Years of investing $20 per month, at 5% interest (compounded) your investment will grow to 50,000. So, buy a total market index fund and put your money there. Chances are you'll earn much more than 5%.

collect stamps only if you enjoy it and be prepared to lose money or break even.

You can not talk about Investments without talking about timing .
Nobody here would believe what happen to me . Back in the late 1980's and early 1990's I was purchasing at stamp auctions huge collection and bulk lots like many thousands of dollars worth each . I would fly out of Chicago to New York and attend Greg Manning Stamp Auctions and purchase the junk lots along with a few collection lots for my own collection . This went on for years .
Then around 1999 something new came around called ebay and selling on the internet ,well those box lots that I sold thru Linn's Stamp News for $18.00 a box and happy to get rid of my junk for years started to sell on ebay for $30.00 to $60.00 on line . Bingo !! Dropped my newspaper ad and emptied out two full closets which took 15 years of buying and sorting ,sold everything in less than a year at 3 times the price that I was happy to sell at . This was all the stuff I didn't want .
Don't even want to discuss all the stuff I kept .Timing is everything .

We can debate whether there are as many collectors (and I would take the side of less), but that is not the only measure of the state of the hobby. As the hobby is being taken over by amateur hobbyists who sell their collections on ebay and displacing full time dealers, the hobby is losing its knowledge base. It has already started. We will soon have the blind leading the blind (and this only benefits the fraudsters).

Traditional dealers should own the internet by now and if not, will indeed be displaced by the amateur. Dealers need to be one step ahead and must have a means to differentiate themselves from the amateur.

If dealers are being undercut by amateur internet sellers then they aren't doing their job.

Why didn't the ASDA (or the APS for that matter) invest in an internet marketplace decades ago? Maybe they did and it died.

First of all, your assumption that only 10% of the US listings are in the auction format being a gross understatement is just wrong. I just checked the US listings and it is currently only 8.5%. More importantly, not every auction lot gets a bid. Again, I just checked the US category and it is about 58% sold in the recent past. So, it comes out to about 49,000 not 100,000. Still a lot, but you have zero info on what took place before ebay to compare it to.

A dealer will always be undercut by an amateur collector who just likes the idea of selling to other collectors and doesn't care about making a profit.




Instead of making crazy suggestions of Maybe something happened or not, how about some facts.

eyesonwall, since you seem to want absolute numbers, here they are. These are the numbers for ebay, as of this morning. For U.S. only, since January 29th, in all categories for U.S. and formats (auction, buy-it-now) there have been 536,521 lots SOLD; for auction only this number is 330,855. Again, this is just for U.S. sold items. That would be 3637 lots per day over the past 91 days for auction only and 5895 for all sales categories.

While there is no statistical data prior to the internet and ebay, the whole point of this is that the hobby is not dying when the number of sales from just one one site and in one group of categories is this extensive.

While my initial estimates were higher than the actual, and I should have taken the time to get the correct numbers, the fact remains that there are lots of people buying stamps. How does that equate with a "dying" hobby?

One could say the old traditional dealer network may be dying. More transactions hobbyist or collectible seller to buyer. There has been some doom and gloom about liquidity in the market. Key dealers have never paid a lot for collections so they will pay even less but prices should fall and collectors should benefit. It is those that live off this and always wanting higher prices. You just will not see it in Scott quickly.

It also no coincidence that Linns's monthly issues has pages and pages on auction results (3 separate articles spanning many pages) which are infomercials to support key advertisers.

I have certainly learnt a lot very quickly just by reading all these posts, and while all appear to come from a lot of experience, it seems that like many interests, the genuine enthusiasts, without spending a fortune, enjoy their past time immensely, and those that purely invest, in this case would perhaps only buy stamps on what their broker suggested, and probably never touch it or examine it. Hide it away in a security box somewhere.
I have been riding bikes since an early teen, and over the years I have noticed investors buying up classic bikes, getting them professionally restored, then vacuum sealing them for a payday down the line. As a motorcyclist, it breaks my heart that these investors do not even ride the bike, the restorers drive up parts prices, yet I lament my lack of foresight to do the same...

I will unpack my old collection, and hunt around for my late step father's album, sort through them, examine them, and then slowly search around to fill the gaps in the sets, and enjoy them.
And the other day I created an account with Commsec investments and an ASX (Australian Stock Exchange) account to research creating a portfolio.

I look forward to researching and reading lots of the old posts and perhaps make up for all those years I was doing other stuff...

cheers, Gareth