Collecting As An Investment

I am an investment stamp collector, and I am making a better return than anything else I have seen. It's not easy because just like any other market you have to be aware of what is going on in the market. One example, two weeks ago I spotted a Canada #46 and #47 on auction out west. A mail auction to be precise. Here is a picture,


The 46 is VF and 47 F, total $800.00 Cdn. purchase price? $65.00 CDN.
Now what collector wouldn't give me a $100.00 for each of them? I do this all the time. I have more examples but you get the point, just like anywhere the rule is, BUY LOW,SELL HIGH.

If you want an investment, go with stocks and bonds -- something that generates income.

People tried to treat stamps as an asset class years ago, in the 1970s, in hopes of diversifying their portfolios. Stocks, bonds, and some commodities generally performed well. The stamps... well, very few people saw their stamp investment portfolios increase in value. Most lost 90% or more on their stamp "investments".

The whole point of the grading craze (in both stamps and coins) was to assign some "objective" condition grade to the collectible, in order to make it fungible (i.e. traders would have some idea of the value, even if they could not see the item in person, so this could create a market for speculation in collectibles.) While this briefly caused a craze both in coins and stamps -- there was a time when common date MS-65 Morgan dollars sold for thousands of dollars, and when common mint modern US commemoratives graded 100 were worth hundreds -- the bubble eventually popped.

People have done the same with comic books, sports cards, etc., and it pretty much always turns out the same way. A few people who ride the bubble up early and sell before it pops make money, most everyone else loses money.

Very few rare stamps have actually appreciated in value over the decades, beyond inflation -- and those are the rare ones. Common stamps have always been common, and always will be common.

This is ignoring the secular decline in the number of stamp collectors. It's not a very popular hobby among young people today -- to say the least. The rise of the Internet has made it easier to buy or sell stamps, and that's helped to float stamp values for a while. But in twenty or thirty years there might well be half or fewer of the number of collectors there are today. Why would stamps sell for more money with fewer people interested in buying them?

If you insist on speculating (not investing) in collectibles, a better idea might be to find a collectible that people like but that hasn't yet been treated as an "investment". Get the nicest examples of the toughest items you can, and hold on. If they become popular, sell them.

I appreciate all the input, and it confirms my concerns for the topic. I've watched most of my 'old man hobbies' dry up over the years where I've lived, saw a lot of hobby stores and such go under suddenly after years of success. Some have come back and found niches to survive, others are gone for good. Even Hobby Lobby has cut back their train section to 1 measly panel, and their models aren't what they used to be either. I'm surprised they still have a coin and stamp section at all.

There are some local stamp places I may be able to get some nice pieces if they offer good prices, but I'm not a fan of the internet purchasing method. I've bought a few, but I much prefer to actually see and inspect what I'm buying as opposed to hoping pixels on a screen accurately depict what I'm interested in. I don't mean to besmirch any legitimate sellers when I say that, I just firmly believe in caveat emptor and have witnessed what happens when you buy naively. I see lots of ads for big, well-established online companies. I know they need to make a profit to stay in business, but their costs are beyond my ability to understand, or be willing to pay when I can get it elsewhere for less and be satisfied. Call me outdated but I like supporting local business anyway.

Are there perks to buying from those big online companies? I know a lot of them do that 'on approval' thing, which may or may not be good in my case. But unless there are perks which counteract the high cost of doing business with them, I don't see an upside for me in that case.

Also, what happened to our modern postage to make it so...blah? Over production? Switch in stylization? Switching to the self-adhesive type? When I look at modern stamps, I'm just not interested in most of them. Apparently a lot of others aren't as well, as I've been in more than one post office with loads of old 'collectible' sheets and such going back 2, 3 or more years. Haven't check in a few years since the last time, but that was the case back in Texas.

Here is my opinion…
Philately has largely transitioned to an online hobby and while you might not like or support this change, it was inevitable. But this change does not mean the hobby is dead or is in bad health. Interfacing with our hobby was previously done by going to a dealer's store, a stamp show, or getting our Linn's or AP in the mail. These things made us feel a part of something larger than just sitting in our den identifying and mounting stamps.

Today, we do not need those things to interface with our hobby. We do not have to wait for a stamp show to be in our region, we do not have to count on good weather to go buy a new stock book and we no longer have to wait until a stamp club meeting to get answers to our questions. We can interface with our hobby 24/7/365 and on demand. The fact that stamps are not typically a good investment is not due to your local stamp dealer or show no longer being around; stamps have always been a challenging investment instrument.
Don

if you deal in bonds, bet on sports, buy and sell anything, you will loose if you don't know exactly what you're doing.


i've collected for 7½ years now, and for the first 2 or so years I mainly collected and bought off small online sites comparable to ebay. I was also a member of a couple of nearby stampclubs.
i quickly learned that the general member was an elderly guy who didn't know much about the internet, how the prices had evolved.
and that I could get the stamps they needed for them, cheaper than they could.. so I searched for cheap stamps on the internet and sold them on the club auction and made a good profit. I extended to taking in wanted lists as well.

my knowledge of my own exact collective area increased fast as I spend A LOT of time on it, and apparently have a knack for it as well. I was soon able to pinpoint exactly what a stamp was, even if described as something else and even with a poor picture.

last 3 or so years i've spent on buying and selling on auction houses or from dealers that buy and sell stamps for a living.

i only buy what I know, I always make a profit.
sometimes my profit is that i'm able to add some expensive or rare stamps to my collection while breaking even on the rest. sometimes I even make a profit at the same time, and sometimes I just sell everything and buy myself something from the profit.

my longterm investment is that no matter what, I will break even, since I haven't really spent anything but profit from sales on my collection.

i enjoy looking at my stamps, or working on my collection, but I just as much enjoy the hunt for new things.

I don't doubt there are benefits to the online aspect for most people.

I just really appreciate being able to get hands-on with my interests. We have a camera shop still in operation just a few miles from me, and an excellent model shop near where I work. I get a lot of enjoyment visiting both places and making purchases first-hand. One local hobby shop has an elderly gentleman who's personal history includes meeting Werner Von Braun at a science expo hosted by his high school back in the day. He's a well of knowledge in hobbies as has seen so much of the industry come and go since the 50s.

I don't see or know a lot of folks in my age bracket or younger involved in these interests. Most people I meet first hand are of my parent's generation. But that may be because the 'young'uns' are all on their computers at home interacting that way.

Common sense tells us that making money requires knowledge, hard work, and opportunity. If making money (at anything) was as easy as falling out of a chair, then everyone would be wealthy.
Don

Exactly Don, I go to a lot of shows,read every auction catalogue, surf the internet, and since I live in Toronto I have access to the Greene Library which is a great resource. So yeah, I work at it. But, I have a lot fun with it and have a great collection besides.

Well, as I enjoy the soak and prep process, who can be recommended for a worldwide bulk purchase here, with the chance of WW2 era stamps or earlier appearing in the lot?

The money is made off people who think they want to invest in something.

The theme raised in this thread regarding the future of philately is one that has been tossed around elsewhere on this board, but I'd like to make one point here without intending a full-scale threadjack. Don is right on the money regarding the changed (no longer changing) nature of the hobby and how we practice it. But one thing that has come with the sea change to a virtual infrastructure is anonymity. The demographics of today's stamp collecting fraternity are therefore somewhat unknown.

I am 65 years old, and I think it is safe to say that I belong to the last generation that entered the stamp collecting hobby en masse as children. Some of us have stayed involved for decades, others (perhaps most) have left and returned. We are the ones who are pursuing the hobby on-line. And it appears robust, at least for now. But how many post-Boomers are in the hobby, or have been in the hobby and dropped out (as we did), perhaps to re-enter in a couple of decades? I don't think we know, but all indicators are that the number is not large. You don't see many young people (under 40) at shows or bourses, APS membership is shrinking and the average age of new members (as listed in the AP every month) seems north of 55. Perhaps these are things that only older philatelists would do anyway. But if there is an army of young people out there on the Internet poised to enter or re-enter the hobby and sustain it at the same level of robustness that the current returned-to-the-hobby cohort has established, then it is invisible. The current state of health of our hobby is not in doubt. In my opinion, the future certainly is.

I know a lot of folks in my age bracket. None of them do this. There are a lot of video gamers and such, but the hands-on hobbies are not represented among my colleagues aside from myself.

My long time general rule of thumb: any collectible is worth only as much as someone else is willing to pay for it. Collect what you like, as a hobby, not as an investment.

The biggest issue, for me, with no direct heirs, has been to plan for what happens to the collection when I'm no longer around (I'm 69). I have taken care of my stamps via my estate planning.

Stamp collecting has been an 'old man hobby' for as long as I have been involved (since the early 1970s). When I became the VP of my local club back then, I was the youngest person in the club by a good
40 years.

Here is a group photo of a 1968 APS meeting

I see few, if any, young people.

I think that the stamp collecting hobby becomes more viable after the age of 45 or so. Humans tend to start thinking about history and their place in it, they have a bit more time, they are less likely to have physically challenging activities.
Don

It is always possible to find good deals - to use Stuart's example above, I picked up a Canada 47F similar to his pictured for $25 six months ago - and I'd be the first to say that I'm not an experienced collector. More recently, last week saw some early French Morocco (e.g. Scott mint 1-7) on ebay offered by a vendor who clearly didn't know those stamps well and so was underpricing them significantly at $10 - so I bought those. And if so inclined could sell them for a good profit. But I know (somewhat) those countries. If trying to make a profit on US stamps - about which I know very little - significant return would be unlikely and due to luck if it occurred.

So if you treat it as a job, and build up the domain knowledge, you can most likely make a profit on it. I already have a more than full-time job and kids still at home, so I treat it as an enjoyable hobby and just feel pleased when I get a great stamp at low price.

For an comparison, my father was a serious stock investor for many years and did very well for himself. But he treated it very seriously, did loads of research and spent many hours a week on it. He only bought something he completely understood. And sometimes even those carefully selected stocks didn't work out. That dedication in time, expertise and inclination separated him from the majority who invest in stocks based on hype, popularity, trend, emotion. I'd argue the same holds true for any endeavour.