Collectibles of all types have an inherent weakness in that their value
is entirely perceptual. You can’t eat or wear or live in a painting,
vase or stamp. Perceptual value is, therefore, a very fickle attribute
that may be subject to broad swings in attitude and thereby, price. This
has certainly been true for all collectibles, and stamps have been no
exception. After reading this book, however, the investor will
understand that there are numerous differences between stamps and all
other collectibles which give them some unique investment advantages.
Below are some of the attributes which help give
postage stamps their value.
* A 100+ year history as a popular collectible
* An extremely well documented collectible with
clearly documented prices and price histories
* Philately is a worldwide activity where all items
can find buyers and sellers practically anywhere in the world
* An aesthetic satisfaction to collectors at any
income levels
* A repository of value and value appreciation for
individuals
* A highly portable, low visibility depository of
wealth with few regulatory restrictions
Let's examine each of these important attributes in
order to learn how they affect value:
150-year history.
Since value in stamps is perceptual, growth and stability in value is to
some extent dependent on how long this perception has prevailed. Stamps
have been valued as a collectible since their inception. This 150 years
of history provides confidence that it will be maintained through all
types of economic or political stress.
A well documented collectible
with recorded price histories.
When one is investing thousands of dollars in stamps, it is important to
know that the purchase price is in line with prices that can be traced
back for decades. This also establishes a foundation for the quick
resale of the item at a predictable price, something most collectibles
don’t have. Hundreds of books have been written on stamps, thereby
providing in depth information for evaluating individual items as well
as specialty areas. The mere existence of extensive data on particular
items increases the level of comfort with an investment in such items
and consequently, demand.
A worldwide activity
Collecting stamps appears to satisfy a natural human need, given the
fact that it is done worldwide across all income levels. Before
international travel and television, it provided a link with an exotic
and unknown world far away. There is still some of this today, perhaps
motivated more by a desire to maintain a link with ones country of
origin. The fact that collecting continues to be strong confirms that
its foundations are rooted in a need that is not being satisfied by
other means.
Stamps provide aesthetic
satisfaction
All collectibles are generally pursued by the collector for some
internal satisfaction. With knowledge of stamps comes aesthetic
satisfaction. This has been best portrayed in the media by wealthy
individuals paying hundreds of thousands of dollars for works of art. It
is no different for stamp collectors with their stamps. A stamp, unlike
a work of art, is not unique. There are generally thousands of similar
copies. To a collector, however, this does not diminish the appeal since
for most, it is not founded on having exclusive possession of an item.
As an aside, however, note that it is possible to build a collection
which is unique and of exhibition quality. This is the pursuit of many
collectors.
Repository of value and value
appreciation
One of the strongest attributes of stamps is their retention of value
and value appreciation. In today’s investment world where we face an
unending selection of investment alternatives, one would question the
need for stamps as a repository of value. The same has from time to time
been said about gold. Two factors account for this continuity of value.
First, investors with years of experience know that few investment
alternatives have worldwide recognition and exchangeability, provide
long term stability and freedom from government intervention. Gold and
diamonds are popular for this reason, however, their value is too easily
recognized and they are not as easily hidden as stamps. The second
reason stamps are popular is that in many parts of the world, where
investment alternatives are severely limited, they do represent a
preferred investment vehicle.
Countries with organized securities markets and the free movement of
funds across national borders is still the exception for most people of
the world. Even when such freedoms are finally established, confidence
that they will not be taken away by the next government is always a
concern. For individuals with some accumulated wealth, stamps represent
a portable vehicle for flight should that become a necessity. The world
of stamp collecting is filled with stories of how stamps were used
precisely for this purpose. In addition to this portability is the fact
that rare stamps are not recognizable as such by most customs and
immigration officials. Hence, even when openly visible, their value is
not apparent to the non-collector.
Stamp Magazine – the world’s finest magazine for
philatelists has been covering the world of stamps for more than
70 years. Within the magazine's editorial mix are must-have
features and news on the great stamps of the world, showcase
stories, behind the scenes reporting and guides to the fairs,
exhibitions and stamp auctions around the globe. Stamp Magazine,
winner of several international awards, is a must have for
everyone serious about the hobby of philately.
George Washington
1847
U.S. Scott #2
Andrew Jackson
"Black Jack"
1861
U.S. Scott #73
Penny Black
1840
Great Britain
Scott #1
People
who never collect or invest in postage stamps often regard stamp
collectors as pre-teen children or aged people with little else
to do with their time. A superficial glance at the window of a
neighborhood stamp store with its display of colorful albums,
stamps with Disney characters from obscure mid-Eastern emirates,
and packets of stamps with pretty pictures selling for a couple
of dollars or so would confirm this impression. Yet, the safe in
the back of the store may contain a "Cape triangle" or two, a
few high value Columbians, a rare Civil War "cover," and some
highly presentable examples of the 1869 issues of the U.S.,
items for serious collectors which have shown remarkable price
appreciation over the past two or three decades.
In the world of philately one finds tens of thousands of
sophisticated investors - engineers, businessmen, scientists,
lawyers, even investment counselors. But the stamps they are
interested in compare with those in the $2 packets and shoeboxes
with "3 for 10 cents" in the front of the store like a vintage
Rolls Royce in pristine condition compares with the beat up VW
you find propped up on bricks in a depressed neighborhood.
Investment quality stamps are rather special. They must be
carefully selected, purchased only from reputable sources, and
carefully preserved. This article is intended as a primer in the
art of buying and selling stamps for profit.
INVESTMENT VERSUS SPECULATION
A plethora of articles have appeared in recent years on the
performance of 'collectibles," as compared with conventional
types of investments, on the relation of prices of collectibles
to the state of the economy, the prevailing interest rates, to
policies of the Federal Reserve. While informative and often on
target, they deal with short term trends - a period of a few
years, by and large. It is self evident that when interest rates
soared to 20%, many so-called "investors" pulled out of the
stamp market and put their funds in money market instruments,
causing a drop in the prices of the type of issues these
speculators had invested in. For these were speculators, not
investors: buying and selling stamps for a relatively short
holding period is pure speculation and, I might add, seldom pays
off. True investment in collectibles must be for much longer
holding periods, ideally 10 years or longer, because a long time
span makes the short-term fluctuations in stamp prices caused by
tight money, unemployment, political uncertainties, etc.
negligible, compared with the long term trend, which is, as
we'll see, appreciation. I like to compare persons who buy
stamps when the market is "depressed" and sell them when they
are "fully priced' with a minor league building contractor I
once met, who bought houses in bad states of repair, moved his
family in while he fixed them up, and then moved them out as
soon as he could sell the houses at a profit with the leaky roof
patched up, new carpeting, and a few other cosmetic alterations.
He didn't care about the house or the neighborhood; his only
motive was fast bucks. It works for awhile but all-too-often
foreclosure is just around the corner.
While money has been made by
speculating in stamps over the short term, even by amateurs who
knew nothing about the market forces which determine the prices,
the writer thinks that this is a risky business. Gambling in Las
Vegas gives you about the same chance for quick profit and there
may even be a good floor show thrown in as a bonus. Investment
in stamps is quite another matter. Besides a long term holding
period, there are several other rules which must be observed.
First and foremost, one should invest in quality, not in
bargains. Stamps in premium condition, particularly if both
scarce and popular, are markedly resistant to recession and can
be sold quickly at any time, because there is always a buyer for
top quality material, while the "pretty nice copy I got very
cheaply" may go begging for a buyer when the time comes to
liquidate a collection. But more of this later. Second, one must
have either first-hand knowledge or advice from a knowledgeable
dealer or investment counselor as to the relative scarcity of
the issue and the demand for it in the marketplace. This
includes some knowledge as to which country's stamps are
suitable for investment and which are strictly for collectors,
with little prospect of major appreciation. Finally, one must
learn how to keep stamps over long periods, to prevent
deterioration, damage, and theft. We shall discuss all these
aspects one by one.
ADVANTAGES OF INVESTMENT IN STAMPS
USA - 1930
Graf Zeppelin Passing Globe
U.S. Scott# C15
The writer has often been asked by newcomers to philatelic
investment what are the advantages and risks associated with
owning quality stamps compared with more conventional investment
media. I usually start by pointing out that, as anyone who has
followed the stock market for a number of years knows, there is
no "floor" under the market price of common stocks but there is
definitely one for widely collected stamps. The historic
price/earnings ratio of a common stock is no harbinger of the
future; it may change dramatically in a short time. The "book
value" of a company's stock is even less of a rock bottom.
Stocks of reputable firms with poor prospects often plunge to a
fraction of the book value. The reason for this is that if the
major buyers, whose activities ultimately determine the market
value of stocks, decide that the future looks bleak for a given
company or given industry, this may initiate a selling trend
which feeds on itself and the plunge may be disastrous. In sharp
contrast, if speculators decide that there is more money to be
made elsewhere and sell their philatelic holdings (as they did
in 1981-82), this has little influence on the price of truly
rare stamps and even the more common ones will decline in price
only to the point where collectors step in and decide that their
long-sought stamp is now affordable. Thus, collectors provide a
floor under the price of all but the most common stamps, below
which the market price cannot fall. Common sense then dictates
that philatelic investments should concentrate on stamps of
countries with the largest collector base. This is why early
U.S. stamps and selected issues of the British Commonwealth are
popular with informed investors. Though the claim of our Postal
Service that over 20 million people collect U.S. stamps is
almost certainly an exaggeration, it is generally acknowledged
that more people collect American stamps than those of any other
country. Thus, theoretically they tend to be the most resistant
to severe price decline. The price trends of recent years have
confirmed this expectation.
Another advantage of philatelic investment is their historic
price performance. Ignoring short-term trends (1 to 5 years),
the rise in the price of U.S. stamps for the past 50 years has
outstripped most other forms of investment, although we can
always point out, with 20:20 hindsight, that buying gold or oil
stocks "at the right time" and unloading them "at the right
time" a few years later would have been more profitable. This is
just exactly the point: carefully selected stamps, held for 10
or 15 years, may be expected to net a handsome profit, far above
the rate of inflation and in a worry-free manner. This brings us
to the third advantage. Most advisory services caution their
subscribers that stock and bond portfolios should be frequently
reviewed, for the great performers of yesterday may be the dogs
of tomorrow. This creates the need to follow the market, to
consult frequently with one's broker, activities which are
definitely not conducive to peace of mind. The stamps you buy,
in contrast, may be safely tucked away in a safety deposit box
for many years, without a concern, because they will appreciate
almost automatically. Some investors are, of course, also
serious collectors and keep working with their stamps, enjoying
looking at them, exhibiting them at stamp clubs and at
philatelic exhibitions.
Fourth, stamps are a relatively liquid form of investment. Not
as liquid as listed stocks and bonds, which can be sold in a
matter of hours at the market price prevailing that business
day, but definitely more liquid than most forms of real estate
or certificates of deposit, let alone limited partnerships - the
least liquid of the common forms of investment. Most stamps can
be sold in a matter of a few days or few weeks to dealers at
bourses and stamp shops and, for the best price, at auction
within 2-3 months. Some auction houses even give an immediate
advance on the estimated realization. Coins share most of these
advantages. They are also less fragile, and thus easier to
preserve than stamps, but they are subject to fluctuations in
the price of gold and silver (except for ancient coins), a
disadvantage as compared with stamps in terms of long-term
stability.
Besides being a professor of
biochemistry and biophysics at the University of California for
over two decades where he heads a sophisticated and
internationally renowned science research laboratory, Dr. Thomas
Singer is well known all over the country as an expert on U.S.
stamps.
He has been a frequent guest on major radio talk shows all
across the western U.S. where he discusses the science of
detecting defects, alterations, and forgeries of philatelic
material and the economics of stamp investing. He has given a
number of lectures on these popular subjects in many cities and
has been the author of several articles in the daily press.
How to Buy and Sell Stamps for a Profit
By Dr. Thomas
P. Singer
source:http://www.gnomevillage.com
Hawaii
1865
U.S. Scott #26
St. Louis "Bears"
1846
U.S. Scott #11X4
Cape of Good Hope Pair
1853
Scott #4
USA Inverted Jenny
1918
U.S. Scott #C3a
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