Investment Versus Speculation on Postage Stamps


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.

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