Philatelic investment
Most collectors endeavor to collect undamaged stamps in the best condition attainable. However, an increasing number are also willing to accept damaged stamps, also known as "seconds." The reasons for this are economic. If a collector wishes to purchase a scarce stamp which has a catalogue value of $2,000, he may expect to pay about 70% to 100% of catalogue value for it if it is in premium condition. If, however, he is willing to accept a VF-appearing example of the same stamp, with a minor defect, he may have to pay only 10%-20% of catalogue value. If he's willing to accept a "space-filler" of the same stamp—an uglier example with a major defect, he may be able to find one for 4%-6%, or less, depending upon how horrible it looks.
The trend toward collector acceptance of seconds implies an unexpected and counter-intuitive prospect, in terms of their investment potential. The value of seconds of scarce and valuable stamps may increase more rapidly than premium examples of the same stamps; in other words, they may prove to be better investments! How, one might ask, could the author make such an apparently insane hypothesis? One example is as follows:
Felix Unger, stamp collector, has $3,000 to invest. He purchases a very nice example of a stamp with a catalogue value of $4,000 (paying 75% of catalogue value), at Royal Hindquarters Stamp Auctions.
His apartment-mate, Oscar Madison, the stamp slob, also has $3,000 hanging around. His dealer-pal, Rip, sells him six VF-appearing but slightly defective examples of the same stamp that Felix bought, for $480 each (12% of Cat. value), and then Oscar uses the remaining $120 in change to take Rip out to a game.
Five years later, the stamp's catalogue value has doubled, to $8,000. Felix and Oscar both decide to sell, because they need the money for alimony.
Since even fewer people can now afford Felix's premium quality stamp than could afford it 5 years ago, he sells it though Royal Hindquarters for 70% of catalogue value, minus commission (about 10%), realizing $ 5,040 ($8,000 CV X 70% = $5,600 -$560= $ 5,040).
Since the increased catalogue value has made the premium quality stamp less attainable, demand for the "second" has risen faster. Oscar dribbles out his six seconds via eBay at 13% to 17% of catalogue value apiece, averaging 15%, minus eBay's commission and the cost of lazy Oscar's labor in typing the things up and mailing them- say, 10% commission total. His final take is $6,600 [15% X total catalogue value of $48,000 = $7,200 - 10% commission= $6,480 + $120 in change from orig. purchase, used to take dealer-friend to game]. Oscar's got more money in his pocket than Felix, can annoy Felix with an "I told you so", and Rip is indebted to him for life.
[
Suggested supplies and resources
Supplies:
- stamp tongs
- magnifying glass
- ultraviolet lamp
- watermark fluid and a basin
- mounts/approval cards
- stockbooks/albums
- "Scott Catalogs" : Published in the U.S., Scott catalogs are the accepted standard classification for U.S. and foreign issued stamps. These catalogs are published annually and contain a depiction and price for each stamp listed in the catalog. Many local libraries have recent editions
- "Foreign Stamp Catalogues" : these often list varieties that Scott omits; also some (notably Michel), contain valuable info. re: printing quantities
- "Linn's Stamp News" : the largest stamp newspaper in the U.S.; published weekly, and well worth the subscription price; some libraries may carry it
Local stamp clubs:
- The American Philatelic Society : all advanced collectors should join; members receive the APS monthly magazine, American Philatelist, and it helps one's reputation to be an APS member in good standing; APS has a disciplinary committee, and if a member cheats someone, the victim can complain to the APS, which can then suspend or expel the offender, if culpable.
- Specialty societies / organizations : if one decides to concentrate on a particular country or area, it may be worth joining the organization of collectors which collect that particular area, if one exists
- Various online stamp auctions (including eBay) are available, as well as more prestigious auction houses such as Robert A. Siegel located in New York City.
- Philatelic museums
- Philatelic libraries
- Expertization / Authentication Services : for a fee, these organizations issue well informed and experienced opinions or certificates on rare stamps; a certificate is well worth obtaining if a stamp is of value and purchased as an investment. It is really, the only objective source the rare stamp investor has about any given stamp. In the United States, there are three well known organizations offering certificates of authenticity; the Philatelic Foundation (PF) is the most prestigious and has issued certificates since the 1940s, and the American Philatelic Society (APS) also well known. Both of these organizations are "not for profit" organizations which should have no monetary interest in the outcome of the expertization of any given stamp. The Professional Stamp Experts (PSE), also offers expertization services, but, is owned by a for profit that offers rare stamps to investors, and is essentially "in business" to serve investors. There is some controversy surrounding the PSE. There are many other expert services internationally; some have areas of specialization, and are better at their chosen areas than others. When purchasing a rare stamp, if the stamp has not been previously expertized, it is routine to request from the dealer or auction house from which the purchase has been made for an "extension of the return privilege" for the purpose of getting the stamp expertized--most auctions and better dealers will grant this privilege, and will also refund the cost of the rare stamp, the stamp certificate plus all postage and insurance costs in the event of an opinion that negatively effects the value of the stamp being certified.
[
Further Reading
- Kenneth R. Lake. Stamps For Investment (1969)
For more information review our copyright contact and privacy policy.