Stamp Investing: 10 Tips To Successful Stamp Collecting
The Hobby Of Billionaires Could Also Make You Wealthy
Stamp investing among the rich is a little known secret about Michael Dell, the founder of Dell Computers, who at the age of 12, got a job washing dishes.
And, at the time he just wanted enough money to fund his stamp collection.
Roll forward another 12 years to 1992 and Dell became the youngest CEO ever to lead a company in the Fortune 500.
By 1999, he was the fifth-richest person in the United States.
Warren Buffet also dabbled in stamp trading in his early days.
There is an interesting correlation between the most successful people and a natural collecting instinct.
These people have always understood the value of tangible assets.
After all, they became the best in the world in the art of buying assets and selling them at a profit.
I would love to be able to say that I will now share with you the 10 secrets to becoming a billionaire.
Sadly, I am nowhere near qualified to write that piece.
What I can do though is to share with you 10 secret buying strategies for selecting stamps for investment.
These are the 10 strategies that have never let me down.
These secret strategies will guide you on what to buy to give you the best chance of selling later at a meaty profit.
I also present you with the opportunity to buy 10 stamps today linked to each of these well proven investment strategies.
My first strategy is probably the most obvious one.
The price you pay is a critical component to investment success.
But, alone it does not cut it.
To be successful, you need to weigh up the price paid to the value of the asset.
In stamps, there is a simple guide to use…
Rural Money Tip: If you can buy a stamp of Stanley Gibbons Catalog Of Stamps quality at a good discount to SG’s catalog price, you have a margin of safety built in to your investment and a strong head start.
What Stamps Are Hot Right Now?
When you follow auction realizations around the world, as I do, you often see moments where the bar is raised.
For a brief time after these breakthrough auction realizations occur, dealer prices tend to lag behind current market values.
Hot Dogs Of The Stamp Investing Market
You may have heard of the, often effective, stock market investment strategy of investing in market “dogs”.
This is normally based on high dividend yields, which clearly do not apply to stamps.
However, I have intensively studied how stamp prices have moved over the years and observed an interesting angle…
While rare stamps generally go up in price over time averaging growth of around 10% per annum, this does not happen on a straight line basis.
Instead, we see prices move in “jumps”.
This is driven largely by those auction events referred to earlier.
As a result, I have found buying stamps that have shown no price increase for some time are often good for investment.
This is because:
- They are probably due a price correction.
- They are lagging behind fair value based on comparable stamps in the market.
- Assuming each stamp will ultimately deliver similar long term growth rates, buying in after a lengthy pause in price growth, is good market timing.
Recent History Of Price Growth
Whilst historic growth rates are no guarantee of future growth, as Mark Twain famously said, “history doesn’t repeat itself but if often rhymes”.
For that reason, I often look at stamps showing strong historic growth rates over the past 10 years.
Provided the market dynamics causing such growth appear to remain in place, such stamps are usually safe bets.
This stamp from Bushire during British Occupation fits this bill perfectly…
Follow The Stamp Investing Trend
To work out where the next spike in prices will occur it is often worth looking at where the big money collectors are and, more importantly, what they are buying right now?
Following the trend and the smart money doesn’t take great intellect, but surprisingly few people consider this when assessing the investment merit of stamps.
Right now, we are seeing stamps from the Middle Eastern countries rising significantly both in the SG catalogue prices and in auctions held around the world.
There is a simple reason for this. This part of the market is more heavily occupied with collectors with big pockets and a desire to build award winning collections.
This demand creates the classic supply squeeze, where there simply are not the rarities available to satisfy demand.
A lot of stamps from these areas are rising in price and becoming out of reach for the average collector.
However, there are still a few out there that have some catching up to do and remain comparatively very cheap …
Emerging Markets Have Hidden Value
Historic evidence shows us that stamp prices are correlated to some extent by the GDP of their country. Countries showing high levels of economic growth generally also show rising stamp prices.
This is simply because some money from rising disposable incomes and newly created middle classes will find its way into the stamp market.
It stands to reason that countries showing high levels of economic growth will create rising home market demand and rising stamp prices.
India and certain countries in Africa are currently showing the most potential based on their real Gross Domestic Product (GDP) growth rates.
India has shown strong economic growth in recent years and recorded GDP growth of 7% in 2018.
Buying stamps from India has been one of the best investments you could have made in stamps in recent years…
Celebrity Status—Gwen Ifil
Some stamps simply have a celebrity status among collectors.
They are adored and desired, therefore, always in high demand.
The Gwen Ifil stamp was recently featured by the U.S. Postal Service.
Frankly, I love it and often wonder what is the criterion for being depicted on a stamp.
Unique And One Of A Kind
As you would expect many unique pieces are way outside the reach of the average stamp buyer selling for £hundreds of thousands, if not £millions.
But, you can still get your hands on some unique philatelic treasures at much more affordable levels…
Unique pieces usually present as excellent investments. The simple fact is if something is unique, you only need two collectors to want it when it appears in auction for it to realize a strong price.
Quite often this price will be much higher than its last realized price, which buyers use as the anchor point in determining what they are willing to pay.
The desire to own something unique can be overwhelming to a collector. Especially if said item is needed to enhance or complete their collection. They know, they will only ever get one chance to own it.
Who Is The Collector Behind The Collection?
Sometimes an item’s provenance alone adds value and prestige. When I can find items with this feature at fair prices, I am sure to pounce…
Condition, Condition, Condition
In the same vein as the famous rule about buying property, “Location, Location, Location”, when it comes to stamp buying I cannot stress enough the importance of “Quality, Quality, Quality”.
Quality is the underlying and unwavering rule I obsessively adhere to in assessing every stamp I study, before putting in front of you to buy.
My final recommendation is the best quality example in existence of this very rare Victorian stamp…
When it comes to quality, obviously, you can’t beat “the finest in existence”. However, the normal rule applies that to get the best you will need to pay a premium.
Likewise, you should also expect a premium price when you sell.
I hope you have found these ten tips useful.
Moreover, I hope that this post has inspired you to start stamp collecting, which is could be another income stream.
I started stamp investing over 50 years ago after my son was born; and I still have my original collection—after many moves, ups and downs.
It’s time to see what it’s worth!
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