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Investors have been trying to diversify into new markets and products, hoping alternative investment methods yield higher returns or may just be safer than the traditional ones. Arts wine and stamps have been in few portfolios up to the moment, but the trend has been gaining some popularity as I keep bumping into more and more news articles about it – probably due to the economic crisis effect.
Most stamps can only sell for a fraction of the listed value and only a few are considered rare. Although some particular stamps have great value, entire collections can be sold for more. Of course, a collectible for investment should be considered when it is in great condition. Stamps are easy to be kept, although rare ones are better off locked and insured – the way they are kept can ensure the investment will not be ruined with time. Of course, stamps to invest in are not those you typically find in your mail or bought for a couple of hundreds. These are quite expensive and very, very rare.
For investors, the current available measuring tool is the Stanley Gibbons Stamp Price Index. The STGI100, listed in Bloomberg, was discontinued this month (February 2013), according to the Bloomberg website. The index was calculated by the prices (retail and auction) from the 100 most frequently traded stamps. Other 2 indexes exist: STGIGB30 Index and the STGIGB25 Index, also listed in Bloomberg. The first treats rare British 30 most traded stamps, while the second treats British stamps over the value of £10,000.(Please refer to Stanley Gibbons’ official website for details).
I find it quite interesting that all the indexes by Stanley Gibbons show a continuous increase of stamp prices over the years – immune to both economic booms and crisis. Given that the company is a stamp dealer itself, I would recommend an investor does his/her own research before investing. There are no 100% safe investments, and most definitely one shouldn’t believe on an upward sloping curve that never goes down (see Stanley Gibbons’ charts bellow, taken from their official website).
My trusted stamp dealer from Basel, over a conversation about catalogue prices between 2010 and 2012 did mention the prices lowering – of course, non-investment items. But that is how markets go: up and eventually down. Generally, stamp experts may know when they could get a bargain (and make a profit out of it).
Stamps were very popular investments especially in the US between the late 1970s and early 1980s. Stamp prices were over the roof when the bubble burst. (more information in Wright, Paul. Zurich Investment & Savings Handbook 2004-2005. Pearson Education Ldt. UK edition, 2005). Nowadays, the stamp market has been mostly growing in emerging markets, like the BRIC countries, where new collectors and investors have emerged.
Among the advantages of investing in them, one may list an obvious few: stamps are tangible assets, relatively easy to store, investors enjoy anonymity and rare stamps will always be rare. Disadvantages: it will not yield periodic returns, stamps may be damaged if not taken proper care (losing value), the transaction commission may be high in comparison to gains and it is hard to spot which and where the golden ones are and predict who will want them in the future.
Overall, understanding the stamp market and knowledge about stamps are key success factors, and knowing varieties (some cancelation, gum, errors) define stamp prices. This is especially important for those who are willing to invest in stamps that cost less than millions. I believe when hobby and money can be combined, that’s great, but usually investors and collectors have different perspectives, hopes and expectations. Investing in stamps requires care, and there are hundreds expressing opinions pro and against it – if you are thinking about it, just think with care.
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