Tuesday, 3 January 2017

Collecting, Dealing, Investing in 2017

Happy New Year! Enjoy it now while it lasts.

As a dealer, I don't expect 2017 to be the year in which I finally make a lot of money. All the economic and political indicators are against that happening. So I will just try to enjoy doing things I enjoy doing and just try to keep my bank accounts positive. I say this even though I will be selling part of an Early Bolshevik Russia collection I have formed over a number of years in the Spring sale at Heinrich Koehler in Wiesbaden. If I don't sell it in the anniversary year 2017, when will I sell it?

I think that those who invest in stamps rarely - if ever - make money. Very few people seem able to beat the market, and if they do, it is more by luck than judgement. In this, they are no different to investment funds most of which fail to outperform the market - whatever their promises. When their fees are taken into account, they offer poor returns to private investors who thought that investment funds were Experts in something or other.

I once met someone who had collected over many years New Issues of the People's Republic of China from the beginning through the 1980s - in complete, mint sheets. He showed me them, housed in specially-made large format albums. I rather doubt that he had done this as an investment decision and as a collecting interest it seemed to me a bit limited. It was hardly more than an eccentric choice. But if in recent years he needed money - well, he would have been very nicely surprised I am sure. There would have been no nice surprise at all if instead he had collected complete mint sheets of Liechtenstein.

Very few collectors are able to say that their collection will sell for more than what they paid for it. The exceptions are those collectors who got interested in something fairly obscure and neglected, collected it seriously, and then have the luck that one day other people with a lot of money to spend suddenly become interested in those obscure and neglected things. In recent years, Dr Raymond Casey's collection of Russian Post Offices in China, sold by David Feldman in Geneva, is the stand-out example of a collection which made the collector a lot of money. But Dr Casey did not collect expecting that to happen; he collected what interested him and did it seriously and very knowledgeably.

Anyone who collects with the idea that one day they will sell - maybe sell just to start a new collection - should bear one thing in mind. It is really only likely that you will sell for more than you paid if you have collected items which can be offered as single lots in auctions where other collectors will buy them. Since the gap between what the buyer pays and the seller receives is around 30% - 35% you don't have much chance of making money except in a rising market - and  right now we don't have a rising market. The only way anyone is likely to bridge that gap is to have found underpriced items in dealers' boxes at stamp exhibitions - and to have done so regularly over many years.

That way of collecting has a low-budget variant. I am impressed by collectors who go through the Cheap Boxes which most dealers have and manage to build interesting collections around themes which not many people have thought about. You may then end up with a collection which is more valuable than the sum of its parts just because someone else can see the theme you have worked with and say Ah ha! That's interesting! You are then getting credit for your intelligence and knowledge which in this case has outperformed your budget.

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