Philatelic investment is investment in collectible postage stamps for the purpose of realizing a profit. Philatelic investment was popular during the 1970s but then fell out of favour following a speculative bubble and prices of rare stamps took many years to recover. [1]
Investing in rare stamps requires a high degree of expertise and can be very risky for the novice. Rare stamps are among the most portable of tangible investments, take up little space but require careful storage as condition is one of the most important factors in determining the value of a stamp. Other tangible investments include art, antiques, precious metals, rare coins and many others that are all termed alternative investments. Interest in stamps as an investment tends to increase when traditional investments are not doing well, causing investors to seek alternatives. The increasing age of the population in western countries has also been credited with a resurgence in interest in stamps. [2] [3]
A British auctioneer warned: "Unless you know what you are doing – and this only comes with many years of experience – it is very difficult to buy sensibly and at the right prices. When you buy on a retail basis, you have to overcome the profit margins the dealer has built into his selling price, plus VAT. When you sell, you also have to overcome dealing charges, whether you sell to an auction house or a dealer. That would consume an awful lot of value. To overcome that mark-up and sell at a profit would require quite a few years of appreciation." [4]
A stamp investor should have a good knowledge of:
The prospective investor will also benefit from attending stamp clubs, auctions, philatelic shows and having a relationship with a knowledgeable dealer.
Very subtle differences in colour, perforation, overprinting, and the like may be what differentiates a valuable stamp from a common one. The investor not only has to be very knowledgeable of these issues but also know (or at least have a reputable expert available to check) whether alterations have been made to make an inexpensive stamp look like a valuable one, or indeed, whether the stamp itself is simply a counterfeit.
The value of a stamp is determined by a number of factors including:
Rare or unusual stamps can be submitted for Philatelic expertisation. The opinions of experts differ and have evolved over time. Conflicting expert opinions, such as on colour shade or whether a stamp has been reperforated, can have a huge effect on a stamp's value. [5]
There are a number of places where a prospective investor can buy stamps:
Stamps purchased for investment are usually old classic stamps in fine condition, such as British Victorian stamps or American stamps from before 1900. These may be thought of as the equivalent of buying a blue chip share. Although future prices may vary, as long as there is a hobby of stamp collecting there is likely to be good demand for these stamps.
Stamps typically included in an investment portfolio will be rare and priced in the thousands of dollars or pounds but they will probably not be the greatest rarities as those unique items are typically sold at public auctions and may reach prices approaching or exceeding $1 million US.
Some collectors and investors also try to anticipate future trends and buy low now, this however, is difficult to get right and may take a long time to pay off. Investors may try to identify a developing country with an expanding middle class who may have the time and money to pursue a hobby like stamp collecting as the developing domestic demand may help to force prices up. Recent examples have been India and China.
Some firms are developing collective or mutual funds where money from many investors is pooled and each investor owns shares or units in the fund. The fund then invests the money in stamps.
Unlike stocks and shares, the majority of transactions in the philatelic or stamp market take place informally, by mail order, or in retail environments, and therefore the size of the market is hard to determine. The market is certainly much smaller than the financial markets but it is not trivial. It has been estimated at £5 Billion. [6] The majority of these transactions, however, are likely to be low value items rather than investments. In a 2007 interview, Mike Hall of Stanley Gibbons estimated that "About $1 billion of rare stamps trade annually in the $10 billion-a-year stamp market." [2] The number of collectors worldwide was estimated at 30 million in 2004. [7] In 2009, Adrian Roose of Stanley Gibbons estimated the figure at 48 million including 18 million in China. It is not known how many of these are serious collectors. [8]
While there are long term records of retail stamp prices, the first catalogue being prepared in 1862, there is little objective historical data about the past performance of stamps as investments. No long term indices like the Dow Jones or FTSE Index exist, although some figures have been compiled by Stanley Gibbons and Stamp Magazine in the UK.
From 2002, Stanley Gibbons compiled a SG100 Stamp Index based on retail and auction prices for the "top 100 most frequently traded stamps" in the world. The index appeared on the list of the Bloomberg service but was discontinued and given heritage status. In 2004 they also launched an index of 30 rare British stamps. [9] In 2012 the company launched the GB250 Rare Stamp Index 'to provide a broad view of the investment market for Great Britain stamps', listing the type of stamps they would recommend for investment purposes. The GB30 and GB250 indices are listed on both the Bloomberg Professional service and Thomson Reuters. According to Stanley Gibbons, rare stamps have averaged an annual compound return of 10 per cent over the past 50 years, [10] however, it is important to remember that this figure has been calculated using backtesting as stamp price indexes are a recent innovation. In addition, the prices in the indexes are based in part on Stanley Gibbon's own retail price lists and frequently traded but low value stamps have been excluded from the index.
Stamp catalogue prices are not considered reliable as they are nothing more than estimates at the top end and represent a retail selling price at the bottom end of the market. Auction realisations may be more reliable but are difficult to use as the investor has to personally analyse the realisations from many auctions over a long period of time in order to come to any useful conclusions. While most trading in shares is on a recognised stock exchange and takes place transparently in public, that is not the case with stamps where only auction transactions take place in public view.
There are a number of ways to sell stamps, as there are to buy, and each has its own advantages and disadvantages.
There is no equivalent of the stock exchange for stamps.
Investing successfully in stamps requires a high degree of specialised knowledge. This takes time to acquire and there are many pitfalls for the inexperienced investor. Some of the risks and disadvantages are:
Stamps purchased for investment do not normally have any special regulatory protection for the purchaser. In the United Kingdom there is no regulation of this area at all from the Financial Conduct Authority. [14] Rules elsewhere may vary. Where investment is collective through a mutual fund there may be some regulation of the activities of the fund depending on its location.
There have been a number of scandals in this area over the years.
In Ireland in the 1950s, Paul Singer, a Bratislavian Doctor of Philosophy, ran a Ponzi scheme under the name Shanahan Stamp Auctions. The scheme collapsed when a mysterious robbery took place at the company's office on 9 May 1959, the eve of a major auction, when more than £300,000 worth of stamps went missing. Singer was charged with fraud, but was acquitted and vanished. [15] [16]
In the 1970s, the bursting of a speculative bubble left investors unable to realise their investment at the price they had paid. Prices took decades to recover. [12]
In 2006, two Spanish firms Afinsa and Forum Filatelico collapsed and left around 350,000 investors with investments worth as little as 10% of the price they had paid. [14] [17] [18]
In November 2017 it was announced that Stanley Gibbons' stamp investment subsidiary in Guernsey had been placed in administration. The company was reported to have £12.6 million of philatelic stock but over £70m of liabilities, made up of £54m of "buy-back" guarantees, £6.5m owed to its parent company, and £11m of sundry liabilities. [19]
Stamp collecting is the collecting of postage stamps and related objects. It is an area of philately, which is the study of stamps. It has been one of the world's most popular hobbies since the late nineteenth century with the rapid growth of the postal service, as a never-ending stream of new stamps was produced by countries that sought to advertise their distinctiveness through their stamps.
The Inverted Jenny is a 24 cent United States postage stamp first issued on May 10, 1918, in which the image of the Curtiss JN-4 airplane in the center of the design is printed upside-down; it is one of the most famous errors in American philately. Only one pane of 100 of the invert stamps was ever found, making this error one of the most prized in philately.
Philip Ferrari de La Renotière was a noted French-born stamp collector, assembling probably the most complete worldwide collection that ever existed, or is likely to exist. Among his extremely rare stamps were the unique Treskilling Yellow of Sweden and the 1856 one-cent "Black on Magenta" of British Guiana.
A stamp catalog is a catalog of postage stamp types with descriptions and prices.
A cancelled to order postage stamp, philatelic symbol , is a stamp the issuing postal service has cancelled, but has not traveled through the post, but instead gets handed back to a stamp collector or dealer. They can come from withdrawn stocks of stamps cancelled in sheets and sold as remainders or from new sheets for sale at reduced rates to the stamp trade. Postal services of various countries do this in response to collector demand, or to preclude stamps issued for the collector market being used on mail. Some of the history of CTOs is from stamps being given to collectors on an approval basis, in person or through mailings; the first CTOs began in the late 19th century.
The Stanley Gibbons Group plc is a company quoted on the London Stock Exchange specialising in the retailing of collectable postage stamps and similar products. The group is incorporated in London. The company is a major stamp dealer and philatelic publisher. The company's philatelic subsidiary, Stanley Gibbons Limited, has a royal warrant of appointment from Queen Elizabeth II.
The 2¢ Large Queen on laid paper is the rarest postage stamp of Canada. Printed in 1868, it was not discovered until 1925, and so far only three have been found, all used. Many more could exist as at least one sheet must have been printed, and possibly many sheets; however, they may all have been destroyed, or lie unrecognised in stamp collections or on cover.
The British Guiana 1c magenta is regarded by many philatelists as the world's most famous rare stamp. It was issued in limited numbers in British Guiana in 1856, and only one specimen is now known to exist. It is the only major postage stamp ever issued that is not represented in Britain's Royal Philatelic Collection.
The Mauritius "Post Office" stamps were issued by the British Colony Mauritius in September 1847, in two denominations: an orange-red one penny (1d) and a deep blue two pence (2d). Their name comes from the wording on the stamps reading "Post Office", which was soon changed in the next issue to "Post Paid". They are among the rarest postage stamps in the world.
An auction rate security (ARS) typically refers to a debt instrument with a long-term nominal maturity for which the interest rate is regularly reset through a Dutch auction. Since February 2008, most such auctions have failed, and the auction market has been largely frozen. In late 2008, investment banks that had marketed and distributed auction rate securities agreed to repurchase most of them at par.
Mystic Stamp Company is an American, employee-owned stamp dealer founded in 1923 by Lawrence K. Shaver. The company is headquartered where it was founded, in Camden, New York. It specializes in the buying and selling of postage stamps, collecting supplies, and other philatelic items.
A stamp dealer is a company or an individual who deals in stamps and philatelic products. It also includes individuals who sell postage stamps for day to day use or revenue stamps for use on court documents. Stamp dealers who sell to stamp collectors and philatelists are of many kinds and their businesses range from small home operations to large international companies.
The Rare 2d Coil was an experimental vertical coil stamp, denominated 2d, issued by the Irish Post Office in 1935 and is one of the scarcest, and most valuable, Irish stamps. It is often referred to by stamp collectors simply as "Scott 68b" or "SG 74b", being the Scott and Stanley Gibbons stamp catalogue numbers respectively.
A philatelic auction, or stamp auction is a sale of stamps, covers and other philatelic material usually run by stamp dealers or specialist collectibles auctioneers, such as, David Feldman, Christie's and Sotheby's, where prospective purchasers place bids in an attempt to obtain the desired items.
Charles James Phillips of London, England, and New York City, was a philatelist highly regarded in both England where he started his philatelic career and in the United States, where he emigrated to in 1922.
Art valuation, an art-specific subset of financial valuation, is the process of estimating the market value of works of art. As such, it is more of a financial rather than an aesthetic concern, however, subjective views of cultural value play a part as well. Art valuation involves comparing data from multiple sources such as art auction houses, private and corporate collectors, curators, art dealer activities, gallerists, experienced consultants, and specialized market analysts to arrive at a value. Art valuation is accomplished not only for collection, investment, divestment, and financing purposes, but as part of estate valuations, for charitable contributions, for tax planning, insurance, and loan collateral purposes. This article deals with the valuation of works of fine art, especially contemporary art, at the top end of the international market, but similar principles apply to the valuation of less expensive art and antiques.
The Golden Monkey Stamp or Gēngshēn Monkey is a postage stamp issued in China in 1980 of which 5 million copies were printed. Although not rare, the stamp has come to symbolise the strong market for collectable postage stamps in Asia. Demand for the stamp has made it one of the most sought after contemporary Chinese stamps.
Investment wine, like gold bullion, rare coins, fine art, and tulip bulbs, is seen by some as an alternative investment other than the more traditional investment holdings of stocks, bonds, cash, or real estate. While most wine is purchased with the intent of consuming it, some wines are purchased with the intention to resell them at a higher price in the future. A wine's value often goes up as time passes and consumption increases as the market becomes tighter and access to good wine is more elusive.
The art market is the marketplace of buyers and sellers trading in commodities, services, and works of art.
A collectible market index is a tool used by collectors and investors to track values of collectibles against collectors market from a specific date, calculated in form of Index. It measures the value of a section of the collectors market.
