Bill Gross and Stamp Collecting

I picked up a copy of the Washington Post on my way into my favorite eatery yesterday. And I found this article about Bill Gross and his stamp collecting hobby:

In the 1940s, a woman in Middletown, Ohio, set aside a stack of postage stamps, expecting them to appreciate in value over time and thereby pay for the college education of her young son, Bill Gross. When Gross went to the big city 20 years later to try to sell the stamps, dealers gave him the bad news: They were worth less than his mother had paid.

Then further down the piece:

Just as he intensively researches the characteristics of fixed-income securities before he buys them, Gross built a library of records of past auctions at his home in Laguna Beach, Calif. When he is considering buying a stamp, he researches its history at auction. By examining what price it sold for in 1928, for example, and 1953, 1974 and 1992, he can get a sense of whether the stamp is sufficiently rare to appreciate at roughly the same rate as U.S. economic growth. This helps him avoid the trap his mother fell into -- buying stamps too common to rise in value over time.

I also noticed this:

It has been a good few years for rare stamps. There are no reliable indexes of the values of rare stamps, but Charles Shreve, of Shreve's Philatelic Galleries, said that in a typical example of recent appreciation, an 1869 15-cent stamp with an inverted center sold at auction in 1993 for $209,000 and in 2004 for $418,000. It just traded hands this week, he said, for $800,000.

Gross examines that rapid appreciation in the last couple of years through an economic prism as well. It is a function, he said, of excess liquidity sloshing around the globe, a result of easy money policies in Japan and the United States. "The liquidity provided by central banks over the past two, three, four, five years has led to asset appreciation not just of homes, but of stamps, collectibles, gold and commodities."

Comments

[sinnerMan]

Ah! Time to start looking through my 20 year old stamp and coin collection. I hope those early nineteenth century East India Company coins are worth something now.

[John]

sinnerMan,

With the way collectibles seem to be popular these days, it certainly sounds worth a shot. Thanks for reading.

[sinnerMan]

I checked on Ebay John and it appears that they are still worth only a couple of dollars each. After looking at your "Big Gainers That Are Still Bargains" post, I remembered all the times I sold my positions in stocks after they had risen 100%. Only after reading Philip Fisher did I realize that the best time to sell a good stock is never (unless something fundamental changes). I am currently holding a 6 bagger (Medifast) and am hoping that it will become my first 10 bagger.

[John]

sinnerMan -- well congrats on your 10 bagger! I normally don't sell stocks after they've risen 100%. I'd probably sell half but it really depends on the situation.

[Steve]

As an avid collector, the fact is you cannot make money in stamp collecting unless you have a lot of money to invest. Only rare items, which are already pricey, really go up in value.

Bill Gross has the advantage of being able to buy a $15,000 stamp and know it will keep going up because every collector wants one. Sure, you may hit the jackpot and find a super rarity in your attic. But you're just as likely to win the lottery.

[John]

Steve,

Thanks for your comment. I don't invest or speculate or gamble on any sort of collectibles because I don't have any knowledge of them and don't have the interest. But what you say about needing $$$ to do it right rings true. I think the article on Gross is interesting, but that's about it.