Investing in postage stamps
Like many stamp collectors, I don’t collect stamps as investment. For me they are fascinating small pieces of paper that I love sorting and placing in my stock books and other stamp album pages. But I also acknowledge that stamps do have a financial side. On a lower end, it is very easy to finance part of the hobby expenses by selling unwanted (duplicate etc) issues. And on the higher end, stamps are investment items comparable to gold, jewelry and fine art.
The basic rule is simple. Buy low, sell higher. Always try to make a profit with what you sell. But there is much more with the topic…
Long or short-term investment
The first question is are we talking about a long or short term investment ?
Short term philatelic investments are highly speculative and live up to the moment. Take for examples deaths of Princess Diana or Michael Jackson – in both cases the stamp values depicting the persons went sky high in matter of days. A return of several hundreds of percentages overnight does not sound bad at all.
1994 Madagaskar - Miniature sheets like this have their ups and downs on stamp markets.
But eventually the craze around specific stamp (or topic) will stop … In 1999 Finland issued a stamp to commemorate F1-championship of Mika Häkkinen. The stamp was burning hot at the time of issue and several investment-minded collectors bought tens, if not hundreds of copies of sheet. Nowadays the markets are flooded with mint sheets that nobody wants – not even for postage. And as amazing as it is, world of philately is filled with similar stories where speculative investments have eventually burned their fingers.
1999 Finland - F1 championship miniature sheet
The other end of the spectrum are long-term investments, a ballpark where professional investors and investment companies play. In general the items on this level are considered (classic) rarities with notable price tag. Instead of few months, the investment portfolios are build and followed in spans of years, preferably decades with steady annual investment in mind. Good examples on items in this range are high values of classic stamp issues, very large scale collections and early postal history.
In search of scarce and rare items
The first step to finding potential investment stamps is low print number – or low number of existing items. That said, not all stamps with low print numbers are valuable, and vice versa.
Take for example most 1960/70’s Rwanda or Afghan stamps – with a print of just 20-30,000 copies they are valued and treated as junk by most collectors and investors. On the other hand the famous Black Penny (world’s first stamp) has a good and solid market and investment value. What many don’t know (or realize) is that Black Penny’s print was nearly 69 million copies and a substantial number of these have survived to our days.
1966 Rwanda - UNESCO. Most Rwandan stamps of this era have very small prints. Most often they are found mint (with hinges).
At least in theory the odds for finding a Black Penny from a random lot of stamps are much higher than coming up with a specific Rwanda issue. But as all know, that is not the case in real life. Most of the existing Black Penny stamps are stored in dealer stockbooks and existing collections – there are very few loose copies to be found on “junk lots” making them scarce.
Quality
A topic mentioned far too rarely is quality. A Black Penny in bad quality is worth very little, if nothing. The same can be said about the Finnish 1860’s roulettes. Or about any stamp for that matter.
1929 Switzerland - Michel #233. In good condition this stamp could be worth 50-60€. Now it's a spacefiller worth nothing...
In all cases, investment stamps should be of best available quality. Perfect color. Nice socket on the nose cancel (or mint never hinged). Complete perforation. Superb centering. Etc. And if talking about classic issues, having a certificate will definitely boost the value of investment.
Understanding the demand
The third part of the equation is demand. And this is where things start to get complicated.
As a generalization, low or non-existing demand equals zero investment value… Only very few collectors want Rwanda stamps, so their market and investment values remain low no matter what.
On the opposite, Black Penny is something many collectors (and even non-collectors) like to own. Compared to Rwanda stamps it has GIGANTIC demand, and thus it has steady and increasing market and investment value.
1866 Finland - 40p roulette stamp on paper with nice Tammerfors cancel. An attractive item with future expectations
Most investment stamps are creatures of in-between. They exist in low numbers but they have somewhat low, but passionate demand. Take for example the Finnish 1866 roulette stamps – most of the demand for these stamps is domestic by a small bunch of collectors.
Future expectations
Like in real stock markets, a major part of stamp investments are future expectations. Take for example FaceBook and Twitter – both companies have somewhat small turnover but due to huge expectations they are amongst the world’s most invested and prestigious business. If a group large enough believes the value will go up, then it will go up. But as the basic law of physics says – what goes up, must also come down eventually.
The same phenomena happens in stamp investment markets too, but more than anything it’s a question of estimating (or creating) the future demand.
Take for example the Afinsa / EuropaCEPT scandal. A group large enough believed that common stamps will become worth a much more than their existing value. Despite the final failure, the movement did manage with their goal: CEPT stamps got a huge, but artificially boosted, demand and increase in value.
1997 Turkey - Europa. Michel#3110, cat. value 3€.
Stamp catalogs, auctions, even many philatelic magazines also ride on this wave. The question “which of these stamps went up in value is a hook that many newbie’s (whether investors or collectors) fall into. Keeping up with market prices important, but the sad truth is that anything that gets printed on paper is more or less outdated before it hits the shelves. Past prices may be helpful at determining market moves, but more than anything it’s all about having a good personal touch with the collecting society.
Is Blue Mauritius really worth millions? Well, it’s not toy money that moves in prestige auctions. But it’s not common collectors that buy such items either . It’s the investors, dealers and alike. And for them it’s all about business – investment value and future expectations. If the stamp is not expected to rise in value and demand, then it will not sell.
For a common collector future expectations don’t count. It’s the item that counts. As simple as that.
Closing words
As always, your responses about the topic are more than welcome.
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the best example of low term high rise of value was the Pelé stamp. In 1969 Brazil post issued a stamp celebrating Pelé’s 1000th goal.
For some reason, dealers thought it would be very valuable and bought thousands of it for their stocks. The stamps sold out and became valuable in a few days. But when all dealers tried to sell their stamps, the market became flooded with them and the price went down to a minimum…..
Here in Argentina, there are some recent stamps that got high prices:
1997 Che Guevara issue.
1998 Argentinian Comic strips.
1999 River Plate and Boca Juniors booklets.
2007 ARA Irizar Ice breaker.
and some others can be valued up to 10 times their face value in mint condition.
A 1000% return in a few years is not bad at all, but these same are one a few among hundreds issued, who can say which ones will rise???
That is the million dollar question. If I knew the one real answer I wouldn’t definitely share it…LOL
Knowing the quantity/run for each issue is somewhat easy, but predicting the demand is much harder. IMHO the stamp markets have become a lot more consumer controlled than before. I know that several stamp dealers no longer stock new issues the same way they did few decades ago – simply because there are so many of them and stocking them all would require serious financial resources with increased risk.
In theory, anything with small print combined to an attractive (preferrably internationally sought) topic (like Europa, Save the polars and Glaciers, Che) has a very good change of going up in value… But like with real investments, there will be some ups and downs – no matter what you try. But that’s just part of the risk anyone willing to gamble has to take.
I have the 1,000 goal of Pele stamp ( 1,969) in good condition, Somebody know the price??
Thanks
Hi Jorge,
Catalog value for 1969 Brazilian Pele stamp is around 1 Euro (both for mint or used); the imperf miniature sheet (issued in 1970) is around 10 Euro.
To whom believe!…SG (2010) says 1969 Pelé stamp mint: £1.25, used: £1.75 that’s aprox. euros: 2.00 to 2.50,now,the MS imperf. mint: £ 3.00 used: £ 3.25…then, euros: 4.75 to 5.00!!!!!…definitive,a big discrepancy with the prices Keijo mention here…I don’t believe catalogues!!! only real offers!
@ Jorge, how much you want for the stamp?
Good article!
If you are a collector of stamps – collect!
If you are a philatelist – study!
If you are a philatelist/collector – collect and study!
If you are an investor – study, study, study, and then, after careful consideration, collect very specifically with options to hedge based on market trends and assemble some specific stamps as leverage to be used in the precious metals markets so, if an when, China, in an attempt to bolster their economy, makes a run on gold, you profit greatly and can in turn re-invest heavily into a hundred copies of a rare stamp in order to destroy 98 copies of it to drive the prices up realizing too late that the population has aged and that the PS2, Wii Generation simply aren’t into collecting postage stamps and that you obviously over-estimated the risk capital you should have invested into stamps,….welcome fellow “collector”!
And to Fred – just remember,..catalog values are merely a subjective, “opening” valuation before the real bartering begins. I have paid as little as 0.05% catalog for a stamp, and as much as 215% catalog. Its all about supply and demand and how much disposable income is out there!
I really think this obsession with profitability misses the point. I collect what isn’t popular, learn from it everything I can while I can get it for a low price, and then hold onto it. I’ve got a good collection of Chinese, Persian, German, Russian, Hungarian, Indian & Latin American states, and yes, even Afghan stamps, most of which I bought by the pound – dealers usually didn’t even care to value what I bought. Some of these are still worthless, I know, but consider the rewards:
1. Because the whole country/region is undervalued, even the low run stamps are priced low.
2. Completing whole sets is much easier.
3. I learn a tremendous amount about the country/region.
4. I have a whole lifetime to wait – I’m not in a hurry to cash out – what doesn’t go up, I can give to my children. Unlike stock in a company, there is nothing that can go out of business.
5. Speaking of children, I can’t think of a more entertaining way to learn geography & history that also keeps them away from a computer/TV screen.
6. There is no pressure to buy & sell at a specific time – we just enjoy the stamps at our leisure.
7. Because they were purchased dirt-cheap, little is lost when I do need to auction some off.
8. A well organized, documented and complete Rwanda collection will fetch far more than what one would pay to put it together.
9. Back-of-catalog stamps from many undesired countries/regions are typically less expensive as well.
10. Because there is no urgency, there is more time to select the best specimens, replace space-fillers with better stamps, and to complete sets.
11. Finding an overlooked Penny-Black-type stamp in an “undesired” lot is more likely. I have come across $50-100 stamps that way.
12. Stamps make great gifts especially if they reference something that is of personal value. I gave a complete set of B. Guyana stamps as a wedding present one time.
13. As a donation to a charity (well documented & organized, of course), the value of this donation is likely to be much greater than the initial investment, depending on where you live.
14. I have a very nice set that I actually framed and is hanging in my office – great conversation starter (and sure beats a motivational poster).
15. What is worthless in Europe, may not be so worthless in the Far East. Because they are easy to ship, stamps are easy to sell to far-away customers.
16. I don’t need to keep buying the latest Scott & Michel catalogs. I used to have online subscriptions to both, but it got too expensive – now I just have a 4-year old print version I bought for a few dollars (the Scott is a 7 years old).
Ultimately, the investment is the best kind – it will seldom go below what it cost initially, but has every chance to go up over time. In that way it is a lot like art and just like a nice piece of art, the enjoyment of owning it and learning from it over time is priceless.
For those who really want to collect for profit by collecting undesirables, I do have one recommendation: let dealers know what you have and keep in touch with them. Sooner or later they’ll call you with an offer for something you have. You’ll have to part with it, but with so many “undesirable” stamps out there, there’s plenty to collect.
@MichaelK – appreciate your insightful comments. I may not follow your advice but it makes a lot of sense! This may have something to do with how I can lose money on any venture I undertake
I ardently believe investors should stay out of collecting fields. Period.
1) The only reliable way to make money in collectibles, is to spend many years at them, understand what you are doing, and act as a quasi-dealer. That is, you regular sell your duplicates, unwanted items to fund your purchases, and you buy out collections. The net result is that you have a good collection that really didn’t cost much (because it was self-funding), but you can cash you when you sell.
2) People who collect at the retail level, that is, buying specific items at retail without carrying a tradestock, I don’t care at what price level or rarity, almost always lose money. In this case you are looking for the greater fool. Someone willing to pay MORE than what you just did (which at the retail price was already a lot).
I have seen plenty (hundreds) of people in category #1 make money, but I have yet to see ONE person in category #2 make money.
I am speaking from not 1, not 5, but 15 years of experience here (not in stamps, but in expired license plates). The principles are the sample.
Oi Tiger!…with that beautiful machine monster…don’t have time for stamps!…LOL!!!