Enjoy stamp collecting as a hobby, not an investment

By Charles Snee

Stamps have been in the news a fair bit of late.

The June 17 sale of the famed 1856 1¢ Magenta of British Guiana generated much excitement and gave stamp collecting some great visibility across the media spectrum.

In the days leading up to the sale, I and others speculated about who the buyer might be.

Perhaps the new owner would be a noncollector or an investor looking for another place to park a significant sum of money.

As it turned out, the buyer is an anonymous stamp collector who has promised that the unique stamp will be shown in public once again.

Both before and after the sale, I read articles discussing stamps as an investment vehicle.

The 1¢ Magenta provided a convenient backdrop to these discussions, because of its inherent rarity and fascinating history.

Nonetheless, it troubles me when stamps are pushed as an investment, rather than as a hobby to be enjoyed and savored.

It is my firm belief that stamp collecting is best pursued as a hobby, not as a means to a brighter financial future.

Several months ago, I made this very point in an Accredited Investor Markets article published online May 8.

AIM was exploring antiques and collectibles as investment vehicles, and I was asked to provide some perspective on stamps.

When I was queried for advice regarding stamps in the world of investment, I replied: “The first piece of sound advice would be to collect stamps because you enjoy it — not because you want to invest with the idea that you’ll eventually sell your collection for more than you paid for it. While there are exceptions, the vast majority of people in the stamp collecting world do it because they love the hobby.”

Those words still ring true with me.

During my interview with AIM, I emphasized the collectible objects themselves and the stories behind them.

A couple of days after the 1¢ Magenta sale, on June 19, a hobby colleague of mine sent me a link to an online article from Market Watch titled “Why stamps are bond king Bill Gross’s favorite investment.”

In that piece, author Nicholas Vardy states that “Gross has spent reportedly between $50 million and $100 million buying stamps. That’s not an insignificant chunk of his $2.2 billion fortune.”

Indeed.

Bill Gross, as many collectors know, has been a great benefactor of the hobby for many years. Among other things, he provided the seed money for the gallery named in his honor at the Smithsonian National Postal Museum in Washington, D.C. The William H. Gross Stamp Gallery opened to much fanfare Sept. 22, 2013.

Is it possible to sell your collection and get more than you paid for it?

Yes, it is. Gross has done so using the same financial acumen and market analysis that he is widely known for.

While stamps might be Gross’ “favorite investment,” they should not be yours.

It is critically important to remember that financial gain when it comes time to sell one’s collection is the exception, not the rule.

Very few of us have the time, talent and interest to accomplish what Gross has with his stamp collections.

A much better approach is to remember what attracted you to this great hobby in the first place.

Recall that cherished relative or friend who introduced you to the delights of collecting small bits of paper that capture in miniature so much of the world around us.

Do you still have your first stamp album?

If you do, pull it off the shelf, turn the pages and relish some of those early memories.

The payback you will receive will far exceed any possible gain measured in dollars and cents.