Myths of the Stamp Market
The rogue country has plenty of stamps, but few collectors
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By John Apfelbaum
When people read the Salamon Brothers report, which maintains that stamps were the third best investment over the decade of the 1970s, ranking behind oil and gold, they expect to see a high percentile increase in the price of stamps on a year-to-year basis. Such an impression is misleading. Most people who avidly watch stocks or commodities know that investment items trade in a relatively narrow band most of the time. Then, for whatever reason-- good news in the case of most stocks and bad news in the case of most commodities-- they sometimes shoot up 20 to 30 percent in a very few days. And often they jump down the same way. Slow, steady progress in financial matters simply does not occur in the trading, though the long-term results may make it seem that way.
Stamps are much the same. A stamp will trade in a very narrow band, then in a matter of a month or two move up 50 percent or more, to remain relatively quiescent for the next interval. This much we now about the stamp market. What we don't know are the two things we most want to: we do not know when a particular stamp will move, and we do not know how much it will move. But we have a theory. The collector is in reality the stamp market. It is he, for whatever irrational reasons, who buys this otherwise worthless piece of paper and puts it in an album never to sell it until dotage or death. One group of market analysts watches the larger stamp dealers, who sell primarily to collectors, to see what they have in short supply-- for it is collector demand that has pruned these dealers' supply. Such items usually go up in price. Theories on how much a particular item will go up once it has begun its move abound; unfortunately, they do not predict much better than chance.
Some people live with the mistaken notion that you have to be rich to invest in stamps.
Read the full post to find out why that is not the case.
