How to Invest - Strategies

Mission

There are numerous stories and anecdotes such as this: a collector visits a local shop and manages to buy a rare item from the shop owner for just $2 yet that item is worth magnitudes more... confirming the old adage that "knowledge is power".

The mission is to find opportunities to deploy knowledge. Knowledge is readily available and easily shared.

Premium material never leaves the marketplace. It simply moves from one temporary custodian to another, from one repository to another. There is opportunity for viable speculation across every area of philatelic interest, at virtually every level. Opportunity is literally everywhere. Entire estates can be re-purposed to extract derivative or hidden value. Individual candidates can be targeted for long term speculation, or spontaneous short term undervalued events or cycles.

The best considered advice when building either a great collection or investment portfolio is to take advantage of opportunities whenever they present themselves.

When unique or extreme rarities become available, act definitively with purpose. The old adage, "There's always another deal around the corner" was never more true than it is in collectibles. However, given the significant influx of new investors and collectors enabled by an ease of access on the Internet, that proverbial "deal" may never be the same. The purpose is to capture opportunity.

From the entry level novice to the advanced specialist, from the casual investor to the most sophisticated mover and shaker:

Knowledge + Opportunity = Successful Investment Strategy. Focus is the key.

Opportunity

Auctions

An auction is an open market communal event in a fluid competitive environment. Price is a function of exposure over time.
Auctions crystallize affirmation that a tangible asset is always worth at least as much as the last underbid.
Each bid confirms the relevance value of the next highest alternative use of that resource.
Each bid becomes the precise new economic benchmark until the final winning bid.
Each underbidder in an open competitive market becomes a contributor to an unwitting collaborative effort.
The final analysis (highest winning bid) is a collective like minded consensus.

While physics may define energy, no one understands raw energy better than a room full of active bidders when each is in pursuit of an unattainable or highly desirable rarity assuring there can be only one.

The commitment to spare no expense to acquire the finest, rarest, unique, or most enigmatic, pays dividends. These are the premium attributes coveted most by like-minded contemporaries with equal means and the same intensity of focus. It is universally understood by the most astute collectors and investors that the most desirable stamps are the ones with the most compelling, interesting or exciting campfire stories to tell.

Retail, Private Treaty

Whereas the market sets the price in an auction, the merchant sets the price in a private treaty. Nonetheless, private treaty may offer as much opportunity, choice and selection as any other form of free trade.

The emphasis for merchants is on the cost benefit analysis of their strategic plans for customer acquisition and retention. Inorder to foster customer relationships, growth, and loyalty, stamp merchants must focus on trust, service and product. Within these parameters, opportunities lie for both collectors and investors to build reliable resources that can lead them to general spontaneous discovery and specialized category study.

Performance

Performance is a one-to-many relationship.

Investment Portfolio

A portfolio may be a random unstructured accumulation of diverse stamps, generally with prices of $1,000-$10,000 each, selected on its respective individual merits, rather than their relationships to each other. There may be no cohesive visible strategy other than acquisition for the sake of pure individual performance.

A typical investment portfolio may be focused entirely on a single country, a targeted continental geographic area, or a world wide selection. A high incidence of certificates will be evident. Assuming a composition of good viable decisions, the value of a successful portfolio is based on its diversity.

Collection

Whereas diversity is the operative strategy of a portfolio, cohesion is the inverse for a collection.

An asset class collection for investment will exhibit several advanced characteristics. It may be highly specialized, but should not be so intensive as to unreasonable exclude a major sector of the respective market. Advanced specialized collections derive their intrinsic value from both the contents and constructs.

Like good literature, when remarkable associations are created in an advanced collection they form outstanding new revelations. The more philosophically compelling a collection is, the more highly desirable it becomes. The best collections win the highest prizes at shows judged by the most knowledgeable peers. An advanced collection may be country or topically specific. Or it may encompass wide areas of interest. The standard of excellence is the execution.

Investment Price Positioning

A single stamp can be worth as much as a roomful. Determining which choice is the wiser investment, is a matter of personal preference. The best choice is the one that brings the greatest satisfaction. No collector is alone in a vast community of shared like-minded collecting interests. There are millions of others just like us.

#331 PSE Graded 90
$25.00

#331 PSE Graded 95J
$60.00

#331 PSE Graded 98
$195.00

#331 PSE Graded 95J
55.00

#331 PSE Graded 98J
$350.00

There are several constants that remain predictable during the lifespan of any investment at any price point level. First, the higher the quality for average issues, the higher the market value to catalogue value ratio. Generally, the higher the price, the lower the market to catalogue value ratio unless significance is amplified by above average quality. The lower the price, the higher the ratio assuming constants such as quality remain the same. Classics are perfect examples of low market to catalogue ratios. However, superb classics name their price.

The Future of Philately

The future of philately is a concept closely held by many to be in a state of perpetual motion.

The field of vision is much broader than the often articulated narrow view of a declining age related collector base. Legacy collectors are but one facet of the entire panorama. The philatelic landscape has changed dramatically from previous traditional venues. The influx of new and highly diverse interests and participation are global and more profound than they ever were.

As we recognize that our children are smarter than we ever were, and we witness that technology has brought our civilizations to thresholds we could never previously imagine, so also will philately transform itself into new and exciting entities we cannot foresee. Because, that is the nature of constant change when there is so much energy clearly evident.

If necessity is truly the mother of invention, then forward thinking visionaries will bring about change and innovation.

Dominant platforms such as eBay will induce new ways to engage in experiential transactions.

Traditional venues will become more relevant. And technology in general will provide new interactive models to exchange and share knowledge, information and resources. Collectors and investors will connect with each other and resources in more robust ways never previously possible or imagined. The future of philately is a climate in the making ripe for development.

As with any industry sensitive to organic or induced change, today's market leaders in stamps who clearly recognize approaching trends on the horizon and who have that vision to meet those challenges with fresh ideas and innovation have the most to gain. In a global market the rewards in the future of the stamp industry will prove to be exponentially greater than they ever were before in past traditional venues.