Buying for Your Collection — If Long-Term Value
Floats Your Boat

by John M. Hotchner

It's interesting to hear what non-collectors say and think about the hobby. Usually it has to do with money. Since I have a rather large stamp collecting poster up in my office (specifically as a conversation starter) I can report that non-collectors usually respond in one of three ways: "What is the most expensive stamp you own?" "Stamp collecting is supposed to be a good investment, isn't it?" or "I understand that's an expensive hobby."

The first and third are fairly easy to answer, but the middle question about investing is complicated. The easy answer is: "I wouldn't know because I'm not an investor. That's not why I collect." But that's just a way to avoid a complicated subject. Despite the fact that, indeed, investing is not why I collect, a high percentage of collectors, myself included, do keep something of an eye on the growing value of their collection — and buy for it with the hope if not the expectation that new acquisitions will contribute to long-term value.

If this sounds like a duck, and walks like a duck, you can be forgiven for thinking that it is investing, but I would differentiate it thus: An investor buys only investment grade material after due study — or by placing trust and substantial funds in an agent. There is no interest in the material itself; only in its value of the moment, and it can be sold in a heartbeat when the owner or agent determines the time is right.

A collector buys both expensive and inexpensive material to fill a gap, understands and appreciates the philatelic importance of the item(s), and intends the material to be held a lifetime, or at least until old age.

There is a set of guidelines for a collector who wishes to see collection value grow. They are gathered here for the convenience of readers:

1. If you have $50 to spend, buy a $50 stamp rather than 200 25¢ stamps. While the latter may be pleasing in some ways, cheap stamps will nearly always remain cheap. On the other hand, expensive stamps have already demonstrated that they are sought after by enough collectors to justify and support a robust price.
2. Buy the best quality that exists. The best quality commands the highest prices, and likely always will, as collectors will pay a premium for perfection. High quality is also equivalent to scarcity, and scarcity drives up price on the long term.
3. Favor regular postage stamps over "back of the book" revenues, post office repair seals (OX labels), postal stationery, etc. The latter can be very good investments, but tend to be specialty areas with a lower collecting base and smaller group of people seeking the best material.
4. Avoid, in general, the easily recognized and available blue chips easily marketed for investment. Good examples are the 1930 Zeppelin Air Mail set of three (Scott C13-C15), and the 1893 $5 Columbian (Sc. 245); especially when you see their prices being driven up. These are popular and expensive, but pick up virtually any auction catalog, and you will see multiple offerings in varying conditions. They are easy for investment agents to buy and market to investors. But that also means that when investors believe the market is peaking or has peaked, many copies will come on the market in a short time period, and the price may fall like a stone. Only the first sellers will profit. Later sellers will take a bath, and along with them will be collectors who need to sell, or whose estates come on the market at the wrong time.
5. If there is any possibility that the stamp could be faked or improved by philatelic doctoring, do not commit your money until the stamp has a good certificate from a reputable expertising service. Certificates add a cost, but good stamps are much more "liquid" — readily salable — with a certificate of authenticity, and at a higher price. The "investment" in a certificate always pays dividends; first in preventing your being fooled by incorrectly described or altered stamps, and second, by supporting higher prices (usually well beyond the cost of the certificate) when the time comes to sell.
6. Think long term. Philatelic values do not fluctuate daily like stocks (unless subjected to mass buying and selling by professional investors — See #3 above.) Slow and steady price rises over the course of years is the philatelic model.
7. Stay with proven popular countries and/or popular themes. You may love the stamps of French Colonial Africa and the independent states which developed from them. By all means buy them for your collection, but don't expect them to rise as fast in price as those of the mother country.
8. The older the better. Why? Because they tend to be of proven scarcity in VF+ condition.
9. Avoid new issues. They are always speculative, accurate quantities are often not known, and even if limited editions, they tend to draw the professional investor, with potentially disastrous consequences.
10. Stay with catalogue-listed varieties. If it is in the catalog, it will be in albums. If it is in albums, collectors will want to fill the space. That supports long-term value. Paying extra for non-cataloged variations such as shades and minor perforation examples rarely contributes much to resale value.
11. Keep your best stamps in a safe place where they will not be stolen or damaged.
12. Identify and store your best stamps so that you or family members will not overlook them or include them with lesser material when the time comes to sell. Throwing premium purchases into the "Do something with later" box along with mundane purchases means that the good items will likely get lost among the inexpensive.
13. Read widely about stamps and stamp collecting. Review print ads, auction realizations, and track catalog values. These will help you to develop a good grasp of collector value.
14. Finally, don't avoid but be careful of buying at auction. Informed buyers can do very well, but always remember that the "winner" pays a price for each item that no other bidder was willing to pay.