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Collecting Stamps: Investment
AN INCREASING INTEREST IN THE "Investment" aspect of stamp collecting is being shown by collectors-young and old-and even by some dealers. Though many of the old guard (the conservative collectors) detest this angle, it is here to stay, and must be taken into consideration.
Actually there is nothing wrong with the investment side of stamps. While it is true the design and overall factors of the stamp itself become secondary to quantity and demand, it is equally true that the average person likes to see his possessions increase in value-paper or real.
There is a wide distinction between investment and speculation. In the former the value of the property for a period of time is realized. In the latter quick gains are sought.
There are several angles which must be taken into consideration in discussing investments in stamps. The first is the simple fact that stamps are a luxury, and as such depend upon general conditions. When money is plentiful people can buy more stamps. When money is scarce, people must give first interest to food, clothing and rent.
Second in importance is appreciation of the rule of supply and demand. If large quantities of any particular stamp flood the market, or hang over the market, the price at best remains dormant or most likely drops. If there is a heavy demand, such as in the 1949-50 Universal Postal Union issue, prices will rise, and quickly. The unfortunate part of such a condition lies in the fact that issues of this sort reach a peak, and then-as interest lags-prices drop.
In the case of United States commemoratives, all too many people feel they can buy singles, blocks or sheets at a post office (disregarding centering) and, in a few years show a very nice profit. They forget a few simple facts. Recent U.S. commemoratives are printed in huge quantities generally. Many are bought and used. Many others are bought and held for a profit. While prices rise the buyers feel smug and hold on, but the market starts breaking after a short time and these same buyers seek to sell their material at near face, or even below face.
There is a "shake-down" period in stamps, as there is in many other fields. While demand is present everything goes on smoothly, but as demand drops so do prices. That doesn't mean that the stamps aren't still good investments-it merely shows that the material in weak hands has been forced out, and, after a time, prices firm up again, and continue to rise.
Several well-versed collectors have sought to predict price rises in stamps, and in many instances have done remarkably well. Unfortunately, too many factors are unknown to even the best informed authorities, and long-range predictions are dangerous to make or to follow. If one is in a sound financial condition, and can afford to wait for a period of years, stamps can be a good investment. Otherwise stamps should be sold on a rising market, and no effort should be made to sell at the peak.
Those who invest in stamps shouldn't be ashamed of doing it-it's a natural instinct. Reversely they shouldn't be greedy. Investments in stamps should be based on knowledge of the market and world conditions, otherwise it's very, very dangerous.