Understanding the Best Buys Data!!

OVERVIEW

Since 1992, we have been publishing individual country guides on the price histories and investment potential of individual postage stamps. The selection of over 4,000 Best buys began with a universe of over 30,000 stamps individually valued at $25 or higher. A price history and other information was then gathered for each of these items in order to allow us to evaluate its past and likely future performance. Certainly, past appreciation history plays a major role, perhaps because it is one variable that anyone can measure simply by using an old and a new catalog. It is not, however, the only one.

Through regression analysis we have been able to identify a number of variables that play a role in stamps which appreciate, and through computer modeling we have been able to assign weightings to each variable. These exercises have allowed us to identify which stamps are likely to perform well above average. The success of this method is born out by the fact that the stamps we identified as "Best Buys" in our 1994 publication titled "Best Buys in Postage Stamps" have appreciated 26.7% and outperformed those not so identified by 49%. The Best Buy selections in the current publication have appreciated an average of 51.3% in the last 5 years versus only 9.7% for the items not selected.

Postage stamps are not being recommended as alternatives to stocks and bonds. They are a long term, hard asset, risk diversification investment much like gold and diamonds. Such assets are purchased because they perform best when stocks and bonds do worst, i.e. times of high inflation or crisis. Since recent times have been good in an economic sense, hard assets have not been attractive and gold have actually declined in value.

The 5 and 10-year returns shown in the attached tables are often less than one would earn on a U.S. Treasury bond over this time period. However, those who saw the strong trends in Asia would have done substantially better. Hence, watching for trends or countries that are popular and then buying the Best Buys for those countries should yield above average returns. Note also that catalog values are revised annually only on a select basis for higher priced items. Comprehensive revisions of an entire country are sporadic and five years or more may pass between a comprehensive price review. Hence, countries that show little or no price changes in the last five years may well be candidates for sizeable increase in the near future. Individual country guides can give the stamp buyer a clue as to where these reviews will occur.

One point stamp investors should keep in mind is that while certain stamps appear to be clear winners over both the 5 and 10 year horizon, the ability to purchase these specific stamps, especially in quantity, is restricted by availability. Therefor, one needs an extensive list such as is provided here so that what is available can be evaluated.

Note that the Best Buy recommendations are done on a stamp by stamp basis. This does not mean that only the purchase of that single stamp is recommended. Many of the items are generally sold as part of a set of stamps, with the Best Buys being the highest values in the set. Purchases in sets is recommended when two thirds or more of the set price is represented by the Best Buys since sets are often easier to resell.

Stamps are often purchased in auction lots or collections where several Best Buy items are included along with others not rated in this section. For this reason, stamp buyers should look at the Stamp Selection Guide published by StampFinder for the country they collect in order to determine how much to pay for the lot. In these guides, all stamps over $25 are evaluated by one of three criteria, BEST BUY, OK BUY and AVOID.

EXPLANATION OF DATA

Countries are organized in alphabetic order for mint stamps and then for used stamps. Note that the listing for mint stamps is twice the size as for used which reflects the fact that mint stamps are far and away the better investment vehicle. Note that mint pricing is generally for hinged stamps for material prior to 1960 and never hinged thereafter. Mint never hinged material from earlier years may sell for several times the indicated price. Such material will also have a better price appreciation history albeit not one which can be easily tracked.

The appreciation percentages represent absolute percentage increases over the indicated time period. The "Var." field indicates whether the item is a regular issue (00) or a variety. See the variety code listing below for an explanation of the codes used. Codes may be used in combination, i.e. AC would be a printing and color difference.

VALUE

Appreciation percentages and values are based on Scott catalog prices , which represent retail prices for stamps in very fine condition. Stamps of a lesser quality sell for substantially less. On the other hand, older items in very fine condition may be extremely rare (given the lower state of the printing art) and therefor sell for much more than the value indicated.

VARIETY CODES

00 Normal issue

BL Block

C Color-variety(shade)

CE Color-error

CM Color-missing

G Gum variety

MT Multiple-Tete Beche

MI Multiple imperforated

MB Multiple-in bklt form

MO Multiple-O/P difference

MS Multiple-different stamps

OD Overprint-double

OK Overprint-inverted

O Overprint-variety(other)

P Paper variety

U Perforation variety

UE Perforation-error

MG Perforation-gutter Pair

UP Perforation-imperf pair

UI Perforation-imperf sngl

A Printing variety

SS Souvenir Sheet

W Watermark variety