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THE KEY TO PROFITABLE STAMP INVESTING

Authored by: Richard Lehmann

Stamp prices will fluctuate to some extent with the economy, i.e. when the stock market is robust, stamp prices will also be strong. This will vary by country so, as the Internet makes the stamp market more and more global, demand will not be dependent on the economics of one country alone. Since we have not yet reached this level of stamp price transparency country by country, there will still be value disparities. As multi-dealer sales sites grow, however, this disparity will shrink. Hence, the opportunity to shop at stamp dealer websites in countries with declining local markets will shrink, but for now, keep this in mind. As I write this, notice that certain countries in Europe such as Spain, Italy, Portugal (avoid) and Ireland are suffering economic hardships which probably impact on local stamp sales. Dealers there should be discounting their offerings and be open to offers for higher priced items, if only to pay the monthly bills.

This long preamble is to introduce you to the second key to profitable investing, buying right. Once you have created a list of stamps you want to buy you wan to buy it at the most opportune price. I will not speak about a stamp's condition as a factor here since this is such an important topic that it needs a posting all its own. Note that a stamp that catalogs for $100 will sell for about $80 retail and would be bought by a dealer for about $40. A collector buyer will pay the $80 because it fills a hole in his collection. An investor has no such objective and should be more focused on the appreciation in value. Clearly, is he pays $80, he risks seeing no appreciation for a very long time. It is worth knowing that dealers have generally paid from 25% to 40% of catalog value to acquire the item, the exact amount is unknown since dealers tend to buy entire collections rather than individual items so their cost allocations are judgmental. If a dealer has several of the item in stock and has had them for a long time, i.e. six month or more, he should be open to an offer below his asking price. You may of course come across the item in a public auction at which you can bid $40 with a maximum bid of $50 and often be successful. Don't hesitate to make low ball offers for items in an auction, you'll be pleasantly surprised when one succeeds.

For investment buyers, focus on stamps cataloging at least $50 or more or mint sets of $100 or more. Also avoid buying stamps cataloging more than $300 from a dealer you don't know, especially one overseas. Expensive stamps should be bought from a reputable auction house which will stand behind its description (or lack thereof) for each stamp offering. The Internet has brought great improvements in stamp buying and selling, but also brought some knaves and thieves to an industry previously known for its integrity in sellers and buyers. Hey, wasn't that true about the securities industry at one time? Only kidding!

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