Investment financial returns: Coins vs. Stocks
Zoins
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I was reading Laura's Hot Topics from April and was surprised by this comparison of coins and stocks for investment return. I hope more people are doing better in stocks.
https://www.legendnumismatics.com/hot_topics/selling-to-legend-numismatics/
HAVE COINS REALLY HELD UP?
Coin collectors do not realize how well they have it. Say you have a coin that you paid $20,000.00 for. Today the best we can pay is $14,000.00. That is a 30% loss. The stock market is offering me $3.99 for GEL (a pipe line that I paid $21.00 for) . That’s like a 76% LOSS! I can say that is NOT an extreme as I know of many other stacks (like Macys down 67%) that are now down and out. My beloved XOM that I am in at $87.00 is now $39.49-a 54% LOSS (which will be more this week)! I think overall coins have held up surprisingly well. I do not know of ANY coins that have gone down 75%!
Comments
I am going to fasten my seatbelt right now...we're in for a bumpy ride!
In honor of the memory of Cpl. Michael E. Thompson
HOT TOPIC: When investing in a moribund sector like oil, please use stop losses!
And I hope more people are “doing better“ in making such comparisons. 😉
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Whatever works.
It’s like the Nachbar ad in CoinWorld. An unlikely result with very specific circumstances that is generally poor advice over the mid to long term.
TurtleCat Gold Dollars
For me, coins are a hobby, not an investment. No stocks to worry about, secure without them
.... Just enjoying life and looking forward to returning to free living without quarantine...Cheers, RickO
If she sold stocks for a living, she would be touting the resiliency of the market. It’s her job. No different than any sales person.
She should be comparing to an index not a single stock.
I could pick examples on both sides but it seems to me that coins dont pay out until you sell. I get tens of thousands in dividends every year...well most years. Also the whole world will buy my stocks (currently), coins are a thin market, maybe not for collectibles but in terms of big markets they are.
The liquidity of the two should not be compared especially by a biased dealer. That said Laura has done well by her clients and has earned the right to boast even if she is an outlier.
11.5$ Southern Dollars, The little “Big Easy” set
.....and I'm into my Apple at $26.97 per share and my 2003 clad proof sets at $10.95 each.
it's crackers to slip a rozzer the dropsy in snide
Lots of people like to pick cherries. Some people say they do it so much better and they tout their cherries are tastier than everyone else's. So people end up trying them, and they taste different for each and every one.
Moral: know your pickers and watch out for the pits.
10-4,
My Instagram picturesErik
My registry sets
Coins and cards are a wonderful hobby. Buy what you like and hope it holds value.
Before buying a stock, do your own research. Don't take advice from ANYONE!
It's your money and you should own it. I've picked winners and losers but at least
I have only myself to blame or pat on the back.
"I spent 50% of my money on alcohol, women, and gambling. The other half I wasted.
This is why I invested in indexes. I realized pretty early on in my investing window that picking individual stocks and keeping up with their performance was too time consuming and stressful.
VTSAX all the way.
"It's like God, Family, Country, except Sticker, Plastic, Coin."
Personally for me, coins outperform stocks by far.
I guess since I am buying and very seldom sell I should be grateful. Means my plan is working but good post. I hope I never find myself in the Sell position probably means I am out of a job and need monies since this is a hobby and not a business. I still have your very special tokens I bought and they are in their own Beaver department
Historically this one is an absolute no-brainer. If given the option of putting a sum of money in an S&P index fund or in a basket of coins for 20 years there is no question which will net more in the end.
There is no gain or loss until you sell.
Basing investment strategy on 30% losses being "positive" is not the way to go.
30 pct loss on $20 k coin - well that’s no fun.
Coins are a retail hobby like model trains. They do not offer the liquidity of financial assets and have much higher transaction costs. One could make comparisons all day long to support whatever they want blog.
For coin market performance I refer to the PCGS 3000. Basically my take on RCI (real world) 1972 - 1989 nowhere go but up 1989 crash - now - Nowhere but constant slide down. It’s all about timing.
Why buy a $20 k coin then take a 30 pct hit on it reselling to the dealer source? Why not use that as an inventory cornerstone or spend that (you must be really loaded to have that kind of money) on smaller ticket material bought from your tables at shows, eBay, GC and churn at shows / online?
Wealthy collectors a different story probably that hit not very material vs his net worth - he probably wanted something else like trading a Corvette for a Porsche.
WHAT? I thought I had my ad blocker on.
For tax purposes, that's true, but otherwise, not. If you bought an item for X and the current market value is less than X, you have a loss. Subsequently, you might recoup it or lose more, but it's still a loss, unless or until that occurs.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
One ongoing problem with these discussions is the use of generic terms. When people say coins are a horrible investment, etc that may or may not be true depending on what they collext and how good they are at evaluating coins. Coin collecting can mean anything from buying crap off tv shows, finding coins in circulation, purchasing heavily messed with coins and it also includes old gold in high grade and old proof gold. I still remain surprised how well truely rare 5 figure on up coins have held up since the pandemic began.
We don’t know what the true fallout will be from the pandemic or how long it will last. While online has done well I see some slowing plus summer doldrums coming. As far as the wealthy that is a specialty market segment like luxury cars. A $20 k coin may be peanuts to somebody who owns a $1.1 m condo or $6m yacht.
I have noticed this is a reoccuring theme in multiple threads-- high priced coins always have buyers despite the overall economy since wealthy collectors are immune to the ups and downs of the economy. I am not commentng on whether this is accurate but if you really think that then it would also make you think buying rare high priced coins would make good investments since they are always in demand.
Transaction costs on stocks are almost negligible today, while you are still going to pay about 8% with the auction houses (and that is the absolute best terms).
Hard assets sit in a bank and do nothing while businesses remain vital and engaged.
The average annual return in the stock market from 1926 to date is about 10%. That's a doubling every seven years - about 10,000 to 1 since inception.
Yeah, there were coins you could buy for a dollar in 1926 that are worth $10,000 today. But you'd have to be prescient to do it. Stocks merely require an index fund.
Coins are great, and I've made a few bucks doing it, but the money in the stock market has done much better.
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End Systemic Elitism - It Takes All Of Us
But they're only worth about 2/3 of that amount.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Except that after you paid for the TV time, you'd probably be underwater unless you sold a bunch of them.
I believe that's his point.
Here's a warning parable for coin collectors...
I think the quote is taken out of context. In the column she is comparing previous sales and buy prices to current and provides those stocks as an example. The article states "Bottom line to this Hot Topics, we are here to do buy and sell. We have stay within the current confines of the market."
It's more like there's 100% loss until you sell. Well, I guess there's still face value
No I would not invest $20 k in a high priced coin when I could put that in a stock portfolio with much lower transaction costs plus churn short term gains.
The $20 k coin is for a collector (most likely wealthy) who desires that piece for his collecting goals much like somebody buys a Porsche. It could have investment potential (future auction) but future very uncertain at this point.
I would simply take issue with "always".
There are many high end collectibles (Honus Wagner card) that people took a drubbing on.
I think it would be more accurate to say that high-priced coins are the last one to feel price pressures. For the same reason that, while I know someone who may lose his house because of the shut down, I doubt too many people with $1 million houses are having trouble making their mortgage payments.
Eventually economic pressure can also get to the high end of the market. That's why Pittman scored so many bargains coming out of the great depression. There was little competition in the marketplace, even for very scarce coins. He once bought a proof gold type set for slightly above bullion value and was allowed to pay over time!
1) i take issue with your statement about Pittman. i dont think it is accurate to say pittman "scored so many bargains coming out of the great depression." The Great Depression was from 1929 through the mid 1930s. Pittman for instance got many great deals at the Farouk sale in 1954. He got those coins not because of depressed prices from the depression 20 years before---he got them because he took out a mortgage on his house and went to a dangerous part of the world to enhance an amazing collection. It is an injustice to minimize what he had to do to build his collection.
If the big hedge funds like those run by Ray Daliio and David Einhorn can't make money during challenging times, you can imagine how speculators, ordinary investors and day traders are doing.
Most all the better date and quality coins I've had and then sold did not do as well as precious metals plus the buy sell spreads are tight. You can always make a quick profit if you are in the right place at the right time and can buy right; however I would prefer that sellers get real market value instead of playing the "how much do you want" game. We could have more win-win transactions if sellers were treated right.
My buying limit is $100.00
I am small potatoes in the collector world! 
He also scored some great bargains coming out of the Great Depression. I'm not sure why you are mad that I mentioned the early years of his purchasing. The gold proof set he bought was around 1940, not at the Farouk sale. Yes, he also spent a lot of money at the Farouk sale.
The story of the proof type set - Pittman was a member of the Rochester club - is that it was around 1940 and no one had any money. When offered the set, Pittman originally turned it down because he didn't have any money either. It's only when the dealer offered to let him pay over time that he took the gold proof type set home.
Pittman bought a lot of coins before and after 1954. It's an injustice to turn his 60 year collecting career into one auction.
Not mad but you diminish his achievement by linking it to snapping up bargains after the depression. Your timeline is suspect. Regardless, buying coins of all things after the great depression took something that almost no one else had the guts to do. No one knew they were bargains back at that time. Easy for you to say they were bargains in hindsight. Pittman was not a Vanderbilt or Dupont----he built a coin collection that we still speak about on white collar salary. Would you mortgage your house to buy coins? You trivialize his accomplishment by attributing it to the great depression.
Other than their monetary value, the stocks and mutual funds I own do nothing for me. They are boring. Coins on the other hand...well, they are miniature pieces of art that also teach us about history, people, and more. Their value comes from more than just the difference between the buy and sell prices.
Laura sells primarily top drawer coins to the top tier of the market. Almost all people who buy these coins won't be financially uncomfortable if they dropped in value to some degree. This has no applicability to the bulk of coin collectors.
Wait until you have a MidlifeCrisis and need to obtain some funds from your Mutual Funds. You'll be whistling a different tune.
Been there and done that...to buy coins.
You trivialize my statement by making it more than it was. Take good old john Jay out of it, if you want.
Great depression. No money. Stuff cheap. Nuff said.
As for john Jay, it was obsession not foresight. I don't know if you knew him, but he is very controversial among the people who did.
You paid too much for AAPL, our original shares were purchased at a share price of ~$9
HST, today it was at $317 so $27 or $9 is like six on one hand, have a dozen on the other........
If only all of my investments did that good, certainly NOT coins where I am happy if I net -10%.
Best, SH
or fskax............ 2 funds that cannot be beat.
au contraire, they accumulate wealth for you so you can spend money on coins and do other things in life, so saying they 'do nothing for me' really is not quite right.......
That wouldn't have worked all that well for you from 1970 to 1990. Investment grade rare coins would have won by a mile. Coins have their strong 5-12 yr runs. It's a matter of being there for the start and hanging on. Massive runs from 1975-1980, 1984-1990, 1996-2008, (2009-2015....not massive....but pretty good). How about the Pittman coins from the 1950's to 1996? I suspect over that 40 yr run he killed the S&P......no doubt the same for many others who were sharp like him. As far as Pittman buying up distressed coins from the Great Depression? He was only in his early 20's then. His real buying began in the mid-1940's, and flourished in the 1950's and later. His peers included Louis Eliasberg, James A. Stack, Harold Bareford, Edwin Newman, John Ford, Bass, and other heavy weights. Give them all a lot more credit than "depression buying."
Well-informed investors, collectors and dealers tend to know what and when to buy and how much to pay. Many or most of them buy near net wholesale levels, even when buying at auction. The general public is usually very uninformed on the real value of real quality coins. Your goal can be to buy for profit or to buy for a collection to matter the cost.....your choice. I remember Jim Halperin's Rare Coin Investment Fund from 1977 to 1980. Only 3 years. And he killed it. He chose about 500 top coins which on average (iirc) went up 5X or more in that period (during a dead stock market). Let's not forget that it took 25 yrs for the Stock Market to return to the highs of 1929 (by 1954). There's another one of those times coming at us.
Your talking about a boiler room operation on TV selling on huge hype and puffery. That has nothing to do with real coins or the real gold market. How about the people that bought those same MS65 Saints from legitimate numismatic sources and their local dealers for $1300-$1400 just 4-5 yrs ago? Doing pretty good now.
Stocks offer instant liquidity and passive income (i.e. dividends) and because of this coins are considered by most financial experts as a second class asset when compared to stocks. Laura provided XOM as an example of her loss but failed to include the dividend payments she received from her holdings. Obviously there is still a loss there, but the dividend payments over time help offset the total loss and the price will likely recover as oil demand stabilizes.
NO ONE EVER SAID THAT ANY OF THEM WERE JUST "DEPRESSION BUYING". Take the names off if your numismatic idolatry gets in the way of seeing the point. In the late 30s and early 40s coins were cheap because there was limited interest and limited money. Things like 19th century proof gold that it is impossible to imagine being considered bullion were pretty much bullion. It is NOT about the collectors, it is about the time period.