Do we need to change our auto response about coins as an investment?
Gazes
Posts: 2,315 ✭✭✭✭✭
There are 100 threads that say dont buy coins as an investment because the s & p 500 always out performs coins (the 500 index is always used as opposed to individual stocks like sears, enron, athome, kodak or even indexes like the dow, etc---awww the joy of giving advice in hindsight). Yes they say that you can make money on your coins but would do far better with the index. Do we need a new thread that says never buy the s & p 500 (except as a hobby) because bitcoin always out performs the index? The new thread would say something like Yes you can make money on the index but you would have made far more on bitcoin.
This is tounge and cheek but shows the danger of using hindsight as proving a point. And it is a fact that someone buying bitcoin 5 years ago would crush the s & p 500.
Comments
This is neither a stock market investment forum nor a cryptocurrency forum, so I'd vote no.
Nothing is as expensive as free money.
If you're looking for investment advice on a coin forum, you deserve the results you get.
Rags and riches, or so they say, you gotta
Keep pushing for the fortune and fame
You know it's all a gamble when it's just a game
It's not about using simple hindsight. With the S&P 500 and the coin market you have over a hundred years of data. Yes, yes, past performance doesn't predict future performance. However, it does inform it.
Bitcoin might well be a better investment over the next 20 years. Or not. Art might be a better investment. Or not. Gold and silver might be a better investment. Or not. But on a risk-adjusted basis, history cautions against it.
The one thing that no collectible does that the stock market is great at is compounding over time. And, frankly, all of the other things you mention are dependent on the stock market doing well. People bid up collectibles when they have money. If the S&P crashes, it drags down those other markets. It's called "the wealth effect".
And bitcoin needs to either stabilize in price or it is just another "collectible". It is useless as a "currency" if it's value is changing by 3 to 5% per day. And if it stabilizes in price, then it will not be outperforming anything. It may work as an inflation hedge (or not) but it won't be an investment vehicle.
Research options, diversify, be attentive. Good luck, Cheers, RickO
I disagree with your opening sentence. The S&P500 doesn’t always outperform coins. Some coins have done incredibly well and there are periods of time where index funds have done quite poorly compared to coins as a class. Obviously, nobody knows the future.
I just recommend that people make informed choices and understand their options. Let’s face it, most collectors loose money and most index fund investors make money. That might change in the future, but the value of corporations is their ability to generate goods, services, and income. The value of coins (for me) is their ability to generate enjoyment, a sense of history, and some odd ability to satisfy the cravings of the collecting gene. If they make money - great, but even when they do, they almost never perform better than other investment classes - not historically anyhow.
As for comparing cryptocurrency to index funds.... what has that got to do with coins? There have always been niche areas of finance that wildly outperform the rest of the market. Tulip bulbs anyone?
And there it is...tulip bulbs have been mentioned!
The reference regarding tulip bulbs and crypto currencies is most appropriate. You now have one of the world's richest individuals hyping a crypto currency. The speculators following him are likely to end up like the lemmings when they reach the cliff.
My own attitude toward crypto currencies is simple: Have None, Want None, Accept None.
My opening sentence paraphrased the often suggested advice that people should never buy coins as an investment and seem to always point to the s & p 500 as the road to take. I do not personally believe it---i was making a point. The point is one can always use hindsight to prove any point. People always point to the pcgs index fund vs the 500 index. It was not always known to buy the 500 index fund---its obvious now that it has done well. There are certain coins that have done far better than the pcgs index. Again, the point of this thread is using hind sight to prove a point is dangerous. Thus, my point to those people who say the 500 index is better than coins is someone can just as easily say you shouldnt buy 500 index but instead bitcoin. I said in my op it was said in tounge and cheek---just making a point about hindsight.
There are people who made fortunes in coins. I think it is true to be very profitable in coins you must be the equivelent in talent to a pro athlete. Spend your 10,000 hours and then some.
I think coins can be an investment along with a well diversified overall portfolio (including index funds) so long as the coin investor has the necessary skills or a honest dealer who has the necessary skills
The bitcoin bull run hasn't changed my opinion of numismatic coins as an investment. The wide buy/sell spreads, storage/custody considerations and lack of current income make coins less than ideal as an investment option in my opinion.
The value of coins (for me) is their ability to generate enjoyment, a sense of history, and some odd ability to satisfy the cravings of the collecting gene.
Words of wisdom.
Most of the people I know who made a fortune in coins did it by selling them to people who thought they were a good investment.
Agreed. And the only way anyone can ever make the point is by cherry-picking the data. And even if you pick that one individual who made a fortune on coins, you still can't really know whether he was just lucky rather than such a clever coin picker.
When 99% of coin buyers underperform even short-term bonds, it is simply not an investment vehicle. Even someone like John Jay Pittman may well have been more historically lucky than smart. And if he was as aggressive with investing in the S&P 500 as he was buying coins (mortgaging the house, etc.), he might have made even more money in the stock market.
Buy coins. Love coins. Enjoy coins. I don't know why people feel the need to rationalize their passion as an "investment".
This is exactly my point about hindsight. Pittman's collection was an amazing investment. You simply use the cliche that he would have done better investing in the S & P 500 than coins. One problem with that piece of hindsight----pittman went to egypt to buy the Farouk collection in 1954. The S&p 500 wasnt created until1957!
You mentioned the "wide buy/sell spreads". I think Numismatics has some of the lowest spreads of any collectable. Alot of this has to do with pcgs and cac. I heard David Bowers speak on this topic and he pointed out that spreads in coins are lower than they have ever been and far better than any other collectable.
I meant wide relative to traditional assets like stocks, bonds, ETFs, etc. Individual bonds may trade a little wider than stocks but still nothing like what you see with non-bullion coins. I view other collectibles as less than ideal investment option as well.
I don’t know how many times it’s been said but coins are an asset, not an investment
"I spent 50% of my money on alcohol, women, and gambling. The other half I wasted.
Pittman was active at just the right time. People buying rare coins during the early years that he was active rode the wave of the rising coin hobby from the mid 1940's to the mid 1960's. Timing is everything in the world of collectibles and his timing was just right.
But Bitcoin or Dogecoin would be even better than many stocks!
More than timing. He went to Egypt at a very dangerous time and mortgaged his house to buy the coins. How many of us would have done that?
Obviously not many people in his time.
But at the same time, how many opportunities are there like that?
If only Bitcoins had dates........
Bitcoin could be decimated overnight with any hint of government regulation.
The transparency of stock and bond market is always better.
Too many hands in the pie to make consistent money with coins, or approach investment returns worthy of the risk.
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@OldIndianNutKase said:
Like this?
https://www.greatcollections.com/Coin/884463/2013-One-Bitcoin-Titan-Mint-Token-wKRe7v7N-ANACS-MS-68-With-Certificate-of-Authenticity
Every asset class has its ups and downs. Coins are very idiosyncratic in nature. It is hard to make generalities about their returns and compare them to financial assets. It's interesting and fun to discuss. One thing is certain, the most savvy collectors seem to do well. Perhaps there should be collector indices (strong, medium and weak) or maybe a CAC index. One thing i can say for sure is that CAC coins seem to outperform the rest.
You are misreading me. I did NOT repeat the cliche. I referenced the cliche you mentioned.You're also being too literal. The Dow existed long before the S&P or he could have just bought baskets of stocks. Kind of hard to lose during the late 1930s through 1950s.
I don't know whether Pittman did better than the S&P or not. But if you consider how aggressive Pittman was with coins, if he had done the same with stock - mortgaging his house to buy the S&P or DOW would have paid off immensely if he bought in 1954 and held till 2000. But I digress...
The point is that even IF Pittman made a ton of money and out-performed the stock market, it doesn't prove that coins are a good investment. It proves that Pittman was either smart or lucky because 99% of his contemporaries did not beat the Dow or S&P.
Tulip bulbs make more sense than so called cryptocurrencies. At least nice flowers come included in the price of the burial!
But where are the coin collectors yachts?
op obviously too sane to collect coins
RCI is all about timing - see the Pcgs 3000 graph. 1972-89 nowhere but up well the rest you can draw your own conclusions.
For me it’s about what I can move now buying / selling and make positive income on. I do enjoy coins / currency. That money invested in numismatics is not gone forever like money one would spend on travel, entertainment, strip clubbing. However those area hobbyists would have their own arguments.....for one you can’t take the coins with you when you pass...for any hobby I would suggest a sane budget factoring in a rainy day down the line not becoming an addict....
Enjoy what you can when your young that way no regrets later on. Coins stick to sensible budget.
I have a lot of acquaintances that went broke trading cryptocurrencies. They bought when it was at a then record high 3-4 years ago and watched BTC lose 2/3 of its value. It’s easy to be a Monday morning quarterback.
That is the only point of my OP. Hindsight is 20/20.
A strong argument for collecting silver or gold coins is that even if their numismatic value lessens, their precious metal always remains. When I liquidated my grandfather's collection, I had very few real collectables but cached in thousands worth of silver (that was then used to upgrade my house). Since then I've started to collect ASEs, modern silver commemoratives, a token piece from different historical coins (Peace and Morgan Dollars, etc...).
I am seeing limited edition coin (i.e. V75 or the new Morgan/Peace offerings) take off in value quickly.
Yes, but we have 130 years of hindsight.
And you can even make a more rational argument for the value proposition. In what world is the price of a collectible going to increase faster than the wealth (GDP) of the country?
Can you cherry pick your way to massive returns? Sure, probably. But what are the odds and what is the risk? It doesn't suffice to have an "eye for quality", you need to predict the tastes of the masses 20+ years later.
In my lifetime alone, there were proponents for FSB Merc dimes which are now widgets. There were GSA proponents in what is now a moribund market. Bright white dollars? Nope. 16-D dimes? Nope. S-VDB cents? 55 Double dies? Full red Indian cents? Classic Commems? All losers over the last 20 years when measured against bonds much less stocks. Even Gem gold has probably done worse than bullion since the premiums have shrunk to nothing.
And again, I say BUY! BUY! BUY! [I'll be happy to sell, sell, sell.] But buy it because you love it, not because you think your smarter than the mutual fund. You might be, but odds are against it.
Yeah, Elon Musk is an idiot for buying Bitcoin instead of tulips! And electric cars and solar energy are a fad. He'll be out on the streets hustling for change in 10-15 years.
Crypto is gonna get crushed. No way the Fed, EU, or China don't end it in some way.
When a bitcoin guy dies on a river in India with his passwords locked up on his hard drive in Canada?
Or the guy that threw a hard drive into the city dump?
Millions lost...
Cougar has the best plan.
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They must have been horrible traders
Electric cars and solar energy make money but are about as useless as tulip bulbs.
"I spent 50% of my money on alcohol, women, and gambling. The other half I wasted.
But they smell so good.
If they held it, they would have made silly high returns. Investing in hindsight would be my preference to be sure...
An awful lot of people, and multibillion dollar corporations, now view crypto as a way to diversify their holdings and have invested billions.
You are referring to the early days of basic crypto wallets and a few cases were a few unfortunate souls lost their passwords with no chance to recover. With modern wallets, it's as easy as resetting your password to this message board.
Hmm... apparently alot of very smart buisness persons are investing billions in electric cars and solar energy as we speak, so they must not know as much as they should if your post is correct. Also, our house has solar, our total electricity bill last year (2020) was $35.86, and we live in a place where the high T is over 100 for 4 months of the year. So it seems that solar energy is not all that useless.................
Successful transactions with-Boosibri,lkeigwin,TomB,Broadstruck,coinsarefun,Type2,jom,ProfLiz, UltraHighRelief,Barndog,EXOJUNKIE,ldhair,fivecents,paesan,Crusty...
Everyman Bust Quarters
Early Quarters
CAC Capped Bust Quarters
CAC Barber Quarters
With a thumb on the scale, many things are useful that would otherwise not be so.
Your low electricity bill is benefiting from the poor subsidizing those that are wealthy enough to be able to afford homes & solar install.
Hey maybe there is rising wave of international coin collectors especially among emerging market citizens..
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Look for markets with growing economies. Those are the countries where local citizens, newly wealthy, will have an interest in collecting coins of their nation. With very limited supplies of high quality early material prices could move sharply upward.
Same thing going on with Teslas. I'm sure the people who can afford them are happy to get the rebates, though.
Thumbs, scales...
What you are describing is effectively random buying, as no amount of affluence is going to turn hardly anyone into a collector. If there was any noticeable correlation, it would be a lot more evident among US minority demographic groups but it isn't. It's somewhat more likely in a country like the US by those who transition from bullion to numismatic material but in most countries, there is limited bullion buying in coin form due to reduced access.
Additionally, in most countries, there is little to buy locally because the better coins (the limited supply which exists) went elsewhere a long time ago and far less liquid (versus US) or no local market exists to sell back at the supposed market price. This isn't something most US collectors can fully appreciate since they have access to practically any coin they want to buy, if it is available.
I am not saying that these people wouldn't buy coins if they have a reason to believe they can make money off of it, only that they have a much better reason to believe they won't.
Coins compound as well. As does the size of the economy, which drives both the stock and coin markets.
The difference between stocks and coins is that a company can grow into something bigger and better. A coin will always be the same lump of metal.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Not in the way that compounding is usually used. Compounding refers to "calculate (interest) on previously accumulated interest." Since coins don't pay a dividend or interest, they can't really "compound" in the traditional sense. I suppose you could argue that a coin going up 5% YOY is compounding if the 5% increase is based on the 105% value, but that seems like a bit of a stretch to me.
Although, I will agree that the economy growing (and compounding) does have a spillover affect on the price of collectibles. So, I think we mostly agree.
My whole business grew and grows from compounding.
That is my business model.