Look at the price Benson paid for many of his coins in the 1940's: One to three dollars for many of his 19th century type coins.
Look at what one exceptional collector paid for certain exceptional coins? Sort of like, look at what Warren Buffet paid for certain stocks, and oh yeah, he gets to ignore his losing stocks too?
For every Benson there are thousands of others who paid three dollars for a coin in the 1940's that can now... buy a couple McDonald's Happy Meals if they're lucky.
I think that's the usual seductive trap of comparing exceptionally well-chosen coins to the general stock market.
Supercoin, not so sure about your comment about coins NOT compounding their value over time.
You're right, I should have said traditional investments have "superior compounding". Yes coins that go up could be considered compounding. Mostly due to inflation, in my opinion, unless you pick the winners.
The real bull is believing in the "long term holding" approach to stocks. This is what the brokers have to have from the masses to make money.
Just an aside -- but that's a misunderstanding of how brokers (and many other market participants for that matter) make money. Most Wall Street players would go broke if all investors were in it for the long-term -- they make their money when people trade, not when they hold.
The stock market is rigged and manipulated from the top down. I'll take my chances in coins any old day!
Yeah, the coin market is filled with honest ethical folks. At least there is an attempt to regulate the stock market.
Do not over estimate expected equity returns. About 8% to 10% per year is a reasonable expectation. In that context coins returns long-term fit in.
But that 8-10% is for a broad market index in which virtually anyone can easily participate with very little time or incidental cost. To get that kind of return on coins, you've got to be very sharp, invest a lot of time, buy/sell at the right time and price, and pick some home run winners. And, of course, if you traded stocks with the same effort and skill... 8-10% is chump change.
Ok, even I'm getting tired of listening to myself!
By the way, in case anyone cares -- while I think stocks are clearly superior investments to coins for the long haul, that doesn't necessarily mean I'm bullish on the stock market right now. So if you go buy a bunch of the Dow and lose your shirt, don't blame me! Buy Ikes!!
Supercoin, maybe I shouldn't have said brokers make money when people hold. More like brokerage houses don't want everyone selling at once.....like now. Same in coins. The average Joe is not buying and selling his stocks on a weekly cycle. The pros do that. And they make money doing so because John Q. stays put to take the beating on the ride down. They depend on most John Q's staying pat or the house of cards would come tumbling down. Hence, they want him to hold for the long term.
I'm with Tradedollarnut on this one. The stock game is rigged. At least in coins we know what the rules are.
I still say, show me someone who bought coins from the EARLY 70's who isn't making money. It does not matter what they bought so long as they weren't ripped of in the first place-and even then, they still stand a chance of making something! The coin market HAS grown overall since then.
Now if you bought in 1989, today, you could very possibly be in a loss postion. However I strongly believe the market will correct itself and those who held-again LONG TERM will come out way ahead. Time (years) does have a certain value in this field.
You can find losers in ANY field if you look. Overall, coins are longer term purchase. If you can't afford the time or risk, then you shouldn't be buying an item like coins and expect to cash out in the short term.
To a degree, Braddick summed it up best: Stocks for investing. Coins for collecting.
Laura Sperber lsperber@hotmail.com
Laura Sperber
JUST SAY NO TO WANNABES! They lurk and prey on unwitting collectors in chatrooms!
Laura, show me anyone who invested in a diversified portfolio of stocks in the early 70s who is isn't making money! Or at least who didn't make a bunch if they sold in the mid 90s. And please don't tell me that some people may have lost money by selecting a bad stock - the same could be true with a bad coin investment such as 50-D Nickel rolls, coins that were counterfiet, etc, etc. Everyone who bought well known companies back in the 70s such as GE, etc or bought a mutual fund that did that increased their investment many fold, and if they lucked out and bought an INTC or MSFT, they stood to make 10s or 100s times.
Even if you find anyone who bought a properly diversified stock portfolio in 89, I think you would have a hard, long search to find anyone who didn't make quite a bit of money by 99. I think it is safe to say that many, many more people have bought a house, business, college for their kids, etc. with a stock market investment then with coins.
JJacks
Always buying music cards of artists I like! PSA or raw! Esp want PSA 10s 1991 Musicards Marx, Elton, Bryan Adams, etc. And 92/93 Country Gold AJ, Clint Black, Tim McGraw PSA 10s
JJacks: I know many people who invested in what was mainstream companies in US industry in the early 1970's.
Very diversified too......
Republic Steel Western Union WT Grant Co. KMART International Harvester Corning Zenith UPI (United Press International) American Motors Corporation(AMC) First Bank of Chicago Penn Central (Railroad) Some of the finest newspaper stocks United Airlines International Business Machines (IBM)
This portfolio is worth less than 50% of its value of 1972 including compounding of all dividends.
Sure with better stock selection one could have done far better. But this list was the recommended long term hold list of a stock brokerage firms back in 1972.
oreville, that may be true on a strict buy-and-hold and never look at basis, but come on. How many people held KMart from the early 70s to present for example? Buy and hold does also mean making obvious adjustments to ones account at times. Even the DOW has changed quite a bit from the early 70s. What has the DOW change been since then? I don't know, but I beleive it was around 800 in 1980. That is an over 10-fold increase for not really doing any work in 20 years. Not too bad. I don't know for sure, but I doubt that many people bought that list of stocks in the early 70s and still have those exact stocks.
JJacks
Always buying music cards of artists I like! PSA or raw! Esp want PSA 10s 1991 Musicards Marx, Elton, Bryan Adams, etc. And 92/93 Country Gold AJ, Clint Black, Tim McGraw PSA 10s
JJacks: You would not believe how many people bought and still have owned KMART for 30 years.
Some of them are retired employees.
Woolworth, Korvettes, Leslie Fay, Rickels, Caldors, Jamesway, Ames did even worse. All national brands. At least Woolworth had the good sense to the hell out of retailing.
There are over 5000 major individual stocks have have become worthless in the last 30 years.
While coins on average would not beat a well picked stock portfolio coins do not have the same extreme risk that individual stocks can have.
This does not even include the numerous number of penny stocks that investors always seem to nibble at every so often. What would be the anaology in coins to the penny stocks?
Furthermore, look at CLCT. It opened at $6 a share a few years ago. It went up to as high as $9 and now it is 70 cents. That is a drop of over 92% from the highs of just a few years ago. Have any sector of coins that you know of ever goner down that much? look at TAZS down nearly 100%. Both of these stocks are in the same industry as coins.
Even Dave Bowers invested significantly in CLCT and is way down. Does that make him any more of a fool than anyone else? I stand by my comment that individual stocks can be much more risky than individual coins but the dividend aspect of stock is what puts stocks on top in general but not always.
Oreville, of course this is true with individual stocks, but not so with a diversivied portfolio. I doubt you could find anyone in the entire country who bought a diversivied portfolio of stocks (or mutual funds) in the early 70s, kept up with current trends and adjusted at times and who hasn't made quite a bit of money. If so, I would like to see what they invested in and how they could have lost money as the DOW went from 800 to 10000+ and the NAS went from nearly nothing to 5000+. And if people made a ton in stocks and didn't sell at least a decent % of them, then shame on them. Dividends are gnerally useless. I don't think MSFT or INTC have ever paid dividends. Why worry about 4% dividends when a stock then drops 20% or something. In stock investing, you always want to look for capital gains.
JJacks
Always buying music cards of artists I like! PSA or raw! Esp want PSA 10s 1991 Musicards Marx, Elton, Bryan Adams, etc. And 92/93 Country Gold AJ, Clint Black, Tim McGraw PSA 10s
Actually I can think of just one area in coins that has gone down over 90%......junk silver coins from the high in that one month of March 1980 but then again were most collectors buying silver coins and bullion then?......no.....they knew better.
JJacks: This is where your position gets faulty. Most senior citizens go fairly heavily into dividend paying stocks since they need the income. They rarely invest in the true growth stocks we have seen in the 20th century. They can't "afford to" as they do not have the staying power (quite often not the case but they worry too much otherwise). They have not participated in much of the growth in stocks since much of their investment were in utilities have are no longer the safe haven they were for nearly 75 years.
I find very few people (clients) trade periodically. They either are more like the "day traders" (impatient)(or are buy and hold investors for decades at a time.
I have found that the real winners over the last 30 years have been those who invested in real estate (and coins).
The Dow Jones was at 991.64 on January 25, 1966. and did not permanently surpass until October 29, 1982 when it was at 991.72.
It took over 16 years during some of the most inflationary times just to get back to its 1966 level.
Sure since then, it has done well but many of of those senior citizens of the late 1960's never lived to see those "good days" after waiting up to 16 years.
However I strongly believe the market will correct itself and those who held-again LONG TERM will come out way ahead. Time (years) does have a certain value in this field.
I would encourage anyone who feels this way to try it out for themselves in a simple spreadsheet. I think few proponents of coin investing ever have.
Even ignoring the much higher incidental and ongoing costs associated with coins, you might be amazed to see how small the annual return is on many coins that you thought were a great investment.
Certainly you can find some winners. You can then decide for yourself how likely it is that you will predict the next winner.
And when you've selected a potential future winner, type its current value into the same spreadsheet and see what it would have to appreciate to over the next 30 years to match the annual growth of an alternate investment. You can't buy many rare coins for $3 any more.
If it still looks good, and you're thinking about committing some serious money to it, go back and make your spreadsheet a little more complicated to deduct the cost of insurance every year (which will rise every year, assuming your investment is appreciating). Just like stock mutual-fund fees, that is a major drag to long-term performance.
If you do that and still want to invest in coins, you're at least a much better-informed investor.
I would bet (my final bet!) that less than 1% of coin investors have ever taken the time to do something like that.
Supercoin: I strongly disagree. I can "overpay" and buy a roll of 1954(p) Lincoln Cents for $50 (they can be had for $10 or less) and possibly "cherrypick" out a $4,000 MS67RD (a $1 cost coin). I can buy a 1954(s) roll of nickels for $40 ($1/coin) and pluck out a MS65FS (a $5000+ coin). I can buy a nice Memorial Cent in a flip at a coin show for $3 that will slab out at $1000. And, what did you pay for your 1971(p) Ike again you bought in a coin store in a flip that graded MS66 (a $3000 coin)?? And, of course, I won't even mention varieties, doubled dies, errors, etc. because you already conceeded those can result in incredible returns.
These are very exciting times in the coin hobby and I hear almost every week about a collector or dealer buying a coin for $3 that transforms into a "four figure coin" due to the advent of the "value added" grading companies,a luxury Benson did not enjoy when he was buying up $3 coins. Wondercoin
Please visit my website at www.wondercoins.com and my ebay auctions under my user name www.wondercoin.com.
Yes, I fully agree and mentioned that in one of my previous posts. These are rewarding times for collectors as there are a number of underappreciated areas ripe for cherrypicking.
But again, that's a very different activity than paying $4000 for that MS67RD and holding it for 30 years. Or similarly, hanging onto it after making it yourself when you could have sold it. That 40,000% return is not likely to be sustainable on an annual basis.
Oops, just realized where the confusion was -- the $3 I was referring to was in reference to what it was said Benson paid for some of his coins back in the 1940's. I assumed those were purchased at their market value.
If in fact they were cherry-picks like my Ike or your Lincoln, then he shoulda flipped them immediately and put the money in stocks. From an investment standpoint.
On the other hand -- as a collector -- I sure wish I had my Ike back. Sold it for far less than $3000 too, hmm...
Aahh! Sorry! Just had to make one more comment to oreville, then hopefully I will stop! I don't want to get suckered into doing 100 replies!
Oreville, you mention that many seniors need dividends, so they bought those kinds of stocks. Here are a few problems:
1. Coins certainly don't pay dividends so its hardly fair comparing coin investing to stock with dividends investing. Once again, for long term gains, you need to bascially ignore dividends, and if you really need the money now, neither stocks or coins are very good.
2. Those seniors who bought in the late 1960s should have started accumulating stocks in the 1940s (after the war anyways!) and 1950s (some of their prime working years), and they would have made a bundle of money in the 1950s and early 1960s. True, you can't just start at 70 years old investing in stocks and think you will make a bundle by the time you are 80 for sure.
JJacks
Always buying music cards of artists I like! PSA or raw! Esp want PSA 10s 1991 Musicards Marx, Elton, Bryan Adams, etc. And 92/93 Country Gold AJ, Clint Black, Tim McGraw PSA 10s
I think Oreville's #'s on the DOW from 1966 to 1887 are very telling. 20 years with no change in the index after the '87 crash. That was a bad 20 years to hold individual stocks. And in fact they did STINK for nearly any average portfolio. And I agree with Oreville. Most portfolios being sold and held long term did not fare well. If not for the 90's, stocks would still stink. Stock holders were vindicated in the 90's. Now if they only bailed before the 90's ended. Using the DOW averages through 2002 still radically skews any return on the DOW for the past 20-60 years. What if the DOW skids down to 5000 or even 2500 to make more sense of PE's. What would those 8-10% rates of returns look like? Let's wait for the next few years to play out before everyone decides that stocks are a guaranteed long term play at 8-10%. People weren't saying this in the 60's and 70's that's for sure.
Oreville, thanks for putting out some useful info. Your portfolio more closely matches what was really happening in the 60's to 80's. I may be naive but I don't think many people were doing Index funds until the 1990's when it became chic. To keep saying anyone with a brain could have easily moved their portfolio around as the DOW changed over the years is being sort of absurb since few probably did it. It wasn't chic then either. Stocks were being held very long term. My Dad never sold a thing until he passed away a year ago. His Dad did the same thing. I think he was very typical of stock holders in this period. Buy and forget about it. It wasn't a bad strategy really. They made out well. But......don't forget that uncle Sam takes 50% or more of your estate away from you when you make serious money in stocks and let it accumulate. Capital gains in the shorter term. In my Dad's case 50% of what he made disappeared to unavoidable estate taxes. What does that do to the 8-10% average gain guys? I think I'd rather pay my $48 a year safe deposit box fee and leave it at that.
Unless you're a Soprano, donate your estate away or own your own foundation (Kennedys) you cannot escape up to 1/2 of that money. You cannot keep it all yourself. And, yeah, you're a criminal if you don't report your coin profits, but it's up to YOU whether you do or not. With stocks, UNCLE is taking his cut unless you pass it on to your spouse or plan carefully enough to lower your estate by giving out $11K gifts each year. Talk about the game being rigged!!!!!!
Good to see Laura's comments here, and I can't argue with what she is saying. But I'm glad to have almost all the US I want (much of it bought from her), and am moving to the dark side.
The opportunities there are almost endless and gem material sells for 5-15% of comparable US. The US market has been sliced, diced, and minced in a thousand ways...crack outs, massive premiums for toners and die varieties, people trying to make every strike variation into a new variety or a double die, etc.
One thing that stocks can do that coins can't is to go to zero. Look and see what GM stock is worth. They took out bankruptcy - their stock - probably the safest and best performing stock of all time - became worth less than the paper it was printed on. I don't think people realize that the GM of today is not the same company that built Oldsmobiles and Pontiacs.
@thefinn said:
One thing that stocks can do that coins can't is to go to zero. Look and see what GM stock is worth. They took out bankruptcy - their stock - probably the safest and best performing stock of all time - became worth less than the paper it was printed on. I don't think people realize that the GM of today is not the same company that built Oldsmobiles and Pontiacs.
True that coins will retain at least some nominal value, but whether you end up with 0% or .01% of the price paid is kind of immaterial. I agree that it is much more likely that a stock will lose most of its value than a coin will. Other points in your post are inaccurate. GM is far from the best performing stock of all time and I’m not sure how you measure safe but GM is not going to be near the top of that list either. Yes, companies sometimes do go bankrupt, even “safe” ones. Anyway, since the bailout of GM the stock has been fairly steady and the company is profitable again. It has a market cap of $53B.
@thefinn said:
One thing that stocks can do that coins can't is to go to zero. Look and see what GM stock is worth. They took out bankruptcy - their stock - probably the safest and best performing stock of all time - became worth less than the paper it was printed on. I don't think people realize that the GM of today is not the same company that built Oldsmobiles and Pontiacs.
True that coins will retain at least some nominal value, but whether you end up with 0% or .01% of the price paid is kind of immaterial. I agree that it is much more likely that a stock will lose most of its value than a coin will. Other points in your post are inaccurate. GM is far from the best performing stock of all time and I’m not sure how you measure safe but GM is not going to be near the top of that list either. Yes, companies sometimes do go bankrupt, even “safe” ones. Anyway, since the bailout of GM the stock has been fairly steady and the company is profitable again. It has a market cap of $53B.
But the GM of today is not the GM of the past. Completely different companies. GM filed for Chapter 11 reorganization on June 8, 2009, so all of their stock became worthless. Show me a coin (fiat currency not allowed), that has gone to zero. GM was the bull of the NYSE. It made it through depressions and recessions, becoming stronger each time.
But, since it went to 0, it wasn't the strongest. Like US Steel, Sears, etc.
This is not true. The stock shares are different but the company is the same. Same plants, same employees, same offices, etc.
Anyway, I agree that stocks can go to 0 and coins virtually never lose even 90% of their value. Some coins have lost a lot over the years, but even 50-D nickels (to pick one) are still worth a few bucks each. As for GM being the bull of the NYSE, that is also false. It was not a good stock for the last 50 years of its existence. Certainly not in the league of IBM or Walmart or 3M or Exxon Mobil. Sears is also on the verge of bankruptcy. Not sure where you are going there.
I do see them losing value. Look at coin shows as an example mostly a much older crowd and will be selling out at some point increasing available supply of given item and not enough buyers to take their place.
Then the same would be true of stocks, bonds, antique automobiles. With the demographics changing and no one to pick up the slack for the Baby Boomers diminishing, there will be no one to buy up the available stocks. And fewer to pay into Social Security and Medicaid/Medicare - hence our economic issues in the near future.
Comments
Coins for collecting.
And the two shall never meet.
peacockcoins
Greg: The (6) pairs of golfing pants only cost me $500 (the sum I lost on that coin). Now, we are shopping at the same store
Look at what one exceptional collector paid for certain exceptional coins? Sort of like, look at what Warren Buffet paid for certain stocks, and oh yeah, he gets to ignore his losing stocks too?
For every Benson there are thousands of others who paid three dollars for a coin in the 1940's that can now... buy a couple McDonald's Happy Meals if they're lucky.
I think that's the usual seductive trap of comparing exceptionally well-chosen coins to the general stock market.
Supercoin, not so sure about your comment about coins NOT compounding their value over time.
You're right, I should have said traditional investments have "superior compounding". Yes coins that go up could be considered compounding. Mostly due to inflation, in my opinion, unless you pick the winners.
The real bull is believing in the "long term holding" approach to stocks. This is what the brokers have to have from the masses to
make money.
Just an aside -- but that's a misunderstanding of how brokers (and many other market participants for that matter) make money. Most Wall Street players would go broke if all investors were in it for the long-term -- they make their money when people trade, not when they hold.
The stock market is rigged and manipulated from the top down. I'll take my chances in coins any old day!
Yeah, the coin market is filled with honest ethical folks.
Do not over estimate expected equity returns. About 8% to 10% per year is a reasonable expectation. In that context coins returns long-term fit in.
But that 8-10% is for a broad market index in which virtually anyone can easily participate with very little time or incidental cost. To get that kind of return on coins, you've got to be very sharp, invest a lot of time, buy/sell at the right time and price, and pick some home run winners. And, of course, if you traded stocks with the same effort and skill... 8-10% is chump change.
Ok, even I'm getting tired of listening to myself!
By the way, in case anyone cares -- while I think stocks are clearly superior investments to coins for the long haul, that doesn't necessarily mean I'm bullish on the stock market right now. So if you go buy a bunch of the Dow and lose your shirt, don't blame me! Buy Ikes!!
I'm with Tradedollarnut on this one. The stock game is rigged. At least in coins we know what the rules are.
roadrunner
Now if you bought in 1989, today, you could very possibly be in a loss postion. However I strongly believe the market will correct itself and those who held-again LONG TERM will come out way ahead. Time (years) does have a certain value in this field.
You can find losers in ANY field if you look. Overall, coins are longer term purchase. If you can't afford the time or risk, then you shouldn't be buying an item like coins and expect to cash out in the short term.
To a degree, Braddick summed it up best:
Stocks for investing.
Coins for collecting.
Laura Sperber
lsperber@hotmail.com
JUST SAY NO TO WANNABES! They lurk and prey on unwitting collectors in chatrooms!
Laura, show me anyone who invested in a diversified portfolio of stocks in the early 70s who is isn't making money! Or at least who didn't make a bunch if they sold in the mid 90s. And please don't tell me that some people may have lost money by selecting a bad stock - the same could be true with a bad coin investment such as 50-D Nickel rolls, coins that were counterfiet, etc, etc. Everyone who bought well known companies back in the 70s such as GE, etc or bought a mutual fund that did that increased their investment many fold, and if they lucked out and bought an INTC or MSFT, they stood to make 10s or 100s times.
Even if you find anyone who bought a properly diversified stock portfolio in 89, I think you would have a hard, long search to find anyone who didn't make quite a bit of money by 99. I think it is safe to say that many, many more people have bought a house, business, college for their kids, etc. with a stock market investment then with coins.
JJacks
Very diversified too......
Republic Steel
Western Union
WT Grant Co.
KMART
International Harvester
Corning
Zenith
UPI (United Press International)
American Motors Corporation(AMC)
First Bank of Chicago
Penn Central (Railroad)
Some of the finest newspaper stocks
United Airlines
International Business Machines (IBM)
This portfolio is worth less than 50% of its value of 1972 including compounding of all dividends.
Sure with better stock selection one could have done far better. But this list was the recommended long term hold list of a stock brokerage firms back in 1972.
oreville, that may be true on a strict buy-and-hold and never look at basis, but come on. How many people held KMart from the early 70s to present for example? Buy and hold does also mean making obvious adjustments to ones account at times. Even the DOW has changed quite a bit from the early 70s. What has the DOW change been since then? I don't know, but I beleive it was around 800 in 1980. That is an over 10-fold increase for not really doing any work in 20 years. Not too bad. I don't know for sure, but I doubt that many people bought that list of stocks in the early 70s and still have those exact stocks.
JJacks
Some of them are retired employees.
Woolworth, Korvettes, Leslie Fay, Rickels, Caldors, Jamesway, Ames did even worse. All national brands. At least Woolworth had the good sense to the hell out of retailing.
There are over 5000 major individual stocks have have become worthless in the last 30 years.
While coins on average would not beat a well picked stock portfolio coins do not have the same extreme risk that individual stocks can have.
This does not even include the numerous number of penny stocks that investors always seem to nibble at every so often. What would be the anaology in coins to the penny stocks?
Furthermore, look at CLCT. It opened at $6 a share a few years ago. It went up to as high as $9 and now it is 70 cents. That is a drop of over 92% from the highs of just a few years ago. Have any sector of coins that you know of ever goner down that much? look at TAZS down nearly 100%. Both of these stocks are in the same industry as coins.
Even Dave Bowers invested significantly in CLCT and is way down. Does that make him any more of a fool than anyone else? I stand by my comment that individual stocks can be much more risky than individual coins but the dividend aspect of stock is what puts stocks on top in general but not always.
Oreville, of course this is true with individual stocks, but not so with a diversivied portfolio. I doubt you could find anyone in the entire country who bought a diversivied portfolio of stocks (or mutual funds) in the early 70s, kept up with current trends and adjusted at times and who hasn't made quite a bit of money. If so, I would like to see what they invested in and how they could have lost money as the DOW went from 800 to 10000+ and the NAS went from nearly nothing to 5000+. And if people made a ton in stocks and didn't sell at least a decent % of them, then shame on them. Dividends are gnerally useless. I don't think MSFT or INTC have ever paid dividends. Why worry about 4% dividends when a stock then drops 20% or something. In stock investing, you always want to look for capital gains.
JJacks
I cannot say the same of the stocks.
I find very few people (clients) trade periodically. They either are more like the "day traders" (impatient)(or are buy and hold investors for decades at a time.
I have found that the real winners over the last 30 years have been those who invested in real estate (and coins).
The Dow Jones was at 991.64 on January 25, 1966.
and did not permanently surpass until October 29, 1982 when it was at 991.72.
It took over 16 years during some of the most inflationary times just to get back to its 1966 level.
Sure since then, it has done well but many of of those senior citizens of the late 1960's never lived to see those "good days" after waiting up to 16 years.
However I strongly believe the market will correct itself and those who held-again LONG TERM will come out way ahead. Time (years) does have a certain value in this field.
I would encourage anyone who feels this way to try it out for themselves in a simple spreadsheet. I think few proponents of coin investing ever have.
Even ignoring the much higher incidental and ongoing costs associated with coins, you might be amazed to see how small the annual return is on many coins that you thought were a great investment.
Certainly you can find some winners. You can then decide for yourself how likely it is that you will predict the next winner.
And when you've selected a potential future winner, type its current value into the same spreadsheet and see what it would have to appreciate to over the next 30 years to match the annual growth of an alternate investment. You can't buy many rare coins for $3 any more.
If it still looks good, and you're thinking about committing some serious money to it, go back and make your spreadsheet a little more complicated to deduct the cost of insurance every year (which will rise every year, assuming your investment is appreciating). Just like stock mutual-fund fees, that is a major drag to long-term performance.
If you do that and still want to invest in coins, you're at least a much better-informed investor.
I would bet (my final bet!) that less than 1% of coin investors have ever taken the time to do something like that.
Supercoin: I strongly disagree. I can "overpay" and buy a roll of 1954(p) Lincoln Cents for $50 (they can be had for $10 or less) and possibly "cherrypick" out a $4,000 MS67RD (a $1 cost coin). I can buy a 1954(s) roll of nickels for $40 ($1/coin) and pluck out a MS65FS (a $5000+ coin). I can buy a nice Memorial Cent in a flip at a coin show for $3 that will slab out at $1000. And, what did you pay for your 1971(p) Ike again you bought in a coin store in a flip that graded MS66 (a $3000 coin)?? And, of course, I won't even mention varieties, doubled dies, errors, etc. because you already conceeded those can result in incredible returns.
These are very exciting times in the coin hobby and I hear almost every week about a collector or dealer buying a coin for $3 that transforms into a "four figure coin" due to the advent of the "value added" grading companies,a luxury Benson did not enjoy when he was buying up $3 coins.
But again, that's a very different activity than paying $4000 for that MS67RD and holding it for 30 years. Or similarly, hanging onto it after making it yourself when you could have sold it. That 40,000% return is not likely to be sustainable on an annual basis.
If in fact they were cherry-picks like my Ike or your Lincoln, then he shoulda flipped them immediately and put the money in stocks.
On the other hand -- as a collector -- I sure wish I had my Ike back. Sold it for far less than $3000 too, hmm...
Aahh! Sorry! Just had to make one more comment to oreville, then hopefully I will stop!
Oreville, you mention that many seniors need dividends, so they bought those kinds of stocks. Here are a few problems:
1. Coins certainly don't pay dividends so its hardly fair comparing coin investing to stock with dividends investing. Once again, for long term gains, you need to bascially ignore dividends, and if you really need the money now, neither stocks or coins are very good.
2. Those seniors who bought in the late 1960s should have started accumulating stocks in the 1940s (after the war anyways!) and 1950s (some of their prime working years), and they would have made a bundle of money in the 1950s and early 1960s. True, you can't just start at 70 years old investing in stocks and think you will make a bundle by the time you are 80 for sure.
JJacks
20 years with no change in the index after the '87 crash. That was a bad 20 years to hold individual stocks. And in fact they did STINK
for nearly any average portfolio. And I agree with Oreville.
Most portfolios being sold and held long term did not fare well.
If not for the 90's, stocks would still stink. Stock holders were vindicated in the 90's. Now if they only bailed before the 90's ended.
Using the DOW averages through 2002 still radically skews any return on the DOW for the past 20-60 years. What if the DOW skids down to 5000 or even 2500 to make more sense of PE's.
What would those 8-10% rates of returns look like? Let's wait for the next few years to play out before everyone decides that stocks
are a guaranteed long term play at 8-10%. People weren't saying this in the 60's and 70's that's for sure.
Oreville, thanks for putting out some useful info. Your portfolio more closely matches what was really happening in the 60's to 80's.
I may be naive but I don't think many people were doing Index funds until the 1990's when it became chic. To keep saying anyone with a brain could have easily moved their portfolio around as the DOW changed over the years is being sort of absurb since few probably did it. It wasn't chic then either. Stocks were being held very long term. My Dad never sold a thing until he passed away a year ago. His Dad did the same thing. I think he was very typical of stock holders in this period. Buy and forget about it. It wasn't a bad strategy really. They made out well. But......don't forget that uncle Sam takes 50% or more of your estate away from you when you make serious money in stocks and let it accumulate. Capital gains in the shorter term. In my Dad's case 50% of what he made disappeared to unavoidable estate taxes. What does that do to the 8-10% average gain guys? I think I'd rather pay my $48 a year safe deposit box fee and leave it at that.
Unless you're a Soprano, donate your estate away or own your own foundation (Kennedys) you cannot escape up to 1/2 of that money. You cannot keep it all yourself. And, yeah, you're a criminal if you don't report your coin profits, but it's up to YOU whether you do or not. With stocks, UNCLE is taking his cut unless you pass it on to your spouse or plan carefully enough to lower your estate by giving out $11K gifts each year. Talk about the game being rigged!!!!!!
roadrunner
OLD THREAD ALERT
Great discussion by some major players
Good to see Laura's comments here, and I can't argue with what she is saying. But I'm glad to have almost all the US I want (much of it bought from her), and am moving to the dark side.
The opportunities there are almost endless and gem material sells for 5-15% of comparable US. The US market has been sliced, diced, and minced in a thousand ways...crack outs, massive premiums for toners and die varieties, people trying to make every strike variation into a new variety or a double die, etc.
Coins are looking better since the market has dropped from 27000 to 23000. I'm glad I don't have all my eggs in one basket.
Overland Trail Collection Showcase
Dahlonega Type Set-2008 PCGS Best Exhibited Set
as long as you buy during the e bucks promos and buy the right coins, you will do ok, at least break even
One thing that stocks can do that coins can't is to go to zero. Look and see what GM stock is worth. They took out bankruptcy - their stock - probably the safest and best performing stock of all time - became worth less than the paper it was printed on. I don't think people realize that the GM of today is not the same company that built Oldsmobiles and Pontiacs.
True that coins will retain at least some nominal value, but whether you end up with 0% or .01% of the price paid is kind of immaterial. I agree that it is much more likely that a stock will lose most of its value than a coin will. Other points in your post are inaccurate. GM is far from the best performing stock of all time and I’m not sure how you measure safe but GM is not going to be near the top of that list either. Yes, companies sometimes do go bankrupt, even “safe” ones. Anyway, since the bailout of GM the stock has been fairly steady and the company is profitable again. It has a market cap of $53B.
But the GM of today is not the GM of the past. Completely different companies. GM filed for Chapter 11 reorganization on June 8, 2009, so all of their stock became worthless. Show me a coin (fiat currency not allowed), that has gone to zero. GM was the bull of the NYSE. It made it through depressions and recessions, becoming stronger each time.
But, since it went to 0, it wasn't the strongest. Like US Steel, Sears, etc.
This is not true. The stock shares are different but the company is the same. Same plants, same employees, same offices, etc.
Anyway, I agree that stocks can go to 0 and coins virtually never lose even 90% of their value. Some coins have lost a lot over the years, but even 50-D nickels (to pick one) are still worth a few bucks each. As for GM being the bull of the NYSE, that is also false. It was not a good stock for the last 50 years of its existence. Certainly not in the league of IBM or Walmart or 3M or Exxon Mobil. Sears is also on the verge of bankruptcy. Not sure where you are going there.
I do see them losing value. Look at coin shows as an example mostly a much older crowd and will be selling out at some point increasing available supply of given item and not enough buyers to take their place.
Then the same would be true of stocks, bonds, antique automobiles. With the demographics changing and no one to pick up the slack for the Baby Boomers diminishing, there will be no one to buy up the available stocks. And fewer to pay into Social Security and Medicaid/Medicare - hence our economic issues in the near future.
Regards this thread since the posts made in 2002 the stock market has done fabulous .
Which helped fund some coins I bought as a hobby !
I give away money. I collect money.
I don’t love money . I do love the Lord God.