Coin Collector Math: Lesson 1

Singapore

If you buy a coin for $100 and sell it for $80, you've lost $20.

However, if you buy a coin for $100, and then later see a better one for $120, you can trade the old one PLUS kick in $40 for the new one and obtain a really good coin for just $40. See? Its a little like how banks increase the money supply that we learned in first year economics.

Now, if you take your $120 coin, keep it for 3 years and then decide to place it in an auction, and it hammers for $125, you have just made $5 on the coin, because of course the sellers fee and all related mailing and insurance costs are considered 'money I would have blown anyway, and besides we just won't eat out as often this month' and you don't worry about those.

This is also true for any fees or costs incurred having a coin graded. If you spend $400 repeatedly cracking out an 1884-CC dollar to get in into an MS-63 holder, you don't consider this part of the acquisition cost of the coin. Rather this is considered 'money that just isn't there anymore'.

Now, if you do buy a coin for $100, and ultimately sell it outright for $450 later that day, this is considered a huge windfall which must then be used to immediately buy 7 new coins all of which will fall into a category I like to call 'crap that is extremely overpriced'.

In lesson 2 I'll cover 'hiding receipts from your wife' and 'the layaway plan: an excellent way to buy something you can't possibly afford'.

wingedliberty

I like the last paragraph.

Brian.

jeffnpcb

The math is confusing but I agree that by your figures trends mess it all up. If you stay with low mintages and rare ones it will all work out. The downside is most married men die before their wives, so if you hide invoices, sales reciepts, etc. make sure you have a good inventory system and an emergency number she can call to cash out your collection. Those round the world cruises are expensive!!

DHeath

Singapore, ......shut up! My wife reads the boards sometimes. LOL

meos1

My standard response to "When did you buy that?" is "I didn't, I did a deal" What I don't tell her is that the deal is I only tell you the truth if I have to or if I need practice.


Dan

Dog97

I use a modified version of the Singapore method.
I don't count shipping, eBay fees, PayPal fees and all that in my total cost. That way I think I did good. Sometimes I make a profit that way.

truthteller

Sounds like Bush-o-nomics.


TRUTH

ColonialCoinUnion

I think this is pretty much the most accurate and realistic post about coin collecting that I've ever read (notwithstanding the fact that I was the author).

mgoodm3

Thank you teacher. I am awaiting lesson two.

BAJJERFAN

I figure everything into the cost of the coin: money orders, postge, insurance, etc because its money I likely would not have spent that way otherwise. Besides if you were a business you would have to. Also if most people didn't care there wouldn't be so much grousing over excessive S&H fees.

<<"The math is confusing but I agree that by your figures trends mess it all up. If you stay with low mintages and rare ones it will all work out. The downside is most married men die before their wives, so if you hide invoices, sales reciepts, etc. make sure you have a good inventory system and an emergency number she can call to cash out your collection. Those round the world cruises are expensive!!">>

The reason that most married men die before their wives is cuz they want to.

Newmismatist

Hmmm! Which method do you use to report your profits and losses on your tax return?

BigAl

did you work in Enron's accounting dept.?

dan1ecu

Hi, Singapore - I have indeed found myself thinking as you've described. It's probably human nature... Good post!

Dan