Greg Manning, Barron's, and an Inflated Collectibles Market
Sequitur
Posts: 1,195
I am particularly interested in this because it touches upon an area of my expertise, securities fraud. If you're not familiar with the article, Barron's ran a story raising questions about Greg Manning Auctions relationship with a third party and its ownership stake in Greg Manning, and raising questions about Greg Manning juicing its publicly reported financials, including cash flow from operations (a key indicator of a company's health, from a financial point of view). Also note Greg Manning prepared a written response to the Barron's article, and in particular took exception to Barron's stamp and coin expert, Robert Campbell Rowe.
Concerning the coin market and publicly traded auction companies, here is Barron's take:
"But Rowe, the retired publisher, sees big hurdles. 'For the serious investor and rare stamp collector, the name of the game is scarcity,' he says, and that's getting harder to come by. Collecting has been turned on its head by the Internet. Collectors around the world are suddenly coming out of the woodwork with stamps and coins previously thought to be rare or almost nonexistent.
"The outlook for rare coins isn't so bright either. Though coins have been lifted nicely in the past 18 months by rising prices for gold and precious metals, rising interest rates threaten to choke off demand. When interest rates are low, investors turn to coins, stamps and other collectibles for returns. But as rates rise, they go back to traditional financial investments.
"Getting consumers interested in collectibles is only part of the battle for companies like Manning. 'It's even harder to sell Wall Street on the idea,' Rowe says. 'Virtually all publicly owned companies with the bulk of their business based on collecting ultimately fail,' he says. For instance, Score Board, a sports-card dealer, went under four years ago because of a sharp sales fall."
Concerning the coin market and publicly traded auction companies, here is Barron's take:
"But Rowe, the retired publisher, sees big hurdles. 'For the serious investor and rare stamp collector, the name of the game is scarcity,' he says, and that's getting harder to come by. Collecting has been turned on its head by the Internet. Collectors around the world are suddenly coming out of the woodwork with stamps and coins previously thought to be rare or almost nonexistent.
"The outlook for rare coins isn't so bright either. Though coins have been lifted nicely in the past 18 months by rising prices for gold and precious metals, rising interest rates threaten to choke off demand. When interest rates are low, investors turn to coins, stamps and other collectibles for returns. But as rates rise, they go back to traditional financial investments.
"Getting consumers interested in collectibles is only part of the battle for companies like Manning. 'It's even harder to sell Wall Street on the idea,' Rowe says. 'Virtually all publicly owned companies with the bulk of their business based on collecting ultimately fail,' he says. For instance, Score Board, a sports-card dealer, went under four years ago because of a sharp sales fall."
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Anyway, the title of the Barron's piece is "Return To Sender," dated 27 September 2004 by Neil A. Martin.
This article still is publicly available.
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The guy may be a retired publisher but he doesn't know squat about coins. What scarce coins have been flooding ebay that I'm not aware of? I've bought one truly scarce seated coin on ebay in 2 years. Yes, the flood gates are certainly open! Non-existant? Who is kidding whom? Maybe he means the "rare" shipwreck effect half dollars that have been "hidden" for 150 years! What was scarce and rare 10 years ago, is still pretty darn scarce and rare today.
"The outlook for rare coins isn't so bright either. Though coins have been lifted nicely in the past 18 months by rising prices for gold and precious metals, rising interest rates threaten to choke off demand. When interest rates are low, investors turn to coins, stamps and other collectibles for returns. But as rates rise, they go back to traditional financial investments.
This joker must not have realized that when coins were going through the roof in 1979 and early 1980, interest rates were close to all-time highs. It takes a lot of interest rate movement to stop inflation and tangibles in their tracks. In the same vein, don't think a 1,2, or 3% rise in rates from here is going to end the party. It took close to 18% to end the party in 1980. Let's get real Mr. Publisher.
roadrunner