I agree, but without seeing the actual portfolio in question, it's impossible to know how much positive selection (or "survivor bias" - another great term!) went into the portfolio.
Since the author is dealing with investors, I suspect that CoinRaritiesOnline is correct in suggesting that any actual portfolio is more likely to include such things as high-grade rare-date Liberty Seated Quarters that few collectors would be likely to buy.
On the other hand, with the presence of the Registry sets, perhaps such coins now have more of a market than they did?
<< <i>Bidask, I think a number of posters are saying that even if in theory/on paper, one believes coins might make for a good investment, the practical reality is that it usually doesn't work out that way. That is because there are a number of real-world variables/factors/influences which are likley to erase or at least reduce any potential gains. >>
Could you have put together a nice portfolio of rare coins 7 to 10 years ago that would have appreciated to overcome the factors and variables you mentioned ? If someone came to you WITH ALOT OF MONEY and asked you to use your professional experience to put together a portfolio today that they would be willing to hold for investment purposes to sell opportunistically over the next 7 to 10 years and it represented a small portion of their overall asset allocation would you discourage them by saying rare coins are not a good investment? I am talking about wealthy people who do not have to sell in down markets. Sure the market for rare coins can go down but who is to say the market may not get hotter? Do you believe in long term rare coin investment? >>
I doubt any beginners are still reading, but if they are...
Unfortunately, most wealthy people looking to invest in coins do not find a good honest dealer. They usually find a telemarketer or a scam artist or a dealer who does a nice song and dance but delivers crap coins at high prices. The markup often exceeds the 40% mentioned. The paper markup on the investment statements might be lower, but the real world markup often far exceeds 40%. The end result is that they get taken to the cleaners--that is the UGLY history of real world coin investors who don't want to learn about the hobby.
Yes, there have been many collectors that have done fairly well. However, almost all of them had a talent for grading, an eye for quality, loved the hobby, and spent hours and hours studying coins and making contacts. Money alone, without the knowledge and desire, will usually result in a big loss. Again, that is the real world track record, not some academic paper written by someone who probably has never looked at a coin under a loupe.
Here is a link to a real world example that has been mentioned before in the newsgroup: link to Doug Winter's article The collector who lost 40% of his million dollars had more knowledge than the average newbie investor. The collector who doubled his money fits the profile mentioned above: an eye for quality, talent for grading, loved the hobby and spent hours and hours learning about coins.
Again, beginners, run for the hills if your dealer is quoting stuff like the article in the original post, the odds are stacked against you.
Look, it is fine to warn wannabee investors about the pitfalls of investing. The abstract points out numerous pitfalls. But I take issue with your notion that most wealthy beginners would fall scam to telemarketers, etc. Most wealthy people I know got there buy hard work and scrutiny over what they are buying. Most wealthy people I know are willing to pay for advice. I work with them. Read the abstract section on Investability. I thought Doug Winter's blog is good. Good professionals like him or others can be hired. Beginner wannabee investors don't have to re-invent the wheel. People will remain your client if you as a professional offers value and service. If I were a professional coin dealer I would have no hesitation in making 25 copies of this thing and show it to my best clients and have a discussion. If I did not have the right clients to show too, then I would retain this article and seek the wealthier client. Then after passing out 25 copies to 25 right, sophisticated investors, I would print 25 more and start the process all over again. The successful high end dealer will understand this and not be afraid of promoting rare coins for the long term. The true wannabee investor has to be willing to pay for advice in some manner and bears the responsibility to seek out the honest, knowledgeable professional coin dealer who deals in quality rare coins and who will be a true marketmaker at a reasonable spread. ( that includes a dealer's ability to recommend saying no if the right coins cannot be found). To suggest for begginners to run away is silly.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
<< <i>Look, it is fine to warn wannabee investors about the pitfalls of investing. The abstract points out numerous pitfalls. But I take issue with your notion that most wealthy beginners would fall scam to telemarketers, etc. Most wealthy people I know got there buy hard work and scrutiny over what they are buying. ... To suggest for begginners to run away is silly. >>
Again, beginners, look at what has been presented here. This Bidask person is pushing a very hardline on this investment angle and suggesting it is safe for wealthy beginners despite the poor real world track record filled with horror stories. Every established dealer on this board can rattle off dozens of horror stories about wealthy people that fell prey to scammers or telemarketers hawking coins as investments. I don't know what ax Bidask is here to grind, but in my opinion he/she is not here to help beginners. Not when I see the volume of posts, and the ferocity he/she defends their questionable position.
For beginners, I beg you, find a dealer who knows coins and doesn't talk up the investment side. If you are working with a dealer who spends a lot of time quoting stuff such as the article in the original post, they don't have your best interest at heart. The history is that such folks are probably looking to take you for a ride at your expense. That is the unfortunate and very ugly real world track record not an academic paper. There may be one or two or three exceptions to that, but as a general rule it is true. There is no way a beginner will know if they are being taken unless they take the considerable time to learn about the hobby. The song and dance routine of the scammers is that good, that polished, that smooth. They quote academic articles, and come up with phony investment statements while your ride is in progress. Only after the ride is over does the emperor have no clothes and the beginner's bank account has been drained.
Again, run for your lives, if your dealer is quoting stuff like the original post. Find a dealer interested in coins, that knows coins, that doesn't talk up the investment potential. Beginners, I have no ax to grind, no financial gain possible from you following my suggestion. I'll let the readers decide who is being silly.
Comments
<< <i>bidask,
You're right - I've corrected my post to change "seven years" to "four years".
(That's what happens when I punch the wrong number into the calculator!
Oh, I guess it was just an accident.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I agree, but without seeing the actual portfolio in question, it's impossible to know how much positive selection (or "survivor bias" - another great term!) went into the portfolio.
Since the author is dealing with investors, I suspect that CoinRaritiesOnline is correct in suggesting that any actual portfolio is more likely to include such things as high-grade rare-date Liberty Seated Quarters that few collectors would be likely to buy.
On the other hand, with the presence of the Registry sets, perhaps such coins now have more of a market than they did?
Check out the Southern Gold Society
<< <i>
<< <i>Bidask, I think a number of posters are saying that even if in theory/on paper, one believes coins might make for a good investment, the practical reality is that it usually doesn't work out that way. That is because there are a number of real-world variables/factors/influences which are likley to erase or at least reduce any potential gains. >>
Could you have put together a nice portfolio of rare coins 7 to 10 years ago that would have appreciated to overcome the factors and variables you mentioned ? If someone came to you WITH ALOT OF MONEY and asked you to use your professional experience to put together a portfolio today that they would be willing to hold for investment purposes to sell opportunistically over the next 7 to 10 years and it represented a small portion of their overall asset allocation would you discourage them by saying rare coins are not a good investment? I am talking about wealthy people who do not have to sell in down markets. Sure the market for rare coins can go down but who is to say the market may not get hotter? Do you believe in long term rare coin investment? >>
I doubt any beginners are still reading, but if they are...
Unfortunately, most wealthy people looking to invest in coins do not find a good honest dealer. They usually find a telemarketer or a scam artist or a dealer who does a nice song and dance but delivers crap coins at high prices. The markup often exceeds the 40% mentioned. The paper markup on the investment statements might be lower, but the real world markup often far exceeds 40%. The end result is that they get taken to the cleaners--that is the UGLY history of real world coin investors who don't want to learn about the hobby.
Yes, there have been many collectors that have done fairly well. However, almost all of them had a talent for grading, an eye for quality, loved the hobby, and spent hours and hours studying coins and making contacts. Money alone, without the knowledge and desire, will usually result in a big loss. Again, that is the real world track record, not some academic paper written by someone who probably has never looked at a coin under a loupe.
Here is a link to a real world example that has been mentioned before in the newsgroup:
link to Doug Winter's article
The collector who lost 40% of his million dollars had more knowledge than the average newbie investor. The collector who doubled his money fits the profile mentioned above: an eye for quality, talent for grading, loved the hobby and spent hours and hours learning about coins.
Again, beginners, run for the hills if your dealer is quoting stuff like the article in the original post, the odds are stacked against you.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>Look, it is fine to warn wannabee investors about the pitfalls of investing. The abstract points out numerous pitfalls. But I take issue with your notion that most wealthy beginners would fall scam to telemarketers, etc. Most wealthy people I know got there buy hard work and scrutiny over what they are buying. ... To suggest for begginners to run away is silly. >>
Again, beginners, look at what has been presented here. This Bidask person is pushing a very hardline on this investment angle and suggesting it is safe for wealthy beginners despite the poor real world track record filled with horror stories. Every established dealer on this board can rattle off dozens of horror stories about wealthy people that fell prey to scammers or telemarketers hawking coins as investments. I don't know what ax Bidask is here to grind, but in my opinion he/she is not here to help beginners. Not when I see the volume of posts, and the ferocity he/she defends their questionable position.
For beginners, I beg you, find a dealer who knows coins and doesn't talk up the investment side. If you are working with a dealer who spends a lot of time quoting stuff such as the article in the original post, they don't have your best interest at heart. The history is that such folks are probably looking to take you for a ride at your expense. That is the unfortunate and very ugly real world track record not an academic paper. There may be one or two or three exceptions to that, but as a general rule it is true. There is no way a beginner will know if they are being taken unless they take the considerable time to learn about the hobby. The song and dance routine of the scammers is that good, that polished, that smooth. They quote academic articles, and come up with phony investment statements while your ride is in progress. Only after the ride is over does the emperor have no clothes and the beginner's bank account has been drained.
Again, run for your lives, if your dealer is quoting stuff like the original post. Find a dealer interested in coins, that knows coins, that doesn't talk up the investment potential. Beginners, I have no ax to grind, no financial gain possible from you following my suggestion. I'll let the readers decide who is being silly.