"Buy the best that you can afford" ???
MrEureka
Posts: 23,936 ✭✭✭✭✭
I've heard this said hundreds of times over the past 40+ years. Early on, it sounded like obvious advice. Today, I disagree.
My advice is to never compromise on quality. Not that you have to buy the finest known. Nothing wrong with collecting Lincoln Cents or Buffalo Nickels in VF, even if you can afford better. But you should never buy a coin that you do not completely like.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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I have never completely agreed with that. Or the corollary: you can never overpay for the finest. Oh, I think you can overpay for anything...
Maybe a slight re-wording: buy the best that you can enjoy, taking into account value and your budget.
"Look up, old boy, and see what you get." -William Bonney.
"Afford" is an interesting word, especially when coin prices get into the range of additional cars and real estate.
I totally agree with you. I try to buy the coins that I desire with the high eye appeal thats original with very nice surface quality. Anything less, I pass and wait. Others sometimes don't understand my patience but thats the way I collect.
I prefer 'buy the best coin for the grade' that you can afford. And when I think of afford in that phrase, it is in relation to one's coin budget for that coin
Some won't put more than 1% of their net worth into coins, some will put 90%
I think the real answer might be something abstract like "buy the coin that gives you the best cost/pleasure ratio".
But objective goals (obtaining the highest grade) seem more rational to new collectors (even if that grade is based on subjective premises)
I feel sorry for anyone that pours 90% of their net worth into this hobby or any one class of asset.
I've heard that a lot......mostly from dealers. Sometimes it works out, sometimes not. I've done well on some low grade coins even though I could have spent more. And the converse is also true - some expensive purchases didn't work out as well.
How sorry do you feel for Warren Buffet with 90% of his net worth tied up in the stock market? Or how about Mark Zuckerberg? Or some other Tech CEO's? Bill Gates probably met the 90% rule for much of his active MicroSoft career. I'm sure there are probably some top notch collectors with 90% of their wealth sitting in rare coins....who have done just fine....if not exceedingly well. I wonder how much of John Pittman's estate was in rare coins? Or James A. Stack? To name a few. There are probably some major/well known coin dealers/collectors of the past 150 years who met the 90% rule....most of them probably succeeding. What about the Stack family on NYC? B. Max Mehl? Abe Kosoff? John J. Ford? Gotta be some in the high group who met the 90% rule. I don't feel sorry for any of these guys. They all did very well.
But sometimes you don't have a choice if you want to complete a set with coins that have a similar level of preservation. I've posted 1834 crosslet 4 $5 gold before. It's in an MS-61 holder now and was once in an AU-58. holder. I agree with an AU-55 or 58 grade, but if I am going to complete the set and not break the bank or die of old age waiting for the "perfect one" to come to market, I ended up buying this one. It would be great if the world was perfect.
Those are anomalies and extreme exceptions. For everyone like this who do not diversify (not limited to coins), there are thousands that have gone bankrupt. At least with real estate, you can generate revenue that is liquid while keeping the asset (e.g. rental income). With coins and similar assets, there is no cash flow until liquidation.
Buy the best coin that you can understand.
My 1866 Philly Mint Set
You didn't mention any "exceptions" in your first post. And if you can find thousands (I doubt it though) that have gone bankrupt being 90% invested as coin dealers/investors/collectors, then I'm certain there are thousands or more who have done very well going that route. Many successful dealers over the years have been collectors as well, many of them keeping most everything they own tied up in coins. Anyone going the 70-95% route generally has built up excellent numismatic knowledge along the way to survive on. A lot of these types don't always trust other financial markets where others have a hand on their assets. I'd bet there are a lot more than you think, with the majority of them being successful at what they do. I have to feel that many of the B&M shop owners I've known over the years do that very thing. Where things go wrong is where hot shot dealers take out heavy loans and leverage on their coin businesses/inventory, and wind up in the tank. This is not how most dealers and top collectors/investors play the game
Buy the best you can afford BUT, sometimes, the best is not in the highest graded plastic.
Trust your own preferences and knowledge.
So, I say buy the best that you LIKE, even if, it is in a lower grade than certain others within your budget.
“I may not believe in myself but I believe in what I’m doing” ~Jimmy Page~
My Full Walker Registry Set (1916-1947)
https://www.ngccoin.com/registry/competitive-sets/16292/
Tough one...I've learned a lot by buying coins I don't completely like (now) but loved when I bought them. This process also taught me what I like and don't like.
I think something that many people don't talk about is the fact that taking up numismatics more seriously will expose you to making bad decisions, from which you will learn, and will be able to provide sage advice to others who can't possibly understand 40+ years of advice wrapped up into 1-2 sentences.
The fact is I wear my mistakes as a proud badge -- and it is because of them that I am much better today after having made them. Do I have a regrets -- a few, but they are stepping stones without which I wouldn't know what I "completely like"
I like your advice @MrEureka and coming from you it shouldn't be quickly dismissed.
Funny that this very situation happened to me today between two coins competing for my attention, at the high end of my range.
I went with the one that I have no regrets about even though I was strongly tempted by the sexier one that had issues.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
I have gotten coins that I love only by having coins that I didn't completely like available to trade....and I own others that are completely irreplaceable that I don't completely like - so I'm not sure that's the best advice. Certainly with common coins - but the truly rare stuff?
I also think that one rule doesn't fit all situations but the OP's is a good base for me....common coins.
The coins I was struggling with today were common circulated Seated Dollars.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
On "rare" stuff, I consider the ACTUAL rarity far more significant than condition rarity.
LIke a circulated Territorial gold piece that shows some history compared to one that is maybe a higher grade but less believable than a "used" one.
MONEY can buy a condition census coin.
Other than the number it doesn't mean it's a significant coin.
Budget Collectors or Budget Buyers always Buy the Best they Like or can Afford. Nice 64's or 65's have always worked for me. A well priced 66 could slip in there though or a Really well priced 67 might get some attention. Finest for the grade do not even get a look.
Ken
Maybe it needs to take into account a broader picture. Let's assume first that we're only talking about hobby money (yes, I could buy some really nice stuff if I turned all my assets into cash, but that's not realistic). With that in mind, now there is a set pool of money that can be spent, and likely (another assumption) more coins desired than can be afforded. The real question is what's the optimal quality level for each desired coin that maximizes quality and quantity.
First, I firmly believe that there shouldn't be any wavering on quality for a grade. If you're going to get a good or a gem unc, it should be nice for what it is. If you can choose between a superb VF20 or an ugly VF30, get the 20. From there, it's a balancing equation. If we grade coins as A, B, or C (corresponding to different grades with various price levels), maybe you can get one A and use up your budget, or perhaps a couple B's and a few more C's for the same amount.
So yes, buy the best quality for a grade, but determine the "best you can afford" as a function of the various coins you want, not a decision to be made for each coin in a vacuum.
I think of the concept as, "buy the best coin that it makes sense to buy."
I could afford a lot better coins if I cashed in my house or 401k., but a grade or three down from the best I could conceivably afford might be the best value before a big price jump for another grade point.
Liberty: Parent of Science & Industry
The best common dates at a premium works well for dealers. I think you need to decide your goals and exit strategy before you dive in to deep.
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
Q D Bowers talks about the 'optimal grade' of a coin per issue. Those words always rang true with me and I practice this strategy a lot. This means at what point does the quality per buck start to severely diminish?
For example--a 1941 P WLH in 67 only costs about $350 more than a 66, so I bought it. A 68 is multiple times more expense and the quality difference is very slight to my eyes. Same concept with a 1935 D or S Walker in 65 or 66 versus a 66+ or 67. That's why my early dates are almost exclusively 64s. My middle dates are 65 and 66s and my short set is mostly 66 or 67s. I still must agree with the grades, though, and if they are undergraded, then all the better.
“I may not believe in myself but I believe in what I’m doing” ~Jimmy Page~
My Full Walker Registry Set (1916-1947)
https://www.ngccoin.com/registry/competitive-sets/16292/
I'm always taking into consideration the total perceived number of people that could be a buyer for the coin. If the coin has a large collector base and demand for the piece then I don't get nervous putting my money into it. If I feel there is less than 5 players on a coin then I'm not going to be holding that looking for a way to get out alive.
There's a time and a place to plunk down the dough, gotta feel that one for yourself and not get snookered by a bumper sticker.
Many of the coins in my collection are rarer than 1804 Dollars. Some are low grade, and some even have holes, but their rarity and overall aesthetics carry the day. The key to liking them is knowing what else exists.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
At some level, you have to start buying the best investment
Coins are not an investment. They are purchases with discretionary funds.
The other thing you have to ask yourself is whether you think there will be a number of new coins for that grade that will be made in the not too distant future.
"Seu cabra da peste,
"Sou Mangueira......."
That's true for some people, but certainly not for everybody.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I dunno. "Buy the best you can afford" sounds wise, but on closer inspection it's probably better advice for the dealer to be giving than for the neophyte buyer to be receiving.
I say buy what you understand, and this holds true across asset classes. It's no sin to acquire a "C" coin for an assigned grade, as long as the price paid is commensurate with the quality of the coin. It's never seemed rational to me that a properly graded 65.1 coin is treated like it has leprosy and a 64.9 coin with pluses and stickers is trotted around like God himself should be trying to buy it. I say buy coins with uncommon attributes like textile-toned Morgans, 1921 Peace dollars with strong strikes, or SLQs with tremendous eye appeal.
One of my side projects is an album full of raw Walkers. If I wanted to, I'm sure I could afford and assemble a 5-6 figure collection within this series. But, it's a side project, and trading up from junk silver purchases or the occasional eBay mini-rip is enjoyable. If the primary goal was investing, I'd get out of coins completely. I'm just a guy trying to have fun, preserve as much of my outlay of funds as practical, meet nice folks, and learn about this great hobby as I go.
I recently started a collection of raw Standing Liberty Quarters. I'm targeting grades of VF to AU. Investment potential is irrelevant. If I were targeting gems, I'd have to consider the financial aspects of the collection.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I was thinking how to add to this conversation and read @BryceM's take.
You nailed it. Imo. Enough said.
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I have always been just a collector.... sure, I have some very nice coins... and I have a lot of mediocre coins... even some coins that likely would be best as give-aways. However, I like my coins and have had a lifetime of enjoyment with the hobby. I do not even consider selling them, and I have long since stopped checking values or list prices.... I buy what I like. Cheers, RickO
The grading system currently used only does an "ok" job at describing a coin's actual eye-appeal and state of preservation, but is inaccurate, and a moving target (it changes over time.)
For that reason, I am of the opinion that collectors should absolutely buy the coin for it's eye-appeal and surface preservation, and pretty much ignore the numeric grade entirely.
I view as buy the best your comfortable with spending for the coin to fill that hole.
I view coins like I view the cars in my GTAO Export / Import Garage.
For coins I view them as Standard Range - less than $100, Mid Range $100 to $300, Top Range over $300. At the show I set up at last weekend, sales were average to slow but I bought one in each range. 2 were offered to me by other dealers, one of those as I was packing up to go a really flashy PCGS 63 common date Morgan for $45. The other 2 coins were slabbed NGC and PCGS Modern World Gold Coins for around 7 pct over melt. One was bought from a bullion dealers table. The public had nothing to offer and for the most part broke. If they were doing any substantial buying it was modern issue gold coins close to melt - AGE, AGB, Pandas.
I don't believe it's any set formula, simply buy what's sensible with your budget.
It's an "investment" in your personal satisfaction.
It's never justifiable if it impinges on your secure future needs.
But so long as it doesn't, go for it.
I've been SOOOOOO happy since I had Russ sell my stuff I didn't even look at anymore.
This aptly illustrates the nuttiness that now permeates the hobby. Smoke, mirrors, and money cause people in both the
business and collecting ends of the hobby to cast aside common sense.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
I view as buy the best your comfortable with spending for the coin to fill that hole.
I agree with this, as a variant of 'buy the best you can understand'.
Sure I can have afforded late date walkers in MS 66/67 15 years+ ago, when they were priced much higher than they are now, but chose instead to stick with ~MS 64 coins, and using my resources to buy the early dates in AU/low MS. I have upgraded some of these later dates to 65/66 now that prices have come down substantially.
With large cents, I have some coins in genny holders....but the coins I chose have minor issues (i.e., I've seen worse examples in graded holders), were priced right, and generally are R4 varieties.
It has more to do with the price differences between discrete grades. That 65.1 might be $8,000 against a priceguide value of $10,000 but the 64.9 might be $4,000 against a priceguide value of $2,000. All because pricing is at whole grades.
I understand that you sold off your 5 rolls of 1912-S nickels just to illustrate this point.
I fully understand that. However, one has to first place a lot of faith in the grades (whole or fractional, it does not matter). There are too many buyers who bid in accordance with what is on a slab insert or even based on what they see others bidding, rather than their own informed opinion of a coin and its place in the pecking order. The game is interesting, in a perverse way.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
About the only collection that I have consistently added to over the years, are circulated Indian Head Cents.
Buying the best I can afford doesn't apply.
Spending $10 or $40 on a VF/AU makes most decisions very easy.
For me, it's the thrill of applying all of this useless CPG knowledge and turning it into a treasure hunt.
The OP's advice to really like a coin before you buy it makes a lot of sense. One of my favorite dealers offered me 3 coins I wanted for the type set. I looked at all 3 and said, "I think this one is the best coin, but...." He said, give me that one, you don't it." When I asked why, he replied, "Because I've found that a little "but" now will be a larger and larger "but" later and I want you to have something you really like."
Get this, my first stop at a show was to his table and I picked out 3 or 4 coins from his inventory. I started to pull out my check book and he said, 'Wait a minute, you just got here. I'll hold these coins for you, you might find something you like better elsewhere in the show." That's a dealer who wants you to be happy with your collection!
Louis Armstrong