I was once "all in" as I never trusted Wall Street and paper assets with over 500 ozs in gold or $20 gold all told, with lots of silver eagles and platinum as well. That style of investment is even rejected by noted gold bugs. Suffice it to say I refined my extreme position.
@logger7 said:
I was once "all in" as I never trusted Wall Street and paper assets with over 500 ozs in gold or $20 gold all told, with lots of silver eagles and platinum as well. That style of investment is even rejected by noted gold bugs. Suffice it to say I refined my extreme position.
Any single asset class is just riskier than diversification. Your former portfolio of all PMs did pretty well from 2000 to 2020 overall. Not so well from 2010 to 2020. From 2020 to 2030???
I'm all for everyone doing whatever they want. If you (generically) want to be 100% in coins, be my guest. But you should at least acknowledge the riskiness of the position.
I'm a coin dealer. with a crack-out artist's sense of arbitrage, A good "eye" and a math geek. Once both of my daughter's Masters degrees were paid for, I went to about 125%. While I used to be big, now I'm just fat, so I'm down to 5%
"People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf." - Geo. Orwell
Let me tell you another true story. This is another reason I'm not a huge fan of hoarding any non-performing asset like coins or PMs.
My father never liked investing in stocks. His whole life he was overweighted in cash and bonds. Well, in 1978, he decided to invest in Kodak. We live in Rochester. Rochester was a Kodak town. He paid $120 per share for 100 shares of Kodak stock. That was very near its all-time peak. Well, my father is a hoarder so he kept that stock and never sold it even though he was technically in the red the entire time he owned it from 1978 until about 2010 when he finally closed out the position with the stock worth single digits and took the $10,000 capital loss.
HOWEVER, my father actually averaged 4.5% per year in total returns over that entire 32 year period after subtracting the $10,000 capital loss! How, you might ask? Because Kodak was a generous dividend payer. And when they spun off Eastman Chemical and J&J he got more shares. So, because it was a performing value stock rather than a pile of gold, he made decent money on it even though the asset itself eventually got to zero.
That is the problem with long-term inventory. It is a non-performing asset with any future profit tied strictly to appreciation. The longer you hold it, the more you need to get for it.
As wealth climbs, I think the percentages can too, if that's what makes you happy. Making sure we have funded the real priorities and not counting on coins to fund our retirement is probably most prudent.
True
There is a big difference between someone worth $10MM with a $5MM collection versus being worth $100K with a $50K collection.
The first might have better cash flow and access to capital, but both are way overextended in numismatic holdings and risk losing their shirts.
I wouldn't do it myself. There are coins in my series I would like to buy, I have the money to buy many (if I can actually find it) but under my definition, no I cannot afford it.
@cameonut2011 said:
The interesting follow up question would be how much of your net worth is tied up in highly liquid U.S. coins? Like every other thread it is really goes back to liquidity and ultimately CAC. How much of your net worth is in PCGS-CAC coins?
Every $1k+ coin I have is CAC and either PCGS or NGC Fatty. I think I'm doing okay in that regard.
@MilesWaits said:
Who has the byline of “comparison is the Thief of joy?”
That’s where this thread is going.
One of my favorite quotes.
I would never have such a skewed investment allocation if i wasn't so well-situated on the non-coin front. This thread is not going to change my approach at all.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
@PocketArt said:
Not sure if it really matters as a collector unless you're married, or have kids, or, have other obligations outside your interest that would be priority.
Maybe if you never plan to retire, are confident you will be able to work until the day you die, and are in immaculate health and will stay that way at least until a short time before your demise. Nothing can wipe out net worth quite unlike unexpected illness. Having illiquid assets in excess just means a better chance of a fire sale where those gems will really cost you.
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector. Of course that goes out the window when you buy whole collections. Everything does have a price though.
I've been dealing over a quarter of a century now. I've weathered through what I consider 3 major slow downs. I've also had similar inventory ratios at times in my life @ColonelJessup mentions. I'm still here! I pulled every cent I had in the stock market and put it in coins in the late 90's. While I can't show it on paper, I would be willing to wager I outperformed the stock market easily by 500%. I consider myself successful and attribute that to the collector in me.
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector. Of course that goes out the window when you buy whole collections. Everything does have a price though.
I've been dealing over a quarter of a century now. I've weathered through what I consider 3 major slow downs. I've also had similar inventory ratios at times in my life @ColonelJessup mentions. I'm still here! I pulled every cent I had in the stock market and put it in coins in the late 90's. While I can't show it on paper, I would be willing to wager I outperformed the stock market easily by 500%. I consider myself successful and attribute that to the collector in me.
Did I just defend EOC?
The total return on the S&P500 from 1995 until today is 1120% $10,000 in 1995 would be worth $112,000 today.
Now, you CAN beat that, but not if you buy and held inventory for 25 years which is my point not EOC's. You beat that number with turnover, not holding, as most coins did not increase 1120% in that period.
We should discuss the difference between a business and a museum.
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector. Of course that goes out the window when you buy whole collections. Everything does have a price though.
I've been dealing over a quarter of a century now. I've weathered through what I consider 3 major slow downs. I've also had similar inventory ratios at times in my life @ColonelJessup mentions. I'm still here! I pulled every cent I had in the stock market and put it in coins in the late 90's. While I can't show it on paper, I would be willing to wager I outperformed the stock market easily by 500%. I consider myself successful and attribute that to the collector in me.
Did I just defend EOC?
The total return on the S&P500 from 1995 until today is 1120% $10,000 in 1995 would be worth $112,000 today.
Now, you CAN beat that, but not if you buy and held inventory for 25 years which is my point not EOC's. You beat that number with turnover, not holding, as most coins did not increase 1120% in that period.
We should discuss the difference between a business and a museum.
If someone is running a business for their livelihood, they need to back-out any salary they would otherwise receive working to compute net business profit. It's subjective but there is an opportunity cost and no one's time is actually free.
The results are frequently if not usually (much) lower when correctly taking this into account.
I think for a number of us it's a difficult question to get a concrete number for. If you're contributing to a 401k or similar retirement plan, then they have a value for the net worth of that asset on your quarterly statement. So, it's a bit easier to calculate how much other assets contribute to your overall net worth. I contribute to a State Pension Plan. It's a defined distribution after I retire, so the dollar value of that asset is a bit more difficult to get to.
Collecting: Dansco 7070; Middle Date Large Cents (VF-AU); Box of 20;
inventory has a cost and turnover increases efficiency and, therefore, profit.
There is that word again, "Turnover"
If your business is based solely on turnover then I feel sorry for you.
The entire bullion market is based on almost nothing but turnover. For most B&M operations, bullion pays the rent. But it only works because the turnover is 20 or 30.
I'm not attacking you. I'm not telling you to change your model. But for people considering this as a business, turnover and inventory costs are a huge issue. I'm not sure why you are taking this personally.
@lkenefic said:
I think for a number of us it's a difficult question to get a concrete number for. If you're contributing to a 401k or similar retirement plan, then they have a value for the net worth of that asset on your quarterly statement. So, it's a bit easier to calculate how much other assets contribute to your overall net worth. I contribute to a State Pension Plan. It's a defined distribution after I retire, so the dollar value of that asset is a bit more difficult to get to.
Usually you consider a 4 or 5% draw. Do you can estimate the value of your defined benefit pension by taking the annual payout and multiplying by 20.
This isn't perfect because, of course, what happens to that asset upon your death varies and so it is not the same as cash. You also have the solvency of the payer as a variable. But financial planners use a calculation like that to get a rough cash value to use to determine your overall asset allocation.
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector. Of course that goes out the window when you buy whole collections. Everything does have a price though.
I've been dealing over a quarter of a century now. I've weathered through what I consider 3 major slow downs. I've also had similar inventory ratios at times in my life @ColonelJessup mentions. I'm still here! I pulled every cent I had in the stock market and put it in coins in the late 90's. While I can't show it on paper, I would be willing to wager I outperformed the stock market easily by 500%. I consider myself successful and attribute that to the collector in me.
Did I just defend EOC?
The total return on the S&P500 from 1995 until today is 1120% $10,000 in 1995 would be worth $112,000 today.
Now, you CAN beat that, but not if you buy and held inventory for 25 years which is my point not EOC's. You beat that number with turnover, not holding, as most coins did not increase 1120% in that period.
We should discuss the difference between a business and a museum.
When you think of EOC, what type and quality of coins does he have?
When you think of jm, what type and quality of coins does he have?
A better question, from a business perspective, would be, “with whom would I partner with/invest in to maximize my return on investment.”
I had a major corporation contact me to work with them selling my unique coinage. I took a Zoom meeting with them. They sent me a contract. I declined the offer. I like my freedom.
@amwldcoin said:
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector.
All else equal, I'd prefer a business relationship with a dealer over a collector, as I'd rather have the opportunity to buy that cool coin the collector would keep for his collection.
@neildrobertson said:
I'm under 5% by design. My coin budget is set to keep things in the 2-4% range.
Bob Brinker had sort of a similar rule for asset classes, although it depends on how you interpret coins as asset classes. I think he would tell anyone who had more than 10% to sell immediately.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
I spend at least 90% of my part time job money on coins. I am still a collage kid who right now lives with a family that feeds me so why not buy rare and expensive coins that make me broke LOL
@amwldcoin said:
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector.
All else equal, I'd prefer a business relationship with a dealer over a collector, as I'd rather have the opportunity to buy that cool coin the collector would keep for his collection.
To be clear, I am a coin dealer and not a coin collector as every coin I own is for sale as in inventory.
I was a long-time coin collector until I became a coin dealer and all of my coins went into inventory as required.
I had a bunch of low-end stuff and I sold all of it off through very hard work. I have zero desire to buy or acquire any low-end stuff.
When I go to buy new business inventory, I am super selective and each coin must meet certain criteria. As if, I was putting that coin into my personal collection
@neildrobertson said:
I'm under 5% by design. My coin budget is set to keep things in the 2-4% range.
Bob Brinker had sort of a similar rule for asset classes, although it depends on how you interpret coins as asset classes. I think he would tell anyone who had more than 10% to sell immediately.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
Fair enough. I tend to feel collectors should consider their hobby sunk costs.
@neildrobertson said:
I'm under 5% by design. My coin budget is set to keep things in the 2-4% range.
Bob Brinker had sort of a similar rule for asset classes, although it depends on how you interpret coins as asset classes. I think he would tell anyone who had more than 10% to sell immediately.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
Fair enough. I tend to feel collectors should consider their hobby sunk costs.
I specifically chose coins as my main hobby because it can be configured to generate wealth rather than consume it relatively easily.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
@neildrobertson said:
I'm under 5% by design. My coin budget is set to keep things in the 2-4% range.
Bob Brinker had sort of a similar rule for asset classes, although it depends on how you interpret coins as asset classes. I think he would tell anyone who had more than 10% to sell immediately.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
Fair enough. I tend to feel collectors should consider their hobby sunk costs.
I specifically chose coins as my main hobby because it can be configured to generate wealth rather than consume it relatively easily.
It’s possible but I don’t know about the “easily” part. Coins have their role as a hobby, but for investments I prefer assets that generate passive income while owned.
@neildrobertson said:
I'm under 5% by design. My coin budget is set to keep things in the 2-4% range.
Bob Brinker had sort of a similar rule for asset classes, although it depends on how you interpret coins as asset classes. I think he would tell anyone who had more than 10% to sell immediately.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
Fair enough. I tend to feel collectors should consider their hobby sunk costs.
I specifically chose coins as my main hobby because it can be configured to generate wealth rather than consume it relatively easily.
It’s possible but I don’t know about the “easily” part. Coins have their role as a hobby, but for investments I prefer assets that generate passive income while owned.
I don't disagree with you, but I am not a high income individual at all. I do have investments that generate passive income (DRIPing until I retire) and whatever hobby I chose would have to pay for itself in one form or another.
For a sense of perspective, my discretionary income per biweekly paycheck is $85. That is not a lot. Coin collecting/flipping has allowed me to turn that small sliver of discretionary income into a 6 figure collection.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
@amwldcoin said:
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector.
All else equal, I'd prefer a business relationship with a dealer over a collector, as I'd rather have the opportunity to buy that cool coin the collector would keep for his collection.
To be clear, I am a coin dealer and not a coin collector as every coin I own is for sale as in inventory.
I was a long-time coin collector until I became a coin dealer and all of my coins went into inventory as required.
I had a bunch of low-end stuff and I sold all of it off through very hard work. I have zero desire to buy or acquire any low-end stuff.
When I go to buy new business inventory, I am super selective and each coin must meet certain criteria. As if, I was putting that coin into my personal collection
Is there ever when it comes to coins? Especially those not traded frequently. All I will say is I was hotly pursuing Russian coins and it got to the point that no matter what I bid I couldn't get anything. It was a WTH moment and consigned my collection to Heritage. While they only sold around 10% of my collection I was pleased when I got the rest back. I just priced it at prices realized and out the door they went. That was the busiest my tables ever have been for a year. I doubt that will happen again!
The stuff I bought 10 years prior was bringing 1000's of percent more than I paid for it!
Had a few Chinese coins do that as well!
Heck, most of the better World coins have done that! I even hit the Canadian market right when I sold my nearly complete collection(Missing 19 coins up to the 80's). The funny thing is few went to Canucks...they have to triple up as a dealer buying in the states!(my experience with the Canuck dealers) I wish I had my Canadian Large Cents back, most if not all were MS. I think I was to tough with my grading from what I've seen since I sold.
@amwldcoin said:
Is there ever when it comes to coins? Especially those not traded frequently. All I will say is I was hotly pursuing Russian coins and it got to the point that no matter what I bid I couldn't get anything. It was a WTH moment and consigned my collection to Heritage. While they only sold around 10% of my collection I was pleased when I got the rest back. I just priced it at prices realized and out the door they went. That was the busiest my tables ever have been for a year. I doubt that will happen again!
The stuff I bought 10 years prior was bringing 1000's of percent more than I paid for it!
Had a few Chinese coins do that as well!
Heck, most of the better World coins have done that! I even hit the Canadian market right when I sold my nearly complete collection(Missing 19 coins up to the 80's). The funny thing is few went to Canucks...they have to triple up as a dealer buying in the states!(my experience with the Canuck dealers) I wish I had my Canadian Large Cents back, most if not all were MS. I think I was to tough with my grading from what I've seen since I sold.
@amwldcoin said:
Some of the Russian coins I bought exceeded your model!
There is no financial scale to your example.
There is some scale for some US coinage and a few select areas in world coinage for a low number of (somewhat) affluent collectors but it's not comparable to "mainstream" asset classes.
Your description for Russian coinage is similar to mine with South African Union and ZAR from 2006-2010, but the scale is even lower. I knew the coins were "underpriced" but could not find more to buy for resale.
During this period, I was able to buy ungraded coins off of eBay and some foreign auctions, get it graded, and sell it for (large) multiples of my cost. South African based collectors presumably must have seen at least some of these coins but would not take the risk.
I ended up dumping most of this series but to my regret, did not sell all of it as I intended to buy it back at lower prices but never did. The price level crashed as I knew it would but I lost interest and there is no market for Union at market price outside of SA.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
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.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
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.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
Yes. Obviously, I'm talking about retail businesses.
I'm a part-time coin dealer. But most full-time operations work that way. Everyone has a few "show pieces" they use to attract attention. Everyone makes a little extra money with the occasional upgrade or variety find or something like that. But the bulk of their money is made on bid/ask spreads. Efficient operations don't really care whether the market is going up or down. Obviously, it's easier if it's going up, but that's why turnover is so key.
The key to being a full-time coin dealer is knowing where to go with different things. EOC has a specialty operation, so that's a little different. But if you are running a B&M or a full-time general operation, you don't want to tell an estate to go elsewhere because you don't deal with that material. You want to at least broker the deal.
Specialty operations are different. They aren't looking for estates or coin collections. They probably buy most of their material either at auction or by being known as The Specialist.
But for most market segments (error coins are different) the main source of revenue is bid/ask spreads. Error coins and exonumia are different because there aren't posted bids and asks for most of their material. In those niches, you can make money more on your superior market knowledge than the bid/ask spreads.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
Yes. Obviously, I'm talking about retail businesses.
I'm a part-time coin dealer. But most full-time operations work that way. Everyone has a few "show pieces" they use to attract attention. Everyone makes a little extra money with the occasional upgrade or variety find or something like that. But the bulk of their money is made on bid/ask spreads. Efficient operations don't really care whether the market is going up or down. Obviously, it's easier if it's going up, but that's why turnover is so key.
The key to being a full-time coin dealer is knowing where to go with different things. EOC has a specialty operation, so that's a little different. But if you are running a B&M or a full-time general operation, you don't want to tell an estate to go elsewhere because you don't deal with that material. You want to at least broker the deal.
Specialty operations are different. They aren't looking for estates or coin collections. They probably buy most of their material either at auction or by being known as The Specialist.
But for most market segments (error coins are different) the main source of revenue is bid/ask spreads. Error coins and exonumia are different because there aren't posted bids and asks for most of their material. In those niches, you can make money more on your superior market knowledge than the bid/ask spreads.
Seems to me that bid/ask spreads are really for widgets ( which make up most market segments ..correct ?) ...nothing wrong with this but when you use the term " bid/ask spreads" widgets come to my mind...
Just curious what you do full time ?
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.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
Yes. Obviously, I'm talking about retail businesses.
I'm a part-time coin dealer. But most full-time operations work that way. Everyone has a few "show pieces" they use to attract attention. Everyone makes a little extra money with the occasional upgrade or variety find or something like that. But the bulk of their money is made on bid/ask spreads. Efficient operations don't really care whether the market is going up or down. Obviously, it's easier if it's going up, but that's why turnover is so key.
The key to being a full-time coin dealer is knowing where to go with different things. EOC has a specialty operation, so that's a little different. But if you are running a B&M or a full-time general operation, you don't want to tell an estate to go elsewhere because you don't deal with that material. You want to at least broker the deal.
Specialty operations are different. They aren't looking for estates or coin collections. They probably buy most of their material either at auction or by being known as The Specialist.
But for most market segments (error coins are different) the main source of revenue is bid/ask spreads. Error coins and exonumia are different because there aren't posted bids and asks for most of their material. In those niches, you can make money more on your superior market knowledge than the bid/ask spreads.
Seems to me that bid/ask spreads are really for widgets ( which make up most market segments ..correct ?) ...nothing wrong with this but when you use the term " bid/ask spreads" widgets come to my mind...
Just curious what you do full time ?
I'm a college chemistry teacher.
There are bid/ask spreads for almost all US coins. That doesn't mean that every coin will sell for the ask or the bid, for that matter. Sure, if you've got a toner, you are off the sheet. But, 90+% of the volume out there are widgets.
If you want to deal only in toned CAC gold, you can, but that is a specialist model. {see above}
People on this forum seem to have a somewhat selective view of what the coin market looks like. Most collections are still predominantly raw, for example. Most collections are 90+% widgets and bullion. You can choose, like EOC, to eschew that part of the market. Most coin dealers are not so selective.
But whatever segment you are in, you are still making your money on bid/ask spreads. If you prefer, buy/sell spreads.
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
Yes. Obviously, I'm talking about retail businesses.
I'm a part-time coin dealer. But most full-time operations work that way. Everyone has a few "show pieces" they use to attract attention. Everyone makes a little extra money with the occasional upgrade or variety find or something like that. But the bulk of their money is made on bid/ask spreads. Efficient operations don't really care whether the market is going up or down. Obviously, it's easier if it's going up, but that's why turnover is so key.
The key to being a full-time coin dealer is knowing where to go with different things. EOC has a specialty operation, so that's a little different. But if you are running a B&M or a full-time general operation, you don't want to tell an estate to go elsewhere because you don't deal with that material. You want to at least broker the deal.
Specialty operations are different. They aren't looking for estates or coin collections. They probably buy most of their material either at auction or by being known as The Specialist.
But for most market segments (error coins are different) the main source of revenue is bid/ask spreads. Error coins and exonumia are different because there aren't posted bids and asks for most of their material. In those niches, you can make money more on your superior market knowledge than the bid/ask spreads.
Seems to me that bid/ask spreads are really .. .
the term " bid/ask spreads"..
Maybe we should defer to you on this subject, for an obvious reason 🤔
Comments
"Nothing goes up in price forever."
Obviously you don't live in Ohio and have to pay property taxes? LOL!!! Every few years - UP, UP, UP..........
"When they can't find anything wrong with you, they create it!"
Does the government support coin prices?
@DelawareDoons said:
What percentage of your net worth, not including your main residence, are coins?
My wife is on this forum monitoring my conversations and I don't know which one of these avatars is her!!
I was once "all in" as I never trusted Wall Street and paper assets with over 500 ozs in gold or $20 gold all told, with lots of silver eagles and platinum as well. That style of investment is even rejected by noted gold bugs. Suffice it to say I refined my extreme position.
Any single asset class is just riskier than diversification. Your former portfolio of all PMs did pretty well from 2000 to 2020 overall. Not so well from 2010 to 2020. From 2020 to 2030???
I'm all for everyone doing whatever they want. If you (generically) want to be 100% in coins, be my guest. But you should at least acknowledge the riskiness of the position.
I'm a coin dealer. with a crack-out artist's sense of arbitrage, A good "eye" and a math geek. Once both of my daughter's Masters degrees were paid for, I went to about 125%. While I used to be big, now I'm just fat, so I'm down to 5%
Let me tell you another true story. This is another reason I'm not a huge fan of hoarding any non-performing asset like coins or PMs.
My father never liked investing in stocks. His whole life he was overweighted in cash and bonds. Well, in 1978, he decided to invest in Kodak. We live in Rochester. Rochester was a Kodak town. He paid $120 per share for 100 shares of Kodak stock. That was very near its all-time peak. Well, my father is a hoarder so he kept that stock and never sold it even though he was technically in the red the entire time he owned it from 1978 until about 2010 when he finally closed out the position with the stock worth single digits and took the $10,000 capital loss.
HOWEVER, my father actually averaged 4.5% per year in total returns over that entire 32 year period after subtracting the $10,000 capital loss! How, you might ask? Because Kodak was a generous dividend payer. And when they spun off Eastman Chemical and J&J he got more shares. So, because it was a performing value stock rather than a pile of gold, he made decent money on it even though the asset itself eventually got to zero.
That is the problem with long-term inventory. It is a non-performing asset with any future profit tied strictly to appreciation. The longer you hold it, the more you need to get for it.
Who has the byline of “comparison is the Thief of joy?”
That’s where this thread is going.
less than 1% & getting lower.
I've never heard that before.
I wouldn't do it myself. There are coins in my series I would like to buy, I have the money to buy many (if I can actually find it) but under my definition, no I cannot afford it.
My collection before I sold most of it was more than my home.
But I live in a shack, so that isnt saying much
Every $1k+ coin I have is CAC and either PCGS or NGC Fatty. I think I'm doing okay in that regard.
One of my favorite quotes.
I would never have such a skewed investment allocation if i wasn't so well-situated on the non-coin front. This thread is not going to change my approach at all.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
Why? Anonymous answers. Could prove to be interesting data that reflects the ANONYMOUS make-up of forum membership.
Give Me Liberty or Give Me Debt
Maybe if you never plan to retire, are confident you will be able to work until the day you die, and are in immaculate health and will stay that way at least until a short time before your demise. Nothing can wipe out net worth quite unlike unexpected illness. Having illiquid assets in excess just means a better chance of a fire sale where those gems will really cost you.
@jmlanzaf Coin = product
@ErrorsOnCoins Passionate Collector
Even though I'm a dealer I'm a collector 1st. This puts me on EOC's side of the debate. I try not to buy anything that I would not like to keep as a collector. Of course that goes out the window when you buy whole collections. Everything does have a price though.
I've been dealing over a quarter of a century now. I've weathered through what I consider 3 major slow downs. I've also had similar inventory ratios at times in my life @ColonelJessup mentions. I'm still here! I pulled every cent I had in the stock market and put it in coins in the late 90's. While I can't show it on paper, I would be willing to wager I outperformed the stock market easily by 500%. I consider myself successful and attribute that to the collector in me.
Did I just defend EOC?
The total return on the S&P500 from 1995 until today is 1120% $10,000 in 1995 would be worth $112,000 today.
Now, you CAN beat that, but not if you buy and held inventory for 25 years which is my point not EOC's. You beat that number with turnover, not holding, as most coins did not increase 1120% in that period.
We should discuss the difference between a business and a museum.
I know so many really smart people that are also really dense.
Business is way way more than just numbers.
Way way way more. What are your goals with your business?
Do you want to build something?
Do you want clients to think of you when they want x?
Are you the go-to guy for x?
Do you write for industry publications building your name and business?
Do you love what you represent or are they just widgets?
Are you making a name for yourself?
Two questions for the forum .....
When you think of EOC, what type and quality of coins does he have?
When you think of jm, what type and quality of coins does he have?
If someone is running a business for their livelihood, they need to back-out any salary they would otherwise receive working to compute net business profit. It's subjective but there is an opportunity cost and no one's time is actually free.
The results are frequently if not usually (much) lower when correctly taking this into account.
I think for a number of us it's a difficult question to get a concrete number for. If you're contributing to a 401k or similar retirement plan, then they have a value for the net worth of that asset on your quarterly statement. So, it's a bit easier to calculate how much other assets contribute to your overall net worth. I contribute to a State Pension Plan. It's a defined distribution after I retire, so the dollar value of that asset is a bit more difficult to get to.
Successful BST transactions with: SilverEagles92; Ahrensdad; Smitty; GregHansen; Lablade; Mercury10c; copperflopper; whatsup; KISHU1; scrapman1077, crispy, canadanz, smallchange, robkool, Mission16, ranshdow, ibzman350, Fallguy, Collectorcoins, SurfinxHI, jwitten, Walkerguy21D, dsessom.
Ad hominem attacks do not support your argument in any way.
And none of this has anything to do with the turnover and inventory costs point.
You can do everything you're doing and still acknowledge that inventory has a cost and turnover increases efficiency and, therefore, profit.
There is that word again, "Turnover"
If your business is based solely on turnover then I feel sorry for you.
A better question, from a business perspective, would be, “with whom would I partner with/invest in to maximize my return on investment.”
The entire bullion market is based on almost nothing but turnover. For most B&M operations, bullion pays the rent. But it only works because the turnover is 20 or 30.
I'm not attacking you. I'm not telling you to change your model. But for people considering this as a business, turnover and inventory costs are a huge issue. I'm not sure why you are taking this personally.
Usually you consider a 4 or 5% draw. Do you can estimate the value of your defined benefit pension by taking the annual payout and multiplying by 20.
This isn't perfect because, of course, what happens to that asset upon your death varies and so it is not the same as cash. You also have the solvency of the payer as a variable. But financial planners use a calculation like that to get a rough cash value to use to determine your overall asset allocation.
Some of the Russian coins I bought exceeded your model!
I had a major corporation contact me to work with them selling my unique coinage. I took a Zoom meeting with them. They sent me a contract. I declined the offer. I like my freedom.
All else equal, I'd prefer a business relationship with a dealer over a collector, as I'd rather have the opportunity to buy that cool coin the collector would keep for his collection.
And my rationale is that I don't want my coins to be an investment or a significant asset, so I have to keep the numbers low. Otherwise I'm just lying to myself.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
I spend at least 90% of my part time job money on coins. I am still a collage kid who right now lives with a family that feeds me so why not buy rare and expensive coins that make me broke LOL
To be clear, I am a coin dealer and not a coin collector as every coin I own is for sale as in inventory.
I was a long-time coin collector until I became a coin dealer and all of my coins went into inventory as required.
I had a bunch of low-end stuff and I sold all of it off through very hard work. I have zero desire to buy or acquire any low-end stuff.
When I go to buy new business inventory, I am super selective and each coin must meet certain criteria. As if, I was putting that coin into my personal collection
Harumph! Turnovers happen to be the keystone of my bakery business, and now you shall never have one.
There is no financial scale to your example.
I actually for real made a chocolate turnover (croissant) for breakfast about an hour ago.
Cherry turnovers with icing drizzle, so fine !
Around 5%,
enough to care about,
not enough to worry about.
Liberty: Parent of Science & Industry
Fair enough. I tend to feel collectors should consider their hobby sunk costs.
I specifically chose coins as my main hobby because it can be configured to generate wealth rather than consume it relatively easily.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
It’s possible but I don’t know about the “easily” part. Coins have their role as a hobby, but for investments I prefer assets that generate passive income while owned.
I don't disagree with you, but I am not a high income individual at all. I do have investments that generate passive income (DRIPing until I retire) and whatever hobby I chose would have to pay for itself in one form or another.
For a sense of perspective, my discretionary income per biweekly paycheck is $85. That is not a lot. Coin collecting/flipping has allowed me to turn that small sliver of discretionary income into a 6 figure collection.
Professional Numismatist. "It's like God, Family, Country, except Sticker, Plastic, Coin."
Hmmm....You've lost the passion! I was offered crazy money for a coin in one of my sets last week. Sorry.
Is there ever when it comes to coins? Especially those not traded frequently. All I will say is I was hotly pursuing Russian coins and it got to the point that no matter what I bid I couldn't get anything. It was a WTH moment and consigned my collection to Heritage. While they only sold around 10% of my collection I was pleased when I got the rest back. I just priced it at prices realized and out the door they went. That was the busiest my tables ever have been for a year. I doubt that will happen again!
The stuff I bought 10 years prior was bringing 1000's of percent more than I paid for it!
Had a few Chinese coins do that as well!
Heck, most of the better World coins have done that! I even hit the Canadian market right when I sold my nearly complete collection(Missing 19 coins up to the 80's). The funny thing is few went to Canucks...they have to triple up as a dealer buying in the states!(my experience with the Canuck dealers) I wish I had my Canadian Large Cents back, most if not all were MS. I think I was to tough with my grading from what I've seen since I sold.
There is some scale for some US coinage and a few select areas in world coinage for a low number of (somewhat) affluent collectors but it's not comparable to "mainstream" asset classes.
Your description for Russian coinage is similar to mine with South African Union and ZAR from 2006-2010, but the scale is even lower. I knew the coins were "underpriced" but could not find more to buy for resale.
During this period, I was able to buy ungraded coins off of eBay and some foreign auctions, get it graded, and sell it for (large) multiples of my cost. South African based collectors presumably must have seen at least some of these coins but would not take the risk.
I ended up dumping most of this series but to my regret, did not sell all of it as I intended to buy it back at lower prices but never did. The price level crashed as I knew it would but I lost interest and there is no market for Union at market price outside of SA.
@jmlanzaf said:
"The fact is, I can make money in a collapsing coin market because I don't hold excessive inventory. Even if prices are sliding, I don't care because I buy today and sell tomorrow and as long as the bid/ask spread isn't shrinking by the hour, I don't need the market to appreciate. That is how almost all businesses run."
Really .....that is how almost all businesses run ?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
By making money on the wholesale/retail price differential. Yes. Few, if any, businesses make money on the appreciation of their inventory.
Or are you referring to OEM's?
No, I thought you are a full time coin dealer and your quote refers to your experience in your industry .....is that correct ?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Yes. Obviously, I'm talking about retail businesses.
I'm a part-time coin dealer. But most full-time operations work that way. Everyone has a few "show pieces" they use to attract attention. Everyone makes a little extra money with the occasional upgrade or variety find or something like that. But the bulk of their money is made on bid/ask spreads. Efficient operations don't really care whether the market is going up or down. Obviously, it's easier if it's going up, but that's why turnover is so key.
The key to being a full-time coin dealer is knowing where to go with different things. EOC has a specialty operation, so that's a little different. But if you are running a B&M or a full-time general operation, you don't want to tell an estate to go elsewhere because you don't deal with that material. You want to at least broker the deal.
Specialty operations are different. They aren't looking for estates or coin collections. They probably buy most of their material either at auction or by being known as The Specialist.
But for most market segments (error coins are different) the main source of revenue is bid/ask spreads. Error coins and exonumia are different because there aren't posted bids and asks for most of their material. In those niches, you can make money more on your superior market knowledge than the bid/ask spreads.
Seems to me that bid/ask spreads are really for widgets ( which make up most market segments ..correct ?) ...nothing wrong with this but when you use the term " bid/ask spreads" widgets come to my mind...
Just curious what you do full time ?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I'm a college chemistry teacher.
There are bid/ask spreads for almost all US coins. That doesn't mean that every coin will sell for the ask or the bid, for that matter. Sure, if you've got a toner, you are off the sheet. But, 90+% of the volume out there are widgets.
If you want to deal only in toned CAC gold, you can, but that is a specialist model. {see above}
People on this forum seem to have a somewhat selective view of what the coin market looks like. Most collections are still predominantly raw, for example. Most collections are 90+% widgets and bullion. You can choose, like EOC, to eschew that part of the market. Most coin dealers are not so selective.
But whatever segment you are in, you are still making your money on bid/ask spreads. If you prefer, buy/sell spreads.
the term " bid/ask spreads"..
Maybe we should defer to you on this subject, for an obvious reason 🤔
Liberty: Parent of Science & Industry