First let me say I am in the Hobby side vs Investment side of collecting. I always said that if everything went to heck in a hand basket at least I would still have face value in my coins and be able to buy a hamburger while the poor sucker collecting beanie babies would go hungry. Sure, we all like to see our coins appreciate – but let’s face it, with what I buy, most of it I bought 10-15 years ago and it’s just now showing an increase. My real money comes from cherry picking coins. But even they begin to fade in value as the population increases.
Just like the market, coins -especially moderns – really went south after 2008. I could call a couple of collectors on this forum out who never even broke even selling off complete modern sets. You may recall they were asking $600 for a 1963 MS 66 Cent back around 2004. I waited 3 years and finally bought it at $103. It’s worth $32 today. All of you know why – first came the hype to just get a MS 66 grade and the registry bubble was getting bigger every day. But there was no way a 1963 cent in MS 67 would EVER be graded but boy did that change.
Finally, I had the good fortune of sitting on Tesla and Apple stock when they split last year and made me a bunch of cash real fast. Faster than any coin I have ever owned. On top of that most of the collectors here are not playing around with $300,000 to invest in anything. I doubt I would have the collection I have now if I was starting out as I do not have the resources I once did when I was working.
Interestingly, I have a financial planner who finally asked what was it I had listed worth over $150,000 on my assets inventory and when I told her a penny collection – she could not believe it. I had to show her my PCGS accumulated inventory value. And yes, as someone commented, every 4th quarter review she ask where that asset stands. She is impressed, but she is not telling me to sell off stocks and buy more coins…Just saying.
WS
Proud recipient of the coveted PCGS Forum "You Suck" Award Thursday July 19, 2007 11:33 PM and December 30th, 2011 at 8:50 PM.
Gold and silver bullion can be good hedges against inflation, not the best.
Coins are like artwork. I would never advocate for the average investor to stake more than 5% of their net worth on art/coins/stamps etc.
However, if those collections begin to become a larger part of your net worth, I would start including your collections in your annual allocation review. Preferably quarterly.
SPY is ok, but intelligent purchase of individual companies, diversified across sectors, with a LITTLE research quarterly will get better returns. I would have left 10% on the table over the last 5 years if I had soley used etfs. That said, if you can't won't or don't know how to evaluate companies, ETFs or no or low cost index mutual are the way to go.
In the meantime, spend that 5% on coins! And reinvest your dividends!
And yet, many of well-trained financial advisors and stock traders are doing what you recommend instead of buying ETFs and low cost mutual funds, or are in charge of managed funds, and only 20% of them are beating indexes like SPY. So those that invest in your way and succeed are in the minority. Hence, SPY much more of a sure thing for almost everyone. Certainly not numismatics........
Gold and silver bullion can be good hedges against inflation, not the best.
Coins are like artwork. I would never advocate for the average investor to stake more than 5% of their net worth on art/coins/stamps etc.
However, if those collections begin to become a larger part of your net worth, I would start including your collections in your annual allocation review. Preferably quarterly.
SPY is ok, but intelligent purchase of individual companies, diversified across sectors, with a LITTLE research quarterly will get better returns. I would have left 10% on the table over the last 5 years if I had soley used etfs. That said, if you can't won't or don't know how to evaluate companies, ETFs or no or low cost index mutual are the way to go.
In the meantime, spend that 5% on coins! And reinvest your dividends!
And yet, many of well-trained financial advisors and stock traders are doing what you recommend instead of buying ETFs and low cost mutual funds, or are in charge of managed funds, and only 20% of them are beating indexes like SPY. So those that invest in your way and succeed are in the minority. Hence, SPY much more of a sure thing for almost everyone. Certainly not numismatics........
And many of the ones who do beat the S&P regularly are hedged into it with a significant portion of their capital and are riding their other Top 20 to 50 picks (which are also part of the index) at a slightly higher percentage than the index is carrying them.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Gold and silver bullion can be good hedges against inflation, not the best.
Coins are like artwork. I would never advocate for the average investor to stake more than 5% of their net worth on art/coins/stamps etc.
However, if those collections begin to become a larger part of your net worth, I would start including your collections in your annual allocation review. Preferably quarterly.
SPY is ok, but intelligent purchase of individual companies, diversified across sectors, with a LITTLE research quarterly will get better returns. I would have left 10% on the table over the last 5 years if I had soley used etfs. That said, if you can't won't or don't know how to evaluate companies, ETFs or no or low cost index mutual are the way to go.
In the meantime, spend that 5% on coins! And reinvest your dividends!
And yet, many of well-trained financial advisors and stock traders are doing what you recommend instead of buying ETFs and low cost mutual funds, or are in charge of managed funds, and only 20% of them are beating indexes like SPY. So those that invest in your way and succeed are in the minority. Hence, SPY much more of a sure thing for almost everyone. Certainly not numismatics........
Bitcoin? Maybe? Collectables? All have a time when "Interest rates are subsidized" relative to inflation by the fed? Should inflation really need to be checked which is not often, . (usually after a long "easy money" trend) Then I'll take cash for awhile. Are we there now?
I really don't know. Check the conversations at the cocktail parties first.
I'd do the total stock market index on an ETF, rather than the S & P, and follow what RYK said re the option angle.
Unspoken is that you can make a lot of money dealing in expensive coins, but you can also loose quite a bit as well. We all see the upside, but have to look more closely to see the downside. Mark Feld is also spot on re bid and ask spreads.
I need a few pre 1835 coins to finish my type set. They are all expensive (to me). They will be bought only with money I can afford to lose, or I won't buy them at all, because this is a hobby to me.
@Higashiyama said: @xbrenbrenx said: SPY is ok, but intelligent purchase of individual companies, diversified across sectors, with a LITTLE research quarterly will get better returns.
I have no opinion on SPY (the etf), but the folks at Vanguard and many academics might disagree with this.
Well yes, of course they would. Their business model is based on the idea that they are better at handling your money then you are.
That may or may not be true depending on who you are and what you want, how much interest you have in learning the market etc.
But it is not a foregone conclusion that everyone is better off in ETFs and mutuals.
@xbrenbrenx said:
Well ok, I have 22% avg return YOY from 2015 through today. But YMMV.
Apparently you are fully leveraged in stock and little in bonds then. Taking that risk, you could have been fully invested in FDGRX and done 25% YOY during that time. Not really a surprise since Growth Company is pretty much Apple, Amazon, Alphabet, Meta, Tesla, all of the large growth pop stocks. I took a more conservative approach where FDGRX was only one portion of a more balanced approach (that has alot of SPY and BND). We will see how that pays off in what might be a real shocker coming up with the prolonged pandemic causing supply chain issues and the Russian war on the horizon. Maybe I need to be out of Growth Company.......... I don't see the big jumps in numismatics continuing either if the war happens or supply chain issues are not corrected, we will see a down economy for the next several years........ OTH if the war does not happen and we rectify the supply chain issues, economy is going to sizzle and so will numismatics.
I’m without a doubt buying SPY. Can I choose my entry point at least? Because it’s finna get hairy out there next week. There’s going to be a nice dip to buy.
One thing I haven’t seen mentioned yet is the volatility of these assets. SPY offers a great combination of returns for unit risk and as a blend of 500 companies it does an excellent job of diversifying individual company risk. It most definitely does not have the highest expected return as there are levered ETFs which would be expected to beat it in the long run (but of course they are riskier). Most investment professionals wouldn’t advise 100% equity investment for people above a certain age as people care not just about expected return but also risk of loss. I don’t know what the volatility of a blue chip coin like the 1796 QE is since it isn’t marked to market every day but if it is lower than stocks it shouldn’t be expected to earn the same return. However, the coin is far less liquid (and indivisible and requires insurance and has other risk) - points raised by @RYK and others - and that would require a higher return (known as an illiquidity premium). Of course, on the other side, the coin may bring substantial joy of ownership! In the example given, I would pick SPY given the scenario and time horizon. Of course, Bitcoin may have a higher expected return (I have to concede there’s a chance it could massively outperform in the next 7 years but it could just as easily go back under $1K.)
In the real world there’s no reason you can’t build a portfolio that includes stocks, bonds, coins, and other alternatives to give yourself a better risk/reward ratio. (This is how modern portfolio theory works). Also, just because an asset isn’t expected to perform as well does not mean it’s strictly worse and certainly doesn’t mean that it has no place in a portfolio. For example, In the short term I would take a guaranteed 5% annual return over an expected 7% annual return with 10% annual volatility. Investing is a two dimensional problem (at least). It doesn’t make sense to just analyze it in one.
When people talk about investing in coins, I imagine it is in the context of a diversified portfolio. It doesn’t have to be a simple all-or-none comparison although I understand the desired simplicity of your hypothetical. That said, as advice to beginners it is sensible to tell them not to focus on the investment aspect since a lack of skilled buying is going to reduce (possibly significantly) the chance of earning a profit when it comes time to sell. One will do better by learning how to grade and appreciating quality rather than trying to guess which coins might appreciate in value over time.
@earlyAurum said:
A PCGS AU58 CAC 1796 No Stars at 300k would be a bargain in this market. I would buy at $400k!
One aspect of coin investing that facilitates outperformance is an informational advantage, This applies more broadly to investing, in general.
In the OP, you indicate that the desired coin can be obtained for $300k. A forum member specialist implies that $400k may be too little to acquire one today. If he is correct, you may sit in cash for seven years or forever because you will not be able to buy the coin. Or you will pay up, $400k or $500k to buy your coin, and now the coin has to add $400k or $500k in value to double. Or maybe the coin will still only be worth $600k at the end of the period, and your return will be 50% or 20%, depending on your entry point, minus the costs of getting out of the coin. And don’t forget the higher capital gains tax for coins, compared to stocks!
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@earlyAurum said:
A PCGS AU58 CAC 1796 No Stars at 300k would be a bargain in this market. I would buy at $400k!
One aspect of coin investing that facilitates outperformance is an informational advantage, This applies more broadly to investing, in general.
In the OP, you indicate that the desired coin can be obtained for $300k. A forum member specialist implies that $400k may be too little to acquire one today. If he is correct, you may sit in cash for seven years or forever because you will not be able to buy the coin. Or you will pay up, $400k or $500k to buy your coin, and now the coin has to add $400k or $500k in value to double. Or maybe the coin will still only be worth $600k at the end of the period, and your return will be 50% or 20%, depending on your entry point, minus the costs of getting out of the coin. And don’t forget the higher capital gains tax for coins, compared to stocks!
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These are all great points. I was reacting to the fact I believe $300k to be a very good entry point for the coin. But taxation and exit costs for coins is very unattractive relative to securities transactions.
@Pnies20 said:
I’m without a doubt buying SPY. Can I choose my entry point at least? Because it’s finna get hairy out there next week. There’s going to be a nice dip to buy.
Take a look at the SPYs 1 year chart. Look for support floors. Calculate pullbacks to support in terms of percentage of current price. During the next dip, try to predict the support floor. Buy then. Don't look back.
You may time it well, you might not.
but at least you'll have a sense of the bottom of dips as they have occurred in the recent past
Part of the Russia Ukraine crisis is already priced in. How much? If I knew that I'd be wealthier.
@earlyAurum said:
A PCGS AU58 CAC 1796 No Stars at 300k would be a bargain in this market. I would buy at $400k!
One aspect of coin investing that facilitates outperformance is an informational advantage, This applies more broadly to investing, in general.
In the OP, you indicate that the desired coin can be obtained for $300k. A forum member specialist implies that $400k may be too little to acquire one today. If he is correct, you may sit in cash for seven years or forever because you will not be able to buy the coin. Or you will pay up, $400k or $500k to buy your coin, and now the coin has to add $400k or $500k in value to double. Or maybe the coin will still only be worth $600k at the end of the period, and your return will be 50% or 20%, depending on your entry point, minus the costs of getting out of the coin. And don’t forget the higher capital gains tax for coins, compared to stocks!
.
I guess I look at it differently. The hypo in the OP states the coin can be bought at $300,000. There is no option discussing waiting for the coin. The coin IS available for $300,000. While others on here were worried about storage costs, transaction costs, etc. , earlyaurum noted that he thought the price was cheap. The price was not randomly picked---it comes from the CAC price guide. SPY and other markets are priced effeciently. Coins not as much. I was waiting for someone to choose the coin at $300,000 because they essentially were starting ahead of the game. Instead, many seem to look at the OP with blinders. It does happen that coins sell for less than they should and sharp buyers recognize this.
I agree that SPY makes sense for most people for an investment. But there are some who can do as well or better in coins---its just a lot harder than pushing a button and buying SPY and sitting back. On the other hand, if I do about the same I would much more enjoy owning the 1796 instead of SPY.
I agree that SPY makes sense for most people for an investment. But there are some who can do as well or better in coins---its just a lot harder than pushing a button and buying SPY and sitting back. On the other hand, if I do about the same I would much more enjoy owning the 1796 instead of SPY.
Investing should be boring. Coin collecting should be fun.
I agree that SPY makes sense for most people for an investment. But there are some who can do as well or better in coins---its just a lot harder than pushing a button and buying SPY and sitting back. On the other hand, if I do about the same I would much more enjoy owning the 1796 instead of SPY.
Investing should be boring. Coin collecting should be fun.
"should be"----I can remember many days when the stock market was not boring for me.
I agree that SPY makes sense for most people for an investment. But there are some who can do as well or better in coins---its just a lot harder than pushing a button and buying SPY and sitting back. On the other hand, if I do about the same I would much more enjoy owning the 1796 instead of SPY.
Investing should be boring. Coin collecting should be fun.
"should be"----I can remember many days when the stock market was not boring for me.
The last few days have been far from boring for me.
So lets not look back. Lets look at today and go on record. Lets not be able to cheat and look back----lets pick now going forward. You have a liquid assets of $1,000,000. Of that amount $300,000 is cash that just hit your account from the sale of real property that you need to invest. You won't need the money for 7 years. You can use that cash to:
1) Buy SPY at $440 per share (the ETF that mimics the S and P 500)
2) Buy Gold at $1872 per ounce
3) Buy Bitcoin at $42,500 per coin
4) Buy a 1796 No Stars Quarter Eagle PCGS AU 58 CAC for $300,000 (CAC price guide lists retail at $300,000 and the PCGS guide lists it at $250,000)
I'd buy SPY. Index funds provide better diversification, are easy to manage, and are very liquid.
Gold is very speculative and about 10% off of its all time high. I don't see it making large gains enough to beat the market performance of others on the list.
Bitcoin is too speculative (and it is really nothing more than an electronic token with no intrinsic value or guarantee that you can exchange it for anything). Cryptocurrencies could increase or take large hits especially with increasing regulation. Regulations in Russia and China come to mind.
I think the coin has potential, but there is no way to diversify. You are literally putting your eggs all in one basket. There are also disadvantages to coin investment. Higher tax rates, higher sales commissions, and thinly capitalized markets come to mind. That said, I like it better than bullion or cryptocurrency. The CAC sticker does add liquidity as you could always flip it to CAC if you need to move it. Out of curiosity, what is CAC's published bid level for one of these?
@Gazes said:
So lets not look back. Lets look at today and go on record. Lets not be able to cheat and look back----lets pick now going forward. You have a liquid assets of $1,000,000. Of that amount $300,000 is cash that just hit your account from the sale of real property that you need to invest. You won't need the money for 7 years. You can use that cash to:
1) Buy SPY at $440 per share (the ETF that mimics the S and P 500)
2) Buy Gold at $1872 per ounce
3) Buy Bitcoin at $42,500 per coin
4) Buy a 1796 No Stars Quarter Eagle PCGS AU 58 CAC for $300,000 (CAC price guide lists retail at $300,000 and the PCGS guide lists it at $250,000)
If the hypothetical $300,000 must be invested in one of the above assets and cannot be traded or liquidated prior to the full seven year period, I would buy gold given the state of all asset markets.
While it is true that over a very long period of time the S&P 500 will outperform gold, I believe the S&P 500 is currently at a valuation so high that in seven years, there is a good chance that an investor will be looking at a negative total return for the period. I'm certain that the Federal Reserve will attempt reflation policies on any sort of significant decrease in price and that should increase the price of gold (while not necessarily reflating stock prices) as the financial system enters a period of chaos.
In a sense, putting the money into gold is kind of akin to staying in inflation-adjusted (actually, monetary mayhem-adjusted) cash. I would not expect to gain any increase in purchasing power through being in gold. However, at this moment in time, I feel gold will do a better of protecting purchasing power than a position in the S&P 500 over a seven-year period. Let me state it differently: Per the conditions of this hypothetical investment question, all of the offered choices are either terrible or not-so-hot. I am choosing the option that I feel is least lousy.
I reject Bitcoin because its intrinsic value is zero and I see it as the ultimate Greater Fool game. In seven years time, it's possible Bitcoin could go to zero or it could hit $1M. This thread is about making a fairly substantial investment ($300,000 out of a total $1M) and 30% into something like Bitcoin is not investment; it's rank speculation albeit one that has worked for over a decade.
I just don't know enough about collectible coins to guess what will happen to the 1796 No Stars Quarter Eagle. However, being that we are in a speculative mania, I suspect that prices for collectibles may be in their own bubbles (Nintendo cartridges selling for $1M, for example). Since I do not understand this asset very well, I stay away especially since there are two other asset classes that I understand quite well.
Well, since you asked….
I’m no guru, but I’ve been into finance and markets for many, many years and learned a lot.
Personally, I’m all about very broad diversification among different asset classes. A little bit of speculative dabbling in lots of different stuff is good but keep the speculations to less than 5% of your net worth. A broad portfolio can include some precious metals in modest proportions, art, even coins- good ones- if purchased well, real estate, and even farm land. Younger folks can have the higher percentages of their assets in stocks, though don’t buy all at once. Moving forward here, It may likely be worthwhile to start nibbling at bonds more as rates increase.
Cryptocurrency’s, in modest proportions to ones total net worth and even there -diversification among different cryptocurrency’s , because I believe most of them are eventually going to go to zero.
****For you younger folks, keep as much of your investments as possible in ROTH IRA’s and tax deferred accounts!
****Max out any matching contributions! That’s free money!
Don’t buy closed end mutual funds outside of a retirement account! Those years when they do great and
dish out a hefty ‘capital gains distribution’ year end could also hit you with a big tax bill. Ouch!
I’ve had to SELL quality shares early the following year, during a rout, at low prices- after tanking- so as to pony up to such incurred tax liabilities. Serious warning here! That was a tough lesson.
****Dollar cost average your ibuying every month, and when the market tanks- and it eventually will, and you see everyone around you cashing out and bailing and YOU feel like vomiting- do the opposite and double up your buying! That is if you have any money left to throw at it! I’m not kidding folks! I’ve been investing and trading since before the crash of ‘87 and was in deep during the popping of the dot com bubble and the 2008-10 bear markets. I’ve been around the block a few times and day trading everything from equities to options and currencies as well. I’ve seen a LOT and have learned some hard lessons.
A bear market and crash WILL eventually happen again! Don’t know when, but it’s a certainty for this aging bull market to eventually roll over.
Keep in mind that MANY of the “tech darlings” lost 90% of their value in the dot.com bust!
JDS Uniphase, Infospace, Qualcomm- the list goes on and on.
I remember it like it was yesterday!
*****NEVER buy stocks on margin! And NEVER sell uncovered (naked) options! NEVER EVER!****
There’s no such thing as a “sure thing” and NEVER put all your eggs in one basket, unless your willing to potentially lose it all in some unforeseen calamity. There is NO FREE LUNCH! If someone is trying to sell you something, there’s a reason they’re trying to get rid of it! Watch The Big Short and The Wolf of Wall Street for some basic fun education. ;-)
Low fee indexes like SPX or even broader market indexes, including some emerging markets are good, especially if they’ve already tanked.
Look at broad diversification across currencies too.
And a little more sage wisdom since you asked….
Don’t believe anyone that says they can promise you consistently higher than market yields!
There’s NO free lunch! Trust VERY, VERY few investment gurus- eventually the market will humble neatly everyone!
For further reading:
A few of the people that can be trusted and have held up to the test of time are the folks at Bridgewater Associates, Ray Dalio is super wise IMO. Warren Buffett, Peter Lynch- long retired former manager of The Fidelity Magellan Fund, and the late John Bogle of Vanguard Investments.
Happy, humble, honored and proud recipient of the “You Suck” award 10/22/2014
@nwcoast said:
Well, since you asked….
I’m no guru, but I’ve been into finance and markets for many, many years and learned a lot.
Personally, I’m all about very broad diversification among different asset classes. A little bit of speculative dabbling in lots of different stuff is good but keep the speculations to less than 5% of your net worth. A broad portfolio can include some precious metals in modest proportions, art, even coins- good ones- if purchased well, real estate, and even farm land. Younger folks can have the higher percentages of their assets in stocks, though don’t buy all at once. Moving forward here, It may likely be worthwhile to start nibbling at bonds more as rates increase.
Cryptocurrency’s, in modest proportions to ones total net worth and even there -diversification among different cryptocurrency’s , because I believe most of them are eventually going to go to zero.
****For you younger folks, keep as much of your investments as possible in ROTH IRA’s and tax deferred accounts!
****Max out any matching contributions! That’s free money!
Don’t buy closed end mutual funds outside of a retirement account! Those years when they do great and
dish out a hefty ‘capital gains distribution’ year end could also hit you with a big tax bill. Ouch!
I’ve had to SELL quality shares early the following year, during a rout, at low prices- after tanking- so as to pony up to such incurred tax liabilities. Serious warning here! That was a tough lesson.
****Dollar cost average your ibuying every month, and when the market tanks- and it eventually will, and you see everyone around you cashing out and bailing and YOU feel like vomiting- do the opposite and double up your buying! That is if you have any money left to throw at it! I’m not kidding folks! I’ve been investing and trading since before the crash of ‘87 and was in deep during the popping of the dot com bubble and the 2008-10 bear markets. I’ve been around the block a few times and day trading everything from equities to options and currencies as well. I’ve seen a LOT and have learned some hard lessons.
A bear market and crash WILL eventually happen again! Don’t know when, but it’s a certainty for this aging bull market to eventually roll over.
Keep in mind that MANY of the “tech darlings” lost 90% of their value in the dot.com bust!
JDS Uniphase, Infospace, Qualcomm- the list goes on and on.
I remember it like it was yesterday!
*****NEVER buy stocks on margin! And NEVER sell uncovered (naked) options! NEVER EVER!****
There’s no such thing as a “sure thing” and NEVER put all your eggs in one basket, unless your willing to potentially lose it all in some unforeseen calamity. There is NO FREE LUNCH! If someone is trying to sell you something, there’s a reason they’re trying to get rid of it! Watch The Big Short and The Wolf of Wall Street for some basic fun education. ;-)
Low fee indexes like SPX or even broader market indexes, including some emerging markets are good, especially if they’ve already tanked.
Look at broad diversification across currencies too.
And a little more sage wisdom since you asked….
Don’t believe anyone that says they can promise you consistently higher than market yields!
There’s NO free lunch! Trust VERY, VERY few investment gurus- eventually the market will humble neatly everyone!
For further reading:
A few of the people that can be trusted and have held up to the test of time are the folks at Bridgewater Associates, Ray Dalio is super wise IMO. Warren Buffett, Peter Lynch- long retired former manager of The Fidelity Magellan Fund, and the late John Bogle of Vanguard Investments.
Nice post. Speaking of Buffet---his partner Charlie Munger just had some very eye opening comments about inflation.
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
Since you referenced @tradedollarnut , I was thinking about him the other day. I wonder if he intends to swoop in as a recession hits and the coin market drops. Wonder what he's up to these days?
@Catbert said:
Since you referenced @tradedollarnut , I was thinking about him the other day. I wonder if he intends to swoop in as a recession hits and the coin market drops. Wonder what he's up to these days?
Im not so sure about the "coin market drop" part.....
@Gazes said:
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
You can't change the conditions just because of a short term pull back in the S&P 500.
Not to mention that you are ASSUMING no pull back in price on the Quarter Eagle.
I'm pretty sure that Quarter Eagle is down 25% since you started this... that was fun! I see why you like up just make up numbers to price your point.
Patting myself on the back for avoiding the Quarter Eagle!
I wonder where the money to buy coins comes from if not GDP growth...hmmmm....
@Catbert said:
Since you referenced @tradedollarnut , I was thinking about him the other day. I wonder if he intends to swoop in as a recession hits and the coin market drops. Wonder what he's up to these days?
Im not so sure about the "coin market drop" part.....
The $64k question is what will happen to the coin market with inflation, possible stagflation, and todays bear market. Everyone has a different take and if I knew I’d give up my day job.
@Gazes said:
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
Then I guess one could have sold back in March / April. SPY about 460. Gold about 2050. Bitcoin about 48,000.
Quarter Eagle about ???
https://youtube.com/watch?v=2YNufnS_kf4 - Mama I'm coming home ...................................................................................................................................................................... RLJ 1958 - 2023
@Gazes said:
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
Then I guess one could have sold back in March / April. SPY about 460. Gold about 2050. Bitcoin about 48,000.
Quarter Eagle about ???
Exactly. That's what happens when you cherry pick the data...7 years just flew by in a matter of 4 months! Lmao
@Gazes said:
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
Then I guess one could have sold back in March / April. SPY about 460. Gold about 2050. Bitcoin about 48,000.
Quarter Eagle about ???
Awwww.....but you didnt post it then.
Everyone is really good at looking backwards and telling people the right thing to do. My OP was to force people to look forward and decide. I like to think outside the box and hearing cliches repeated about never invest in a coin, etc i find narrowminded. Just trying to get people to think.
@Gazes said:
The OP said you dont need the money for 7 years. It did not say you had to hold for 7 years....dont change the rules!
I was one of the people who indicated he would prefer to be in gold given the investment choices offered (S&P 500, gold, Bitcoin, or a rare coin) under the assumption that the asset could not be liquidated for seven years; i.e., a seven-year holding period. That said, even if I understood the question as you have clarified, I still would have put the money into gold.
I am still quite confident that the return on the S&P 500 over the next 7 years is going to be quite dreadful, Bitcoin is likely to get thrashed along with all of the other rank speculative junk (cryptocurrencies, NFTs, SPACs, etc.), and I suspect collectibles are going to take a hit since they are, IMO, unnaturally high-priced due to high speculative activity over the past few years.
If we were allowed to change asset allocations during the seven-year period, I likely would have taken a mix of gold and cash with a goal toward redeploying the cash when the S&P 500 fell to a semi-sane level (around 2,500 or lower).
If you had made your original post today with the clarification that we could change asset allocations during the seven years, I still would put the money into gold or, if the rules of the question permitted, a mix of gold and cash (maybe 30% gold, 70% cash). Despite the recent turmoil in the markets, assets still aren't inexpensive by any stretch of the imagination.
The ironic thing to me is this is a coin forum. We all love coins and thats why we are here (although there are a few here im not so sure love coins Even though we see almost every asset class plunge (ie stocks, bonds, cyrpto, etc) except coins which have done very well---there are still people on here who bash rare coins as a place to put money. This is the time to gloat! Coin collectors we are doing well! Enjoy it!
@Gazes said:
The ironic thing to me is this is a coin forum. We all love coins and thats why we are here (although there are a few here im not so sure love coins Even though we see almost every asset class plunge (ie stocks, bonds, cyrpto, etc) except coins which have done very well---there are still people on here who bash rare coins as a place to put money. This is the time to gloat! Coin collectors we are doing well! Enjoy it!
@Gazes said:
The ironic thing to me is this is a coin forum. We all love coins and thats why we are here (although there are a few here im not so sure love coins Even though we see almost every asset class plunge (ie stocks, bonds, cyrpto, etc) except coins which have done very well---there are still people on here who bash rare coins as a place to put money. This is the time to gloat! Coin collectors we are doing well! Enjoy it!
Baseball cards crush coins
By all means, you wont hurt my feelings if you go to their message board😏
@Gazes said:
The ironic thing to me is this is a coin forum. We all love coins and thats why we are here (although there are a few here im not so sure love coins Even though we see almost every asset class plunge (ie stocks, bonds, cyrpto, etc) except coins which have done very well---there are still people on here who bash rare coins as a place to put money. This is the time to gloat! Coin collectors we are doing well! Enjoy it!
Baseball cards crush coins
By all means, you wont hurt my feelings if you go to their message board😏
Comments
First let me say I am in the Hobby side vs Investment side of collecting. I always said that if everything went to heck in a hand basket at least I would still have face value in my coins and be able to buy a hamburger while the poor sucker collecting beanie babies would go hungry. Sure, we all like to see our coins appreciate – but let’s face it, with what I buy, most of it I bought 10-15 years ago and it’s just now showing an increase. My real money comes from cherry picking coins. But even they begin to fade in value as the population increases.
Just like the market, coins -especially moderns – really went south after 2008. I could call a couple of collectors on this forum out who never even broke even selling off complete modern sets. You may recall they were asking $600 for a 1963 MS 66 Cent back around 2004. I waited 3 years and finally bought it at $103. It’s worth $32 today. All of you know why – first came the hype to just get a MS 66 grade and the registry bubble was getting bigger every day. But there was no way a 1963 cent in MS 67 would EVER be graded but boy did that change.
Finally, I had the good fortune of sitting on Tesla and Apple stock when they split last year and made me a bunch of cash real fast. Faster than any coin I have ever owned. On top of that most of the collectors here are not playing around with $300,000 to invest in anything. I doubt I would have the collection I have now if I was starting out as I do not have the resources I once did when I was working.
Interestingly, I have a financial planner who finally asked what was it I had listed worth over $150,000 on my assets inventory and when I told her a penny collection – she could not believe it. I had to show her my PCGS accumulated inventory value. And yes, as someone commented, every 4th quarter review she ask where that asset stands. She is impressed, but she is not telling me to sell off stocks and buy more coins…Just saying.
WS
And yet, many of well-trained financial advisors and stock traders are doing what you recommend instead of buying ETFs and low cost mutual funds, or are in charge of managed funds, and only 20% of them are beating indexes like SPY. So those that invest in your way and succeed are in the minority. Hence, SPY much more of a sure thing for almost everyone. Certainly not numismatics........
Successful transactions with-Boosibri,lkeigwin,TomB,Broadstruck,coinsarefun,Type2,jom,ProfLiz, UltraHighRelief,Barndog,EXOJUNKIE,ldhair,fivecents,paesan,Crusty...
And many of the ones who do beat the S&P regularly are hedged into it with a significant portion of their capital and are riding their other Top 20 to 50 picks (which are also part of the index) at a slightly higher percentage than the index is carrying them.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
And it isn't the same 20% every year.
Unfortunately, the graph is an accurate interpretation of a cycle. Not necessarily a few years but sometimes decades.
The Key, of course, is to correctly interpret... where are we now?
Let's look at a LT Nikkei chart... 30 years from the 1990 top and I'm only down 25%?
https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data
Bitcoin? Maybe? Collectables? All have a time when "Interest rates are subsidized" relative to inflation by the fed? Should inflation really need to be checked which is not often, . (usually after a long "easy money" trend) Then I'll take cash for awhile. Are we there now?
I really don't know. Check the conversations at the cocktail parties first.
I'd do the total stock market index on an ETF, rather than the S & P, and follow what RYK said re the option angle.
Unspoken is that you can make a lot of money dealing in expensive coins, but you can also loose quite a bit as well. We all see the upside, but have to look more closely to see the downside. Mark Feld is also spot on re bid and ask spreads.
I need a few pre 1835 coins to finish my type set. They are all expensive (to me). They will be bought only with money I can afford to lose, or I won't buy them at all, because this is a hobby to me.
Well yes, of course they would. Their business model is based on the idea that they are better at handling your money then you are.
That may or may not be true depending on who you are and what you want, how much interest you have in learning the market etc.
But it is not a foregone conclusion that everyone is better off in ETFs and mutuals.
Well ok, I have 22% avg return YOY from 2015 through today. But YMMV.
@xbrenbrenx said “ But it is not a foregone conclusion that everyone is better off in ETFs and mutuals.”
I agree with this, though I think the vast majority of amateur investors will not beat the market, and for many who do, it is a matter of luck.
Apparently you are fully leveraged in stock and little in bonds then. Taking that risk, you could have been fully invested in FDGRX and done 25% YOY during that time. Not really a surprise since Growth Company is pretty much Apple, Amazon, Alphabet, Meta, Tesla, all of the large growth pop stocks. I took a more conservative approach where FDGRX was only one portion of a more balanced approach (that has alot of SPY and BND). We will see how that pays off in what might be a real shocker coming up with the prolonged pandemic causing supply chain issues and the Russian war on the horizon. Maybe I need to be out of Growth Company.......... I don't see the big jumps in numismatics continuing either if the war happens or supply chain issues are not corrected, we will see a down economy for the next several years........ OTH if the war does not happen and we rectify the supply chain issues, economy is going to sizzle and so will numismatics.
Best, SH
Successful transactions with-Boosibri,lkeigwin,TomB,Broadstruck,coinsarefun,Type2,jom,ProfLiz, UltraHighRelief,Barndog,EXOJUNKIE,ldhair,fivecents,paesan,Crusty...
*sigh
I’m without a doubt buying SPY. Can I choose my entry point at least? Because it’s finna get hairy out there next week. There’s going to be a nice dip to buy.
BHNC #248 … 108 and counting.
One thing I haven’t seen mentioned yet is the volatility of these assets. SPY offers a great combination of returns for unit risk and as a blend of 500 companies it does an excellent job of diversifying individual company risk. It most definitely does not have the highest expected return as there are levered ETFs which would be expected to beat it in the long run (but of course they are riskier). Most investment professionals wouldn’t advise 100% equity investment for people above a certain age as people care not just about expected return but also risk of loss. I don’t know what the volatility of a blue chip coin like the 1796 QE is since it isn’t marked to market every day but if it is lower than stocks it shouldn’t be expected to earn the same return. However, the coin is far less liquid (and indivisible and requires insurance and has other risk) - points raised by @RYK and others - and that would require a higher return (known as an illiquidity premium). Of course, on the other side, the coin may bring substantial joy of ownership! In the example given, I would pick SPY given the scenario and time horizon. Of course, Bitcoin may have a higher expected return (I have to concede there’s a chance it could massively outperform in the next 7 years but it could just as easily go back under $1K.)
In the real world there’s no reason you can’t build a portfolio that includes stocks, bonds, coins, and other alternatives to give yourself a better risk/reward ratio. (This is how modern portfolio theory works). Also, just because an asset isn’t expected to perform as well does not mean it’s strictly worse and certainly doesn’t mean that it has no place in a portfolio. For example, In the short term I would take a guaranteed 5% annual return over an expected 7% annual return with 10% annual volatility. Investing is a two dimensional problem (at least). It doesn’t make sense to just analyze it in one.
When people talk about investing in coins, I imagine it is in the context of a diversified portfolio. It doesn’t have to be a simple all-or-none comparison although I understand the desired simplicity of your hypothetical. That said, as advice to beginners it is sensible to tell them not to focus on the investment aspect since a lack of skilled buying is going to reduce (possibly significantly) the chance of earning a profit when it comes time to sell. One will do better by learning how to grade and appreciating quality rather than trying to guess which coins might appreciate in value over time.
Decades worth of research support the "ridiculous" statement.
One aspect of coin investing that facilitates outperformance is an informational advantage, This applies more broadly to investing, in general.
In the OP, you indicate that the desired coin can be obtained for $300k. A forum member specialist implies that $400k may be too little to acquire one today. If he is correct, you may sit in cash for seven years or forever because you will not be able to buy the coin. Or you will pay up, $400k or $500k to buy your coin, and now the coin has to add $400k or $500k in value to double. Or maybe the coin will still only be worth $600k at the end of the period, and your return will be 50% or 20%, depending on your entry point, minus the costs of getting out of the coin. And don’t forget the higher capital gains tax for coins, compared to stocks!
.
These are all great points. I was reacting to the fact I believe $300k to be a very good entry point for the coin. But taxation and exit costs for coins is very unattractive relative to securities transactions.
Take a look at the SPYs 1 year chart. Look for support floors. Calculate pullbacks to support in terms of percentage of current price. During the next dip, try to predict the support floor. Buy then. Don't look back.
You may time it well, you might not.
but at least you'll have a sense of the bottom of dips as they have occurred in the recent past
Part of the Russia Ukraine crisis is already priced in. How much? If I knew that I'd be wealthier.
I guess I look at it differently. The hypo in the OP states the coin can be bought at $300,000. There is no option discussing waiting for the coin. The coin IS available for $300,000. While others on here were worried about storage costs, transaction costs, etc. , earlyaurum noted that he thought the price was cheap. The price was not randomly picked---it comes from the CAC price guide. SPY and other markets are priced effeciently. Coins not as much. I was waiting for someone to choose the coin at $300,000 because they essentially were starting ahead of the game. Instead, many seem to look at the OP with blinders. It does happen that coins sell for less than they should and sharp buyers recognize this.
I agree that SPY makes sense for most people for an investment. But there are some who can do as well or better in coins---its just a lot harder than pushing a button and buying SPY and sitting back. On the other hand, if I do about the same I would much more enjoy owning the 1796 instead of SPY.
Investing should be boring. Coin collecting should be fun.
"should be"----I can remember many days when the stock market was not boring for me.
@Gazes "calling-all-investment-gurus"
Gurus. I love it. That's so 1970's!
The last few days have been far from boring for me.
If the hypothetical $300,000 must be invested in one of the above assets and cannot be traded or liquidated prior to the full seven year period, I would buy gold given the state of all asset markets.
While it is true that over a very long period of time the S&P 500 will outperform gold, I believe the S&P 500 is currently at a valuation so high that in seven years, there is a good chance that an investor will be looking at a negative total return for the period. I'm certain that the Federal Reserve will attempt reflation policies on any sort of significant decrease in price and that should increase the price of gold (while not necessarily reflating stock prices) as the financial system enters a period of chaos.
In a sense, putting the money into gold is kind of akin to staying in inflation-adjusted (actually, monetary mayhem-adjusted) cash. I would not expect to gain any increase in purchasing power through being in gold. However, at this moment in time, I feel gold will do a better of protecting purchasing power than a position in the S&P 500 over a seven-year period. Let me state it differently: Per the conditions of this hypothetical investment question, all of the offered choices are either terrible or not-so-hot. I am choosing the option that I feel is least lousy.
I reject Bitcoin because its intrinsic value is zero and I see it as the ultimate Greater Fool game. In seven years time, it's possible Bitcoin could go to zero or it could hit $1M. This thread is about making a fairly substantial investment ($300,000 out of a total $1M) and 30% into something like Bitcoin is not investment; it's rank speculation albeit one that has worked for over a decade.
I just don't know enough about collectible coins to guess what will happen to the 1796 No Stars Quarter Eagle. However, being that we are in a speculative mania, I suspect that prices for collectibles may be in their own bubbles (Nintendo cartridges selling for $1M, for example). Since I do not understand this asset very well, I stay away especially since there are two other asset classes that I understand quite well.
I am not an investment guru and view coin collecting as a hobby, not part of an investment strategy.
I do not want to fret over my investments and wish for it not to disturb my sleep.
I’ll take the broad stock market approach.
Coins are a commodity. Investments produce revenue.
At the end of the day, investment is about making money.
Well, since you asked….
I’m no guru, but I’ve been into finance and markets for many, many years and learned a lot.
Personally, I’m all about very broad diversification among different asset classes. A little bit of speculative dabbling in lots of different stuff is good but keep the speculations to less than 5% of your net worth. A broad portfolio can include some precious metals in modest proportions, art, even coins- good ones- if purchased well, real estate, and even farm land. Younger folks can have the higher percentages of their assets in stocks, though don’t buy all at once. Moving forward here, It may likely be worthwhile to start nibbling at bonds more as rates increase.
Cryptocurrency’s, in modest proportions to ones total net worth and even there -diversification among different cryptocurrency’s , because I believe most of them are eventually going to go to zero.
****For you younger folks, keep as much of your investments as possible in ROTH IRA’s and tax deferred accounts!
****Max out any matching contributions! That’s free money!
Don’t buy closed end mutual funds outside of a retirement account! Those years when they do great and
dish out a hefty ‘capital gains distribution’ year end could also hit you with a big tax bill. Ouch!
I’ve had to SELL quality shares early the following year, during a rout, at low prices- after tanking- so as to pony up to such incurred tax liabilities. Serious warning here! That was a tough lesson.
****Dollar cost average your ibuying every month, and when the market tanks- and it eventually will, and you see everyone around you cashing out and bailing and YOU feel like vomiting- do the opposite and double up your buying! That is if you have any money left to throw at it! I’m not kidding folks! I’ve been investing and trading since before the crash of ‘87 and was in deep during the popping of the dot com bubble and the 2008-10 bear markets. I’ve been around the block a few times and day trading everything from equities to options and currencies as well. I’ve seen a LOT and have learned some hard lessons.
A bear market and crash WILL eventually happen again! Don’t know when, but it’s a certainty for this aging bull market to eventually roll over.
Keep in mind that MANY of the “tech darlings” lost 90% of their value in the dot.com bust!
JDS Uniphase, Infospace, Qualcomm- the list goes on and on.
I remember it like it was yesterday!
*****NEVER buy stocks on margin! And NEVER sell uncovered (naked) options! NEVER EVER!****
There’s no such thing as a “sure thing” and NEVER put all your eggs in one basket, unless your willing to potentially lose it all in some unforeseen calamity. There is NO FREE LUNCH! If someone is trying to sell you something, there’s a reason they’re trying to get rid of it! Watch The Big Short and The Wolf of Wall Street for some basic fun education. ;-)
Low fee indexes like SPX or even broader market indexes, including some emerging markets are good, especially if they’ve already tanked.
Look at broad diversification across currencies too.
And a little more sage wisdom since you asked….
Don’t believe anyone that says they can promise you consistently higher than market yields!
There’s NO free lunch! Trust VERY, VERY few investment gurus- eventually the market will humble neatly everyone!
For further reading:
A few of the people that can be trusted and have held up to the test of time are the folks at Bridgewater Associates, Ray Dalio is super wise IMO. Warren Buffett, Peter Lynch- long retired former manager of The Fidelity Magellan Fund, and the late John Bogle of Vanguard Investments.
Happy, humble, honored and proud recipient of the “You Suck” award 10/22/2014
Nice post. Speaking of Buffet---his partner Charlie Munger just had some very eye opening comments about inflation.
Thought i would bump this and show an update. Since i posted the OP here are the results so far:
Those who chose
SPY---would be down 17%
Gold---would be down a little over 1%
Bitcoin---would be down over 50%
The 1796 Quarter Eagle No Stars PCGS Au58 cac----unclear but i think there is certainly reason to believe one would go for more than 300k if sold today.
In the OP i said that you would not need the money for 7 years but there is nothing to say you couldnt sell it now. So for now pat on the back to @earlyAurum , @Pedzola and myself for taking the coin option.
Taking the victory lap!? A little early, me thinks.
Since you referenced @tradedollarnut , I was thinking about him the other day. I wonder if he intends to swoop in as a recession hits and the coin market drops. Wonder what he's up to these days?
Im not so sure about the "coin market drop" part.....
You can't change the conditions just because of a short term pull back in the S&P 500.
Not to mention that you are ASSUMING no pull back in price on the Quarter Eagle.
I'm pretty sure that Quarter Eagle is down 25% since you started this... that was fun! I see why you like up just make up numbers to price your point.
Patting myself on the back for avoiding the Quarter Eagle!
I wonder where the money to buy coins comes from if not GDP growth...hmmmm....
You want him to wait until the market moves contrary to his position...
The $64k question is what will happen to the coin market with inflation, possible stagflation, and todays bear market. Everyone has a different take and if I knew I’d give up my day job.
Then I guess one could have sold back in March / April. SPY about 460. Gold about 2050. Bitcoin about 48,000.
Quarter Eagle about ???
https://youtube.com/watch?v=2YNufnS_kf4 - Mama I'm coming home ...................................................................................................................................................................... RLJ 1958 - 2023
Exactly. That's what happens when you cherry pick the data...7 years just flew by in a matter of 4 months! Lmao
Awwww.....but you didnt post it then.
Everyone is really good at looking backwards and telling people the right thing to do. My OP was to force people to look forward and decide. I like to think outside the box and hearing cliches repeated about never invest in a coin, etc i find narrowminded. Just trying to get people to think.
The OP said you dont need the money for 7 years. It did not say you had to hold for 7 years....dont change the rules!
What, we can't use hindsight to look smart?
Looking forward, my prediction .....
Time to start looking at stocks to buy over the next few months.
Sell my crypto assets on the next big run up (time frame 2-3 years if needed) and never get back in
Buy more coin inventory
So I can day trade the S&P 500 and that counts?
I was one of the people who indicated he would prefer to be in gold given the investment choices offered (S&P 500, gold, Bitcoin, or a rare coin) under the assumption that the asset could not be liquidated for seven years; i.e., a seven-year holding period. That said, even if I understood the question as you have clarified, I still would have put the money into gold.
I am still quite confident that the return on the S&P 500 over the next 7 years is going to be quite dreadful, Bitcoin is likely to get thrashed along with all of the other rank speculative junk (cryptocurrencies, NFTs, SPACs, etc.), and I suspect collectibles are going to take a hit since they are, IMO, unnaturally high-priced due to high speculative activity over the past few years.
If we were allowed to change asset allocations during the seven-year period, I likely would have taken a mix of gold and cash with a goal toward redeploying the cash when the S&P 500 fell to a semi-sane level (around 2,500 or lower).
If you had made your original post today with the clarification that we could change asset allocations during the seven years, I still would put the money into gold or, if the rules of the question permitted, a mix of gold and cash (maybe 30% gold, 70% cash). Despite the recent turmoil in the markets, assets still aren't inexpensive by any stretch of the imagination.
I would still take the quarter eagle today.
My Gold Type Set
The ironic thing to me is this is a coin forum. We all love coins and thats why we are here (although there are a few here im not so sure love coins
Even though we see almost every asset class plunge (ie stocks, bonds, cyrpto, etc) except coins which have done very well---there are still people on here who bash rare coins as a place to put money. This is the time to gloat! Coin collectors we are doing well! Enjoy it!
Baseball cards crush coins
By all means, you wont hurt my feelings if you go to their message board😏
7 years is long enough to buy into this stock market soon. There is no doubt about that.
On the other hand it it not long enough to not diversify into tangibles.
Frankly, original American muscle cars of the 60's and very early 70's are a great option within the tangible category.
May become politically incorrect, thought.
You'd miss me.