Serious coin collectors profit over time
RYK
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"I have yet to meet a serious coin collector who has built a nice set of United States coins over a period of years and who, after holding them for five years or more, has not made a really wonderful profit. As I have met thousands of collectors and bought thousands of coin collections over the years, this is a truly remarkable and dramatic statement."
Who might have made such a statement, and what do you think of it?
Who might have made such a statement, and what do you think of it?
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Experience the World through Numismatics...it's more than you can imagine.
This is true with any investment even the stock market. The key is "serious" collector or investor, one who gets involved with what is going on.
If I broke even I would be happy because I simploy enjoy the "game".
Too many people seem "up tight" over events. Why? Just buy what appeals to you and enjoy it.
The events that swirl around us will always be with us.
There are no guarantees that I know of in any investment plan. Coins are no exception. For example, some people think we are in a coin bull market, others a bear, others a momentary stall before more bull, etc., etc. It you watch stock market investors they use the same language.
The truth is nobody knows. If you buy quality ever time and watch what you pay every time then your odds of winning will go up. If you can wait out a down cycle you will PROBABLY win.
Mark, your statement is true.
Richard Russell says of the stock market, you have to buy when there is real value in the company, when the PE is low, and sell when the company is undervalued, extremely high PE.
I suspect it's the same with coins. Collectors with long term collecting interest will acquire the collection over time and if acquired with "value" they stand to profit upon sale.
In my case any fool could put together 85 uncirculated Morgans in the late 50's at a dollar each, buy the others at New York City at Stacks, etal., and it would be very hard to lose money. The future is just a guess however--
The reason you are right is that over time a collector will be buying in all types of markets, bull and bear.
Therefore, his collection will have an "average" of all cycles, assuming even purchasing of course. Another reason why the long term collector who knows what he is doing SHOULD be okay.
On other point, we shouldn't be playing with money we will need immediately.
I agree with Mark, also. While on average QDB may be (MAY BE) correct, it is ludicrous for me to think it is always the case. Sorry for the reality injection into an otherwise upbeat topic.
If coin collecting was a sure way to wealth then there would be many more collectors and fewer sad stories.
Thanks Mark!
Even if you loose money, it'll prove to be some of the cheapest fun you'll ever have.
Go play a round or two of golf? After a few years of avid golfing, all you'll have to show for it is a farmers tan and you'll never recoup the hundreds (or thousands) of dollars you've spent on greens fees, balls, clubs, shoes, etc.
Play tennes? Racket, shoes, balls, restringing, membership at the raquet club, farmers tan, etc.
You like to fish? Rod, reel, lures, boat, farmers tan, etc.
Strip bar? (I won't even go there)
You and Mark are very close to the truth. What he says is true.
However, the next bit of advice collectors need is to be patient. This is the type of advice any good investment advisor will give. Sure, at any time you can be buying into an up cycle. But, if you diversify and don't panic and stay for the long haul with other investments at other times you tend to come out okay.
This is not intended to be a treatise on return on investment. It is simply common sense.
In the meantime, ENJOY what you collect. If you like it then others probably will also when it comes time to sell.
<< <i>One of the reasons I find Mark such a breath of fresh air in an industry filled with hype, is his total honesty and dogged effort to tell it how it is. >>
Sort of like Laura.
Russ, NCNE
MarkG,
I do not get the same sense of time frame from the statement, but it is certainly open to interpretation. In 1984, coming off of the run-up leading to the crash of 1980, I am surprised that there were not a lot of (financially) disappointed collectors around.
Ditto, probably to a much larger and more dramatic extent, for those acquired just before the big drop of approximately 15 years ago.
If I look at my coin holdings, I probably have about doubled my investment over the past 10 years. Before anyone gets too excited, that is only a 7.1% compound average return in that time period. Could I have done better or worse in other investments? Of course. The key is a a diversified investment portfolio - not just divesified in the coins you own, but your overall portfolio.
For me, coins are a fraction of my investment portfolio - the huge difference is that I enjoy my coins. The other investments are just numbers on a piece of paper.
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
It certainly is not guaranteed, but some significant return of the hobby expenses spent during the years of collecting, can be reacquired at the end.
That assumes that the collector bought coins in one time period and never did anything after that. I bought coins in that period and made money on them so I personally know there are exceptions even to that argument. However, the real "solution" to up and down markets is consistency in buying in all markets and never forget that it is a hobby.
The other point is worth thinking about--buying at the top?
The problem: Some rare coins only come out of the woodwork at the top of the market. If that's the only time to get that pop 5 coin, you have to pay-up and admit it's a hobby first and your coins are a store of value second. And MUCH less money than just my lost golf balls at todays prices!!!!!
I was merely giving examples in which, even if collectors did engage in cost-averaging AND held their collections for 5 years or more, they could/would still lose money. That was in response to the original quote provided in this thread, as well as subsequent posts on the subject.
BUT, if a collector/investor picks the correct undervalued coins or series, a 5 year period is most likely enough time for that group of coins to increase nicely. The question always is, which coins and which series?
For the last 2 to 3 years, there have been many winners. But who really cares? Maybe the dealers who want to stock coins that will sell, the funds who use hard assets as a part of their investment portfolios, or the investor who buys only high end coins for ego and profit.
The sincere collector, who always has a limited budget, is happy with the additional coin(s) for the set, and will be thrilled just to get a choice coin for the grade, at a fair price. Profit is a small part of the drive. The visual beauty and ultimate accomplishment of the task takes precedence.
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Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)