Buy the best you can afford?

Barry · February 24, 2006 10:27PM

I pulled this quote from Mr. Eureka's teenage thread. I've heard it many times, but still don't understand it. You have an inicome stream from your job and you have money in the bank and other (conventional) investments.

So what does "the best you can afford" mean in those terms?

Hyperion · February 24, 2006 10:36PM

sounds like disposable income to me.
you have your long term, short term savings goals, and retirement goals, daily, monthly and yearly requirements.
then you have your excess liquid cash that you need to have around, and a 6 month emergency living fun intact.

any funds that dont dent your real life needs go under disposable income, if you stay under here you can buy bulk baloon toys if it makes you happy

coinpurchases can come from here. of course, if you dont officially budget yourself, or set concrete goals then your shooting in the dark no matter what.
in that case spend what you can, whatever the limit that doesn't raise the attention of your spouse

AgMe · February 24, 2006 10:42PM

<< I pulled this quote from Mr. Eureka's teenage thread. I've heard it many times, but still don't understand it. You have an inicome stream from your job and you have money in the bank and other (conventional) investments.

So what does "the best you can afford" mean in those terms? >>

I've always seen it this way:

"whatever amount you plan on spending, buy a coin that knocks your socks off vs. a coin that you can get a very good deal on because it has problems (like a whizzed coin)"

There really is a limited supply of "special" coins and hard core collectors (usually with deep pockets) want them!

~g

MrEureka · February 24, 2006 10:51PM

I pulled this quote from Mr. Eureka's teenage thread.

Just for the record, I've never advocated that people should "buy the best they can afford". IMHO, it's miserable advice.

ldhair · February 24, 2006 10:58PM

I see it as a purchase that has no impact on my normal day to day cash flow.
If you lost it tomorrow you could live with it.
If it messes with my financial security, I cant afford it.
Just the way I see it.

RYK · February 24, 2006 11:05PM

Here's my take on it.

Let's say that you have decided to buy a Dahlonega half eagle for your collection, and you have allocated $2500-3000 to buy a nice, original XF example. You start looking and RYK offers you two coins: a VF piece for $2000 and a probably dipped and somewhat marky XF piece fot $2250. The bargain hunter in you might say: "Barry, buy one of these and you can save some money." Those who say "Buy the best you can afford" would say (I think), "Stick to your guns and wait for a nice, original XF example."

As stated, I do not think it is great advice on the surface. I would replace the statement with the following:

"Whatever you buy, buy a nice one for what it is."

Sometimes this requires a little more patience and a little more money, but in the end, it is usually worth it...be it an XF Dahlonega $5 or an XF common date buffalo nickel.

fc · February 24, 2006 11:14PM

"buy the best you can afford."

this type of thinking probably sits well with wealthly people
who are used to stepping up for quality durable goods.

If you plan to buy something, you might as well do it right
the first time and take your time shopping around.

The problem probably arises for most, is that what is the
best for you as a collector.

I know I cannot collect MS65 half eagles.
I could collect MS60-62 half eagles but I choose not to in most cases.
I like everything below that because that is the best I can afford
which makes me happy.

Barry · February 24, 2006 11:23PM

"Whatever you buy, buy a nice one for what it is."

Sage advice, rad

ldhair - I agree 100% with you (Andy, too, just for the record.)

roadrunner · February 24, 2006 11:28PM

Sometimes the "best you can afford" is within your means but the competition at that level could make the coin a major league loser.
Higher grades do not always mean a better value, even if the coin is nice for the grade. Witness an NGC MS67 1837 half dime I have seen on the market for $15,000. Considering that the NGC pieces outnumber the PCGS 67's by a sizeable amount, and the difference in 67 quality is minute, I'd say that a PQ 65 or 66 at a fraction of the price is a better value and with tons less risk. If you look in Rare Coin Wholesaler's (BV Coins) inventory you will see a number of monster grade ex-Knoxville collection coins that have been languishing for nearly 3 years. I last viewed them at 2003 ANA.
While these certainly qualify for buying the best, there must be other factors at work (obviously) that they have gone unsold.

With the same logic you might be able to afford a collection of one single coin. Whether that is a better value than 20 or even 100 lesser coins remains to be seen. The current market run has shown many coins in the Good-VG range outplay most of the MS66-68 market. Good barbers and Indian cents, even wheat pennies have outperformed say an MS67 Barber quarter. Everything's relative.
No different than the advice that QDB often offers that says he'd rather have 10 MS63 Morgans than a single MS65 or higher graded piece. It's all relative in the end. To many people, the single coin may give more satisfaction and outperform the 10 lesser pieces......or NOT.

roadrunner

coinkat · February 24, 2006 11:29PM

I think the better way of saying this is buy quality for the grade... and I am dead serious...

There is no shame in buying a circulated rarity... just make sure it looks original and what it should be for the grade. BTW, there is alot of interest in the 1901-s Barber quarter in decent circulated grades... try finding an original decent and acceptable 1905 Canadian Half and a British 1905 1/2 Crown...

RedTiger · February 24, 2006 11:42PM

"Buy the best you can afford" is one of the most dangerous cliches in the hobby--my opinion.

How the cliche is frequently interpreted is to buy the highest grade, rarest, highest priced coins that a person can fit in their budget. For the knowledgeable veteran this can be an excellent way to proceed. However, the new collector usually has no idea how to grade, no idea what a nice oriiginal coin looks like, no idea what a dipped coin looks like, no idea what artificial toning looks like, no idea that certification companies differ (MS65 at a top tier company means something very different from MS65 at a no-name company), that even coins certified at the same grade by the SAME company often differ in value by a large percentage. For these reasons, the new collector that follows the cliche often end up being taken by song-and-dance merchants who sell garbage but claim their coins are the best of the best.

The popular auctions, Ebay, Teletrade, Heritage, are often a dumping ground for "dog" coins. Dogs are coins that are low end for their certified grade, that hundreds of other collectors and dealers have said "pass" on at shows or at another auction. It is often the unsuspecting newbie thinking "bargain" that takes home these puppies.

Much more useful is to buy what a person can understand. In a recent thread one collector said that MS62s look the same as MS64s to him/her. Well, until that collector can discern the difference, I see little point for that person to pay the extra money for MS64s. There is a steep learning curve to the hobby, and many sharks out there waiting to snap at the new collector. It is a great hobby, but a new collector has to learn what "quality" is before committing major money. This process often takes a year or more.

THEONLYTBONE · February 24, 2006 11:42PM

That term is diffrent for everyone, but you also need to know what your collection is, I started out buying everything and was also givena very healthy head start, but I am now collecting errors, low mints, single coins from penny to dollars, I also am pretty fired up into currency as well............I myself buy when it comes to me or you just cant live without...........Good Luck..

DRUNNER · February 25, 2006 12:14AM

Good points all . . . . .

I would add that buying the "best you can afford", when used as advice by a "knowledgeable collector" helps to eliminate the upgrade costs as serious collectors move across the grade spectrum to eventually arrive at the grade they consider terminal for their collecting needs. I believe this is a critical consideration.

Drunner

100proof1957 · February 25, 2006 12:27AM

Huge difference between best you can afford if its a very esoteric coin or smoething more common.

Price,demand,desire and populations all enter in to it.

if you make 50 K a year you probably shouldnt be thinking about a collection of Half Dimes in MS65 no matter how much you like them !

RYK · February 25, 2006 12:35AM

I would add that buying the "best you can afford", when used as advice by a "knowledgeable collector" helps to eliminate the upgrade costs as serious collectors move across the grade spectrum to eventually arrive at the grade they consider terminal for their collecting needs. I believe this is a critical consideration.

Excellent point. Buy the coin you really want the first time, rather than buying one that you expect will be replaced.

p8nt · February 25, 2006 12:43AM

Buying the best you can afford doesnt necessarily mean that you spend all of your money buying the coin. It means that you know what your target is (VG-F for the album) and you only buy the coins that fit that requirement. At least to me, it just means dont buy something just to fill the hole. Wait and buy what you want for your goal.

mgoodm3 · February 25, 2006 12:45AM

Don't buy coins because they're cheap.

Coxe · February 25, 2006 1:07AM

As general advice, it's usually best to buy top quality for your $$$. There are always exceptions, but appreciation is historically on the side of higher rarity and grade, particularly in more popular series. However, risk diversification is certainly also important. Putting the whole wad on one coin might not be too wise. Type collectors are generally advantaged over series collectors in terms of risk and the ability to use market cycles to get some pieces low when they are out of favor and other set spots are too hot to enter.

TheRaven · February 25, 2006 1:54AM

My take is this:

If a coin in MS-60 is $110, MS-63 $125, MS-64 is $150 and MS-65 is $500.....

Unless you have plenty of money I would go for a MS-64 coin and buy below the big step up in price.....

I also agree with buy the highest grade possible without straining your budget, in the long run you will be thankful.....

The point of you need to know the difference between a 63 & 64 and so forth is something that will come with time and you should not be plopping down money on coins you don't understand the grading of them.....

For Morgans for example, purchase a number of cheap ones and learn the differences in grade before you go for the big ones.....

MrEureka · February 25, 2006 3:05AM

The advice should vary with the series. For example, I'd advise a Civil War Token collector to always buy the best, period. The advice to a beginning Morgan Dollar collector would be very different.

PerryHall · February 25, 2006 4:24AM

I always try to buy the highest grade before the big price jump.

MrEureka · February 25, 2006 4:37AM

I always try to buy the highest grade before the big price jump.

That's a great way to inexpensively build a nice collection of unexceptional coins.

Julian · February 25, 2006 4:48AM

I think that you are being too critical, Andy.

I might suggest to purchase the highest grade before the big jump, but shop around for a particularly nice one of those, not just the first one that you see.

That way you have the best of both worlds.

Please remember that when purchasing premium coins, you are not likely to be able to buy them for wholesale prices. Be prepared to pay a premium, but only for premium coins.

Coxe · February 25, 2006 4:52AM

<< The advice should vary with the series. For example, I'd advise a Civil War Token collector to always buy the best, period. The advice to a beginning Morgan Dollar collector would be very different. >>

I'd use the same advice to a Morgan collector -- go for the best within your budget. To any novice, real money shouldn't be spent until they know how to grade and understand what they are collecting. (Perhaps completing a grading set through MS66 of a common date would be a good start.)

MrEureka · February 25, 2006 4:55AM

To any novice, real money shouldn't be spent until they know how to grade and understand what they are collecting.

Agreed. Doesn't matter how much money the person has.

TheRaven · February 25, 2006 5:06AM

<< I always try to buy the highest grade before the big price jump.

That's a great way to inexpensively build a nice collection of unexceptional coins. >>

Why would you say this? Talking about morgan dollars would be big unexceptional to have a nice AU 84-S instead of a MS coin? In my mind with my limited budget this is smart collecting.

Just because a coin is expensive does not mean it is not a nice coin. I enjoy collecting VG Barber coins quite a bit, they would not qualify as exceptional to most, but I enjoy them.

cladking · February 25, 2006 5:12AM

Buying the best you could afford used to be excellent advice on several levels. It has long
been the high end of the quality scale which tends to see the most and largest price increases.
Buying the best quality has always meant that you don't have to upgrade later and that you're
more likely to be happy (or at least satisfied) with your specimen. High quality coins will always
be easier to sell than other coins. There are things to be learned from comparing only the best
coins in a series. Even if the best you can afford isn't the very top quality, there has still been
a greater interest and greater demand for the finer coins and there is still something to learn
from finding why the best you can afford is a specific grade.

But this trend has been in place a very long time. The spreads between grades can result in
tens of thousands of dollars in cost. There must be at least some risk associated with paying
a huge premium for a little better grade Morgan or a huge multiple for a little better grade mod-
ern.

This isn't to say that "buy the best you can afford" is bad advice, merely that this should no long-
er be attempted at all unless you understand the differences in pricing, availability, and demand.
You should also understand the grading of the specific coin which is the best you can afford.

Since this spread is across the board now for most all US coins perhaps the advice should be
modified to "buy the best you can appreciate and understand".

There are many numismatic and exonumismatic items where grade has little or even no bearing
on price. As time goes on it will be fascinating to see where we take these trends.

Coxe · February 25, 2006 5:17AM

<< Talking about morgan dollars would be big unexceptional to have a nice AU 84-S instead of a MS coin? In my mind with my limited budget this is smart collecting. >>

Definitely. There are 84-S AUs that have more eye appeal than most of the few MS ones out there. You get to choose a miniscule amount of wear (AU58) over an ugly, baggy MS61 for a LOT less money. And many dates have a crazy jump from 64 to 65 (especially as DMPLs) where you are best served hunting down a PQ 64 with the right eye appeal and the right fit to your set. The 1880-O is a good example of that. Julian has the right advice here.

MrEureka · February 25, 2006 5:34AM

Talking about morgan dollars would be big unexceptional to have a nice AU 84-S instead of a MS coin? In my mind with my limited budget this is smart collecting.

It may be smart collecting, but that doesn't make the AU 84-S exceptional. Exceptional value, perhaps.

On the other hand, an MS 63 84-S is certainly an exceptional coin, but it is probably not an exceptional value.

My experience is that money is best spent on exceptional coins that are ALSO exceptional value. In mature markets - such as that for Morgan dollars - these opportunities are few and far between. Hence, the big jumps in price when you enter the realm of the "exceptional coin", e.g., the unc 84-S or the MS 65 1890.

In other words, I prefer to spend my money on exceptional coins that are not yet fully appreciated.

PerryHall · February 25, 2006 6:09AM

<< I always try to buy the highest grade before the big price jump.

That's a great way to inexpensively build a nice collection of unexceptional coins. >>

It depends on what you collect.

MrEureka · February 25, 2006 6:10AM

It depends on what you collect.

Perry - How about an example?

Baley · February 25, 2006 6:11AM

I'd modify the expression to, "buy a nice, eye-appealing example that fits your budget for the coin"

MrEureka · February 25, 2006 6:16AM

How about "Buy the coin that you would buy if all coins were raw and you trusted nobody"?

barberlover · February 25, 2006 6:23AM

<< Buying the BEST you can afford in my book means: if you can afford and MS64 piece-buy the BEST MS64 piece you can get. It does not mean you have to buy an MS68. >>

I agree with this and this disproves the best you can afford automaticly means a higher grade.

Selling most of my collection over the past years didnt have a single m.s. or proof 67 in the bunch, but I had more interest in my coins then the grades or sheet values would have gotton. Highest quality you can afford means alot of things other then grade.

Les

TheRaven · February 25, 2006 6:49AM

<< Talking about morgan dollars would be big unexceptional to have a nice AU 84-S instead of a MS coin? In my mind with my limited budget this is smart collecting.

It may be smart collecting, but that doesn't make the AU 84-S exceptional. Exceptional value, perhaps.

On the other hand, an MS 63 84-S is certainly an exceptional coin, but it is probably not an exceptional value.

My experience is that money is best spent on exceptional coins that are ALSO exceptional value. In mature markets - such as that for Morgan dollars - these opportunities are few and far between. Hence, the big jumps in price when you enter the realm of the "exceptional coin", e.g., the unc 84-S or the MS 65 1890.

In other words, I prefer to spend my money on exceptional coins that are not yet fully appreciated. >>

But I would rather save all that money and have a nice AU 84-S instead of 1 expectional MS-63 and purchase a bunch of other nice coins..... Different tastes for different people.....

CalGold · February 25, 2006 7:00AM

Actually, I think people first need to ask themselves what it is about a series that attracted them to it in the first place. If the answer is that you love the way the coin looks in mint state condition, but you can only afford to buy them XF or lower, you might not be happy with the best you can afford.

CG

Edited to add: My bias is that I would rather have an incomplete group of nice mint state coins than a complete circulated set or a set that was mostly MS with the keys in VF.

CG

oreville · February 25, 2006 7:59AM

<< Buy the best you can afford? >>

I remember the beginning of the usage of that phrase.

It was back in the mid 1960's when it seemed everyone wanted rolls and bags of the uncirculated coins. It was approaching madness.

I remember a dealer saying to a collector at the New York show and he was hopping mad (I was only 11 years old at the time) the following:

<<<<<<<"Godd*** it, stop buying all that quantity of rolls and bags. You will bury yourself in them. Forget quantity and think of quality. Buy the best you can afford!">>>>>>>>>>

I NEVER FORGOT!

RYK · February 25, 2006 8:04AM

How about:

Don't buy coins. The rules are too complicated. Save your money for something useful.

PerryHall · February 25, 2006 9:20AM

<< It depends on what you collect.

Perry - How about an example? >>

How about better date gold?

MrEureka · February 25, 2006 9:37AM

How about better date gold?

Pick a specific issue where a coin one point below "the big money" grade is still an "exceptional" coin for the issue. I think that when you try you'll find that all the coins with the big jumps are not especially rare, except in top condition. Which means that the coin that missed the big-money grade is not especially rare, or exceptional.

DMWJR · February 25, 2006 10:14AM

The first question is: What is your goal? What is your goal going to cost? Can you afford to complete your goal?

If your goal is to own a complete Lincoln set 09-date in 65red, you are going to have a very easy time finding many of the coins, and you will have lots of choices in which you can select the very best 65 out there that you can find. You can continue to upgrade "in the holder" as we say by continuing to search for 65's, swapping them out as you go. For several issues, you are going to struggle mightily to get a 65, and as for the 26-s, well there's only one, so you find the very best 64 that you can find.

If PerryHall's goal is to complete a "value" set in the "one under big money" grade, then he can search for the exceptional coin in each of those grades. That's his goal. I don't think your statement is accurate that he will not have exceptional coins. Right there you have mixed the issue by saying that an MS63 is an exceptional coin. Says who? I've seen many misgraded coins. A knockout AU58 can beat a terrible or even average MS63. Same thing you are doing when you are talking about better date gold. Under your definition, only "big money high grade" coins would be exceptional. I think the thing to do is buy the best coin for the grade that meets your collecting goal.

Then there is another collector on the board who recently declared that he was selling his coins and not buying any while he waits for that one big coin that he has always wanted. More power to him. He's going to try to "buy the very best coin that he can afford."

All this to say, you should determine what your goal is, and then buy the best that you can afford that is in line with your goal. Then upgrade within the holder. Who knows, one day you might just get a big surprise when you have the coins regraded. You might find out you have a complete Lincoln set 09-date in MS66! The coins you have will still be the same, as so should your satisfaction level.

PerryHall · February 25, 2006 3:50PM

Very well put DMWJR. I think it all comes down to what "exceptional" means. Andy---in your case I think you mean "exceptional" to be "expensive". I think exceptional coins can be found in all grades. A VF Barber half that's totally original and totally free of marks and hairline scratches can be an exceptional coin. A chain cent in AG with smooth surfaces and a pleasing chocolate brown color can be an exceptional coin. There's more to collecting than pop reports and grey sheets. But I'm not a dealer, so what do I know?

Myqqy · February 25, 2006 4:36PM

Don't buy coins. The rules are too complicated. Save your money for something useful.

This seems to be the best advice in this thread.....

construct · February 25, 2006 5:29PM

What does "can afford" mean? To me, it means to stay within your budget. The budget includes disposable income and takes into account all the issues you are currently targeting. If you're thinking about buying more than one coin, the best you can afford will be not quite as good as if you were only seeking one.

What does "best" mean? Most likely to appreciate in value? Highest grade? Rarest? Premium quality for the grade? Most coin for the money? Each of these suggestions are arguably correct, but the answer will vary with the collector. I, myself, adopt different definitions of "best" in different searches.

topstuf · February 26, 2006 1:25AM

It's good as a "strategy" though. Paying crazy money for crazy quality or outrageous eye appeal means that you have scoured the market (or show) and for a relatively small amount have CORNERED the "glitz" factor. Lot cheaper than spreading your money all over "collector" coins which would eat your budget in a short amount of time.

Then.....the only thing you have to do is ADD PRICE to whatever you bought. None of this goofy "underrated" or "unappreciated" or "sleeper" stuff. Nope. Just any old coin with something crazy-neat about it. Modern or classic doesn't matter. As long as it can be passed to some young lion who is coining change like mad off some emerging market and wants to demonstrate his ability to conquer the "registries."

Seems like a bunch of the ultrabuck coins aren't being bought by most of us ole fuddy duddys here. But take a new multimillionaire who likes splash and there is a new market.

I would bet that this ultramoney will leave the market as soon as the "newness" of registry "fame" dies down and the new fad pops up whatever it is...... shopping centers maybe.

But .....BUYING THE BEST...... in an already high market can reap a lot of quick new money.

Holding the support of that market will be the trick.

lathmach · February 26, 2006 3:20AM

I don't agree with so simple a phrase as "buy the best you can afford".
As a long time collector, 49 years now, I'd say "buy rare coins in a grade you can afford".
Common coins will always be common.
As the years go by, seeing rare coins in your collection will be what gives you the real thrill. Not some extra shiny piece of common junk.
It'll also give you the biggest monetary return.

Ray

coinkat · February 26, 2006 3:55AM

Either I am missing the point of this or just about everyone else is...

Again... there is no shame in buying circulated rarities as long as they are quality for the grade. It is not always about money and more money does not always buy quality for the grade.

Lets take a whack at MrEureka's question... I propose an 1888 10 Lib as the better date gold coin. The one I own was graded 58 and is nice and crusty with attractive original surfaces. This is a better date and a 63, if one could be bought, would probably go for $3-$4K, perhaps more. Well, I still have a nice coin with alot of change left to buy something else that I want and I like the coin that I have. It is quality for the grade and even works as the value play that seems to be part of this thread.

MrEureka · February 26, 2006 5:33AM

I guess it just depends on whether you're talking about "exceptional for the grade" or "exceptional for the issue".

coinkat · February 26, 2006 5:50AM

Andy:

I tend to agree that there is a difference, but quality or exceptional for the grade for better dates is a reasonable approach... am I going to get rich with the 88 ten Lib in 58? No... Is my chance likely greater of making more if I chose to buy a 63? That may be, but what other buying opportunities are lost in the process? There is a big difference between 400 and 4,000...

MrEureka · February 26, 2006 6:27AM

CoinKat - I'd say an 88 needs to be a real 64 before it's "exceptional for the issue". And I'd say that the typical 63 is a horrible deal at 4K. I'd definitely prefer your AU at $400.

clw54 · February 26, 2006 6:31AM

Try to buy nice coins without problems, even if they're AG3. Nothing wrong with an AG3 key date.

Buy the best you can afford?

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