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Thursday, May 12, 2016

Stamp Values Over The Years - An Interesting Revelation

The conventional wisdom in the hobby that I have always heard growing up is that if you want your stamps to increase in value you should buy the highest value stamps you can since rare stamps will always increase in value, while cheap stamps will always be inexpensive.

About 20 years ago, I predicted that superb mint examples of the low values up to the mid 1930's would increase by much greater amounts than the high value stamps would. My reasoning was rooted in simple economics: there are more collectors who can afford them and all collectors need them to complete their sets. So a collector who has already bought superb examples of the expensive stamps and needs the inexpensive ones, must compete with a larger body of collectors who could not afford the high values, but who can afford the low values. With a limited supply, this could only result in prices increasing.

This has come true in a big way. Earlier this month I had a chance to purchase:


  • A 1983 Lyman's Canadian Catalogue and
  • A 1994 Unitrade catalogue.
In addition to my 2016 Unitrade catalogue. Wouldn't it be interesting to look at how the catalogue values of a select group of lower value stamps from 1851-1935 has changed in relation to another group of high value, blue-chip stamps from the same period. I will show on the left, the 1983 value according to Lyman's, the 1994 Unitrade in the centre and finally the 2016 Unitrade value on the right. For the purposes of this exercise, the lower value stamps are:

  • #14 1c rose First Cents Issue, fine used: $50, $35, $40 
  • #25 3c red Large Queen, fine used: $18, $15, $20
  • #41 3c vermilion Small Queen, very fine NH: $70, $100, $240
  • #51 1c orange Jubilee, very fine NH: $21, $37.50, $120
  • #67 1c green, Maple Leaf, very fine NH: $27, $50, $210
  • #75 1c green, Numeral, very fine NH: $30, $56.25, $225
  • #89 1c green Edward VII, very fine NH: $36, $45, $280
  • #96 1/2c black brown, Quebec Tercentenary, very fine NH: $7.50, $15, $45
  • #104 1c green Admiral, very fine NH: $18, $27, $120
  • #152 4c bistre Scroll Issue, very fine NH: $34.50, $35, $70
  • #168 4c bistre Arch Issue, very fine NH: $24, $22.50, $50
  • #195d 1c green Medallion flat press, very fine NH: $2.50, $2.60, $12
Not all the stamps in this group increased significantly in value, most notably the first two stamps. However, all the others experienced very healthy price increases relative to their initial values. The catalogue value of the above portfolio in each of 1983, 1994 and today is:

  • $338.50 in 1983
  • $440.85 in 1994
  • $1,432 in 2016
That is an average increase of 423.5% over 33 years, which is a simple rate of just over 12% annually. Most of that increase has been in the past 10 years. 

The high value stamps are:

  • #2 6d slate violet Prince Albert, fine used: $1,300, $1,000, $1,100
  • #16 10c black brown, First cents: $2,300, $3,000, $3,500
  • #30d 15c grey Large Queen with script watermark, fine used: $1,750, $2,250, $4,000
  • #40 10c dull rose lilac Small Queen, very fine NH: $900, $1,350, $6,800
  • #65 $5 olive green Jubilee, very fine NH: $5,000, $4,250, $6,000
  • #73 10c brown violet, Maple Leaf, very fine NH: $520, $618.75, $2,400
  • #84 20c olive green, Numeral, very fine NH: $1,100, $1,350, $3,000
  • #95 50c purple, Edward VII, very fine NH: $1,800, $1,687.50, $5,250
  • #103 20c brown Quebec Tercentenary, very fine NH: $437.50, $562.50, $1,200
  • #122 $1 orange Admiral, very fine NH: $297.50, $250, $450, 
  • #159 $1 olive green Parliament, very fine NH: $612.50, $700, $900
  • #177 $1 Mt. Edith Cavell, very fine NH: $350, $437.50, $600
  • #198 4c ochre, Medallion, very fine NH: $105, $105, $150
These stamps, except for #2 all increased in value, but except for a couple of stamps like 30d, 40, and 95, the increases have not been that spectacular. The catalogue value of this portfolio by contrast in each of 1983, 1994 and today is:

  • $16,472.50 in 1983
  • $17,561.25 in 1994
  • $35,350 in 2016
That is an increase of 214.6% over the same period - roughly half of the percentage increase for the top group. Thus if in 1983 you bought multiple examples of each of the low value stamps - say 50 examples of each, which was entirely doable back then and even now, you would have had a holding worth more than double what the high value stamps are worth. Not only that, it would have been a less risky property to sell because the value is spread out over a larger number of stamps, which means that if you have a bad day at an auction, you can make up for it in another. In contrast, a poor realization on just one of the high value stamps would significantly lower your return. 

This is exactly the opposite of the conventional wisdom. So does this mean that you should just collect inexpensive stamps? Well not exactly. In the above examples, the low value stamps in superb condition or very fine NH condition were always scarce, even back in 1983 - its just that they were undervalued relative to the high value stamps. The only way you would know that is from experience. If instead of VFNH, you only bought fine, it would be a completely different story. If instead of these stamps, you bought sheets of post 1935 stamps, it would be a different story as well, because these stamps are readily available in VFNH condition. 

The moral of the story is that you CAN invest in stamps, but to do so successfully, you need to be able to identify stamps that are undervalued by the market. 

Food for thought. 

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