Putting
A Stamp On Your Portfolio
Contributed by Stanley Gibbons
Ltd
10%
market returns per annum from stamps & autographs
provide the perfect platform to diversify your wealth
Historic Returns
Rare stamps have always been a good investment. A leading
US Investment Bank rates rare stamps among the top four
investments of the 20th Century, giving an average annual
return of 10%.
This belief is backed up by hard data. Stanley
Gibbons, the leading name in stamps and autographs,
publishes a number of performance monitoring indices
which are now available to professional investors via
their Bloomberg screens. These enable investors to compare
performance with other asset classes.
Stamp prices, based on the above indices, have shown
a 9.4% increase per annum over the past 50 years. The
chart below shows the performance of the SG 100 Index
(measuring a basket of 100 worldwide stamps) and the
SGGB 30 Rarities Index (which comprises 30 of the rarest
stamps of Great Britain) over the ten year period to
2007. With the FT House Price Index showing its weakest
reading for 6 years and global stock markets showing
sharp falls, it is encouraging to report that the prices
of stamps continue to rise strongly.
The SGGB 30 Rarities Index continues to outperform traditional
investments, having risen 9.95% in the past year and
more than doubled in value in the 6 years from 2001
to 2007. Stanley Gibbons has been publishing stamp price
catalogues since 1867 and has annual pricing data on
every stamp issued.
The 100 most popular autographs have also shown impressive
growth over the past 10 years, with a cumulative increase
in value of 256%. Some items have recorded incredible
growth in value over the last 10 years with Neil Armstrong,
Paul McCartney and Andy Warhol pieces seeing growth
of between 850% and 1000%.
Malcolm Forbes of Forbes Magazine comments on autograph
values:
"In my view, they are the most undervalued
of all areas of collecting, especially when you consider
what people are paying for even second rate paintings."
Demand
is outstripping supply for the rarest items in premium
quality condition, forcing prices upwards
Over
48 Million Collectors Worldwide
Collectible tangible asset investments do well over
time because their supply is restricted. Prices rarely
go down as they are underpinned by a huge worldwide
collector base. A survey by the Universal Postal Union
(UPU) revealed that there were over 30 million collectors
around the world spending over US$10 billion per annum
on their hobby. To this can be added a further 18 million
collectors in China now able to indulge their passion
for stamps. This huge collector base provides the best
possible backing for prices.
With an ever diminishing supply and increasing demand,
together with loss through damage or destruction and
donations to museums, there is a natural consistent
increase in prices of rare items in good condition.
Many of the rarest items can be counted in single figures
and this has led to fierce competition from wealthy
collectors, keen to add these gems to their collections.
“Over 4 times profit – it’s better than the
Stock Market”
From US$2.5 Million to US$10 Million in less
than 10 years
The best recent example of scarcity driving prices to
new highs has been the sale of part of the William Gross
Collection in New York in June 2007. Bill Gross is the
legendary manager of the $700 billion PIMCO Bond Fund
and a lifelong stamp enthusiast. In June he decided
to sell part of his Great Britain collection for charity.
The collection had been assembled from 1999 to 2002
at a cost of $2.5 million. It contained a treasure trove
of wonderful pieces and the auction proved to be the
philatelic event of the year. When the hammer went down
for the last time for a total of $10 million Bill proclaimed
that stamp collecting was ‘better than the stock market’.
Liquidity and Portability
Stamps and autographs, which benefit from being highly
portable, are internationally traded in all currencies
and the price obtained is constant wherever you sell
them. There are regular sales in major cities worldwide
and the wealth of information in catalogues and on the
Internet means that real time prices are easily accessed.
This globalization meant that Bill Gross was able to
obtain top prices for his Great Britain collection when
sold in New York. The highest price at auction for a
Penny Black, the iconic stamp that started it all in
1840, was obtained at a sale in Denmark. Recent auction
realisations for quality material are often exceeding
current listed catalogue prices, an indicator of a strong
market.
"If you share my view that the stock market
is likely to go sideways and the residential property
market will be lucky not to go backwards over the next
year or so, you might well be scratching your head about
where to put your money."
Tom Stevenson, editor Hemscott.net
Market prices are readily available through Stanley
Gibbons' printed and online stamp catalogues. The Internet
has opened up the world market of collectibles and provided
increased visibility and tradability. Stamps are the
third most popular sales category on eBay. Auctions
and the Internet are now reducing the spread on the
buying/selling price, which is giving increased confidence
to both collectors and long-term investors.
Rare stamps and autographs benefit from their portability.
By weight, stamps are the most valuable commodity on
earth and this only adds to their attraction as investment
items.
Diversification
Diversification helps minimize the impact of falls in
any investor’s portfolio of traditional assets. Rare
stamps and autographs offer highly attractive risk/return
trade offs because their price performance has a low
correlation with that of other major asset classes.
In addition, the support of the massive collector base
referred to earlier means that the prices of rare collectibles
has low volatility and does not show the spikes that
occur in a purely investor driven asset.
"The average high-net-worth individual invested
approximately 12% of their assets in alternative investments
in 2004."
Merril Lynch Wealth Report
Investments in collectible tangible assets have, historically,
been broadly unaffected by political and economic vagaries
and therefore can offer a form of protection and insulation
to an element of your net worth. Stanley Gibbons offers
two tailored rare stamp and autograph investment products
to enable you to diversify your investments and risk,
in order to obtain the best returns within your chosen
time frame.
Prospects
The current economic environment has changed the historic
perspective. It provides conditions ideal to invest
for maximum growth potential, when compared to returns
available from mainstream investment.
The fundamental market forces of supply and demand suggest
that stamp prices will continue to rise in the future,
and the historical evidence is that rare stamps and
autographs have proved to be a consistent and reliable
medium to long term investment.
Fact: The only growth consumer market
A large percentage of collectors are in the 50-60 year
age group, the only growth consumer market according
to the UK Government Actuary Department, due to their
higher disposable income. With official British Government
figures showing an expected 6 million extra over 50's
by 2012 in the UK alone and 27.4 million by 2040, the
next 35 years look set for a boom period for collectibles
as baby boomers invest this disposable income in hobbies/alternative
investments such as stamps. This increased interest
for a limited supply product can only have positive
effect on prices.
We are also seeing the emergence of new economies, with
new wealth on a staggering scale, especially in Brazil,
Russia, India and China. New collectors in these countries
are looking to buy the rare items of their country that
invariably have been sold abroad in the past as they
appreciate their national heritage.
Pride of Ownership
"None of my other investments give me the joy
that autographs do, because they make me feel that I
am holding a piece of history in my hands."
Malcolm Forbes of Forbes Magazine
Excellent returns are complemented by the wonderful
feeling of pride from owning such an important piece
of history. No other alternative investment can offer
such an eclectic range of benefits and emotions. How
many people do you know with a genuine signed Marilyn
Monroe photograph or a unique stamp with full provenance
with only one other example in a national museum?
“Apart from the obvious point of portfolio diversification,
the fascination of owning something of which there may
be only half a dozen examples in the world is very powerful.
And so long as Man’s obsession with collecting things
continues, the laws of supply and demand will ensure
that rare stamps continue to appreciate in value over
the long term.”
Dominic Pemberton, Director, Cazenove Singapore
At Stanley Gibbons, we take pride in the fact that many
of our investors develop their portfolios into award
winning international collections: an achievement which
gives added interest, provenance and value to their
collection.
How do I Invest?
Visit
the Stanley Gibbons website for more details. Click
here
150
Years
Stanley Gibbons, a holder of the Royal Warrant, was
established in 1856. It has been the number one brand
name in stamp collecting for 150 years. When Mr Stanley
Gibbons started his philatelic business in 1856 he formulated
a policy which grew into a Stanley Gibbons tradition:
to deal in fine quality items and to give careful and
objective advice based on specialised knowledge. As
the market leader, the Company has the global prominence
to source the finest investment grade material, dealing
with over 100,000 clients throughout the world every
year.
London and Guernsey
Stanley Gibbons set up a designated Investment Department
during 2003 to cope with demand. The Department, based
in London has grown considerably since inception and
now has over £millions of stamp and autograph portfolios
under management. In 2006 an office was opened in St
Peter Port, Guernsey, to deal with the increase in demand
from offshore investors.
Key Elements of Service
Our qualified team of experts is able to handle all
aspects of the investment service: from offering only
the highest grade material for purchase, to providing
full assistance on exit strategies to maximise return.
Investor confidence is increased in the knowledge that
Stanley Gibbons only sells material which we would ultimately
be pleased to repurchase at a later date.
Stanley Gibbons offers secure storage and insurance
facilities in our vaults at 399 Strand, London or offshore
in our Guernsey facility, free of charge for the duration
of investment. On certain products interest free payment
terms are available, providing investors with added
confidence and flexibility. Free annual portfolio valuations
will be provided so that you can follow the performance
of your investment.
Contact: Adrian Roose, Investment Director
Tel:+44(0)1481 708 277
Toll Free from the US: 1 866 644 6146
Email: investment@stanleygibbons.co.uk
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