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The Most Popular Hobby in the World: A Look at Collecting Rare Stamps

The Most Popular Hobby in the World: A Look at Collecting Rare Stamps

Why Collect Stamps?

Why Collect in Stamps

“Few hobbies match the flexibility of stamp collecting,” according to the American Philatelic Society. “It is suitable for nearly all ages. You can collect stamps all 12 months of the year regardless of the climate where you are located. It does not require any special skills or great wealth…. Stamps also usually provide a much greater return on your investment than other hobbies.”

Of the more than more than 5 million people in the United States who collect squares of postage, most simply love the tiny works of art they display and history they evoke. According to Chad Snee, editor of Linn’s’ Stamp News, the world’s largest newspaper devoted to stamp collecting: “[t]he first piece of sound advice would be to [collect stamps] because you enjoy it – not because you want to invest with the idea that you’ll eventually sell your collection for more than you paid for it. While there are exceptions, the vast majority of people in the stamp collecting world do it because they love the hobby.”

Stamp collecting can be a highly individualized and personalized endeavor. “Some collect on a topical basis, like collecting stamps featuring botany, or dogs,” says Snee. “Stamps are great for a new collector because they can be collected based on what you personally like. There is also a strong sense of personal connection to what you collect.”

“Casual collectors might concentrate on acquiring stamps from certain time periods, or focus on particular subject matters such as birds or trains,” says Jim O’Donnell, museum specialist at the National Postal Museum. “Serious collectors, or philatelists, study stamps, including history and usage, ink and paper varieties, and printing techniques.”

Stamps for fun… and Profit

Collecting StampsBill Gross (founder of PIMCO), owns what has been called, “the finest, most valuable collection of U.S. stamps and postal history owned by a private individual.” He approaches stamp collecting with analytical assessments. Gross, according to Snee, conducts market research and studies auction realizations over decades to determine which stamps have done better and better over time, so he can pursue them, and he has the collections – and the returns – to prove that his approach works. However, his unparalleled financial success as a stamp collector is the exception.

While collecting stamps as a financial investment isn’t a sure thing, one aspect of what keeps some interested in collecting is the hunt for the elusive “white whales” of the philatelic world – The One stamp that could make a collector set for life – and it does happen (ie., “The Inverted Jenny”).

However, in his experience as a collector himself and editor of worldwide stamp-related news and information, Chad Snee points out:

There are a good number of stamps that, in terms of examples of what exists today, are far rarer than the Inverted Jenny. There are many stamps with just a few remaining pictures left or that are unique (meaning there is just one of it in the world). What makes a stamp the most rare or scarce is story behind the stamp itself.

With the Inverted Jenny, the story behind it is what makes it special. There are more of those available than there are of other rare stamps, but Jennies capture the imagination and people like the story.

The story is often key, whether at auction or from a dealer, collectors get their own slice of history and that excites even non collectors. It’s quite possible that when the “Penny Magenta” is sold in June, that a non-stamp collector will buy it, just because of the story and the title of it being “the world’s most valuable stamp”.

Valuation and Returns

Stamp CollectingAlthough resources abound, David Lidman and John D. Apfelbaum’s book, “The World of Stamps & Stamp Collecting” is a major go-to for guidance in collecting, as are resources like Linn’s and the American Topical Association. The Scott Standard Postage Stamp Catalogue is considered to be the only annual catalog that values and identifies all the stamps of the world.

“Expertization” is one way to understand a stamp’s individual value and to help protect a collection against fraud because, “there are absolutely fakes, forgeries and reproductions” cautions Snee. The best way for a collector to avoid buying a fraudulent stamp is to seek the help of an expertizing service, which utilizes the power of a committee of experienced collectors who can examine an item and issue a certificate stating that they, in their opinion, see it as genuine or in what way the stamp has been altered.

Although expertizing services will cost you, it’s the most reliable way to protect a collection against fraud. Additionally, expertization provides a collector with reliable, and neutral, proof of the value of their stamp.

Why not Stamps?

Although stamp collecting is a popular hobby, it is experiencing a slight decline in the number of collectors. Why? Snee attributes the decline to all the other aspects of modern life that vie for attention. “Stamp collecting is a very cerebral hobby,” he says. “It’s much slower paced and requires patience and discipline and that can be difficult for some, especially younger people. There is no instant gratification.”

Another issue is the age of collectors, as it is an area that tends to be dominated by much older people who started their collections as children.

According to Lidman and Apfelbaum, collecting stamps has some drawbacks like:

  • Similar to artwork, the value of the stamp is held in the actual item, rather than in stocks, bonds or certificates.
  • Stamps can’t be used as leverage for anything. While stocks and even other tangible items can be leveraged or borrowed against, stamps can’t.
  • Stamps are subject to a high markup, fraud and fees, among other expenses – if a collector truly wants to operate on the highest levels of the hobby.

Getting Started in Stamp Collecting

“In the beginning, new stamp collectors tend to want to collect everything they can, but realizing they can’t have it all, they tend to narrow into a specific area,” says Snee.

Areas of specialty, like stamps from the British Commonwealth or the U.S., are popular, but there are also “Classical periods” (starting around 1840, with the first adhesive stamp issued from Great Britain with Queen Victoria’s profile image) through the early 20th century.

Aside from collecting by era, geography or topic, “postal history” is also a big genre in stamp collecting. This involves collecting the papers, envelopes and other elements that stamps to which are affixed, rather than the stamps alone. “Essay stamps” – those that never found their way into print – are another genre of collection.

As Lidman and Apfelbaum note, what is rare and what will become rare are two different concepts. Based on that they advise, “the best investment ideas for the future are only hunches today.” Cornering the market is another strategy, where a collector will essentially purchase all there is available of one particular genre of stamps – however, this is a strategy can be pricy and risky as well.

AIMkts’ take

As with all antiques and collectibles, stamps have no representative value; they don’t represent ownership of a revenue producing company. Nor do they have intrinsic value; they cannot be consumed like the crops on a farm or oil from a well. Based on this logic, AIMkts would discourage investors from “investing” in any antique or collectible and there is the legitimate question of whether one truly invests in these asset classes. Collect? Yes. Speculate? Certainly. Invest? If the market is sufficiently large enough, AIMkts’ position is that one can think of purchasing such tangible assets as an investment. However, because the number of stamp collectors is small and, arguably, shrinking, one must question whether stamps as an investment makes sense before moving ahead. All that said, we think stamp collecting is a terrific hobby, as long as you go into it assuming you may not make- and could actually lose- money at it. AIMkts always advocates investing in what you love, then you’ll never really lose.

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About Alicia Purdy

With a Master's degree in Journalism and extensive experience as a freelance writer and editor, Alicia has found success across genres including: news, business and finance, government/politics, faith and family as well as blogging.

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