As I See It...
By James E. Lee
(From Newsletter No. 50)

 

The Future of Collecting in the
Current Economic Climate


Over the past three months a day does not go by when a collector or dealer asks: “What is going to happen to the stamp market?” I believe that it will remain strong and vibrant since it is market that is collector driven. While some collectors may pull up on the reins others will pick up the slack. After all collectors collect at some level all of the time.

The stamp market experienced its own Wall Street type debacle back in 1981. It is important to revisit the events of that point in time in order to understand why I think the market is healthy today (please forgive that some of the chronology of events may be off by a year or two).

By the late 70’s the prices for certain stamps (as an example 573, C13-15, and C18) were going up in price almost every week. At this point in time the “investor” (people with very little knowledge of stamps) was up to his/here neck in the stamp market. People were even putting stamps into retirement plans. In 1978 or 79 the famed British firm of Stanley Gibbons bought the Marc Haas collection of United States Postal History for $11,000,000.00. This extraordinary collection of classic postal history had been appraised by U.S. dealers for only $6,000.000.00. Haas had arrived at his price by determining the amount of money he needed to achieve a certain annual return forever. The head of Gibbons did not flinch at the price as he wanted to big splash entry in to the U.S. market.

I can remember reading an article published in 1979, in “Stamps Magazine”, where Andy Levitt was asked when the bubble would burst. Andy’s response was that this high flying market probably had no more than two more years to run. Sure enough by early 1981 the excesses in the stamp market came to screeching halt. By that time the IRS had ended the stamp loophole for retirement accounts. The Gibbons firm was floundering with the weight of the Haas purchase. Both their retail sales and auctions of his material were not meeting their expectations. The prices for all of the semi-key U.S. stamps that promoters had been able to promote plummeted. But the true collector just kept plodding along adding to their collections and in many cases at reduced prices.

I was fortunate enough to have first hand the demise of the Gibbons firm. When they acquired the Hass collection I had been interested in what he had in the way of one-cent 1861 issue postal history. Within months of their acquisition of the collection I received color copies (imagine color copies in 1980) of the covers they had for sale. The prices were at least four or five times what I was willing to pay. I politely declined. Fast forward to couple of years later and again I heard from the Gibbons firm. A letter arrived asking if I was still interested in the covers that I had turned down earlier. They had a representative bringing the collection to the U.S. to dispose of, if interested please give them a call. I called, expressed some interest, and was told I would receive a package of copies by currier the next morning. Sure enough a cab drive came to the door of my house at seven am with a package for me. At ten am I received a phone call in my office asking if I was interested in the covers. My response was that I could use seven of them but not at the marked prices (they still had the original prices on them). The Gibbons representative told me to disregard the prices. We finally settled for twenty-seven cents on the dollar.

As you can see the stamp market crash of the early 80’s was not unlike what happened on Wall Street. Greed and the greater fool theory had over taken the market. Since that time the stamp market has inched ahead and has been both orderly and consistent. The investor is long gone. While we do have this certain euphoria over graded stamps and ballooning prices in that segment of the market it is confined to a very small number of people. The rest of the market appears very stable.

Many collectors that I have spoken to have found their collections a great source of enjoyment and provide a calming reprieve from the financial winds of our time.


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