Coin investing, keep the flaming down!

Which is the sad story of every investor. Who is able to time anything perfectly?

Instead of trying to nail down what the exact annual ROI was for that S-VDB, I think most people are more intrigued with the idea of a collector purchasing one for that $125 or $245, no matter when they purchased it, and just holding on to it in their collection for a while and not caring.

Eventually they hand it down to their kid or grandkid. Now it's worth $1500. The kid now owns it. They didn't pay anything. Not a bad gift and not something that will be found in many households. If it takes 20-30 years, who cares? The price didn't drop to $50 as some would imply.

Not to mention...was $245 a half a month to a month's pay in 1988 for the average person? I don't think so. What about $1500 today? Was it easier for 'most' to buy one in 1988 at the $245 price point or is it easier or equivalent to purchasing one for $1500 today? That's the better question. Can the same number of people equally afford one today? I highly doubt it. So was it a decent investment?

 

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I don't know. I was collecting long before I was 30. If I worried as much as some folks here, I'm almost certain I would have died of a stroke before now.
Guy~

 

I inherited the collection I have. I know how much the person I inherited it from enjoyed his collection. He had a lot of fun trading, enjoying and giving away coins to his grandchildren.

My mission is to be a responsible caretaker for this collection. There's everything from rolls of "melt value" silver to MS grade coins. So far most of my time has been cataloging and providing proper storage for the collection.
When the time comes, I hope to pass it to someone who will carry the flame for another generation.

It's a real treat to look at some of these coins and think about the history of the times when they were made. I carry around a very well-worn 1881 Morgan "pocketpiece". When I look at the wear, I wonder how many hands it passed through and where it traveled. I took this coin to Europe last summer
because it's traveled so well in its 125 plus years, I thought it may as well go along for another ride. While we were in Barcelona visiting the Picasso museum, I noted that Picasso was born in 1881, same as the coin I was carrying. I think Pablo would have appreciated the beauty of coins as well.

 

I look at my coins everyday and to me they are worth the world, when in reality they are not worth a lot. I figure it is only a matter of time until someone breaks into my house while I am gone and steals them, or since we hardly ever leave our house they will break in and knock off the wife and I and then steal them. So I live for today and enjoy them today!!!!:hail:

 

Coins, to me, are a hobby that I spend disposable income on and not an investment.

It is nice that coins have residual value, but in the end that really matters little to me.

While losing a significant portion of the "investment" in the hobby would be distressing, I look at it like this -- there are other hobbies that I have spent a heck of a lot more time/resources on and have nothing left other than memories of fond times.

Coins get me that and more, but I try not to let the "more" get in the way of my quest for numismatic enlightenment.

But maybe that's just me.

 

p.s. I think that people who are considering investing in coins would be well-advised to determine the real transaction costs associated with playing the coin game. Sell a few coins and you'll learn first hand why plotting price guides is a fool's game.

 

There's been a lot of emphasis in this thread on whether a coin is worth $1 or $2. I think the effect of demand is much more important.

I think the coin market (or any other market) is "low" when you have a hard time selling your stuff at almost any price. If the coins aren't moving off the dealer's tables, then it's a slow market. Period.

Published catalog values will always lag the real market. And then there's that mysterious designation of "primo". If you have a primo example, you'll probably be able to find a buyer; otherwise maybe not so much.

 

If I was buying coins as an investment, my instinct would be to look at those countries which are likely to see a high rise in standard of living over the next couple of decades and buy their coins.

When more Indians and Brazillians join the ranks of the middle classes and have the kind of disposable income required to collect coins, demand will increase considerably, IMHO, and so will prices.

You may have noticed I left China out of that equation. The reason I have done that is that is because it is the epicentre of modern coin forgery and I believe China's dubious reputation within the numismatic community may hamper the value of historic Chinese coins. There are also harsh penalties on the exportation of 'cultural artifacts' which unless repealed will also diminish the potential of this market....

 

Excellent point, Doug, and one that has seemed to escape mention here. Thats exactly how I view all my investments, with the exceptions of my home, because it's paid off, and my kids' educations. The rest, I'll either make money on and have a few million in play money when I retire, or I'll lose it and still have my retirement and my initial investment, as my employer backs 100% of our initial investments against loss, minus profits earned. It's a win-win situation in my book, but I realize thats not the case for most. Investments have always been proven as bad savings accounts.
Guy~

 

wow, great thread. I even copied that graph. I certainly am not in this for the money. It's the hunt, having something of value, hopefully not going negative, re kindling something from my childhood, telling my kids if they don't behave the coins will go to the pet dog, tracking the coins in my inventory and also just having a hobby where I can learn something to keep the brain going and be part of a forum like this. I wish I would get into coin shows, but that would take it/this to another level. Not sure I want to pull that trigger, yet.

 

Doug:

Although you make excellent and well-supported points, you can and sometimes should buy in a falling market. An example is the current housing market. Now is an excellent time to buy because the values of homes are about as low as they can possibly go. They may still be falling, but over the long run, they will rebound and re-gain at least some if not all of their value.

Some stocks were also a real value in 1930 after the crash (although some not). The idea that I am espousing is that if you can determine that an item has real value in the marketplace and accurately guess (that's right, it's a guess) where the bottom is, you buy as close as you can to it. Either side going up or down, because it is a bottom.

Typically in market bottoms the prices are low not because value isn't there, but because the money with which to buy is unavailable to the majority of people.

 

What he said!

I was gonna say that!

 

I also agree with mikenoodle's point about now being the time to buy. That is sure driving some of my purchases.

 

Vess I think yu are comparing apples and oranges. My comments were made on an SVDB in GOOD, and I don't think they are going for $1,500 in GOOD. From what I see on completed eBay sales it looks more like $500 for a GOOD. and that would be an ROI of 4% from 1988 to today.


But lets assume you meant an Unc and look at those numbers In 1963 an Unc was $280. In 1988 it was $350. That is a 1% ROI, even worse than the return in Good. Now from $350 in 1988 to $1500 today you are doing considerably better at 8%. Now how about the long run from 1963 to today in Unc? It works out to 4%, still pretty lousy and just slightly better than if you had bought a Good and kept it the same 45 years. It returned 3% And since the prices seem to be barely keeping up with inflation, at least the official rate, then yes it is probably just about as easy now for the average person to buy those coins now as it was back then.

 

Most of what you wrote falls into the category of technical analysis -- "the trend is your friend until it ends" sort of stuff that also gets into programmed trading. It doesn't matter what you buy as long as the price is moving up. It's a legitimate way to invest, but not the only way. There is also fundamental investing and its very successful offshoot, value investing. Value investing isn't concerned with the price trend. Interestingly, there are a lot of value investors out there routinely outperforming Wall Street and the technique you describe.

There are many ways to invest successfully.

 

I agree with Mike 100%.

I buy in falling markets. The key question is "when". That's not an easy question to answer, ever.

A wise man once told me that you make money by buying right. His wisdom has been proven to me time and time again, and is apropos to this discussion.

 

And none of that includes the transaction costs, which if factored in will likely cancel a significant portion of the already-weak return rate.

Just some food for thought....Mike

 

Well written. Well thought out. I liked this part. You're exactly right and most here probably fall into this category. Some may not admit it. I will admit this and agree with this point.

 

You are right, of course.