An Interview with Hugh Jefferies, Stanley Gibbons Catalogue Editor by Mike Hall, Chief Executive of Stanley Gibbons
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| Newsletter - What Do The Experts Have To Say? |
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Dear Reader,
I think our readers deserve a break from listening to me harping on about what a great investment rare stamps and autographs are...
I believe it is always useful to hear what the experts have to say - that's how I learn. Recently, I interviewed Hugh Jefferies to find out his views on the merits of investment into rare stamps at this time.
Hugh Jefferies is an old timer at Stanley Gibbons. He started working for the company in 1975...
By 1988, he was appointed editor of our world renowned magazine, "Gibbons Stamp Monthly"...
In 2003 he took on one of the most prestigious roles in philately - that of Stanley Gibbons Catalogue Editor.
I like Hugh Jefferies... He is a collector at heart, first and foremost. His 33 years of experience make him one of the world's foremost authorities on the subject of stamps.
The dialogue below represents the full interview unedited. As such, it is quite long. I do urge you to bear with it though to find out the "twist in the tail" towards the end of the interview.
Hugh lets us in on a market secret you won't want to miss...
First question Hugh - do you believe that stamps represent a sound investment vehicle?
They certainly can.
Short and sweet. What do you think are the key risks that potential investors should be aware of?
The most important one is that not all stamps are sound investments. Indeed, the vast majority are not, and never will be. But, if you buy the right material in the right condition at the right time, success is pretty much assured.
I agree. You will be more aware than most that there are dissenting views from collectors on using the "investment" word. What do you think the key reasons are that collectors disapprove of the promotion of stamps as an investment?
There are a number of reasons for this Mike. As a collector, I can tell you first hand.
Uppermost in our minds is the last "investment boom" in stamps in the late 1970's. Some people who bought unwisely with the hope of profit had their fingers badly burned and "stamp investment" suddenly had a very bad name.
As a result, there was an unwritten rule in the trade for about 20 years that one should not mention the "I" word. Having said that, we were all happy to celebrate high auction realisations and significant catalogue price increases.
Now, 3 or 4 years after stamp investment started receiving a positive press again, many collectors, auction houses and members of the trade, still consider it bad form to promote stamp investment, while, it seems to me, being very happy to enjoy the benefits that arise from it.
Another issue is that we all have gaps in our collections which we would like to fill. For example, I would love to have a really nice used £5 orange. Unfortunately the price is out of my reach. So, in general, while collectors are happy to see the value of stamps which they already own rise and rise, that happiness is counterbalanced by the fact that the stamps which they do not yet own move out of their grasp, possibly forever.
I believe it is important to view stamps as a medium to long-term investment. Unfortunately in the 1970's stamp price boom, there was a suggestion that profits could be almost instant. Such expectations were unrealistic. This time round, the stamp investment message is much more responsible and realistic and, in my opinion, sustainable.
Makes sense. As I am sure you are aware, the world is a different place today than it was even a couple of weeks ago. What do you see happening in the stamp market as a result of the recent economic turbulence?
I have already mentioned the 1970's. Earlier periods of economic turbulence in the 1930's and 1960's similarly led people to put money into "alternative investments" and since stamps have such a well established market, an established guide to values (the Stanley Gibbons Catalogue of course) and are so "transportable", they have always been a favourite "alternative".
Added to this, it is still possible to buy a good investment grade stamp at a price within the reach of a large number of people which is not possible with, say, investment in art, precious metals and gemstones or classic cars.
I feel sure that the longer the present turbulence lasts, the greater will be the sustained interest in stamp investment.
I think historical price evidence backs up this argument. In your experience from pricing the catalogues, what areas of collecting seem to be "hot" just now?
Stamps from Great Britain continue to be very popular, with rarer material increasing in price the most rapidly. I am currently working on the new edition of the "Great Britain Specialised Catalogue Volume 1" which is showing some extraordinary price rises for things like essays, die proofs, colour trials, imprimaturs, and early usages of Mulreadys and Penny Blacks. Some of these exist in very small numbers, mainly preserved in institutional collections, so when they do come onto the market, demand for them is high and prices rise accordingly.
Stamp errors from Great Britain is another area where there have been some large and increasing prices in recent years. In some other countries, based on lower current demand, errors are still very affordable at present although prices are definitely rising.
This is particularly true of Australia, where prices for errors are rising fast. In Australia, there is a particularly strong market for rare inverted watermarks. For example, a used 1945 2s. maroon in this form (SG 212w) has risen from £1,500 in the 2002 catalogue to £15,000 in the 2009 book. Now that is what I call an investment!
Other areas, which are strong at present, are driven by growing home markets competing with the traditional "homes" of philately in North America and Western Europe. The most obvious examples here are in China and India.
Prices in China have been rising for some time, while those in India have also started to move in the last year or two. Here, stamps that have been stored locally have suffered from the climate, so demand is for stamps that have been held in collections in temperate climates. Again, increasing demand and limited supplies of stamps in fine condition is fuelling price rises. I note, for example, that the 1948 Gandhi 10r. unmounted mint (SG 308) has gone up from £55 to £120 in this year's catalogue. At the higher end of the scale the very scarce "OFFICIAL" overprint (O150d) has risen from £14,000 to £25,000. Need I say more?
Fascinating Hugh, thanks for that. What advice would you give someone thinking about investing in stamps?
Without any doubt - invest in knowledge. The very first thing to invest in - and this really is an INVESTMENT - is the latest catalogue covering your area of interest or specialisation. I know what you are thinking - he is the Stanley Gibbons Catalogue Editor, he would say that - but a very knowledgeable dealer told me this about 40 years ago, and in all the years I have been collecting and working in this business, I have never been given a better piece of advice.
I am always surprised at the number of otherwise very astute collectors who think that they can make do with a catalogue 5 or 10 years old. Well, they can think that as long as they like but the only people who benefit from it are those who have the latest book to refer to.
I would also recommend that you join the appropriate specialist society or study circle, read its journal and attend its meetings when possible. You should also invest in any books covering your area. Finally, make sure you view the exhibits at stamp exhibitions. The International Stamp Show in 2010 comes to London and is likely to mark an important milestone in philately.
I would say that this is very good advice for collecting stamps Hugh. I would suggest that many investors wouldn't wish to devote this amount of time to research though. Is there any advice you would give specifically to investors?
Well in that context Mike, the main piece of advice I would give would be to ensure that when buying for investment you only work with a reputable dealer.
I make no apologies for my bias in this respect. Based on my knowledge of the market over 33 years and in working for Stanley Gibbons I know from personal experience that, to avoid the pitfalls, it is essential that you deal with a reputable dealer and I can think of no other that fits this purpose better than Stanley Gibbons.
Well you would have to say that Hugh in light of the fact that we pay your wages, but it is good advice whether you are biased of not. Just going off on a tangent now Hugh because it is something that interests me personally - what is it about collecting stamps that gives you pleasure?
Wow! That's a difficult one - I never really thought about that before. I suppose it is the thrill of finding the stamp that you have been looking for or discovering something which is previously unrecorded. Finding a good bargain is also exciting.
Even the most "mundane" aspects of the hobby give me pleasure. Sorting out your stamps, laying them out attractively on album pages and mounting them up. Then, quite simply, just looking at them, remembering where you bought them especially if they were "good buys". All of the above give me pleasure and you will note that I have not even mentioned them increasing in value!
What got you into stamp collecting in the first place?
My father got me started when I was eight. I am a 4th generation collector; my great grandfather was, apparently, a general collector though my grandfather was a serious "Empire" collector and fellow of the Royal Philatelic Society.
Unfortunately, most of his collection had to be sold, and only the Great Britain remained, which my father took over and expanded during the 1960's and 70's.
As I say, I was given my first album when I was eight and was persuaded, at the age of 11 or 12 to pass the "foreign" on to my younger brother and sister and concentrate on Commonwealth. I still to this day collect the whole Commonwealth, Abu Dhabi to Zululand, but only up to 1980 (I stopped buying new issues when I got married). I prefer used stamps to unused as I just find them more interesting.
What is the most valuable item you own?
It will probably surprise you to hear that I don't really know. In terms of catalogue price, it is probably my block of four Great Britain Edward VII ½d.blue-greens with inverted watermark, especially as the lower pair is unmounted. I was fortunate to buy these, unintentionally, on a 50p album page which I purchased for the nice used 10d. on the same page. It was weeks later that I realised that the ½d. block has the watermark inverted variety.
When I telephoned my father and asked him to look it up in the specialised catalogue, he told me that they were "six-fifty" each. I was very pleased to hear that I had made a total of £26. Then he corrected me by adding a "hundred and" in between the "six" and the "fifty". I was very happy indeed.
As it doesn't really fit into my collection, I am happy to store it in the vault at the Strand and probably do regard it more as part of my investment portfolio than my collection.
Do you think you can collect and invest simultaneously?
Obviously you can do both. After all, you are buying the same commodity. Speaking for myself, I do not view my collection as an investment, as I simply would not wish to part with any of it.
However, I do look upon it as part of my legacy for my children (neither of whom have taken up the hobby, sadly) and hope that they will benefit from the return on something that has give me so much enjoyment. I also hope that other collectors will then own the stamps and gain as much pleasure from them as I have.
At the same time, I think it is vitally important that however much some collectors may profess to despise stamp investment, we ignore the lessons it teaches us at our peril. We need to employ the rationale of the investor when acquiring new items for our collections, especially the more expensive items.
Always seek stamps in the finest condition and, if you want to buy something in average or below average condition, insist that the price is discounted accordingly.
Finally, if faced with a choice between buying a scarce but currently less popular stamp and an equally costly stamp which can be easily obtained for a price at any time, always choose the former. The former is likely to rise in price faster and you can always buy the other one later on.
I would be surprised if any of our readers have read this far Hugh but I must say I have found this very interesting. One final question, do you have any top investment tips for our readers - what stamps would you buy today as an investment?
As I think you realise by now, I would not buy any stamp simply as an investment. It would have to fit into my collection and I would never want to sell it, as doing so would leave a hole in that collection.
As for "top tips", I think one can learn a lot from studying other areas of the stamp market. Currently in the US, there is what may seem to collectors in the UK an almost irrational desire for the very finest quality.
Stamps in the US are graded according to their gum, centring, margins, perforations, the intensity of their colour and visual appeal. Really quite modest stamps which were given high "grades", sometimes fetch prices many hundreds of percent over full catalogue value. Such mathematical grading of stamps has not yet taken hold elsewhere in the world, but it may one day.
I believe that by acquiring stamps now in premium condition, particularly unmounted mint examples, there is real potential for significant price appreciation in the future. Should the grading system of stamps in the US spread to stamps from other parts of the world, this would seem almost certain.
Hugh, I think you just touched on a "gem" of an investment idea. Thank you for your time and insightful thoughts.
Hugh referred to the grading of stamps in the US resulting in much higher prices fetched for stamps in "superior condition", particularly unmounted mint examples. At present, this grading system does not exist outside of North America.
I believe we have an opportunity here to get into an area of the market where returns could be exceptional. I need to do some more research BUT...
Watch this space for the next big investment opportunity in the rare stamp market....
Sincerely,
Mike Hall
Chief Executive
The Stanley Gibbons Group
PS. I would really welcome your feedback. Did you find this article useful, informative and interesting and would you like to see similar such interviews with independent experts in the business.