Market Watch: Stamp Collectors Get A Better Return On Their Money
Our Chief Executive Reports On The Performance of the SG100 Stamp Price Index in 2008
Dear Reader,
2008 was a year when I watched my own personal wealth drop dramatically.
In an economy where nothing seems safe, the normal natural inclination is to hoard your cash in a savings account. In a normal world, your savings would deliver a pretty boring return but at least you know your money is safe.
That is no longer the case.
We now find ourselves in a situation where the return from banks is negligible (base rate now at 1.5% in the UK). As if that isn't miserable enough, we don't even know whether our money is safe anymore.
In 2008, the stock market, the property market and bank savings interest rates collapsed. Stamp prices went up.
Stamp collectors - often the subject of ridicule - are having the last laugh.
It seems stamp collectors invest their cash wisely.
SG Index Rises by 3.4% in 2008
Our SG100 Index, quoted on Bloomberg, tracks prices of commonly traded stamps. The stamps bought every day by your average stamp collector. They are not the type of stamps we would recommend as an investment.
The SG100 stamp price index increased by 3.4% in 2008 compared to 5% in the prior year. What this means is that your average stamp collector is making a better return than if they had left their money festering in their bank account.
Stamp collectors no longer need to feel guilty about the amount of money they spend on their collecting habits.
The index performance can be broken down as follows:
Stamps from:
|
Increase
(%) 2008
|
Increase
(%) 2007
|
Great Britain
|
2.7 |
6.4 |
British Commonwealth
|
5.6 |
2.5 |
Rest of world
|
0.0 |
2.1 |
| |
|
|
Total index movement
|
3.4 |
5.0
|
Not unexpectedly, the GB market has cooled somewhat. In light of the fact that we live in a country at the centre of financial crisis and widespread panic you would need to be delusional to expect prices of readably obtainable stamps to continue to rise at the rate they have enjoyed in recent years.
The performance from British Commonwealth countries was more than double last year. Looks like my prior recommendations in this respect have proven sound.
The Statistics
The chart below shows the performance of the SG100 Index compared to the retail price index (RPI inflation indicator) and UK interest rates from 1999 to 2008:
Your average stamp collector has enjoyed compound annual growth averaging 6.5% over the past decade. Whereas during that same time inflation was only 2.8% and bank base rates averaged a compound annual return of only 4.5%.
Now remember you could pick these stamps up any time you like without any difficulty. They are not particularly scarce (otherwise, they would not be commonly traded).
It makes even more sense for stamp collectors to invest in their collection in the year ahead. Especially with interest rates currently at only 1.5% and widely expected to fall further.
This is great news for stamp collectors trying to justify to their wife why spending money on stamps is a good idea!
How Will The Current Economy Hit The Stamp Market?
If I am truthful, I have absolutely no idea.
What I have learned over the past year is that anything can happen. I personally though will be happy to put more of my money into stamps during 2009.
I have probably done more research into historic price trends in stamps than anyone else on the planet. I know for a fact that during previous recessions, stamp prices held up formidably.
Historical analysis backs up the simple and honest truth - stamps are a secure and stable way to protect your wealth on a long-term basis.
There is one fact that is unavoidable however.
If 1 million people lose their jobs in the UK over the next year, a percentage of those people will be stamp collectors.
I therefore maintain a cautious view on whether commonly traded stamps will deliver particularly high returns during 2009. Despite this, I still expect returns in excess of bank interest rates.
When it comes to rare stamps, which we promote as an investment, the story is completely different and I remain fully confident on strong returns for 2009 and beyond. Watch out for my update on the GB30 Rarities Index later in the year.
Why Not Do Your Own Research
I would like to give you the opportunity to do a bit of your own research. That way you can see for yourself how stamp prices have moved.
The simplest way to do this is to compare prices in the current catalogue to what they were a few years ago.
Our Collect British Stamps catalogue contains all the GB stamps which are included in our SG100 index. I also have a few spare copies of our 2004 Edition available.
The retail price of both catalogues is £19.90. I would like to offer you the 2009 Edition of Collect British Stamps with the 2004 edition FREE, meaning you only pay £9.95 (giving you a saving of 50%).
I will even throw in FREE POSTAGE for UK customers saving you a further £4.50.
I only have a limited quantity of the 2004 catalogue so I advise you order quickly before they run out.
To take advantage of this offer and to compare stamp price movements over the past 5 years for yourself please follow the link below to order now:
The offer closes on 31 January 2009, so make sure you order soon to avoid missing out.
If you would like to find out more about investing in stamps and would like one of our advisers to give you a call to enlighten you further, please complete the contact request form by following the link below:
one of our advisers>
Sincerely,
Mike Hall
Chief Executive
The Stanley Gibbons Group
PS. To track the monthly performance of our SG100 Stamp Price Index, visit our website. We update other Indices only annually (due to the rarity of the constituents of those indices). You can view our indices now by clicking on the links below:
SG100 Stamp Price Index - compound return of 6.5% per annum over past 10 years
GB30 Rarities Index - compound return of 13.2% per annum over past 10 years
COM30 Rarities & Errors Index - compound return of 9.3% per annum over past 10 years
Frasers100 Autograph Price Index - compound return of 12.9% per annum over past 11 years
Background on SG100 Stamp Price Index
The SG100 Stamp Price Index provides a definitive measure of overall price movement and performance in the stamp market. The index is based on actual prices, either retail or at auction for 100 of the world's most frequently traded stamps and includes selected items from all major collecting areas.
The index is weighted towards the most frequently traded and higher value stamps. A review of its components is conducted annually to ensure that the "shopping basket" continues to reflect a fair representation of the total market.
The index provides a monthly indicator of the health of the stamp market as a whole but not of the market in rare stamps which we offer to our clients for investment purposes. It is however a useful barometer to investors providing evidence of the strength of the overall market in stamp collecting ensuring the foundations to a secure investment.