There are billions of stamps, and only some of them should be part of a reasonable investment strategy. In general, investors should try to stay away from the new issues of any country, be it United States or foreign. Many people have made huge gains by buying up quantities of modern, newly issued stamps that have later turned out to be scarce. But the risks are too high, and the possibility of postal authorities reissuing the stamps if supplies run short always exists. If an investor had bought every new issue since 1960 from major countries, he would still be unable to sell the entire group at a profit. And that is true even though many stamps have sprung up in value. The bulk of philatelic items, perhaps 95 percent or so, never show any significant financial gains.
Above all, stay away from United States new issues. There is an appeal to some investors in purchasing mint sheets from the United States Post Office, in that the sheets have a certain face or postage value, and so the investors assume there is little downside risk. And this is true. But there is little growth potential, either. Since 1950, out of the over 900 stamps that the United States Pot Office has issued, all but perhaps 30 sell for either a few percentage points above or below face value. The reason for this is that mint sheets seem like such a perfect investment to people that thousands buy them, creating a supply that is far in excess of demand. Stamp dealers routinely use the stamps from the 1950s on their mail as they cannot sell them in quantity at even face value. And if dealers cannot sell these mint stamps at face value, you can bet they will pay a lot less than that if you come to sell them.
There has been a great deal of general media publicity and advertising recently over a whole variety of specially prepared, illustrated, even personalized first-day covers. Such covers have a price of between $2 and $4, and are mailed monthly to subscribers as the stamps come out. The first-day cover clubs produce a handsome, artistic, and educationally satisfying product. Unfortunately, the investment potential of these particular first-day covers is small. A collector can service his own cacheted first-day covers, through the United States Postal Service, for about 50 cents; the wholesale value of first-day covers in quantity when bought by a dealer is about 35 cents each. When bought at this price, there is some investment potential. But when purchased on subscription from the national “clubs” that offer them, the covers must increase in price over 700 percent before you can get your cost back! Furthermore, should you decide that the convenience of the clubs is worth the expense, avoid the temptation to “personalize” your first day covers, that is, to have your name and address placed on them. America’s modern penchant for labeling everything from eyeglasses to dungarees does not find favor with philatelists. Addressed first day covers since 1945 have traded about 50 percent of unaddressed.
For investment potential, as a general rule, investors should stick to established, responsible countries such as (though not limited to) the United States, Canada, Western Europe, the British Commonwealth, and Japan. These countries have a strong base of native collectors, who have created an intrinsic demand for their indigenous stamps through strong and weak economic times. There are many countries now, in Africa, Asia, and Latin America, that use their postal services in an attempt to earn foreign currency. The stamps routinely commemorate American, English, and European events, even though these countries just as routinely frustrate our goals in the United Nations and on the world scene. The stamps are attractive and for the most part well designed and executed. But they are produced solely for export; there are few collectors in those poverty-stricken nations. So unless worldwide collectors reverse their 140-year trend of preferring the stamps of their own nation, there is little likelihood that the $10 and $20 face value sets of most third world countries will enjoy booming resale.
Ultimately, the future of stamp investing comes down to the future of stamp collecting. Stamps have no intrinsic value and no commercial applications; their value is all perceived value as a collectable. Several factors do seem to point to a stronger and stronger collector base in the industrialized world. Stamp collectors break down into essentially two age groups, the teens and the over forties. While some people retain an interest in stamps throughout their life, the pressure and constraints of career and family building during their twenties, thirties, and forties makes most collectors’ interest passive in these years. They begin to collect again the later third of their life– and it is this group’s demand that has caused the increase in stamp prices. The simple demographic fact of the post-World War II baby boom means a gigantic increase ahead in people with the time and means to resume collecting. This group will make the period from the 1980s into the early part of the next century the golden age of philately, even if increased publicity makes them collect in no greater numbers than did the generation preceding them. We should add to this the fact that women seem to beginning to create collections of substance and value for the first time. Previously, though many women collected stamps, they were rarely serious collectors or investors in rare stamps. But this situation has begun to change radically.
It is the opinion of most people who counsel stamp investors that philately is not the best investment. It has problems of leverage, storage, and high spreads between bid and ask that many alternate investment forms do not have. But stamps do not have to be the best investment, for they are not, in the final analysis, primarily an investment. To most people who collect and invest, they are primarily a hobby in which the hobbyist may receive a financial benefit in addition to the benefit conferred by the hobby itself. Of all the hobbies, only the collectables offer their pursuers psychological satisfaction as well as pecuniary gain; and of the collectables, none offers more of both than stamps.