Lessons To Be Learned/Applied In Comics From A Major Stamp Collector/Investor

[esquirecomics]

A lot of parallels in this stamp collector/investor's story can be applied to comic collecting/investing.

 

Lessons Learned, Investor Builds Portfolio of Stamps

PIMCO Director's Rare Collection on Display

 

By Neil Irwin

Washington Post Staff Writer

Saturday, May 27, 2006; D01

 

In the 1940s, a woman in Middletown, Ohio, set aside a stack of postage stamps, expecting them to appreciate in value over time and thereby pay for the college education of her young son, Bill Gross.

 

When Gross went to the big city 20 years later to try to sell the stamps, dealers gave him the bad news: They were worth less than his mother had paid.

 

He went to college anyway, thanks to a scholarship, and became William H. Gross, managing director of Pacific Investment Management Co., controller of more than $600 billion in fixed-income investments and perhaps the most influential bond investor in the world. Somewhere along the way, he decided to give a try at assembling a stamp collection with better financial staying power than his mother's -- and in the process learned that building a portfolio of rare stamps is not all that different from building one of bonds.

 

"I knew stamps could be a money-losing proposition," he said yesterday. "Being a bond investor, I wanted it to be a hobby, but a successful one. I just didn't want to lose my shirt."

 

He hasn't.

 

His collection, along with dozens of others, are on display at the World Philatelic Expo over the next week at the Washington Convention Center. Gross's collection is in competition to be named, in effect, the most impressive stamp collection in the world.

 

He owns -- and has put on display -- every stamp the United States produced from 1847 to 1869, including the 1868 1-cent "Z Grill," a specially embossed stamp with the image of Benjamin Franklin, of which only two are known to exist. It cost him $3 million, via a trade in which he gave up four 1918 24-cent "Inverted Jenny" stamps. In total, his collection is valued in the tens of millions of dollars. (Forbes magazine estimates Gross's net worth at $1.1 billion.)

 

It has been a good few years for rare stamps. There are no reliable indexes of the values of rare stamps, but Charles Shreve, of Shreve's Philatelic Galleries, said that in a typical example of recent appreciation, an 1869 15-cent stamp with an inverted center sold at auction in 1993 for $209,000 and in 2004 for $418,000. It just traded hands this week, he said, for $800,000.

 

Gross examines that rapid appreciation in the last couple of years through an economic prism as well. It is a function, he said, of excess liquidity sloshing around the globe, a result of easy money policies in Japan and the United States.

 

"The liquidity provided by central banks over the past two, three, four, five years has led to asset appreciation not just of homes, but of stamps, collectibles, gold and commodities."

 

He started out as a serious stamp collector in the early 1990s, when he was becoming wealthy from the investment-management business. He fondly remembered collecting stamps as a young man but hadn't engaged in the hobby in decades.

 

So Gross went to see a stamp dealer, who offered to sell him a group of stamps for $2,000. In trying to make that transaction work, he used his business training.

 

"Being a bond trader, I wasn't about to pay face value," Gross said yesterday, as workers set up booths on the vast convention floor. "I told him I'd pay him $1,800 and promise to make him my dealer as I built my collection over subsequent years."

 

"He said 'No deal.' I said, 'Sorry.' I figured the person I wanted to do business with would have to be flexible."

 

Eventually he settled on such a person, Shreve, who serves as Gross's "philatelic adviser." For years, he did not publicly identify himself and was known in auctions only as "Monte Carlo," spurring widespread speculation in the stamp world. He identified himself only recently and agreed to interviews about his collection for the first time this week, to publicize the Philatelic Expo.

 

Just as he intensively researches the characteristics of fixed-income securities before he buys them, Gross built a library of records of past auctions at his home in Laguna Beach, Calif. When he is considering buying a stamp, he researches its history at auction. By examining what price it sold for in 1928, for example, and 1953, 1974 and 1992, he can get a sense of whether the stamp is sufficiently rare to appreciate at roughly the same rate as U.S. economic growth.

 

This helps him avoid the trap his mother fell into -- buying stamps too common to rise in value over time.

 

Moreover, it is his strategy to make purchases only when he feels he has some edge on price, such as when a seller is eager to unload a stamp. He said he has followed that strategy consistently ("I have bought well," he said) -- with one exception: the Z-Grill, part of an experimental production in which only 1,000 were made. Two are known to exist; the other is on display at the National Postal Museum.

 

That was the last stamp he needed to complete his collection of mid-19th-century U.S. stamps. In that case, he lacked leverage.

 

"I think they knew I was an eager buyer."

[LuckyCantor-migration]

Interesting read!!!

[shadroch]

Short version-study before you invest.

The bottom line is that very few members of this forum will ever be buying books that are super-rare,one of a kind comics.

Now,with the new "forever" series of US Postage stamps,there may be an angle to investing in them.If you buy 10,000 of the new stamps at 40 cents each,and wait twenty years until postage is $1,you'll net $6,000.

[Sal]

Short version-study before you invest.

The bottom line is that very few members of this forum will ever be buying books that are super-rare,one of a kind comics.

Now,with the new "forever" series of US Postage stamps,there may be an angle to investing in them.If you buy 10,000 of the new stamps at 40 cents each,and wait twenty years until postage is $1,you'll net $6,000.

 

postal futures trading. someone give shad a copyright or something here wouldja

[lou_fine]

When he is considering buying a stamp, he researches its history at auction. By examining what price it sold for in 1928, for example, and 1953, 1974 and 1992, he can get a sense of whether the stamp is sufficiently rare to appreciate at roughly the same rate as U.S. economic growth.

 

Mark;

 

Maybe it's time for you to come up with some trend graphs for books such as Action Comics #1 and 'Tec #27 and send a copy of them to this guy here. Just think, you could become his personal dealer similar to what Shreve did for him in the stamp market. As long as you can do a better job than what Hughes had done for JP.

 

Seriously though, I doubt somebody like Gross would ever become a player in the comics market for an extended period of time. The comics market, unlike the coins or stamp market is just far too illiquid in the sense of lack of both supply on one hand, and big money collectors on the other.

[tth2]

Good article, thanks for posting it, Mark. Gene is undoubtedly beside himself with glee after reading this.

 

A few things from the article immediatley jumped out at me:

 

"Being a bond investor, I wanted it to be a hobby, but a successful one. I just didn't want to lose my shirt."

This is a great line, and reflects my own views on comic collecting.

 

His collection, along with dozens of others, are on display at the World Philatelic Expo over the next week at the Washington Convention Center. Gross's collection is in competition to be named, in effect, the most impressive stamp collection in the world.

You know, it's a real shame that the guys with the killer comic collections like Dave Anderson and John Verzyl have never felt any desire to share their comic book collections with their fellow collectors by publicly displaying them at a major con or museum of some sort. Even Geppi hasn't really publicly displayed the real gems of his collection, as far as I know.

 

So Gross went to see a stamp dealer, who offered to sell him a group of stamps for $2,000. In trying to make that transaction work, he used his business training.

 

"Being a bond trader, I wasn't about to pay face value," Gross said yesterday, as workers set up booths on the vast convention floor. "I told him I'd pay him $1,800 and promise to make him my dealer as I built my collection over subsequent years."

 

"He said 'No deal.' I said, 'Sorry.' I figured the person I wanted to do business with would have to be flexible."

Good to see that stamp dealers are as stupid and myopic as comic dealers.

 

In so many of these cases (both comics and stamps), the old expression "For want of a nail, the kingdom was lost" comes to mind. This dealer could have landed the proverbial "whale" client and lost him over 200 measly bucks.

 

This helps him avoid the trap his mother fell into -- buying stamps too common to rise in value over time.

A good lesson learned, and a trap that so many comic collectors also fall into.

[Norrin_Radd]

Thanks for posting that, Mark. I had heard about Gross in a previous krazykat thread.

 

And I agree with shadroch that the forever stamps seem interesting. I heard about them on NPR.

[ComicBookGuy]

Good article, Mark. Thanks for posting.

I'm curious if you made it down to the big show?

I did and was impressed by the professionalism of the dealers and the entire tone of the show in contrast to a comic show. You go into a booth and sit down on a leather couch to page through inventory, or you sit on a cushioned bar stool as you're waited on. I saw what was tantamount to a museum on display for everyone to see, was never pressured to buy anything, left with lots of free stuff, and was not charged admission. Comic dealers and convention exhibitors could learn a thing or two from the stamp world. Not that I'm thinking of switching teams, but don't think it didn't cross my mind today.

[ShoNuff-migration]

Not that I'm thinking of switching teams, but don't think it didn't cross my mind today.

 

Not that there's anything wrong with that.

[Silver Surfer]

Even Geppi hasn't really publicly displayed the real gems of his collection, as far as I know. .

 

Hopefully that will change with the new museum (btw has anyone heard any recent news on its progress?) This article reminds me why I'm glad I shifted the bulk of my collecting focus mainly to rarer GA books. Moral of the story, be kind to billionaires.

[drdonaldblake]

interesting read

 

im wondering when guys like verzyl and geppi and anderson die, will their children inherit their comics or will they be sold?

 

i remember reading here that andersons son also collects?

 

what about geppi and verzyl?

[tth2]

The 2 "D's", Death and Divorce, used to be among the biggest reasons why great collections got broken up and sold. However, I'm sure Anderson and Geppi have state-of-the-art tax advice to make sure their heirs don't have to sell anything they don't want to.

[adamstrange]

interesting read

 

im wondering when guys like verzyl and geppi and anderson die, will their children inherit their comics or will they be sold?

 

i remember reading here that andersons son also collects?

 

what about geppi and verzyl?

 

The Geppi kids have been involved in the collection and Veryzl's daughter is with him at shows.

[adamstrange]

The 2 "D's", Death and Divorce, used to be among the biggest reasons why great collections got broken up and sold. However, I'm sure Anderson and Geppi have state-of-the-art tax advice to make sure their heirs don't have to sell anything they don't want to.

 

The auction houses usually refer to the 3 D's of dispersal as death, divorce, and debt.

 

Bankrupticies are good for business.

[adamstrange]

His collection, along with dozens of others, are on display at the World Philatelic Expo over the next week at the Washington Convention Center. Gross's collection is in competition to be named, in effect, the most impressive stamp collection in the world.

You know, it's a real shame that the guys with the killer comic collections like Dave Anderson and John Verzyl have never felt any desire to share their comic book collections with their fellow collectors by publicly displaying them at a major con or museum of some sort. Even Geppi hasn't really publicly displayed the real gems of his collection, as far as I know.

 

Geppi has displayed material from his collection at the Diamond Galleries for special events over the years.

 

The Philatelic world is very different in that research and display of a collection and winning competitions is a prime motivator for the hobbyist. In the 70s/80s one Japanese businessman, Ryohei Ishikawa, put together a couple collections that didn't win before he spent big bucks (20+ million) to put together one of the finest collections of 1847 - 1869 stamps that won him first prize. I wouldn't be surprised if some of the items from his collection have made it into Gross's.

[esquirecomics]

Mark;

 

Maybe it's time for you to come up with some trend graphs for books such as Action Comics #1 and 'Tec #27 and send a copy of them to this guy here. Just think, you could become his personal dealer similar to what Shreve did for him in the stamp market. As long as you can do a better job than what Hughes had done for JP.

 

Sad to say that everytime I hear of some comic collector having someone front for them for advice on major purchases, I only hear of horror stories. Too often people don't look towards the long term rather than trying to make out big in the short term.

 

Seriously though, I doubt somebody like Gross would ever become a player in the comics market for an extended period of time. The comics market, unlike the coins or stamp market is just far too illiquid in the sense of lack of both supply on one hand, and big money collectors on the other.

 

I became a stamp collector (though not active for years) at the same time I became a comic book collector more than 30 years ago. At times, particularly in the late 1970s/early 1980s, it would likely would have been accurate to state I was far more involved with stamps than comics. Yet, just like the article noted, my collection has barely increased in value in 25 years and even some stamps, for which I still have the price paid, decreased!

 

Comics have had their ups and downs to be sure, but has been a market far better and profitable than stamps. Unless, of course, you have the resources like Gross has to invest in certain stamps. I don't pretend to know the stamp market anymore, and I have little doubt there is money to be made there, but the two markets are very different from an investment standpoint. Though I like from a collecting standpoint, i.e., what interests people, they are very similar. I bet there is a great deal of overlap between the two communities, such as with me. I still love stamps, but more for pure enjoyment (I still take out my albums and look through them, and I have my great-grandfather's 1892 album) than for investment.

[esquirecomics]

Good article, Mark. Thanks for posting.

I'm curious if you made it down to the big show?

I did and was impressed by the professionalism of the dealers and the entire tone of the show in contrast to a comic show. You go into a booth and sit down on a leather couch to page through inventory, or you sit on a cushioned bar stool as you're waited on. I saw what was tantamount to a museum on display for everyone to see, was never pressured to buy anything, left with lots of free stuff, and was not charged admission. Comic dealers and convention exhibitors could learn a thing or two from the stamp world. Not that I'm thinking of switching teams, but don't think it didn't cross my mind today.

 

I have not yet attended, but it is there this entire week and I think I will go.

 

Definitely some marketing strategies to consider.