The Glory Decade of Stamp Collecting - By: David L Stargel

If you participated in the US housing market boom which occurred
between 2001 and 2005, you might have an idea of just how much
money can be made when speculative fever sweeps through a
particular market sector.

But what you may not know is that the same sort of speculation,
during the 1970s, surged through the market for collectible stamps, and from the beginning to the end of the decade prices for some US postage stamps increased 1000%.

That sort of appreciation dwarfed anything seen in the recent
real estate bubble, and it was not uncommon for stamp dealers to
be offering double the current catalogue rate for stamps in good
condition, simply because they knew they could sell them for a
profit as soon as they put them back on the market.

When a collector was able to purchase particularly sought-after
stamps, he or she would often simply put them away, reducing the
market supply and causing a further increase in their value. And
all of this stamp speculation was happening against a background
of both double-digit inflation, and collapsing stock and bond
markets. In 1979 alone, the overall value of collectible stamps
rose nearly 61% while the stock market increased only 5.3%.

Postage stamps became a favored haven for investment dollars and
retirement funds, and as usually happens when a market for a
particular investment is discovered, stamp dealers set up shop
in record numbers. Most of them, however, had one thing in
common: before the influx of money into the market, their
closest association with postage stamps had been licking them
and affixing them on their outgoing mail.

These dealers pointed out that since the first British Penny
Black postage stamps was issued in 1840 and the first US 5c
Benjamin Franklin postage stamp in 1847, stamps were a commodity
the value of which never decreased (an uncancelled penny stamp,
no matter when issued, will still buy you a penny’s worth
of mail transportation) and collectible stamps were one of the
very few commodities which held their value even through the
dark days of the Great Depression.

Stamps were being promoted as investments in terms of their
rarity, grade, and collectibility. Little mention was made of
the lack of liquidity which would arise as the number of
collectors who had all the stamps they wanted increased. Before
the buying frenzy was over, some speculators would simply show
up at stamp shows, buy a stamp lot from one dealer, and flip it
for a five or ten percent profit before leaving the building.
Holding an inventory of stamps simply became unnecessary.

But like the 21st century real estate bubble, the stamp bubble
of the 1970’s ran into reality, and like those real estate
speculators who ended up losing their last home purchases to
foreclosure when home buying came to a screeching halt, the
economic policies of the Reagan years spelled doom for the stamp
market. The market fell by nearly 70% over the next five years,
although some eternally optimistic dealers kept their catalogue
prices well above what the market would bear.

The stamp market of the 21st century is back in the hands of the
true collectors who buy stamps for the pleasure of holding them,
but collectors who have the discipline buying to limit their
purchases to the right postage stamps at the right point in the
economy are the ones who will avoid the disappointments left in
the wake of the 1970’s postage stamp boom.

If you participated in the US housing market boom which occurred
between 2001 and 2005, you might have an idea of just how much
money can be made when speculative fever sweeps through a
particular market sector.

David Stargel is the owner of several web businesses and enjoys writing articles about how the internet is affecting business. Get more information regarding stamps.