Wednesday, June 20, 2012

Collecting Stamps - Risk vs Reward - the truth about stamp investment

Volatile. No single word is more likely to unnerve the investor.

Volatility means that the headline grabbing figures you read about a month ago can disappear overnight. Volatility means that if you part with your money, you do so with your fingers crossed. And if you invest in volatile markets too often, you're going to get burnt.

It's a word that has been applied to the stock markets for years, and in the past few months to gold (down 1.06% since April).

It's also a term that has been labelled against the collectibles market, in some cases with justification. The wine sector witnessed a large-scale correction last year, although it appears to be returning to health. Values for all but the finest pieces of antique furniture are also in a decade-long slump.
But one area where volatility does not apply is the rare stamps sector, and it's a key reason why I think you should be seriously considering stamps as a component of your portfolio.

Stamps vs Stocks - the volatility ratings revealed

A recent comparison by Livemint.com of risk-adjusted returns found that the 100 leading investment-grade British and Commonwealth stamps comfortably outperformed the Dow Jones between December 1998 and January 2012.

The well-respected SG100 Index revealed that those leading 100 stamps brought returns of 5.54% pa over the 14-year period, comfortably beating the Dow Jones figure of 4.52%.

The volatility of the 100 stamps - that is the standard deviation of annual returns - was just 2.55%, providing an Annual Return/Volatility rating of 2.17.

The figures are in stark contrast to the Dow Jones' whopping 15.66% volatility and a rating of just 0.16.

The SG100 also had a better rating than gold, which despite its 14.62% annual returns during the time frame, suffered from 17.44% volatility to provide a rating of 0.84.

You can capitalise on the security of stamp investment with Paul Fraser Collectibles, the home of the stamp investment experts. Until recently I was the owner, and Chairman, of renowned stamp dealer Stanley Gibbons, while my colleague Adrian Roose was a founding director of Gibbons' investment department.

If you are interested in buying quality Stamp supplies to store your investment quality stamps - go to www.boscastlesupplies.com

Source: http://www.paulfrasercollectibles.com/section.asp?catid=211&docid=11168&n=200612

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