Stamp collecting: Hobby or Investment?

Inverted Jenny

An “Inverted Jenny” was sold at an auction in June 2005 for $525,000.

Few hobbies are pursued as universally as stamp collecting. Although the vast majority of collectors are looking at this as a hobby, a study shows that this passion is among the top four investments of the 20th century, producing the second best annual returns.

A 2009 study by two finance professors, Elroy Dimson at London Business School and Christophe Spaenjers at HEC Paris, of the investment performance of British collectible postage stamps between 1900-2008 shows an annualized return of 7% in nominal terms, or 2.9% in real terms:

Mean nominal returns

Real returns

Geometric

Arithmetic

Geometric

Arithmetic

Stamps

7.00%

7.70%

2.90%

3.60%

Equities

9.20%

11.20%

5.10%

7.00%

Bonds

5.40%

6.00%

1.40%

2.30%

Treasury Bills

5.00%

5.10%

1.10%

1.20%

Art

6.40%

7.30%

2.40%

3.20%

Gold

4.70%

6.10%

0.70%

2.00%

Inflation

4.00%

4.20%

Source: Ex Post: The Investment Performance of Collectible Stamps http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1444341

Stamp collecting reached its zenith in the 1960s and 1970s. Despite the 1980s bust and the lower interest among younger generations, stamp collecting remains one of the world’s most popular hobbies and as the above study shows one of the most profitable investments.

And this is not a small niche industry: the tens of millions of stamp collectors worldwide annually spend up to $10 BILLION on their hobby.

2 comments

  1. tony says:

    THX for sharing.

  2. Marisha says:

    Very valuable information, I am very grateful,I agree with your Blog~~~ so please keep up your work.

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