William H. Gross is a familiar figure in the investment world. Author of several books on investing, co-founder of PIMCO and manager of the worlds largest bond fund, he is often referred to as The Bond King.
Less well known is the fact that he is also an internationally regarded stamp collector.
When he was a young boy, Gross mother started buying sheets of modern-issue stamps from the post office. She thought she was making a smart investment for the future. Unfortunately, when it was time to go to college, Gross found out that the stamps were worth little more than their face value. Happily, he received a scholarship and was off to college anyway.
Gross interest in stamps never left him. As he earned his fortune on Wall Street, he started spending more and more money on his hobby. He is now the proud owner of the most complete collection of rare 19th century U.S. stamps anyone has assembled. Amongst these is the 1868 1 cent Benjamin Franklin Z Grill, which he acquired in a $3 million trade. It is regarded as the most valuable stamp in the world.
As I travel around the United States, speaking at various investment conferences, I meet many people who regard collecting stamps as a harmless, if slightly outmoded, pastime. But when Bill Gross put his British stamps up for auction in 2006, investors sat up and took notice said Stanley Gibbons Investment Portfolio Manager, Geoff Anandappa.
Over the previous 5-10 years, Gross had spent $2 million assembling his collection. When the auction ended, the sale had realized over $10 million. Its four times profit, Gross said. Its better than the stock market!
The Gross auction was a defining moment for rare stamps as an investment asset class. A renowned investor had made serious money from stamps. This was something new for the financial media. But for the 150-year-old Stanley Gibbons, it was old news.
Established in 1856, Stanley Gibbons Ltd. is the oldest and largest stamp dealer in the world. In 1914, King George V awarded the company the Royal Warrant and today, Stanley Gibbons is still Philatelist to the Queen. This is a small company with a big asset, said The Times. Its brand is imbued with an unblemished reputation for expertise and honest dealing.
Generations of schoolchildren have pored over Stanley Gibbons stamp catalogues and albums. You may have been one of them. Bill Gross is by no means the only famous stamp collector. President Franklin Roosevelt popularized the hobby during the Great Depression. Today, President Nicholas Sarkozy of France is known to be a passionate stamp collector. As is Maria Sharapova, the Russian tennis ace. Many of the royal dynasties of Europe, such as the Rainiers of Monaco, have valuable collections built up over generations. And the most comprehensive collection of British Commonwealth stamps is owned by Queen Elizabeth II.
You may be surprised to learn that most stamp collectors now are in Asia. It is reckoned that, of the 50 million or so registered stamp collectors, 12-15 million are in China. The 2009 World Stamp Exhibition, held in Luoyang, attracted an estimated 750,000 visitors. In India, too, philately is a well-respected hobby amongst the burgeoning middle class. It is estimated that stamp collectors worldwide spend some $10-20 billion each year on their hobby.
Every year, Stanley Gibbons compiles an index of investment-grade stamps, based on the catalogues theyve been publishing for the past 140 years. For example, the GB30 Rare Stamps Index tracks a portfolio of classic British stamps. It has averaged gains of 9.7% per annum since the 1950s and, during all that time, has never fallen in value.
The GB30 Index demonstrates the value of rare stamps as an alternative investment, uncorrelated with mainstream asset classes. In 2008, when stock markets, property and even gold were tumbling, the GB30 Index was up 38.6%.
Even today, there is relatively little investment money in stamps. Most of the rarities are still owned by dedicated collectors who hold on to them for years. But this is gradually changing, as new investment options are offered. For example, Stanley Gibbons pioneered a number of investment products, some with guaranteed returns and capital protection.
I like to tell audiences that, when you invest with Stanley Gibbons, you will be diversifying into an off-shore investment that comes with a capital guarantee said Geoff. In addition, Stanley Gibbons has no management charges and offers free storage for your stamps in their vaults.
I hope youll take another look at rare stamps as an enjoyable hobby and as a potentially lucrative investment. Rare stamps are indeed one investment you can love.