Friday, September 11, 2009
"Seconds," or "second choice stamps" are stamps with defects, which sell for far less than sound examples. Some beginning collectors mistakenly believe that a stamp with a defect is worthless, but nothing could be further from the truth. While a sound, well-centered stamp with a high catalog value may be out of reach for many collectors with limited budgets, the same stamp with a Very Fine appearance and a minor defect may provide a more affordable alternative.
A variety of factors determine the percentage of catalog value for which a second will sell, including the type of defect, the appearance of the stamp, the popularity of the issue, catalog value, and whether most or all stamps of a particular issue are faulty. A stamp with a crease or a thin will usually sell for more than one with a tear, because a tear may widen. A stamp with a VF appearance will sell for more than one which appears Fine, Average, or Poor. A stamp from a popular issue, such as the U.S. Zeppelins, Columbians, or Tran-Mississippis, will sell for more as a second than one that is more obscure. A second with a higher catalog value will sell for a higher percentage than one with a lower catalog value. Finally, if most or all of the stamps of a particular issue are known to be faulty, as is the case with some rarities, then condition problems will be less relevant. Often when this is the case, it is noted in the catalog.
The third and fourth factors listed above (popularity of issue and differential in percentage paid based on catalog value) are the most relevant to stampselectors, because they reflect market trends which may be analyzed and predicted. If a particular issue appears to be becoming more popular, then the percentage paid for its seconds will also increase. The same is true if a stamp's catalog value substantially increases over time.
Typically, a VF-appearing second of "average" popular appeal, which catalogs for between $500 and $ 1,000 will sell for about 8-10% of catalog value. If a similar stamp has a catalog value of between $ 2,000 and $ 5,000, it will sell for between 12% and 15%. In other words, collectors will pay a higher percentage for a second which catalogs $2,500 than they were willing to pay for the same stamp when its catalog value was $500.
The reason for the difference is obvious. As a stamp becomes more pricey, the pool of collectors willing to buy one with a condition problem grows. Simultaneously, the number of collectors who can afford the far more expensive sound stamp decreases, and consequently, unless demand for the sound stamp is very strong, the sound stamp will tend to sell for a lower percentage of catalog value at a higher level than it did when the stamp was more affordable.
The logical conclusion may seem counterintuitive but is valid nonetheless: a defective stamp (or second) purchased at the right level, may sometimes be a better investment than a sound one.