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Monday, November 16, 2009

General Commentary: Getting in on the Ground Floor

There is a saying on Wall Street that a good time to buy stocks is when there is "blood in the streets." The old adage also applies to philatelic investing, sometimes quite literally, when it comes to stamps of "basket case" countries which have "bottomed out" due to war or economic stagnation, and for which the situation can't get much worse. Of course, there is the possibility that such a country's situation may not improve much in the long-term, but remain bad indefinitely. Fortunately, there are ways of investing in stamps of stricken nations which minimize the consequences of this risk.

There have been many notable examples of countries which have risen from misery, and for which the stamps have followed suit. The three Axis powers of World War II - Germany, Japan, and Italy- were impoverished for years following their defeat, and stamps of those countries purchased during the lean years of recovery and reconstruction have risen considerably. Many of the countries of the Far East and South Asia were considered Third or Fourth World nations only a few decades ago, yet based on their recent growth, the time may come when Chinese or Indian parents tell their children to finish the food on their plates and pity the poor, starving Americans. Latin America, once a region dominated by corrupt, oligarchical dictatorships and American multi-nationals, has experienced a mega-trend of democratization and economic reforms which has created greater prosperity and a nascent middle-class where none existed before.

Of course, it is always possible that a stricken country will remain so for decades. When investing in stamps of such a country, the risk of loss may be minimized by investing in stamps which are sought by collectors outside of the country itself - extremely scarce to rare key items which are of interest to specialists, and scarce popular topical issues which appeal to collectors worldwide. Demand for such stamps will not be significantly affected should the country remain in the doghouse or even decline further, but will increase rapidly if it breaks out.

1 comment:

  1. Then it's probably the best time to buy Hong Kong!