Economy falling down... when to buy?

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You may not be aware, but in the 19th Century collectors of coins, stamps, art, and other collectibles never expected to make a profit from their hobbies. They bought things solely because they liked them. They paid for the pleasure of owning and handling the material. Many collectors ending up selling at a loss as confirmed by existing early auction records. In those days a rare coin might not change in value for 20 or more years.

It was only in the 20th Century that buying for investment came onto the scene. The fundamental question is "Why should we always expect to make a profit?" Often we do make a profit, but not always. After all, we never expect to make a profit on the vast majority of other things that we buy, e.g., cars, televisions, CD's, furniture, clothes, etc.! Why should coins and paper money be any different?? One problem with paper money, coins, stamps, etc., is that although they are easy to liquidate in good economic times they are not so easy to liquidate in bad economic times. After all, you cannot actually force anyone to buy the note that you want to sell! The same goes for real estate too!

The moral of the story has always been to buy what you enjoy owning and don't become obsessed with making a profit!

You may not be aware, but in the 19th Century collectors of coins, stamps, art, and other collectibles never expected to make a profit from their hobbies. They bought things solely because they liked them. They paid for the pleasure of owning and handling the material. Many collectors ending up selling at a loss as confirmed by existing early auction records. In those days a rare coin might not change in value for 20 or more years.

It was only in the 20th Century that buying for investment came onto the scene. The fundamental question is "Why should we always expect to make a profit?" Often we do make a profit, but not always. After all, we never expect to make a profit on the vast majority of other things that we buy, e.g., cars, televisions, CD's, furniture, clothes, etc.! Why should coins and paper money be any different?? One problem with paper money, coins, stamps, etc., is that although they are easy to liquidate in good economic times they are not so easy to liquidate in bad economic times. After all, you cannot actually force anyone to buy the note that you want to sell! The same goes for real estate too!

The moral of the story has always been to buy what you enjoy owning and don't become obsessed with making a profit!

I totally agree with you. REAL collector know this moral. If you planning to make profit with banknote well maybe your not a real collector !

Patrick

bugsy: Although collecting notes is a hobby, it is one where you're trading assets. And you do not trade assets to make a loss. The time and energy you spend to have a collection is the "hobby" part. But the money you spend and the calculations you do is the "investment" part. One can make an argument for a gambler who gambles as a "hobby" or someone who plays Poker as a "hobby". You do not spend money on gas and all that time of yours to go to a Poker game without hoping to win some money.

Although some notes may be 100% for a hobby, where will a 1935 $20 bill that sits in the closet take you? You can impress your friends by showing it to them and telling them how much it's worth and the history behind it. I showed my sister a 1935 $2 bill that's worth $625 and what does she do? She buys a 1974 $2 bill (very bad quality) from a friend for $10. I told her it was really stupid and she was like "whatever it's only 10 bucks" and she spent the bill at face value (dumbest thing ever).

But overall, it is an INVESTMENT. When my kids go to college, I know that of I don't have the cash (God forbid), the $10K that I have spent in my collection can bring me back $100K then and that could make the difference between my boy becoming a doctor or a 9-5 commoner. But most probably my kids will have some of the bills that their generation can only obtain from shows for thousands of dollars a piece.

Also, would you ever buy a rare bill at above the book value? I mean wouldn't you want some kind of insurance that you can get your money's worth eventually... if not within a year, at least when the next series of bills come out.

I have purchased many notes at above catalogue value, and would do so today, even with the current economic uncertainty. I have never regretted any of those above-book purchases.  Those are the purchases that have always resulted in the best returns, when a sale occurs. Good material will always translate to good returns, whether for collector satisfaction or investor purposes. The few times I have not made such a plunge are what I regret most.

Well put Alvin.
 I often tell collectors to buy the note/coin, not the bargain.
Often, choice material is not bargain priced, nor will be in the future.

the $10K that I have spent in my collection can bring me back $100K then and that could make the difference between my boy becoming a doctor or a 9-5 commoner.

I don't think money will be the determining factor as to whether or not your son becomes a doctor or as you say "a 9-5" commoner

eyetrade:

I will have to disagree with you. All hobby's cost money and I'm not doing it for an investment purpose. I do it because I love doing it. If I was doing it for investment purposes I can think of loads of ways to make better and quicker money then investing in paper money. The investment is something that will  take place after keeping it for some time. That's just a bonus as far as I'm concerned. I know lots of people that are just addicted to collecting notes and there entire collection is not worth 1000 dollars but they are in it for the spirit not the potential to make money.. If you think your collection is the cost of your son being a doctor or a 9-5 person you are in it for the wrong reason, I think..  And always remember to stay within your means.. I collect because I enjoy it and if I can make some extra cash great. Ask how many people would still collect if they could not make any money at it, and I bet most would say yes, because they are in it for the love of the hobby and not the big money like you are..

I collect because I enjoy it and if I can make some extra cash great. Ask how many people would still collect if they could not make any money at it, and I bet most would say yes, because they are in it for the love of the hobby and not the big money like you are..

I agree with you on this...I collect because I enjoy it...not because it will make me rich....and as you said there are better ways to make money....

We all believe in telling people to collect for fun, and the money is secondary.
Truth is, paper has been a great investment long term.
Compared to stocks that have peaked and dropped.
Bettered only by real estate that has skyrocketed, but in certain regions only.

For those of you collecting for the pure joy of it and disregarding the investment aspect of our hobby, you may be pleasantly surprised by the value of your collection once your ready to sell or pass it on.

The truth remains that this has developed into an investment oriented hobby where the risk of depreciation exist as does the potential for growth. It is difficult to compare this to any sporting hobby as the capital invested in numismatic is very likely to sustain its value.  I am confident in saying that many of the future and existing members will not continue our hobby if they do not see the same potential.

I have always liked member "Ottawa" signature " Buy the very best notes that you can afford and keep them for at least 10 years. "

I am not saying I do it to get rich. But it's still in a way an investment. When you're looking for a rare bill where the face value is insignificant and the difference between one grade to another involves in hundreds, if not thousands, you tend to shop around to get the best quality for the least price.

If I can buy a $20 bill that's worth $180 for $120 because the auction's end time was overnight, I'd be happy to resell it at $170 and buy two notes in exchange.

I know it out of the topic “Economy falling down …. When to buy”

When reading forum members comments here, I want people to take in consideration for the following illustrations:

First, I got a neighbor buying their 2nd house nearby and rent it out to cover the mortgage.  The husband told me because he got two kids, so 10 to 20 years down the road, each kids can get one.  He’s planning for his kids.  If one day he needs the money and sell the 2nd house, do we consider him as an investor, or using our term as collector?

Second, I got a distance friend with hobby to buy old antique cars (1930 to 1950) and I would say he’s a 100% collector.  He got a good government job (6 digits salary), no kids and every month spend money to rebuild those cars …..  Who's going to own the cars when he pass away?  Can the selling price over his total costs?  Probably not.

Third, how do we distinguish a collector, reseller or dealer?  100% buying not selling classify as collector … or 90% as collector 10% reseller …. something like that …., it’s really hard to draw a line.  In real world, I believe even a collector may still sell his collections.  Not talking he makes money or not, I am talking his reason because he changed his mind to collect [1] Chartered Bank Notes from BOC Notes or [2] “Solid Number Notes”

Fourth, I have a relative with hobby to taste “Red Wine”.  This is his only one hobby and he can’t sell it, he just to enjoy it.  Is it cost him money?  Definitely yes and without any return except personal satisfaction.

It’s not we need to raise our children that we have no choice.  We have choice to select our hobby and determine how much to spend ……

My comment is don’t over spent (means don’t use all your money to buy notes), we need to have some reserve in our bank for emergency or using investment adviser's term “don’t put all your money into one single basket”.

No one has a conclusion for this topics and it leaves to everyone to digest just like we buy what we like to buy (means collections) …..

Lastly, I agreed with kid_kic79 that this hobby has developed into an investment hobby.  Ask yourself whether you want quick money or really to enjoy your collections?


Good economy, bad economy, people still spent money.

Good economy, bad economy, people still spent money.

Relatively.

Good economy = Stable job, productivity, inflation, basic life needs covered, money to burn (ie: spend, invest, travel, leisure) = More jobs, more spending, more production/innovation.

Bad economy = Lower demand --> Lower production --> Layoffs --> Lower buying power --> Bad business, struggle to keep up with life's basic needs, very little room for luxury. Might even consider liquidating assets, investments, savings, etc.

If collecting is a hobby, the supply vs. demand will rise as people won't be able to afford such an expensive hobby. Those with $1000 bills sitting in the closet might need to liquidate them if their primary source of income has depleted.

The pure investors know the market swings relatively better and when market is good, they buy and sell to make a steady profit but when it's bad, they use their cash to buy buy buy! Because they know it'll return them big once market goes on a boom. They usually look at the primary trend more than the secondary trend. Though I know some traders in the market that look at daily fluctuations and most of them are losers in the long run.

Besides, if you're gonna put so much time and effort into a hobby, and work your ass off so you can afford it, why not put some work into it and make the hobby earn you money? Like in Poker.... some people work for the money so they can spend it in Poker, some people put the work in Poker (studying the game, managing bankroll) so that IT brings them money to afford better things in life. Who ever said a hobby can't be a part time job?

I have always liked member "Ottawa" signature " Buy the very best notes that you can afford and keep them for at least 10 years. "

I'd agree with that statement, judging from a majority of auction results I've watched that seems to be the case especially with the older rare notes.

If you're a just beginner in collecting banknotes it would seem to be a good time to buy since most common material would be selling for not much above face value.

Gasp  TD Bank is gonna charge me a $35 inactivity fee for not using my line of credit. This is gonna force me to order bricks more often. To me one of the fun aspects of collecting is the thrill of the hunt!

Dei Gratia

Hi everyone, I have to contribute to this one:

Any contrarian investor will be the person who waits to invest/buy until a time like this when economy crashes.   The question of when to buy really becomes a question of "are we actually at the bottom, and how long before recovery?"

So, that is the investor standpoint, as I see it.

From a collector standpoint, it doesn't matter, we have the notes we love, and that is great.  Like the car example.  Things may cost us more money, but the satisfaction in return is the payoff.

Cross over between collector and investor / speculator may be apparent when a collector needs to sell off because he is too far invested.

A car collector might have to sell off one of his beauties.
A note collector might need to divest himself to make the ends meet.

So, the time to buy would be at the lowest point (of course, but no one really knows where that is), and a person who has the available extra funds will be in the best position.

Those who needed to divest, are losing out.

That's the economy. 
I'm on both sides right now:   I need to do some divesting so that I can re-allocate assets.  They are notes from my personal collection, so I do not consider myself a dealer, but I am sure many people who see continuous sales posts from someone assume someone might be in it for the dough primarily.



Anyway, If I knew when to buy, then I would be able to see into the future, and if I could do that, I would have taken the 6 49 already. LOL

Have a good day everyone.

Hudsonab