The latest ad from Ryan Cole for his Unconventional Wealth newsletter has been pushing a lot of questions our way — and I can understand why.
He throws around examples of extraordinary wealth created from very small beginnings, of big-name folks who benefited from these “Queen’s Account” investments like Franklin Delano Roosevelt, Bill Gross, John Lennon, Mark Cuban, tennis player Maria Sharapova… and the list goes on.
And, of course, he talks about the man who, back in 2013, turned $5 into a million dollars using this same kind of thing. Crazy, right?
So, naturally, we want to know what this “Shocking Private ‘Account'” might be, and whether it’s worth considering. So I spent a little time digging through the ad to see if I could get you some answers — here’s a bit of the spiel to give you a taste:
“What I discovered shocked and excited me — a private way to grow wealth that’s completely outside the Wall Street machine.
“As far as I can tell, the ‘Queen’s Account’ has 4 major benefits.
- Can grow your money at clips way higher than the stock market…
- Has not gone down in value in over 60 years…
- Can be used by you today, starting with just a small amount of money that’s probably in your couch…
- Allows you to pull your money out at any time (so you’re not “locked in” like you are with 401(k)s or IRAs… and so that there’s no waiting around for checks to arrive like Social Security).”
So what is the “Queen’s Account?” Well, I hate to break it to you… but it’s really just “stamp collecting”
And yes, as was teased in the ad Maria Sharapova does have one of these accounts — and she was forbidden from talking about it by her agent. But that’s not because it’s such a fabulous and lucrative secret, it’s because her agent didn’t want her to lose her sex appeal. When the stamp hobbyist magazines are calling and elbowing aside GQ or Maxim (are those still even around anymore) for the next photo shoot, your income goes down.
Unconventional Wealth teased stamp investing before, too, starting a little over two years ago when they pitched what they were then calling “guaranteed Phi Accounts” with 12% returns. At that time, I concluded that they were teasing the stamp investment accounts managed by Stanley Gibbons, the preeminent collectibles dealer in the UK, and readers discussed that here.
This time, that 12% guarantee and the guarantee not to lose money are conspicuously absent from both the ad and the Stanley Gibbons promotional material. But I assume that Cole is probably still pitching the same thing — unless you are actually going to become a stamp collector yourself, buying rare and valuable issues from dealers or at auctions and holding them for many years until their value increases enough to create a profit (for you and the dealer, since this isn’t a really open and liquid market), then the Stanley Gibbons accounts make more sense for those folks who aren’t inclined to enjoy the hobby of philately but who want to “invest” in these collectibles with some expert advise.
Gibbons offers a few different kinds of accounts, with different minimum investments, but they basically all do the same thing — you invest a certain amount, they buy stamps with it that they recommend and store them for you, and when you want to sell they sell for you. It seems that now, at least according to their marketing material on their website, most of their income from this comes from profit sharing — they don’t mention any management fees or commissions (though those may exist, too, I don’t know), but they do say that for short-term trades they take more than half the profit and for longer-term investments they take 30% of the profit when you sell.
I can see how that works out pretty well for Stanley Gibbons — it helps them to create a more liquid market, since they effectively control all of this stamp-focused money, and they get a cut of a market whose values they pretty effectively control. OK, maybe “control” is an exaggeration — but they seem to set benchmark prices for much of the stamp collecting world.
The idea is pretty compelling — alternative assets always appeal to a certain subset of investors who think there’s got to be something better than stocks and bonds and cash and gold. The best rare stamps have certainly continued to increase in value over time, though you’re not going to be buying the best rare stamps for your $15,000 investment (that’s the minimum), and Stanely Gibbons has been around for a long time and done well for themselves, and presumably for stamp investors as well since they claim that stamps haven’t lost value for decades.
But, as with all kinds of investing in collectibles for neophytes, you’re essentially committing yourself to an opaque market where everyone you’re transacting with knows more than you do. That’s not necessarily a recipe for success. The investing model with Stanley Gibbons is interesting, with them only apparently making a big profit from you if you’re successful and make a profit selling your stamps in the end, but they also get the value of adding you as a buyer in their marketplace, whether you win or lose. You can check out their different kinds of investment accounts here if you like, but it’s not something I’m going to run out and put money into.
(Incidentally, Stanley Gibbons itself, which trades at SGI in London, was just about to make a nice run when I last covered this topic in January, 2013 — it went from 240 pence or so up to 375 before heading almost straight down over the last 18 months. Maybe if you’re not crazy about stamps, you’ll find that SGI appeals more… it’s not an obvious value, Bloomberg says they’re trading for about 50X earnings and have a 2% yield, but perhaps if stamp investing takes off they’ll benefit. Not currently holding my breath, but perhaps the Chinese investors burned by their stock market crash, real estate crash, and gold crash will be looking for a new place to put their money… maybe penny blacks?)
I’ve appended the original comments from our older article to this one so you can see some of the input from stamp collectors and other folks, just FYI. Please feel free to add your own thoughts with a comment below… and enjoy!