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!
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I’m a member and we’ve gone from good solid stock picks to buying papier-mache Santa’s being sold at flea markets and now stamp collecting. Go figure, this is as bad as Herve Villechaize demanding a million dollars an episode for this “starring role” on Fantasy Island. Maybe that’s the answer, maybe I’m on Fantasy Island. Listen can you hear the music?
http://www.youtube.com/watch?v=1x_QbVDlLbI
My kids still hold out hope for the return of the Beanie Baby investment mania … fingers crossed! 🙂
Love these remarks, thanks
Travis, I’ll bet I can find a Cabbage Patch kid in my garage! My former mother-in-law believed everything sold through the McDonald’s drive-thru was a “collector’s item”. I never did figure out what theat meant.
Heh… in my house they are collectors items. They collect dust…
My poor sister was lumbered with scores of them that I bought her when we were kids.
My daughter’s first Beanie Baby she got as an infant just went off to college with her. I’d say we got 1000x return on our investment. When it is finally time to cash it in, it will probably get buried in the back yard next to the family dog.
Stamps are as real as the USD or the stock market – LIGHTEN UP !!!!
Trusted stamp dealers always told me “buy (collect) stamps for enjoyment of the hobby, and definitely NOT for investment purposes.
I buy/bid on stamps available on foreign auctions. The seller of these stamps pays the auction house 20% of the realized price. The buyer also pays 20% in addition to the realized price. How long does it take for the stamps to increase 40% in value? A long, long time and possibly never. Many stamps issued in the 1800’s have practically NO catalog value today. So go figure.
So buy stamps for the enjoyment of collecting and for no other reason.
Steve Lombardi, please lighten up. Travis got notified of something being hyped, then analyzed it, and it turned out to be a comapany that deals in stamps (collectibles). When you say we have gone from good solid stock picks to stamp collecting; that’s not Travis’s fault, he was asked to smoke it out and that’s what was there. This is the best service for the cost on the internet, and I hope travis is always open to smoke out whatever is hidden behind the smoke screen.
As you can see “Blackwater” I use my legal name. You missed my point. I wan’t picking on Travis, I rather enjoyed his article. I was poking fun at UW, of which I’m a paying member. I was telling Travis where the UW has been and is heading. Re-read my comment and you’ll see.
That’s what I thought.
Yeah, I saw that right off too.
Travis if you look back into the ownership and history of Stanley Gibbons you’ll find the name of a legendary investor from New Zealand called Sir Ron Brierley….Sir Ron started of in the 1960s investing in many money making companies in both Australia and New Zealand. He’s pretty much retired now and lives still in Sydney, but he figured out that to move money across borders years ago during times of restricted money movement (still the same today) why not buy a valuable stamp (easy transportation) in one country and sell it in another…the next logical step was to buy the price setting business Stanley Gibbons, thereby establishing a price guarantee in many countries. This was just one of many little tricks used over the years, Sir Ron was our Warren Buffett
As we say in the south. You just hit the nail on the head. A rich investor had a bunch of money to move and protect so he went into the stamp collecting business. Being very wealthy he could afford the most collectable, therefore pretty well guaranteeing his money would be safe until he could move it and cash out. But Stamps as with any other collectable’s value depend on current value, estimated future value, and collector participation in that market in the future. There is no guarantee that any collectable will make profit and if it does, it will never (or at the least rarely) be a short term deal. I’m not saying that there is anything wrong with it. I’m just saying that (1) it is with rare exceptions a long term thing and (2) NOBODY can guarantee you a profit for very long and I suspect that that will change. Again, I’m not bashing stamp collectors. I just know that I can research and make a decision about other investments and get out at any time without having a mandatory waiting period and penalty if I want to unload a loosing trade. To me. That makes better sense.
AND, aren’t collectables taxed at your regular income tax rate, NOT capital gain rate, when you sell?
And stamps in the 80’s suffered a huge bear market, nobody wanted them. I don’t think they are cheap now.
Rare stamps and rare coins are like buying property. For property it’s all about location. For these items it’s all about rarity, quality and demand. Usually the rare items that eventually turn a profit are those that are very expensive to begin with.
Good god Ron, 28% tax on collectibles, and heres me thinking the robbing bastards in the UK were harsh,. time you had your own little revolution mate, 28% you dont need a gun to commit robbery, join the IRS.
Also be aware of the tax consequences of collecting stamps for a profit. From the IRS website: “‘Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate.”
SG along with sister company Paul Fraser offer real and valuable alternatives to stocks. It is not just stamps but from a rare Ferrari, famous autographs and such as gold and silver coins from Elizabeth 1 and so on. The risk is that the rare ‘something’ you have bought receives a hit as a metal detector or old archive of books suddenly throws up numerous similar items in similar condition. I am on the edge to invest and diversify but have not jumped yet. There is a request to divorce from Henry V111 to The Pope at well over 100,000 sterling but I guess in the end it is solely based on supply and demand! I believe they both offer 120% guaranteed return as a minimum over five years on certain rare items. I am a Brit and would trust Gibbons and Fraser having known SG for over 60 years.
Of course, I should have guessed! The ‘Phi’ of Phi Account is obviously an abbreviation for philately.
Ha! Good point, I was too focused on the details to make that connection.
With stamps,as with most collectables,there’s the “book value”-what the seller says it’s worth according to whatever guide they’re using when you acquire them,& there’s actual price that you get when you go to sell them. It’s ALWAYS lower than what the guides say the value is,often substantially so. Stamps are a nice hobby,I’d be very wary of them as a serious investment . You pays your money & you takes your ride.
So much for the hype. USPS is always in the RED. Go figure…
Little known facts about USPS.
They are forced by law to fund their pension obligations with US Treasury Notes. Only. Amazingly enough, they have put enough away that the USPS pension fund is fully funded.
They are forced by law to deliver spam at ruinous loss. By law. Direct marketers bought leverage over USPS monopoly and had rates pushed down to almost nothing.
They are completely unionized.
Thanks to the writers for expounding on the stamp biz. All new to me.
The USPS is in the hole due to mismanagement and mail delivery issues. They don’t care about others property and they are now reaping the what they sow. Someone will come along and buy them out and hopefully the new owners will see the problems and deal with them in a professional way.
Trading rare stamps is no different than coins with the caveat that the market for coins is much broader than stamps. I use to collect stamps but only as a hobby. I loved stamps with maps, ships and nudes. Up until about the 60’s or 70’s it was dignified. The US use to only have 1 new issue per month. The subjects were historical and important and the competition to have one choosen was high and the engravings were of the highest quality . Then as post offices around the world realized there was real $ to be made they started to print every silly ass stamp imaginable and in the millions. At that point I quit . It is hard to imagine that there will ever be “rare stamps” in the future from the present era.
No asset class has gone up in value faster and in greater percentage gains than domain names. Since picking up steam in 1995, the internet has created hundreds of mega millionaires who bought early and flipped names like, business.com, realestate.com, cars.com etc. There is a weekly list of domain sales at DNJournal.com (note: I am not affiliated with this site in anyway) but quite an eyeopener so see what high quality, high type in traffic domains sell for. Sex.com sold for $14,000,000 a few years ago to give you an idea.
I have collected worldwide stamps off and on for over 50 years. The gentlemen who mentioned today’s stamps are not worth collecting is correct. US stamps in particular are like confetti. I haven’t done much with them for 15 years. However, I used to buy a lot of old US stamps on ebay. I never paid more than 20% of book value. I always bought mint if the price was right. Book value is an inflated number.
Speaking of stamps – not their collectability, just their existence – I’ve always joked that the way US stamps have increased over the last few years, I should just buy 5,000 books of ‘Forever’ stamps and hold them as an investment. Clearly, not a great plan, but I’m pretty sure one of these newsletter guys could sell it, eh? We’re pretty sure they’ll go up, and that there’ll be a market for them.
When buying a collectible always check the bid and asked price. With stamps my guess is that there is an unacceptable gap between bid and asked. When a market is efficient and fair the bid-asked spread is tiny. This is why I avoid stamps and rare coins. Typically at the instant you buy a coin your net worth decreases by an amount equal to the bid-asked spread because net worth is based on liquidation value, namely the bid value. Caveat emptor!!!
Some comments on stamp investing:
These need to be relatively long term investments because you pay a hefty commission when you buy, and again when you sell (could be around 20%) – so the items have to appreciate significantly just to break even. Investment grade stamps must be top quality only. Frequently they are graded as ‘superb’ – this refers primarily to the centering of the image. They want large margins around the image (some old items may not be available in this state however) – usually the larger (‘fatter’) the better. Be certain the perferations are crisp, and flawless – nicked perfs cause significant reductions in value. Be careful of minor imperfections in the body (i.e., tiny rips or holes that have been repaired are not easy to spot). If the stamp is mint (never used) the gum on the back must be in great shape. Be careful of ‘regummed’ stamps – hard to detect efforts to make a flawd gum stamp look good. In any case, the stamp should have a certificate of authenticity from the philatelic society. If it does not, you will have to submit it for that certification, pay a fee, and wait for it to be processed and hopefully approved (better to buy only certified items). Then, good luck – hope your pick does well. Keep them safe in a low moisture conrtrolled environment and avoid the temptation to take them out to enjoy them – each time they are handled, they can be damaged.
Collecting stamps can be fun, but I’m not in this to have fun, it’s to make money. But for those of you who are I will sell you stamps. Just send me $1.45 for as many stamps as you want and I’ll show you how to do what the post office can’t. I’ll even start a pension fund with half the revenue. Any takers?
Okay, Steve, I’ll take your teaser deal, if you’ll reveal how to fix the post office. I’ll bet even Travis can’t discover the answer to that question. Where do I send my $1.45?
OK, Steve doesn’t seem to be interested in your offer. I only want your $1.45 if you can get the rest of the Gumshoe readers to contribute but I got an idea of how they can at least start to fix the USPS. Did you know that of all of the carriers out there, the USPS is the only carrier that by federal mandate is required to service every address in the country? That means they have to go to each house, no matter how remote and what pig trail they are on to make delivery. Now how much money would they save if those remote areas had a central location for mail delivery and when farmer Brown went to town he could just pick up the mail while there? Fewer delivery vehicles, less gas, less miles, and less up keep = more profit potential. Answer= Get the government out of the postal business.
Am retired Post Office worker and love beautiful old stamps and on rare occasion would see letters or packages plastered with gorgeous old stamps and would comment to the sender that they may be valuable and the answer was always the same “They are worth more as postage than the dealers offer me.” Collected comic books for two years and found the prices in the catalogs were roughly twice the price a dealer will give you. Nice article, Travis.
There are more “regummed” “de-inked” stamps in the collector market than with which you can afford to “buy and then die”. I speak with the authority of several families’ generations of stamp collectors. Stamps minted by the millions after the 1930s are worth only their face value. Collect stamps for fun with the kids, sharing geography and historical themes looking at a map of the world, but DO NOT start investing in stamps in the 21st Century. It wouldn’t be an investment, only an uninformed, stupid speculation on your part. NO EXCEPTIONS. There are several other get-rich bagholder schemes you can enjoy. Stamps are not something you’d enjoy, being cheated beyond your imagination, to the loss of all your mis-spent funds.
I think I’ll stick to collecting M2 Machines.