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What are Top Investors Buying Right Now?
Stanley Gibbons Investment Director, Keith Heddle, examines the results of Dianomi’s H1 2011 Investor Survey in relation to rare stamp and autograph investment.
Dianomi Ltd recently undertook a wide ranging survey of almost 2,000 investors and potential investors in the UK.
The results make interesting reading.
Inflation was reported as the primary fear, with investors doing all they can to choose assets that inflation-proof their portfolios, whilst also selling gilts. As well as alternative assets, gold, silver and sectors like utilities and infrastructure are proving popular for the top investors.
With fears of inflation-creep and continued market instability, trust has become the byword of choice. 46% of investors surveyed feared a combination of another credit crunch, further recession and inflation. On the subject of trust, most investors back only themselves with the lowest levels of trust being afforded to estate agents, banks and the government!
Although 40% of investors use structured products, many complain that they are opaque, risky, complicated and too expensive; 37% of those surveyed didn't even know what structured products were.
Two hot topics of discussion and where investors wanted free guides or reports included, "How to create a morally responsible banker" and "Guide to investments during periods of stagnation or inflation" - regrettably we can't help you with the former, but we do know that rare stamps have proven a strong hedge against inflation in the past and are proving their worth in that context once again. Their consistent growth rates, tracked on Bloomberg in the GB30 Rarities Index, clearly demonstrate their stagnation-busting ability, particularly as a medium-term hold.
It is worth noting, therefore, that rare stamps not only hold up strongly against other asset classes, but also provide an excellent hedge against inflation. As an indicator, the last time we experienced seriously high inflation, in the period 1975 to 1980, the GB30 Rarities Index actually increased in value by 593%.
What are the top investors buying right now?
Not surprisingly, 30% of investors are buying gold and silver compared to just 19% at the same time last year and property also shows some signs of recovery with 32% buying versus 24% last year - but from your and Stanley Gibbons point of view, the real news is that alternative investments have surged year on year, 29% of top investors are buying alternatives (including rare stamps and coins) against 17% last year.
When you consider the continuing buoyancy of the rare stamp market and the increasing profile of rare stamps as an asset class, uncorrelated with other mainstream asset classes, this is actually no surprise.
What's happening in the rare stamp market?
In contrast to many core asset classes and markets, the rare stamp market is in rude health.
The Royal Wedding put stamp collecting into the limelight again and although these are not primarily the sorts of stamps to make it into portfolios, it certainly galvanised certain sectors of the market.
More importantly, the GB30 Rarities Index, possibly the best indicator of the strength of the rare stamp market, nudged up another 4% year on year to 2011 and as we reported, there were some significant movements in GB stamps, such as the famous 'Tyrian Plum' breaking through the £100K barrier for the first time in history. Unsurprisingly also, Penny Black prices are increasing, with added interest coming from abroad (particularly China) as well as in the UK.
Further afield, both the Indian and Chinese stamp markets are booming, with Chinese stamps particularly continually breaking all sorts of records at auction; the emergence of 5 new (philatelic) auction houses in Hong Kong in the past year points irrefutably to the region becoming a new powerhouse in stamp trading circles.
Over the past year, the GB30 Rarities index went up by a further 4%, showing real stability and continued growth despite the continued difficult economic conditions and a consistently flat interest rate environment. The key fact is: the index has not dropped in value in any 5-year period over the past 50 years. You can now see why many financial commentators refer to our market as a "safe haven investment".
So - if you have been undecided about taking out an investment in rare stamps, now is your time to act.
Do bear in mind that although the rare stamp market continues to grow, the quantity of premium-grade stamps we have available to us to place in portfolios is tiny - it's just 0.01% of the 3 million stamps we deal with every year.
Since we also carefully manage our commercial risk by limiting the number of portfolios we offer (particularly where we offer to guarantee your capital), it is vital that you don't remain undecided for too long or we may not be able to satisfy your investment request.
You see, we are debt free and solvent, but financially prudent - not only does it make sound business sense, but as holders of the Royal Warrant, we need to ensure our reputation is maintained. We take a very limited commercial risk by both strictly limiting the subscription levels of the Capital Protected Growth Plan (CPGP) and relying on the underlying strength of the rare stamp market, which has not shown a dip in a 5 year period for over 50 years. So if you are interested, I'd recommend you inform yourself further and don't delay your decision too long.
Review the CPGP for yourself at www.stanleygibbons.com/investment
