The Investment U E-Letter: Issue # 337
Thursday, May 13, 2004
Interview with Van Simmons: How to Make Some Coin with Undervalued Coins
By Dr. Steve Sjuggerud, President, Investment U.
Throughout the decade of the 1990s, stocks did nothing but go up. In the same time, collectibles like rare stamps and rare coins lost three-quarters of their value.
Here in 2004, stocks are now extremely expensive, and are finally starting to break down. But collectibles like rare stamps and coins are super cheap (still down by 75% from their 1980s highs) and have been rising.
Today I interviewed a man whom I consider to be one of the most knowledgeable investors on the planet when it comes to collectibles. Van Simmons came to my hotel room this morning here in Las Vegas, and we talked for nearly two hours on collectibles. I'd like to share some highlights now, including:
1) How to make money in collectibles
2) Which collectibles are attractively priced right now
3) And what you should do now with coins you own if you own them
The Profits Hiding In Neat Old Things...
Van has been a collector his whole life. Van was a founder (and still is a large shareholder) of Collector's Universe (www.collectors.com), a company specializing in authenticating and grading collectibles, like sports cards, stamps and coins, so he has an intimate knowledge of these markets. Separately, he likes to collect a variety of things from other, smaller collectibles markets as well... including guns and knives.
Additionally, Van's day-to-day business has been running David Hall Rare Coins (www.davidhall.com), where he's dealt with collectibles investors for a few decades. He's seen how people succeed and what they do right, and he's seen how people lose money. I don't think anyone has had a broader experience in collectibles in the world.
Van's strategy for making money is fairly simple. He always buys things of the highest quality. And he buys something when nobody else is interested in buying it. Then he sells when everybody thinks it's the perfect time to buy.
Van gave numerous examples... like the real estate he bought in California (people thought he was crazy back when he bought, and people now think he's crazy for selling).
For "buying quality," you can see an analogy in the stock market - when the market is getting hit, the smaller, poorly run businesses usually get hammered the worst, and may even go out of business. But the decent businesses can hang on, and eventually rise above where they were in the crisis.
It's the same in the collectibles market... "common" collectible items can crash to close to nothing. But exceptional items don't, Van says. Even better, they soar the highest when the market starts going back up again... which is where we are now.
Making 1,000% Profits on the "Next Harley"
In sizing up the markets right now, Van thinks that baseball cards could be "fully priced." But high-quality rare coins and stamps are "a bargain." Many of the other markets are smaller, and more difficult for you to be successful in.
As far as where to speculate in collectibles now, a nifty rule of thumb Van suggested is this: Consider a 35-year-old man today. 15 years ago, he was 20 and there was something in this world that he lusted after, but he couldn't afford. In 15-20 years, he'll be able to afford it. Figure out what that thing is, and buy it now. Hold onto it for 15 years, and sell it, for maybe 10 times what you paid for it. For example...
Right now, guys in their 50s and 60s are willing to buy Harley Davidson motorcycles, both new and old. Van says you can buy a much better motorcycle than a Harley for the money today (I don't know, I don't ride 'em). But people aren't buying the bike, they're buying back their youth... and buying themselves a symbol that "they've made it." So they're willing to pay any price for it. You'll love to sell to that guy in 10 years...
What's the Harley Davidson of the next 10 years? There have to be many of them. Figure them out, and buy them.
How to Make Money by Selling Low and Buying High
Van had a suggestion for you: Many people have coins laying around, and they don't know what to do with them. They're generally lower-quality coins that might have been in the family.
Van has offered to give a free appraisal of the coins. With that appraisal, you can then sell them on your own, or you can have Van sell them for you. What Van would recommend you do is sell off these lower-quality coins, and buy a few very high-quality rare coins.
Van and I believe that high-quality rare coins are cheap right now. It's kind of like buying California beachfront at 75% off the highs. It's a great opportunity. He was saying, "Sell off your acres in Wyoming (the lower-quality coins) and use the proceeds to buy super-cheap California beachfront (high-quality rare coins), as quality endures, and prices will recover."
Van won't make his money on your old coins if you choose to sell them through him. He makes his profit on the high-grade coins he buys for you if you decide to buy "California beachfront at 75% off." He is the expert, and he deserves his pay, as he'll get you into good, quality coins that have the potential for triple-digit gains in the next five years, and he won't cheat you. What more could you want?