Collectors Universe agrees to be acquired by investor group 1 1

[zadok]

On 8/9/2021 at 4:59 PM, World Colonial said:

I attribute most of what you describe to the surrounding asset mania.  I'm not questioning your personal observations.

i would attribute asset mania to a commodity bubble n i personally dont think the current coin collecting increases in prices or numbers r indicative of a bubble nor do i view coin collecting as a commodity even though some have intrinsic gold n silver value....non-collector speculation does fit ur definition but i dont consider that to be coin collecting....the biggest threat to coin collecting is generational...in my opinion the upcoming generation doesnt collect anything....

[World Colonial]

On 8/9/2021 at 5:22 PM, zadok said:

i would attribute asset mania to a commodity bubble n i personally dont think the current coin collecting increases in prices or numbers r indicative of a bubble nor do i view coin collecting as a commodity even though some have intrinsic gold n silver value....non-collector speculation does fit ur definition but i dont consider that to be coin collecting....the biggest threat to coin collecting is generational...in my opinion the upcoming generation doesnt collect anything....

Let me clarify.

I don't consider the recent increase in activity and prices since COVID a mania. 

I do consider the elevated US price level dating back to the late 70's a side consequence of the mania.  The "wealth" from inflated asset prices in other asset classes and income made possible by the fake economy is the predominant cause, whether the buyer is predominantly motivated by collecting or not.  Without both, there would be no market for the most expensive coins at anything close to current prices.  This is equally true of art and other collectibles.

[GoldFinger1969]

"As "investment", coins are a dead asset.  It's what Buffet says about gold but at least gold has some utility as jewelry, a central bank reserve asset and to some, an alternate form of money as a liquid store of value.  Today, the most expensive coinage also has an outsized dependency on the TPG label (plus the CAC sticker for some US coins) which doesn't mean anything to the non-collector, except for the price.  Coins generate no income in the form of interest, dividends, rents or royalties.  The annual yield is negative due to carrying costs.  Coins have no status value to non-collectors which, in the absence of "yield", is necessary to incentivize the non-collector to hold it."

Two of the most unique coins recently purchased and sold -- the 1933 Saint-Gaudens Double Eagle and the 1908-S  MS67 CAC Norweb Saint -- each returned about 5% a year.

So these 2 super-unique coins were purchased by the types of people (ultra-rich) who are price insensitive and for whom the expenditure won't change their lifestyle at all...and even these well-heeled "investors" only got 5% a year when even owning the S&P 500 index would have beaten that handily. 

You would need to buy bullion coins or numismatic coins where bullion was a good portion of the value....then have gold (or silver) skyrocket in the next few years....and then the return would be comparable to stocks.  You'd have to buy LOW and sell HIGH -- either one is tough to do, to do both will make someone one-in-a-million.  And you'd have to stay out of coins/the asset class for years (decades ?) so as not to lose $$$ if you sold into or at the top of another bubble.  

That is why I say just enjoy the damn collecting....enjoy the coins....and if you make $$$, great...if not, who cares....and if you die with them, your heirs will learn a bit about why you held 'em. 

Edited August 9, 2021 by GoldFinger1969

[zadok]

On 8/9/2021 at 5:51 PM, World Colonial said:

Let me clarify.

I don't consider the recent increase in activity and prices since COVID a mania. 

I do consider the elevated US price level dating back to the late 70's a side consequence of the mania.  The "wealth" from inflated asset prices in other asset classes and income made possible by the fake economy is the predominant cause, whether the buyer is predominantly motivated by collecting or not.  Without both, there would be no market for the most expensive coins at anything close to current prices.  This is equally true of art and other collectibles.

there is always a pathway to wealth thru good times n bad times....regardless of any of the economical/financial influences over the past 50 years real or fake there was wealth to be made n those who were committed to make it....there have been collectors, coins n otherwise, over the past 200 years in the US n the past several hundred years in europe who endeavored to continue to collect even in the worst of times...the wealth just wasnt so spread around in those periods as it is now....collecting isnt going to go away, it may diminish but not thru lack of resources thru lack of interest....all of the principals should dedicate some of their efforts n resources to maintaining that interest n not just to the money the hobby generates.....

[Henri Charriere]

On 8/8/2021 at 9:44 PM, World Colonial said:

Generically, three groups of buyers:

1) Recreational collectors or hobbyists.... I'd never buy what I do if I was mostly motivated to recover my outlay or make a profit.

2) A combination of collector and "investor".... I'd describe these buyers as actual collectors but that doesn't mean they really like what they buy that much, not enough enough to lose "a lot" of money or a noticeable proportion of their outlay.

3) Speculators and "investors".  .... why would anyone ever expect that most buyers would be more interested in actual collecting than the price trend and at least recovering their outlay?

QA:  You talk about "outlay" a lot.

WC:  It's an important consideration.

QA:  Will I recover mine?

WC:  You, recover?  My friend -- Rooster Guy, right? -- if what goes up (gold) must come down, I'd say you'd be awfully lucky to walk away with 37% of melt.  And you're 70!  Um-um-um. . .

QA:  You sure know how to hurt a guy.

WC:  The truth always hurts.  Always.

[bernard55]

Outside of motivations and macro issues, I've also been trying to research the 'personality profile' of coin collectors versus trading card collectors.  I'm trying to understand if the dramatic growth this last 18 months in cards means that there are just more of them... However it is very difficult to separate the gambler from the collector on the card side... and there seemed to be quite a few gamblers at the National show--the loud cheers for people unwrapping cards and finding something of value was crazy... this is something you would never see at a coin show.

Please let me know if you have seen anything written on the subject of personality profiles. I found a few old things such as:

https://www.grandrapidscoins.com/blogs/entry/personality-traits-of-coin-collectors#:~:text=Perhaps just like you%2C they,to work long%2C crazy hours. (Coins)

• "The results of this study indicated that the collector group scored significantly higher in academic achievement than did the noncollector group."
• Passion, patience, ability to roll with ups and downs, and an awareness of trends

https://www.londoncoinmissionviejo.com/traits-of-a-coin-collector (Coins)

• Coin collectors are considered meticulous, perfectionists, extremely orderly, passionate and quite patient.
• alludes to a difference in personality of type collectors, vs. bullion vs. error vs. rare

https://forums.collectors.com/discussion/comment/3493655/#Comment_3493655 (Cards) - not a study but a great comment

• a touch of obsessive-compulsive behavior
• a strong tie to sports
• control issues - collecting cards sets a very specific attainable goal
• filling some void
• cards connect us to our inner-child
• making friends
• collectors are competitive (The Registry)
• idol worship (stars like Nolan Ryan)
• intelligent and fairly-well adjusted
• "I think there are some modern card collectors who are dummies. They are more into the gambling aspect of pulling from packs. The real collector gambles, but that is not his main driving force."

there has to be a more solid answer for why this bubble didn't bleed over into coins... My gut tells me that it's because cards had the GaryVee factor and there is a tight coupling between sports and gambling...  but that is my bias stepping in...

[bernard55]

On 8/9/2021 at 6:28 PM, GoldFinger1969 said:

Two of the most unique coins recently purchased and sold -- the 1933 Saint-Gaudens Double Eagle and the 1908-S  MS67 CAC Norweb Saint -- each returned about 5% a year.

and the TPG put the 18M asset in a typical plastic holder... yea, that made a lot of sense... 

[World Colonial]

On 8/9/2021 at 7:52 PM, zadok said:

there is always a pathway to wealth thru good times n bad times....regardless of any of the economical/financial influences over the past 50 years real or fake there was wealth to be made n those who were committed to make it....there have been collectors, coins n otherwise, over the past 200 years in the US n the past several hundred years in europe who endeavored to continue to collect even in the worst of times...the wealth just wasnt so spread around in those periods as it is now....collecting isnt going to go away, it may diminish but not thru lack of resources thru lack of interest....all of the principals should dedicate some of their efforts n resources to maintaining that interest n not just to the money the hobby generates.....

If you are familiar with financial history, the end of the current mania I am discussing will be the dominating economic event for the majority of the population for the rest of their life.  The current financial excesses and economic distortions dwarf any other period in the history of this country and many others.

No, it doesn't mean the "end of the world" and no, it doesn't mean everyone will end up poor or destitute.  It also won't happen linearly, since there are cycles of contraction or expansion within good times and bad.  It does mean the majority of the population is going to become poorer or lot poorer than they are now over the indefinite future.

I'm not claiming collecting is ending either.  A crash in the price level which is what the end of the mania represents just means that those who bought at inflated prices will lose a noticeable proportion of their outlay.  Nothing more and nothing less.

If the buyer doesn't care, they collected within their means, and it's mostly or all about the coin, then it doesn't make any difference, does it?

[GoldFinger1969]

On 8/9/2021 at 8:58 PM, World Colonial said:

If you are familiar with financial history, the end of the current mania I am discussing will be the dominating economic event for the majority of the population for the rest of their life.  The current financial excesses and economic distortions dwarf any other period in the history of this country and many others.

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes

[World Colonial]

On 8/9/2021 at 8:40 PM, bernard55 said:

there has to be a more solid answer for why this bubble didn't bleed over into coins... My gut tells me that it's because cards had the GaryVee factor and there is a tight coupling between sports and gambling...  but that is my bias stepping in...

I don't believe the psychology can be tied to a specific root cause.  That's what everyone tries to do with price movements in the financial markets where some outside fundamental event supposedly "caused" an asset (stocks, currencies, commodities, whatever) to move "up" or "down".

[World Colonial]

On 8/9/2021 at 9:05 PM, GoldFinger1969 said:

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes

This is true, but it has already been irrational for at least 22 years minimum, depending upon how you want to measure it.

It's one hell of a lot closer to the end than the beginning, that's for sure.

[World Colonial]

On 8/9/2021 at 6:28 PM, GoldFinger1969 said:

"Two of the most unique coins recently purchased and sold -- the 1933 Saint-Gaudens Double Eagle and the 1908-S  MS67 CAC Norweb Saint -- each returned about 5% a year.

So these 2 super-unique coins were purchased by the types of people (ultra-rich) who are price insensitive and for whom the expenditure won't change their lifestyle at all...and even these well-heeled "investors" only got 5% a year when even owning the S&P 500 index would have beaten that handily. 

You would need to buy bullion coins or numismatic coins where bullion was a good portion of the value....then have gold (or silver) skyrocket in the next few years....and then the return would be comparable to stocks.  You'd have to buy LOW and sell HIGH -- either one is tough to do, to do both will make someone one-in-a-million.  And you'd have to stay out of coins/the asset class for years (decades ?) so as not to lose $$$ if you sold into or at the top of another bubble.  

That is why I say just enjoy the damn collecting....enjoy the coins....and if you make $$$, great...if not, who cares....and if you die with them, your heirs will learn a bit about why you held 'em. 

You and I seems to be in agreement on most of this topic.

Coin collecting is a good hobby.  A coin is nice or "great" whether it is cheaper or more expensive.  It's the same coin.

Where collectors go wrong is in placing too much emphasis on the financial side by mentally viewing it as an "investment".

Coins aren't competitive with "mainstream" asset classes.  That's just reality.  Sure, someone can get lucky and there are times when it can perform better or move contracyclical but that doesn't change reality.

That's why I used an example like CVX (Chevron) last time this subject came up.  Late last year, it had an 8% to 10% annual yield differential with any potential coin related fund and slightly less than owning a a coin outright  It's a business with cash flow paying dividends that sells something people actually need and that's what these asset classes do.  Since then it's left most coins in the dust and anyone can trade it  at scale in a liquid market.

A coin can give a collector satisfaction but  has no utility to anyone else, whether it increases in value or not.

Edited August 10, 2021 by World Colonial

[bernard55]

On 8/9/2021 at 9:06 PM, World Colonial said:

I don't believe the psychology can be tied to a specific root cause.  That's what everyone tries to do with price movements in the financial markets where some outside fundamental event supposedly "caused" an asset (stocks, currencies, commodities, whatever) to move "up" or "down".

on that subject... Read https://www.bridgewater.com/big-debt-crises/principles-for-navigating-big-debt-crises-by-ray-dalio.pdf 

[GoldFinger1969]

On 8/9/2021 at 8:40 PM, bernard55 said:

there has to be a more solid answer for why this bubble didn't bleed over into coins... My gut tells me that it's because cards had the GaryVee factor and there is a tight coupling between sports and gambling...  but that is my bias stepping in...

Did you see all the $$$ coming in for NFL broadcast rights from the networks, cable companies, Amazon, Facebook, etc ?  Same thing with other sports broadcast rights. 

Now go look at a coin infomercial at 4:30 AM. 

The meme/NFT/sportscard bubble is unique to the products that have widescale, TV and social media exposure.  ESPN, NFLN, FoxSports, even CNBC/FBC/Bloomberg will talk about the big business of sports and ancilliary items like cards and NFTs.  No such outlet for coins and money unless you are talking about the financial channels discussing the money supply.  

You make a good point on gambling -- RobinHood is for momentum growth investing, not for value stock investing.  Coins are a value investment, if you can call them investments at all. 

Gold and coins are an inflation hedge.  Well, BitCoin has gone up 20-fold in a few years but it didn't drag up gold or silver -- if anything, it sucked money AWAY from them.  Gold and silver would probably be 20-50% higher if not for cryptocurrencies. 

 

[GoldFinger1969]

On 8/9/2021 at 9:07 PM, World Colonial said:

This is true, but it has already been irrational for at least 22 years minimum, depending upon how you want to measure it.  It's one hell of a lot closer to the end than the beginning, that's for sure.

Stocks aren't cheap -- but they aren't at bubble-like valuations, either.  And U.S. stocks encompass some of the best companies in the world.

Don't discount private property rights and the rule of law (as long as Bernie and AOC aren't in charge).  If you doubt their importance, go talk to an investor in Chinese education stocks. 

[GoldFinger1969]

On 8/9/2021 at 9:54 PM, bernard55 said:

on that subject... Read https://www.bridgewater.com/big-debt-crises/principles-for-navigating-big-debt-crises-by-ray-dalio.pdf 

An excellent read -- but that doesn't necessarily mean it contains INVESTABLE information.

[bernard55]

On 8/9/2021 at 10:21 PM, GoldFinger1969 said:

An excellent read -- but that doesn't necessarily mean it contains INVESTABLE information.

not at all... just pointing out that it aligns with @World Colonial 's gloomy outlook... :-)

[Henri Charriere]

Kudos to @RWB the OP for a thoroughly enjoyable read... started right after Thanksgiving... last year!

[GoldFinger1969]

On 8/9/2021 at 10:24 PM, bernard55 said:

not at all... just pointing out that it aligns with @World Colonial 's gloomy outlook... :-)

I doubt that Bridgewater's asset allocation reflects that piece.  Dalio himself may have changed his views.

I met Ray before he hit it big.  Wish I had given him my resume. 

 

[World Colonial]

On 8/9/2021 at 10:15 PM, GoldFinger1969 said:

Stocks aren't cheap -- but they aren't at bubble-like valuations, either.  And U.S. stocks encompass some of the best companies in the world.

Don't discount private property rights and the rule of law (as long as Bernie and AOC aren't in charge).  If you doubt their importance, go talk to an investor in Chinese education stocks. 

The last time we had this conversation, you used the forward P/E.  I consider it one of the weakest and least reliable measures of valuation.

This is aside from the fact that earnings are just an accounting number, not even real money.  You can't spend earnings.  Earnings flow into dividends and book value.  No one cares about book value, except when a company is about to become insolvent.  As for dividends, somewhat in fashion now and "competitive" versus bonds but that's only because bonds have never been more overpriced either.  Dividend yields have never been lower than now, except at the 2000 peak. 

Other valuations such as market cap to GDP (Buffet's favorite if that means anything) and price to sales are also at record levels.  US valuations are on an island in deep outer space versus other global stock markets, not just China.

The valuation level you are referencing is only "reasonable" because of artificially cheap money and the fake economy.  The actual economic "fundamentals" are a combination of weak and terrible, disguised by artificially cheap money and "growth" since 2008 which is mostly or entirely the result of increased government deficits, even pre-COVID.

When the mania finally ends, whenever that is and regardless of the "reason", the real state of the American economy and society will be exposed for what it actually is, not what everyone sees now and wants to believe.

[World Colonial]

On 8/9/2021 at 10:24 PM, bernard55 said:

not at all... just pointing out that it aligns with @World Colonial 's gloomy outlook... :-)

My outlook is pessimistic because I look at the environment for what it actually is, not for what I wish it to be.

I haven't ever claimed that everyone is going to be worse off.  In the 30's or other periods of economic adversity (not the 70's), a noticeable minority of the population remained well off or prospered, at least relatively.

However, most were (a lot) worse off.  The "fundamentals" now are also a lot worse than the past, though the starting point is from a higher base.  Most either do not know it because they are ignorant of current reality, ignorant of historical context and even if they are informed, have a false sense of confidence (a belief in "magic") that somehow, central banks and governments have the ability to (mostly) prevent declining living standards.  

There is no doubt to me that government economic policy will run the economy "into the ground" in an attempt to prevent a general decline in living standards and for other reasons I'm not getting into here.  These efforts will ultimately fail.

[World Colonial]

On 8/10/2021 at 12:24 AM, GoldFinger1969 said:

I doubt that Bridgewater's asset allocation reflects that piece.  Dalio himself may have changed his views.

I met Ray before he hit it big.  Wish I had given him my resume. 

 

People don't necessarily manage their money the same way they manage someone else's because it isn't theirs.

Someone may also hold different views over different time horizons.  That's my view.  I don't think the US or global economy will completely fall apart now, I just know that risk is a lot higher than practically everyone else believes.

There are areas I am looking to buy into, but it isn't in the US stock market now and none are for long term holds though I'm not a day trader either.  I am also not short on anything.

[GoldFinger1969]

On 8/10/2021 at 8:56 AM, World Colonial said:

When the mania finally ends, whenever that is and regardless of the "reason", the real state of the American economy and society will be exposed for what it actually is, not what everyone sees now and wants to believe.

There was a mania in 1999-2000 with valuations.  No where near that today.

Look at TSLA.   I still think it might be overvalued, but does anybody still think it's going back to $25 or a market cap of $30 billion ?  NFLX....everybody has it.  Disney could have bought the whole company for $12 billion.  Today it's 20x that amount.

Never bet against America, WC. 

[GoldFinger1969]

On 8/10/2021 at 9:12 AM, World Colonial said:

There are areas I am looking to buy into, but it isn't in the US stock market now and none are for long term holds though I'm not a day trader either.  I am also not short on anything.

GMO of Boston is a great value shop.  They like small cap global value.

[World Colonial]

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

There was a mania in 1999-2000 with valuations.  No where near that today.

That's where we disagree.  I'm telling you it's worse.  Don't just look at US stocks which are also worse, but the aggregate.

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

Look at TSLA.   I still think it might be overvalued, but does anybody still think it's going back to $25 or a market cap of $30 billion ?  NFLX....everybody has it.  Disney could have bought the whole company for $12 billion.  Today it's 20x that amount.

There is no "maybe" about it.  At $30B, it would still be overpriced or at most "fairly" valued, depending upon it's future market position and the future state of the auto industry. In it's most recent quarter, it made record profits but in it's existence, it's lost boat loads of money and all prior "profit" was due to the sale of regulatory credits.

Only by performing the assessment assuming permanently cheap money and ignoring that the US auto industry is mature if not shrinking would anyone believe otherwise.  Netflix is somewhat different but mostly a bag of hot air at current valuations too.

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

Never bet against America, WC. 

There is nothing in economics that prevents  Americans from at minimum experiencing long term stagnation in living standards to work off the excesses and distortions of the last 40+ years.

The sentiments you are expressing are akin to believing the distortions I have described are a minor blip.  Well, maybe it is in a longer term context (not going there here as it isn't relevant), but it's myopic to say the least to believe that after this country has been living beyond it's means for decades, any future setback will be so minor as to be insignificant to those living now and living standards are destined to to increase for most of the population as far as the eye can see.

Good luck with that.

Edited August 10, 2021 by World Colonial

[GoldFinger1969]

Median P/E's are much lower than the S&P 500 or R2000 average because of the influence of the mega-caps (which themselves are much more reasonable than their counterparts in 2000).

[World Colonial]

On 8/10/2021 at 10:30 AM, GoldFinger1969 said:

Median P/E's are much lower than the S&P 500 or R2000 average because of the influence of the mega-caps (which themselves are much more reasonable than their counterparts in 2000).

You are still using the P/E as your benchmark for value.  I also presume you are using the forward P/E, as that's what you did the last time we had this conversation.  We have a difference of opinion on it's relevance as a measure of relative value.  I consider it one of the least relevant, for the reasons I have provided.

[Henri Charriere]

On 8/9/2021 at 9:05 PM, GoldFinger1969 said:

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes

"Water seeks its own level"   🐓

[bernard55]

On 8/10/2021 at 10:39 AM, World Colonial said:

You are still using the P/E as your benchmark for value.  I also presume you are using the forward P/E, as that's what you did the last time we had this conversation.  We have a difference of opinion on it's relevance as a measure of relative value.  I consider it one of the least relevant, for the reasons I have provided.

your an austrian economist in a keynesian world... :-)

[World Colonial]

On 8/10/2021 at 1:29 PM, bernard55 said:

your an austrian economist in a keynesian world... :-)

Yes, to a point though I'm not going to claim to know all the specifics of both.

To my knowledge, Keynes wouldn't agree with modern Keynesians either.  I never agreed with it but at least government economic policy was reasonably sensible until it started going off course under the Bush II administration.  It's gone completely off the rails in the last two administrations.  Same for monetary policy with Greenspan around 2003, though it actually started in response to the 1987 crash.

There is no turning back now without crashing both the economy and financial markets.  Moreover, there isn't even a hint of an intent to attempt it.  

Another reason it isn't possible to turn back is because there has been substantial social decay which isn't completely visible since it's partly mitigated by artificially cheap money and deficit spending.   It's evident to a point politically even now but this is a topic outside the scope of the forum.