How Long Should You Hold Your Collection
Posted on 5/5/2016
One of the most frequently asked questions I receive from collectors is about how long to hold before selling. This seems like a simple question, but the answer can be much more involved. Nearly all collectors pursue numismatics because they enjoy it, but most are also concerned about the investment aspect as well. How long you are willing to hold your coins is a major element in being a successful collector.
|John J. Pittman examining coin at the sale of King Farouk collection 1954
Over the years I have seen every type of collector when it comes to how long they hold coins. On one extreme there are the collectors who never sell. That will be a decision for their heirs when they pass. John Jay Pittman was a great example of this. He collected coins for decades starting in the 1940s. He never sold coins to travel the world, buy fancy cars, or build his dream home. He may have traded a few coins over the years, but for the most part his collection remained intact until he died in 1996. He truly loved his coins, but upon his death, his heirs auctioned the collection for over $30 million almost immediately.
The famed collector Eric Newman also played the long game, accumulating most of his fabulous collection in the 1930s, 40s and 50s. He decided to sell and donate most of the proceeds to charities of his choosing. Not a bad strategy, but most collectors will not celebrate their 100 birthday like Eric did a few years ago! His collection earned over $55 million when certified by NGC and sold by Heritage from 2013-2014. For obvious reasons, holding coins for 40-50 years is almost always a great investment. Most collectors however, have a much shorter time horizon.
On the other end of the spectrum I have had customers who bought coins with an extreme case of ADD (attention deficit disorder). One week they want to buy every coin in a series and a short time later move on to something else. They love the hunt, but when done or facing a few holes in the collection that are difficult to fill, they are ready to move on. This is usually a terrible way to buy coins. Most retail collectors who buy rare coins have to pay at least 10-30% above wholesale to acquire them. This spread is hard to overcome when selling too soon. This concept can be easily understood by examining recent auction records for coins purchased from old time collections, and then resold at auction less than 24 months later. The 1828 Quarter, now graded NGC MS 67, that Eric P. Newman purchased in the 1940s for $50 is a great example.
|1828 25C NGC MS 67
Sold auction as part of Eric P. Newman collection in November 2013 by Heritage, lot 33348, price realized $352,500.
Sold auction in May 2015 by Heritage, lot 98322, price realized $282,000.
Click images to enlarge.
For most collectors, a holding period of at least 5-10 years is recommended for the best performance. In fact, this amount of time is usually required to form a nice collection of most series. Finding the right coin at the right price is critical if you hope to be a successful collector/investor. As I have preached many times in my articles, numismatic education and patience are very important.
Patience is also required for many collectors who choose out of favor and underpriced areas of the market. For decades tokens, medals, and many non-traditional numismatic items sold for a pittance in relation to their importance. The sale of the John Jay Ford collection by Stack's Bowers changed that forever. His collection, that contained very few examples of Federal coinage, sold for over $35 million in a series of blockbuster auction sales.
World coins are another example of patience being an incredible asset. Twenty five years ago, many Chinese coins were practically free. With the development of the Chinese economy, these coins have soared in value and desirability. Many collectors now wonder which country will provide a similar scenario in the future. Maybe South American coins will be next!
Many parts of the United States coin market have been flat for decades. This includes most Type coins, silver and gold commemoratives and many others. Someday these will also have their day, but in the meantime collectors will need patience. Selling too soon can be painful.
In summary, building a well thought out collection of coins or paper money takes lots of time and patience. For the best performance, wait until the area of the market you have chosen to collect has its day in the sun. Being in a rush when buying or selling will lead to poor results. In my opinion, buying and selling with a short time horizon is more about speculation than collecting. Given enough time, most collectors will enjoy the journey and be well rewarded in the process.
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