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By Beverly Chandler, Opalesque London:

Academics from the London Business School have researched stamp catalogue prices to investigate the returns on British collectible postage stamps over the period 1900–2008. Elroy Dimson and Christophe Spaenjers’ paper, "Ex Post: The Investment Performance of Collectable Stamps’, published in the Journal of Financial Economics, reported that stamps have an annualized return on of 7.0% in nominal terms, or 2.9% in real terms.

The authors believe that these returns are higher than those on bonds but below those on equities and that the volatility of stamp prices approaches that of equities. It appears that stamp returns are impacted by movements in the equity market, but the systematic risk of stamps remains low. The authors says: "Stamps partially hedge against unanticipated inflation. Estimates of average after-cost returns for individual investors show that stamps may rival equities in terms of realized performance."

The authors state that non-pecuniary benefits like the aesthetic enjoyment of a collection of stamps or the pride in having secured a rare issuance are what motivate amateur stamp collectors, while investors are more interested in how high-end stamps perform as an asset class. "Just like other collectibles, stamps are often considered a comparatively safe investment in times of financial turmoil, and one that potentially hedges better against changes in the aggregate price level" they say, quoting The Wall Str......................

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