The Greed Effect: In the End, it All Becomes Worthless…
Among other things, I'm a stamp collector.
No, not the kind of rubber stamp you use to make pretty patterns on paper, but postage stamps, you know the ones people used to put on letters to send them... and I trade in the really old ones that have become valuable after a century or more.
I started collecting stamps when I was maybe six years old, because my dad's job meant he had got correspondence from all over the world. My dad also thought this was a good idea, because maybe I could learn something about geography and culture in other countries.
Anyway, during the second half of the 1970s, there was a lot of interest in stamp collecting. Because of this interest, the value of really old stamps was steadily increasing. That was fine, but then somebody in the financial world got the idea that stamps could be used as an investment. And then it was off to the races!
Even investment brokerages and Wall Street got into the business of assembling stamp collecting portfolios for their clients. This continued interest kept ramping up until about 1981.
However, as is always the case with these hot commodities, there soon enough came a time when some of the people who had "invested" in stamps wanted to sell their stamps. Maybe that's reasonable enough, but let's keep in mind that this was a hobby not a commodity.
The investment gooks might have decided they were dealing with a commodity, but they were not.
The outcome was not pretty, And in the beginning of 1982 the market for collectible stamps collapsed and within a couple of years, prices were down about 85% from their highs.
Now you might wonder "so what?"
The real problem here, was for the stamp collectors, not for the investors. In the early 1970s, the stamp collectors were just quietly going about their hobby minding their own business, but suddenly they found themselves involved in something that had been there for peaceful enjoyment, for many decades, and now people were talking about stamp collecting like it was some kind of weird scam.
Why? Because a bunch of investors who in no way were interested in stamps - just in making money - lost their shirts. Again we should add that they lost their shirts investing in something that wasn't an investment vehicle, and never intended to be one.
And 40+ years later, even allowing for 40 years of inflation, the market for collectible stamps is still not back to where it was at the end of 1981.
Of course I singled out stamps because it happens to be something I know about and something I've done a fair bit of trading in. Not trading as an investment, but trading to improve my collection and to help other people improve theirs.
This sort of thing has happened in many places. One of the other things I've collected over the years was antique fountain pens. a very similar situation happened in the fountain pen market during the late 1980s in early 1990s. once again, you had an item that was basically a hobby collectible and somebody decided that they were going to turn it into an investment. as a result, a large number of innocent bystanders, meaning the collectors, ended up basically getting thrown under the bus.
These are just a couple of examples of what happens when greed enters a market.
I am totally hip to the fact that there are going to be uptrends and downtrends and that's not what the problem is. I'm even hip to the fact that sometimes there's going to be wild speculation. However, the problem isn't even the speculation, it is the asshats who come in and think they can turn something simple into something it was never designed to be and the second part is the fact that once they have burned out what they thought they could make money on, you end up with a barren wasteland.
And that is the price of greed... the destruction of a previously thriving hobby.
Greed cares only about "the money we can make right now," and is oblivious to the fact that in the course of making those millions, thousands of people might have lost their livelihood and an entire marketplace is laid to waste. And that, my friends, is why you often find me railing against anything that involves greed as the primary driving force!
Yes, I still collect stamps and trade some, as well... but the hobby market was permanently wrecked by the investment period, and will never be the same.
Thanks for stopping by and have a great weekend!
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Created at 2024-09-28 01:12 PST
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The Commander rules committee for Magic: The Gathering recently announced 4 cards as banned for the format. This led to much outrage as players complained their cardboard tanked in value. The cards are scarce, but their value was tied to that artificial scarcity combined with being absolutely broken as game pieces. Those of us who play casually never had the cards in the first place, but people who thought they had $500 or so in value got mad when markets shifted against them.
The presence of internet services have rendered stamp services redundant in my country