Wait until hype is over and then buy

The Forecaster is an investment newsletter than I have kept my eye on since 1969. John Kamin writes it from his base in Southern California.

Longevity in the investment advisory business means that people find enough value in the advice to keep paying for it.

One tidbit of wisdom Kamin has imparted over the years is his Rule of 10 for proof sets. Never buy the current year’s set from the Mint. Wait 10 years. It basically boils down to not getting caught up in the current hype surrounding a new issue because hard experience shows that you will likely be able to buy it on the secondary market at a lower price in the future.

Any collector who follows proof sets closely will heartily concur. This Rule of 10 works for other new issues as well.

I am sure there are buyers of the Mint’s 225th Anniversary Enhanced Uncirculated Coin Set who wished they had followed the Rule of 10 in this case.

It seems buyers now can’t back out of their orders fast enough. What a change from the enthusiasm of Aug. 1 as I witnessed the line of people at the Mint booth at the American Numismatic Association show in Denver. What looked like a sure thing has turned into a burn.

Coin collectors are adults and are entitled to speculate if they want to. However, just like gambling, you need to know your limit. When luck turns against you, you won’t be ruined.

However, not making a profit, or incurring a loss, still stings. In collectors, it leads to outrage:

• Outrage if you couldn’t buy the set on the first day.

• Outrage that there was no order limit.

• Outrage that promotional shows on TV were selling them for super high prices.

Unfortunately for those collectors active in the field of new issues, there seems to be only two settings: outrage or boredom. Isn’t there a happy medium somewhere?

There should be great satisfaction in owning first-day issues, or coins that grade -70.

However, not all of these new issues are going to become valuable, or make a profit for the buyer.

The secondary market has many great deals for coins like this that are selling for better prices than they did just after the time of issue.

For new issues, how about if we create a Rule of 3?

While as an adult you are entitled to speculate in new issues all you want, it might be a better long-term strategy to jump into the market for first-day issues and -70 grades after they have had a little seasoning and the hype has gone on to other things.

You can buy a 2014-W gold Kennedy half graded by the Professional Coin Grading Service as PR70 DCAM First Strike for $1,300 on eBay. That’s just $60 over issue price. It’s beautiful. It’s gold. You didn’t have to stand in line to buy it.