Sunday 22 March 2009

SHARES AT POSTAGE STAMP PRICES;WHY NOT GO FOR THE REAL THING?

No-one is sure when the bottom will bottom in shares, lower new highs, lower lows, and no-one wants to overpay even when getting back into the market at obviously historical lows far below net book values. Our bank shares are now postage stamp prices, so I say why not buy the real thing? I favour stamp investments when they are like Bonds, but also a great inflation hedge and recession-proof investments. And, of course, no stamp-duty when buying 'forever' postage stamps. For those investors ignorant of the 'forever' jargon, this means a postage stamp stating first class or second class but not the class-price! Only 'forever stamps' are investment-grade! I just wish our banks paid as much as the annual gain on 'forever stamps' in retail deposit rates? The cost of sending a letter in UK will go up next year. First and second-class stamps are being increased by 3p to 39p and 30p from April. That's a heady 7.7% and 10% return if you buy now. This will be the second set of rises in 12 months after similar increases last April well above the rate of inflation never mind stratospherically above stock market returns. First class stamps back then went up by 2p to the current 36p and second class by 3p to the present 27p. Business customers will see average price rises of 4.2% (worth in total over £200m). The Royal Mail said that even after the rises, UK stamp prices would remain among the lowest in Europe. That means plenty more scope for rises. If you are a US$ dollar investor now might be a great time to buy UK stamps in expectation of additional currency exchange rate gain sometime later this year. In the UK, around five million fewer letters are being delivered every day compared with two years ago. Therefore, post offices will have many spare sheets, good as cash, better as they rise in value. This is a liquid market with less uncertainty than Gold. Stamps must have a big and ready market of willing buyers and willing sellers now that many post offices face closure threats. hence the prices have got to be 'fair value' and by buying stamps in their thousands it is a win-win for post offices and stamp-holder investors. In the USA, postage stamp rises are limited to the rate of consumer price infltion, hence the next rise like the last one is only about 2% (though 32% for a canny £ sterling investor back then) but for the US$ investor no currency gain. Long term if you could get Forever Stamps, not a bad return. Sending a letter will soon be a little more expensive in the U.S. Postal Service. The next 2% increase is effective May 11, 2 cents to 44 cents for a first class stamp. The total rise is worth about $billion, so not a market for big speculators. Stamps are like cash. Forever Stamps are like AAA bonds and franking machines are like treasury bills. You can buy "Forever Stamps" at the current 42-cent rate and make a 2% return in only 6 weeks or less guaranteed, even wait until the 10th and make the gain in 1 day. That's better than the banks are guaranteed to return on any day, but who knows when they might rebound and stay up?

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