Feb

16

My brother collected stamps when we were young but I thought philately will get you nowhere and became a numismatist instead. It was from the 6th to 8th grade when I would spend all free hours and all free cash flow investing in rare coins. It was my first obsession with trading, because I did it for the joy of making money one day, not to have one of every coin.

All my coins were housed neatly in books with a ledger for each item’s cost, condition, where found, and value. Each quarter the revised published values would come out and I would update the ledger with new values, unrealized gains and losses, and foot and cross foot the big book to get my profit. It was strictly a buy and hold strategy with dollar cost averaging thrown in — each week’s allowance and odd job money was invested. It was a contest with my best friend at the time; to see who had the best value change from period to period, but he would often in bad quarters fudge the grades a bit higher for marketing purposes. I never did that — he probably runs a hedge fund now.

There was a kind older gentleman who ran the coin shop in Springfield, Virginia where we would stop after school to gaze the coins and plan our purchases. He took a kindness to us and offered us tips and favors when trading, waiving part of the regular vig, to entice us. Maybe it was an angle too, like buying drugs, he was often referred to as the “coin dealer.” There was an auction board on the wall where people could put up their coins for sale each week with penciled in bids to close Wednesday nights at 6PM. It was eBay before Bill Gates dropped out of Harvard.

I learned the hard way about the dangers early on when I went a little crazy sensing some extraordinary “values”– someone put a bunch of stuff on the wall at a 30% discount to the book listed value. In no time I had accumulated $136 of winning bids and got the first margin call of my life. While than may not seem a large sum right now, getting a substantial margin call 6th grade early 1970’s for the son of a working military man, it was all the money in the world. I had until close of business Friday to pay. The only way to pay was to borrow, or sell assets. Unable to admit this stupidity to my parents I was forced to sell assets. And the only buyer in town was the coin dealer. And the only value he paid was 50% of book. So I sold $250 worth of my collection to add $200 in “value,” it was the worst quarter of my young trading career, and a devastating but valuable lesson.

After that I bought strategically, and sold even more strategically, and never with borrowed funds. The collection was worth $650 in 1977 as compiled from “Handbook of United States Coins-With Premium List” (1977 thirty-fourth edition by RS Yeoman), the last time I paid much attention to it. It sits untouched in a box in my closet that hasn’t been opened in 32 years and seven relocations — for security purposes it’s taped shut and marketed in big red letters “baby toys.” As for returns, I checked one coin, my favorite, a nearly uncirculated (let’s call it AU-50) 1909 S V.D.B.. At the time it was worth $112.50 according to the book, and now is worth $660.00 according to coincollecting.com. That’s 5.7% return for 32 years. Not bad.

Steve Leslie writes:

I met Bruce McNall in the late 1980s when he put together limited partnerships of rare coins with Merrill Lynch. He is a short stubby character who gained fame via sports team ownerships and celebrity status, associating with the likes of John Candy and Wayne Gretzky. He was responsible for bringing Gretzky to LA and owned some assets with him. One in particular was the most famous baseball card in history, the Honus Wagner. He began his career as curator for Getty Museum and went on ultimately to Federal prison after coins began disappearing from the partnership. He was considered the ultimate authority on rare, ancient coins. A tragic story but one that is becoming all to familiar.


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