Very early, 3:30 AM. I got up for a pee, and a craving for a diet cola. I leafed through a 1991 copy of a US coin price guide and noticed the vast increase in prices over the past ten years. More collectors, I guess. I’d been remembering coins from my youth recently and the book got me interested. My advice to anyone who does not want to become an expert is just to save anything you find from before 1967 and give it to your grandchildren. It should be worth a lot in another 75 years. True, there are other factors, but I am considering storage space, weight, and the amount of money. I’d guess to keep saving until you have about $300 coins in pennies, nickels, dimes and quarters. Anything else is fancy and only coin dealers collect them. The more serious would sort the coins by years, and replace newer ones as they chance upon the older.
This also got me pondering the whole investment setting. I feel it is on the verge of drastic change. I give no more a damn about the value of other people’s loss than they cared about me when I needed a helping hand back in the 70s. I remember too clearly the attitude that I was poor because I was not good people. Yet, all my investments are very vulnerable to any change in the value of money. I own no real property as an investment. That means I am really basing a lot on being able to pick up such property cheaply when the real estate bubble bursts. It also means I must have damn good timing and peer into the future a bit further than ordinary, two factors which don’t have a good solid history of being on most people’s side.
Unlike Internet columnists, I am not sitting on a pile of inheritance that can take the odd 50% loss as nothing more than an interesting statistic to be made back treble on the next round. The horror stories I hear about German inflation in the 20s tell me to buy something of value. Something that will hold value if other things do not. To me that means something that has some intrinsic or utility value. While I believe real estate can drop fast, I don’t think the same is true of the entire economy. Naturally, I would also like something that is non-perishable, needs no special storage requirements, and is easy to move. “Those fortunes which survive are those that can be carried across the border at midnight in a suitcase.”
Now real estate is to me the one thing that can drop in isolation and not seriously affect the rest of the economy. Oh yes, it will affect millions of people, but to me the whole lot are speculators and I hope they lose. How many of them live in the same house they bought in 1970? The rise in real estate prices in 30 years has not changed peoples other requirements, such as food, and in America anyway, entertainment. While most other changes in value would cause a ripple effect through the economy, causing everything from layoffs to who knows, I can envisage that a plunge in real estate prices would not hurt anyone but the speculators. If the houses on my block all fell to a tenth of their price, who but the banks would care? The houses are still at the same value in relation to each other. What I am predicting is a rapid drop in price that replaces the thirty-year climb.
I guess my uneasiness at times is no different than anyone who invests. I should not worry the little bit that I do, for it is always wiser to have something invested than nothing at all. I know all about people who think absolute poverty protects them from loss. While I still have nothing like the infrastructure needed, I do have a substructure that supports investment, and I cannot help eyeing real estate from a distance. But I am too smart to buy a property without some kind of passive income to support it. Somewhere deep in my thoughts is the rule that to buy a $100,000 property to live in, you should have a matching $100,000 invested at 6% to support that property. Or you have to go to work just to pay the property taxes and such.
There are strange advertisements that support my views, I think, on billboards nowadays. The people are heavily advertising they will buy “ugly” houses. Similar ads are now pouring over the countryside, searching everywhere for houses that need fixing up. True, the market existed before, but are houses that need fixing up becoming a national resource to be mined and forested? Well I can see it, if for the past few decades, people spent all their money flipping real estate instead of spending money on maintaining what they had. Hey, any inspected house (with the exception of Canadian condos) will stand for twenty years before it needs major repair, and I think we are seeing the tip of that iceberg. People unloading their painted over plaster could be clearing out just in time.
Either way, I see a huge potential market for rentals from people who quite understandably fear winding up in a nursing home. Look what happened in Bellingham, charging old people three times the going rate for a room with a hotplate. I notice one clever outfit who point out all their staff are “English speaking” which I perceive comes in truly handy when you are dying. I do not know or fully understand the liabilities of owning such rental property, but I can see investing in it indirectly. There, I’ve cheered myself back up, and need a two-hour nap before work today.
ADDENDUM
Good thing I got that nap, it kept me in a better mood. Is everyone here familiar with the story of my ’85 Cadillac? The one I kept in pristine shape for 15 years until I moved to Florida. The car was hit again today. I say again, because that is the fourth time the car has been hit while it was parked or stopped. You have never seen anything quite like Miami for people hitting stationary objects. It is plainly not considered negligence to do such a thing around here. Some white guy in a Chevy Silverado I62-HJC expiry 12-04, dark green, took out my driver’s taillight and quarter panel extension, and dented my trunk lid. In broad daylight, in a paved parking lot during clear, dry weather. I made him a deal – pay me $200 tomorrow morning and I won’t tell your father. (He was a big one, about 24, but driving his dad’s truck, so I went easy on him. But he did leave the scene of an accident.) On average, people hit my parked car once a year, about this time, yet they all whine about insurance costs.
I have never driven into a stationary object by accident in my life. Bob, the site supe asked what on earth I was doing working at a construction site with my abilities. I dunno, I guess one day I will decide to teach again. That would be okay for a while. I also like low-pressure sales and computer systems. Meanwhile, who cares? I never got rich or fell in love when I was young (not with anyone who loved me in return, I mean), so it makes very little difference today. I’d like to meet a decent gal, but if that is not possible, another totally indecent gal. It’s the in between that would bore me.
That new payroll clock is a fiasco. It has not been properly beta tested. There is a help desk that we called y’day (Mikey and I), but they never returned the call. Some payday deadline help they are. It took all damn day to get the payroll done and even then I want to re-check a few things tomorrow. I got an e-mail from Marti but did not have time even to reply. I am already looking forward to living in Hollywood, you know this is the first time in my life I have chosen a place totally based on what I wanted, not what I could afford. If I did not get the best place around there, it will only be a short while before I find that out, and the new landlord knows all that.
I have to leave you early today, because I want to run some statistics. One concerns the advice I gave about coin collecting – would it really be worthwhile to save the coin or to invest it? I’m assuming one of the two, not the third option of spending it. There is probably a breakeven point, because I’ve been skimming a 1991 book about coin dealer prices and no way those numbers are random. I will do the research based on 4% annual historical inflation. Another concerns my investment in Eaton Vance, the self-styling money-laundering vigilantes. Trying to fool us that they need personal information to protect America. They won’t take a money order, although even the tax department accepts them. I need to calculate the exact payout on that investment to November 17, 2019, just 15 years from now.
I’m back already. The future value of that tax-free fund which now stands at $4,169.21, assuming a constant rate since it has been very constant for years now, is $11,166.42. This also assumes, since the fund invests in bonds, that there will be no real capital gains possible. This is the true and original Denny’s coffee fund that was supposed to reach $12,500 in equity. That money will now go some place that appreciates my way of doing things. One could look at it and say that is only $11,166.42 and what will that buy in 15 years. Or one could say that is 1% of a million bucks, and that’s a lot further than most of you readers will ever get, pardon my saying so. In case anyone asks, yes, this fund will get cashed in very quickly if inflation returns to 5% or more.
Now the coins. I have to make some assumptions. One is that you are only likely to stumble across coins from the last fifty years. I have never personally seen a 1792 coin, or an 1892 coin. Even handling my paper delivery money, I think I’d seen one or two 1912 pennies, and certainly no other coins that old. Of that fifty years, I have to draw the line at 1965. There is a coin grading system that would make finding a “mint” condition coin in circulation pure fairy tale stuff, and I have no intention of seeking out the coins at this time. We are confined to coins before 1965 that you might have a chance of finding. The period from 1936 to 1956 has the most high values, but I’ll try to grab anything before 1965, maybe even sooner if in really good condition. The calculation here is to find the value of each coin of each year if invested at 6% and suffering a 4% inflation, and compare that value to the price in the coin dealer book.
Careful here, the idea is not to chance upon a rare and valuable coins, but merely to take aside and save coins with a potential for value. The more clever will see that a sharp concentration of money at the right time can be just as good as a steady stream. These coins are to be cashed in on the 30th anniversary of my death, or in about another 50 years or 2054. The calculation is strictly for curiosity and will not affect my decision to save up $300 worth of coins. The first thing we notice is that nickels are not a good candidate. Nickels trade at less than 5 times face value for rare examples, while pennies, dimes and quarters all beat 10 times. Thus, the longer a coin has been around gives it, in my formula, a better chance of being worth something.
First thing we notice is that investing the coins does not even come close to the value of selling the coins. At an annual rate of 6%, a coin becomes worth 59 times its original value in 70 years, but if you factor in 4% inflation, it is only 3.4 times the face value, before taxes. For some reason I am reminded of the story I heard about when silver became worth more than the coin value. It was apparently illegal to melt down coins in Canada, and a large collection came up for sale. The police stood around the auction to make sure every bidder was identified, obviously as a potential criminal. Last I heard, they were supposed to wait until after a crime was committed to create a suspect list. Question – why would it be illegal to melt coins, anyway?
I’m tired, but not anywhere near done thinking this thing through. I see it is plainly worthwhile to at least be aware of the dates of coins you handle, or to be familiar with the styles which are in demand. That is how I spotted the 1944 wheat head penny, it was something I had not seen in years, so I turned it over. Think of old, not necessarily rare, coins as a poor man’s treasure hunt. Even if you got five times face value for a jar full of these coins, it is better than all but the risky stock market.
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