Stamps as an investment

In the UK since 1989 you have been able to buy a stamp that is simply called '1st' for 1st class post. These are known as 'forever stamps', (or the rather boring Non Value Indicator (NVI)) as they will forever pay for 1st class postage. The price of one of those 1st class stamps has risen from 20p to this year's (from April) 46p, a rise of 130% (inflation has been 75% on the CPI over that period).

So would it have been a good idea to buy those stamps in 1989 and hold them until today? The above chart shows the value of a 20p put into a bank account (or £20 or £20m etc) and the same amount of 1989 'forever' 1st class stamps. It's true the bank account would have done better, returning 61p today, enough to buy nearly 1.3 1st class stamps. However if you take off 20% income tax then the amount is very similar.

Furthermore stamps have clearly done better over the last few years.
This chart starts at 2005, and show stamps have outpaced even pre-tax bank accounts.

Stamps have other advantages. They are backed by the British government in a way - certainly there wasn't a run on them in 2008. They don't count against means tested benefits. They might (I've not checked) be good diversifiers.

Of course there are drawbacks. Stamps are not the most liquid of assets. You can use them, but you might not place 46p of value on them, or you can sell them (the Post Office won't buy them back). An auction just ending on Ebay is fetching 40p a stamp, a discount of nearly 2.5% on the current 41p price (for another month). Others show a larger discount. Stamps are quite bulky if you want to invest a lot.

A more major issue might be what you are buying. In a world of Twitter and email and so on one might think the value of posting a letter will not keep up with prices. That it has so far is no proof it will in the future. Another problem is default - the Royal Mail might go bust. More common is a change in the contractual terms - e.g. a restriction in what the stamp buys. In fact this happened on 21st August 2006 when the Royal Mail introduced a size limit on 1st class post - 240mm by 165mm by 5mm. However it also increased the weight limit from 60g to 100g. This makes comparing pre-2006 to post-2006 data difficult.

Maybe it would be easier to speculate. Buy up a lot at the current price of 41p, then sell them in April for a small discount on the 46p new price.

Shopkeepers in London suffered their worst January for five years...?

No, it was almost certainly their best January ever - sales rose 3.5% from 2009. Furthermore:

London fared better than the rest of the UK where sales fell 0.7 per cent in January in the worst performance for 15 years.

See below...

Worst or best?

So is the headline on this BBC piece.

Have a guess if that's true or not? That's right, it's not. In fact shop sales were the best since records began.

The article itself is more accurate, it's the 'worst growth' for 15 years. But let's put this into perspective, the rate of growth was 1.2% (like-for-like was a fall of 0.9%, but that's irrelevant in a macro sense). I don't have the figures to hand, but if GDP in January (which would have to be estimated) was 1.2% higher than in January 2009 it would be a pretty good result. And in a recession partly caused by overstretched household budgets!!

GDP again

This story gets itself rather confused. My italics.

UK growth falls less than thought [UK growth falls less than thought would make sense only if growth was say 0.8% in Q1, then though to be 06% in Q2, but in fact was 0.7%. They really should say UK GDP falls less than thought, or if that is too technical, 'national income']


The rate of contraction of the UK economy in the three months from April to June has been reduced again. [this is right]

Gross domestic product (GDP) [growth] has been revised to a fall of 0.6% compared with the last quarter, up [you know what they mean here - up as in less of a decline - but it looks a little odd, I think 'better' is better] from the previous estimate of 0.7%.

The figures were revised upwards last month, from a 0.8% decline, according to the Office for National Statistics. [this is OK, but 'The figures have already been revised from a larger 0.8% decline' is better]

Many other countries, including Germany and Japan, emerged from recession in the second quarter [Again OK but perhaps 'saw positive growth in the second quarter' would be more accurate].

No, UK production has shrunk the most in 40 years

Sigh, yet another example of this common error.

Averages

Every taxpayer in the country has lost almost £40,000 since the onset of the credit crunch, as plunging house prices and the savage sell-off in stock markets have obliterated £1.2 trillion of Britain's national wealth.

No they haven't. If we take the figures as correct, then some have lost more than £40,000, some less. On average the loss is £40,000. This is not nit-picking, the statement 'every taxpayer has lost' is pretty definitive, and entirely wrong.

Exchange Rates

This is a disappointing piece making the old comparisions - I'd say modestly fleshed out on this 'blog some time ago - about how exchange rate movements have altered the relative standing of the US, Eurozone and UK over the past four years. But we all know that when discussing dollar (or any other common currency) GDP you can talk about exchange rates, but when you start talking about 'living standards' you need to make a lot more explanations. This statement is clearly nonsense:

The Oxford Economics consultancy, which only a few months ago reported that Britain’s living standards had overtaken those in the United States,

It's disappointing because David Smith knows all of this more than just about anyone else around. And see post above.