Peter Temple: Coining it in with tangibles

While my modest portfolio of small quoted companies is in an even more tattered state than a month ago, asset allocation decisions of a few years back have provided something of a comfort. This highlights a universal truth about investing: that individual stockpicking matters less than choosing the right broad areas in which to invest.

I’ve noticed it particularly this month, in relation to my equity, property and alternative investments.

For my equity portfolio, I drew back from adding to my holding in Claimar Care, following its recent price falls. That was just as well. A profit warning has seen the shares drop sharply since then. There seems little to be gained from selling at this stage, and the shares may even recover.

The market may show some signs of revival later in the year, but after this most recent affront to my supposed stockpicking skills, I am contemplating playing any upside by buying index trackers.

My property holdings have at least assuaged some of the pain from the stock market, as I’ve had some good news about the value of my Isle of Man property. I regard this as a bona fide part of my portfolio, as
I part-funded its purchase by selling a number of equity holdings. An identical property has recently been valued and the figure suggests a substantial uplift on the price I paid around three years ago. Even discounting this to allow for the inbuilt enthusiasm of estate agents, I can still reckon on a near-doubling in the equity I have.

I’m also glad that three or four years ago I made a decision to reduce the emphasis on equities in my portfolio in favour of investing in tangible assets such as stamps, coins and gold bullion.

Of course, unlike shares – whose prices can be checked daily in the FT – valuations of tangible assets come in fits and starts. I can value my gold bullion coin holdings by looking up the gold price and the sterling/dollar exchange rate. But rare coins and stamps are a different matter. Here, one has to rely on the catalogues published each year by Stanley Gibbons and Spink.

And even then, the process of valuing a collection of rare coins is a difficult one. While an individual coin can be readily identified, prices are quoted for specific grades and working out where a particular coin fits in the pecking order of value is not easy for anyone other than a professional numismatist.

The bulk of the value of my collection is in three main areas: Anglo-Saxon and Norman silver pennies; Charles I and Commonwealth era coins; and Isle of Man coins and tokens.

Judging by price changes from one year to the next, the first of these coin categories has been reasonably buoyant. This was highlighted by Spink in the market commentary in its 2008 Standard Catalogue. Gains in value on my pieces from this era seem to average 8-12 per cent. There has also been some appreciation in prices of Charles I and Commonwealth coins, probably in the region of 9 per cent for the coins I hold.

Valuing my Isle of Man collection is more difficult: catalogues of prices appear once in a blue moon, but reports from dealers suggest that prices are rising, with a shortage of material for sale and a greater than usual number of collectors interested in buying.

Either way, performances like this have meant that coins been a much better choice of investment over the last 12 months than the stock market.

Peter Temple is an active private investor writing about his own investments. He may have a financial interest in any of the companies, securities and trading strategies mentioned.

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