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Strategy Followup

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Hmmm - I wonder if NGC is inadvertantly costing collectors money. Most dealers that I trust have consistently told me one thing - it costs you money to upgrade. You are better off saving up so that when the ultimate coin is available you can buy it vice buying a 63, then a 64, then a 65 and then a 66. You lose money at every step.

 

By rewarding the acquisition of low value specimens (some have bonus points above market and some are not discounted), is NGC encouraging the very habit that knowledgable dealers discourage????

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From your other thread:

 

--

TDN,

 

I think this trusted advice from dealers regarding not upgrading is based on the presumption that the collectors don't know how to buy.

 

Perhaps that is true in the majority of cases, but there certainly are plenty of us collectors who do know how to buy right.

 

Knowing how to buy, btw, is the key to being a successful coin dealer. (So I've been told...)

 

EVP

 

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I have several thoughts on that:

 

Even if you buy right, you are still going to lose 10-25% in that price range. Oh, I'm sure occasionally you'll find a super PQ coin that you make money on when you sell or the market goes up while you hold or you get an upgrade, but all in all, the dealer (or auction company) has to stay in business so you'll lose your 10-25%. Every time you upgrade. Think you can just trade it in? Think again. Dealers hate trades, unless they get the trade in at wholesale or the higher coin is really full retail.

 

In the long run, it's a losing proposition.

 

Here's a real life example:

 

My first 1878-S was an MS64. I lost $500 on a $2700 coin when I bought the Eliasberg MS66. Then I lost $2,500 on a $15,000 coin when I bought the Seattle hoard MS67.

 

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Some coins you win on, some you lose on. Upgrades are expensive, but sometimes you do it just because.

 

I have recently bought several pieces that were same-grade improvements to my set -- better color, more eye appeal, etc.. The original would have worked for my set, but I found one that caught my eye and called to me even more. laugh.gif

 

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I think that upgrades can also be fortuitous or in-the-flow-of-time events. I, for one, never counted on upgrading certain coins, but along comes a whopper that knocks my eyes out and WHAM! Next thing you know, I have two of the same date, one or more grades and hundreds or thousands of dollars apart. I've also experienced that I aimed for a certain grade because I wished to put a price tag limit on any single coin in the series. This is the most treacherous thing I have done, and I have found that it does not work very well. But still, this may be a very practical way for many to approach collecting a series.

 

My most recent case: I wanted a 1914/3 buffalo nickel. I genuinely never thought I'd own the grade I wanted (MS64 or 65), as the beast is rare as hen's teeth and fairly expensive in its upper grades. (NGC reports 4 of these coins in MS64 and one in 65. PCGS reports 10 of these coins in MS64, two in MS65 and one in MS66. And as population reports, one knows these are inaccurate and probably inflated by resubmissions.) Upon acquiring an MS64 example, I realized that my long-held and beloved MS62 1937-D 3-legger was not going to satisfy me in the long-term. But it wasn't until I had moved down the road a bit with the series and matured with my collecting desires that I even recognized my desire to upgrade!

 

Hoot

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My strategy is buy NGC coins.... add them to the NGC Registry, then crack them out and keep the inserts. Then have PCGS grade them. One coin..... Two Registry Sets at half the price! blush.gif

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My dilemma was whether to purchase some 66's or an occasional 67 IHC. I sat down did some spread sheets, did the old risk analysis they teach you in MBA classes and decided it would be more fun and in the end less expensive to shoot for 64 Reds and 65 r/b's (some of which are more attractive than the Reds). My budget is free at last, the last of four college students is out on her own. This seems like not an inexpensive venture, but one well within my limits and I am having an enjoyable time at it.

 

Of course all it takes is for one knockout to come along, but I have factored that into the equation. In two weeks my proof quarters 36-42 will be finished, except for two upgrades, then I plan on getting serious. I just hope there isn't a nice 56 FE at FUN. shocked.gif

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All I need to do, is a risk analysis of the Stock Market. Then go back to reading the paper. This coin money is not going anywhere until Market conditions change. A no-brainer. tongue.gif

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