Creating a Jefferson Nickel short set - what is the ideal date range? 1 1

[World Colonial]

On 8/12/2022 at 5:34 PM, The Neophyte Numismatist said:

@World Colonial Okay.  I am really trying to understanding of what you mean, keep it numismatically focused, and not make this about my differences of economic opinion:

Are you saying (my numbers below are completely made up):

If a Jefferson is $100 and X collectors like it, and a Buffalo Nickel is $200 and 10X collectors like it, the Jefferson's ability to appreciate will erode as the price point gets closer to the Buffalo?  That breakpoint could be $120 before the collector justifies the overage, but certainly by the time they reach price parity the person buying the Jefferson would convert to the Buffalo.  This makes the assumption (based on historical numismatics) that the Buffalo would be the preferred design tomorrow as has been in the past.  Therefore, the relative differential between the Jefferson and the Buffalo would have to remain constant to prevent the collector from "changing brands" to maintain demand.  Therefore, the Jefferson and Buffalo can only move together.  Furthermore, the only difference in modern Jefferson collecting is the addition if "full steps" designation, however, this is not expected to generate enough interest to be able to compete with the more favored design if price points between the two are comparable?

Yes, something like it.

This is coin collecting (not physics), so there are no absolutes.  But keep in mind that, at minimum to my knowledge, no series has passed another one since 1975 when I first became a collector.  If it happened, it must have been between two that aren't actually competing directly.  In your example, the preference between these two series remains as lopsided as ever.

The reason this hasn't happened isn't because it "can't" happen, but because collectors essentially prefer the same coin characteristics, over time.  And the reason this happens is because collectors over time bring in the same cultural preferences external to collecting, from the broader culture.  In the example of the two series you used, the only realistic way the relative preference is going to change "noticeably" is if the public prefers presidential portraits over classical style art.

Changes such as preferences for TPG, CAC, "eye appeal" (toning or lack of it), and full strike designations such as FS are all internal to coin collecting.  (TPG somewhat more broadly to collecting generally.)  That's why it's a lot easier for these changes to occur (and impact prices) than something that's brought into collecting from the "outside".

Preferences from outside collecting include metal content (gold, silver, base metals), designs, coin size, and relative scarcity.  Another one that is definitely evident in coin collecting is the overwhelming tendency of coin collectors to prefer their own coinage for cultural reasons.  Your preference is typical of US based collectors (US vs. everything else) but still somewhat dependent upon relative prices.

Has the preference for a series increased relative to another without overtaking it?

I'd say yes but I can't identify how much without access to the data.  If I had an extract of the Heritage archives, I could run an analysis.  Anecdotally looking at limited auction data, it's been a low to minimal closure of the gap and probably mostly due to generic changes in collecting. 

As an example, with the introduction of TPG in the 80's (which was a one- time occurrence), coins now in a holder with the highest TPG grades have increased more than some lower grade coins in another series.

The other important factor (a very big one) is relative financial liquidity.  Higher preference and more "popular" coins are usually more liquid, but collectors may (and IMO do) buy coins they like less than others because the financial part is more important than collecting as a recreational activity. 

Think of it this way, if collectors knew (or had a high probability to believe) they could get most or all of their money back irrespective of what they bought, I think it should be evident relative prices would be quite different.

[The Neophyte Numismatist]

On 8/12/2022 at 9:26 PM, World Colonial said:

Yes, something like it....

Thanks.  I totally understand this point of view, and my apologies for coming-off gruff.  I take economics very seriously, and when economics and my hobby combine - it can lead to passionate outcomes.  It took me a few minutes to really understand the points you were making, and I had to try to contextualize it.  I had to sever your economic points (that frankly I do not subscribe to) from the numismatic points (which I am not yet an expert).  I do think that there is an inverse correlation between popularity and potential upside, however, these thoughts I discount as speculation (although there are residual effects).  I try to remove "emotion" from every business decision I make.  Buying coins, because it is emotional pursuit, can make this difficult.  

I apologize for anything that may have misrepresented what you are trying to say numismatically.  I think I now understand your key points, but it took me a while to get there. I am a neophyte (as the name implies), and I want to be sure that I never overstate my numismatic knowledge.  

I think we may always have differences in fundamental/financial valuation, because we see through a different lens (economically speaking), but I would like to publicly say that I appreciate your numismatic perspectives and have taken this as an opportunity to learn.  Thank you. 

Edited August 13, 2022 by The Neophyte Numismatist