Heritage Auctions

How You Can Use Warren Buffett's Personal Secrets of Success In Today's Exciting Rare Coin Market
By Scott Tilson

When it comes to figuring out how to be successful at any pursuit, I firmly believe there's absolutely no reason to re-invent the wheel. Many wise men have discovered it's far easier to learn the hard fought lessons from the legendary visionaries that have already graduated from "The School of Hard Knocks".

So over the past two decades I decided to learn everything I possibly could from the most successful and ethical investor in the world, Mr. Warren Buffett. I realized I was no financial genius, but I was highly confident that most of Mr. Buffett's rules for success in the stock market could be readily applied to my area of interest ...the buying and selling of rare collectibles.

So I read every book and magazine article I could possibly find on Warren Buffett. I read every one of Mr. Buffett's Berkshire Hathaway annual reports and I've faithfully attended each of his annual meetings in Omaha, Nebraska for the past 11 years.

In 1998 and 1990, my friend Jim Halperin (The chairman of Heritage Auctions) and I even went as far as paying $20,000 to have lunch with Mr. Buffett, so we could personally have him answer all of our questions about his rules for success. Of course, people thought we were crazy at the time (you paid $20,000 for lunch???) but this was unquestionably the smartest money either of us has ever spent.

And now that lunch with Mr. Buffett goes for over $2,000,000 (no, that is not a typo) — an appreciation of over 100 times our cost — we can also argue that this was the best investment we've ever made!

Advice that's worth its weight in gold...

Here's what Mr. Buffett has repeatedly said publicly, and to me personally, about what it takes to succeed in any market and how I've applied it to today's rare coin market:

1. Specialize. Define your circle of competence and collect inside it.
   Don't try to be a jack-of-all-trades. Specialize on one or two specific areas and find out everything you can about them. Buy the book before you buy the coin.
   
   Decades of experience and thousands of collectors have proven this to be an incontrovertible law for success. In fact, I have yet to hear or read about even a single collector who has successfully neglected this rule.
   
   The bottom line is that the more educated you are, the more successful you will be — no exceptions!
   
   
2. Buy the very best quality coins you can . It's better to buy a great coin at a fair price than a fair coin at a great price.
   It's critical to understand that sophisticated collectors always want the very best and remain ready, willing and able to act quickly when opportunity presents itself. These collectors understand that the opportunity to acquire a rarity is often rarer than the collectible itself! For these savvy folks, price is secondary, quality comes first.
   
   Successful collectors understand that museum quality will always be highly sought after and become increasingly desirable while run-of-the- mill quality will never rise above boring and un-exciting.
   
   Successful collectors understand that years from now it will be an insignificant fact that they "stretched" an extra 20 - 30% to add something special to their collection. Successful collectors aspire to locate rarities today that will be impossible to locate at virtually any price tomorrow. In fact, if you're not prepared to "stretch" for the very best, you won't be the person who ends up with a world class collection. The spoils will simply go to someone else.
   
   David Queller, one of the most successful coin collectors of this era recently stated in an online interview that "the best, most expensive coins always wind up being the cheapest in the long run." To see this interview, click here.
   
   
3. Buy for the long term...with the idea of holding forever.
   The best rare coins are just that...really rare and extremely difficult to find. It also takes a tremendous amount of time and energy to track down the really top tier material.
   
   You must realize that what you sell today could very well be impossible to replace at any price tomorrow. When you buy the best it just keeps getting better. So think long term, every successful collector I have ever heard about has religiously embraced this strategy.
   
   
4. Patience is critical. Wait for the perfect pitch, right down the middle of the plate.
   This one's going to be tough for you to follow because it involves fighting human nature. I urge you to resist the temptation to rush out and acquire items that are inferior in quality and desirability. It's easy to place funds in second tier material because these items are always readily available. Simply don't do it, you'd be shooting yourself in the foot.
   
   
5. When the opportunity presents itself, act quickly and seize the day.
   It's not enough to simply indentify an opportunity. It's more important ... far more important ... to decisively act on rare opportunities and exploit them to their fullest potential. Every long time collector can quickly rattle off the "coins that got away" ...coins that they were offered and passed on... usually because of price. After you have done your homework have confidence in your judgment and do everything in your power to seal the deal.
   
   
6. Work only with Dealers you like and trust.
   Coin collecting is a wonderful hobby and pursuit that should bring you pleasure and respite from the world's everyday pressures and hassles. Make sure that the dealer you choose to work with is adding enjoyment to your life, not a barrage of annoying phone calls and hype.
   
   I believe that the dealer(s) you choose to do business with will be the single most important decision you make. Find someone you trust that has an excellent reputation.
   
   I like dealers that are interested in educating me ...not just selling me stuff. Make sure your dealer offers full transparency and offers you the latest tools and technology available in the marketplace.
   
   Don't be afraid to ask for references ..and then be fastidious in following them up. Find a dealer that stands behind the coins they sell before, during and after the sale.
   
   In return, show loyalty to your dealer and do your part to build a strong relationship. Savvy collectors know that the most loyal customers are the ones that get called first when the most coveted material surfaces. Do everything you can to be that person.
   
   

Scott Tilson is a long time client of Heritage Auctions and has been involved in the rare coin market for the past 30 years. His main collecting interest and focus is early U.S. Type. For the past several years Mr. Tilson has been busy establishing the Psychedelic Art Exchange which allows collectors to participate in a new ground floor collectibles opportunity...1960's Psychedelic Rock Concert Posters. Mr Tilson welcomes your comments on this article and can be reached c/o Jim@HA.com.