The rarity myth

What do you think a fair bid should be?

(c) Can Stock Photo / by Tydirium

Before reading the rest of this page, decide what you would bid on the following certificate and then click the PLUS SIGN to read more. The conditions are:

  • A stock certificate in YOUR specialty is coming up for sale in your country.
  • The item is being sold by an average professional auction house whose results are typically "middle-of-the-road."
  • The offered item is the only variety of stock certificate known for the company or location you specialize in.
  • A bond is also known to exist for this company, but it is equally rare.
  • The certificate being sold is one of only two serial numbers ever recorded.
  • The certificate was not printed by American Bank Note Co.
  • Winning bids are lowered automatically to one bid increment above the next highest bidder.
  • There are no reports of any special autographs, specimens, proofs, or remainders.
  • Your favorite relative is funding your purchase, so money is not an issue.

How much would you bid to add this certificate to your collection?

And the answer is ...

According to my database,

  • any bid above $3,500 has a 99.999% of winning.
  • Statistically, a $100 bid has a 50% chance of winning.
  • In real life, some rarities like this have been won for $5 or less!

The reason is ...

Rarity is a bad way to estimate prices

The rarity myth pervades every collecting hobby. The rarity myth is a siren song that seduces collectors into fervently believing that scarcity determines value. I think every beginning collector believes the myth. Unlike Santa Claus, the majority of adult collectors hold on to the belief with nail-dragging ferocity.

I always ask collectors to give me guidance on how to price their new acquisitions. Many give me estimates higher than the amount they paid because their certificates are rare. Never mind that they paid significantly less only a few weeks before. And let's be clear, they were winning bidders. That means every other bidder thought the winning bid was too high. No one else was willing to pay more.


There seems to be a common belief that rarity is a primary driver of price.

I am not saying that scarce certificates should not be worth more than common ones. They should be! I am suggesting that there is a huge disparity between what collectors think scarce certificates should be worth and what they are actually willing to pay.

I have not been involved in every collectibles hobby, but I am not aware of any hobby that displays greater disparities between rarity and price than scripophily. It should be obvious that other factors are working counter to rarity.

Take, for instance, two certificates of equal rarity from different states. All other things being equal, including rarity, most collectors are willing to pay much more for certificates from some states than others.

Examples of prices counter to myth

Roche Rock near St Austell, Cornwall, UK, Can Stock Photo by ziggyzag
  • Equally rare certificates from different states attract different prices.
  • Generic certificates are usually scarcer than custom-vignetted certificates, but rarely attract similar bids.
  • In companies that issued both common and preferred shares, preferred certificates are much less numerous but rarely sell for more than common certificates of the same design.
  • Stock certificate denominations such as 1-share, 5-shares and 25-shares are much scarcer than denominations such as <100-shares and 100-shares but almost never sell for more.

Price analysis

I ran a deep analysis of prices recorded in my database in early 2022. I wanted to know whether varieties represented by only one or two certificates attracted prices commensurate with their rarity. The answer is, "well...uh...sometimes..."

I wanted to quantify the prices paid for the rarest certificates from the rarest companies. I wanted to find situations where collectors could not other common varieties in order to avoid buying rarities. I wanted to find examples where collectors could not avoid genuine rarities by buying more plentiful and possibly unnumbered remainders. So I searched for:

  • railroad certificates only
  • companies represented by either one variety of stock, one variety of bond, or one variety of each
  • stock certificates or bonds only (no "other" certificates like transfers, certificates of deposit or temporary certificates)
  • no "blind" sales (all companies were excluded that ever had any certificates sold that lacked serial numbers or were sold in lots represented by stock images)
  • certificates known in single issue/cancellation states ('iu' only or 'ic' only, with no celebrity autographs)
  • no other variations in issuance recorded (companies were excluded if they had any specimens, proofs, autographs or remainders)
  • no more than two serial numbers reported
  • no lot sales

And the results:

    Type Lowest
Stocks $3 $203 $100 $3,439
Bonds $5 $239 $121 $3,613
Both $3 $211 $105 $3,613

How many legitimate coins, stamps, comic books or sports cards with only one or two known examples, have you seen sold in recent years for under $3,600? I'm guessing there are possibly a few. The railroad stock and bond specialty has over 1,650 similar examples.

Yes, I found seven certificates that had fetched over $3,000 apiece plus an equal number between $2,000 and $3,000. Those are respectable numbers. But there were also 700 examples that sold for under $100 apiece? As I have said numbers of times, our hobby gives practically every railroad stock and bond collector the opportunity to own serious rarities without going broke. All they need to do is stay in the hobby for five years.

The point of this is to illustrate that prices in our hobby are seriously out of line with rarity.

Rules of thumb

There are many "rules of thumb" in pricing collectible certificates. Rules are always made to be broken, but if we assume the same number of available certificates, then advanced collectors generally:

  • pay more for well-vignetted certificates than plain certificates
  • pay more for custom-engraved certificates than generic certificates
  • pay a little more for bonds than stock certificates
  • pay more for American Bank Note Company certificates than others
  • pay more for older certificates than modern ones
  • pay more for celebrity-signed items than non-autographed items
  • pay more for unissued certificates than cancelled ones
  • pay more for issued certificates than unissued "remainders"
  • pay more for serial #1 and #2 than others
  • rarely pay more for higher-numbered certificates

Let's consider a few more observations.

Every experienced collector has witnessed countless examples of scarce certificates that went unsold in one, or maybe even several auctions. Then suddenly, those same certificates sold for curiously high prices in later auctions. If rarity were so important, why didn't those certificates sell on their first appearance? One can reason that other factors were more important than rarity.

I am NOT saying that rarity does not affect price. It does and it can be significant. It just does not affect prices in a direct manner. THAT is the key to understanding disparities between rarity and price.

The world is full of one-of-a-kind items. Rarities are everywhere. You probably have rarities in your house right now that you would never willingly part with. Yet, there may be no one in the entire world who would pay for your rarities. Those are items like photographs of grandchildren, trinkets from past vacations, or handwritten letters of your great-grandmother. As unique as your items may be, they are probably worth little to anyone else.

I strongly suggest that the most important factor in pricing collectible certificates is the number of collectors who desire to own particular items. Take a certificate variety with only a fifty examples known. If only 20 collectors want that variety, it will not sell for much. If 2,000 collectors want that variety, it will sell for dramatically more.

Price increases not with rarity, but with the number of desirous collectors. The more collectors, the more desire, and the higher the price..

I see examples every month where two essentially identical certificates go up for sale on eBay and in professional auctions. The rarity of those certificates is equal but the number of desirous collectors is not. Generally, more interested collectors see certificates offered in professional auctions than on eBay. Consequently, professional auctions attract higher bids than eBay.

There are so many disparities between price and rarity that it should be completely obvious that rarity is only one factor among many that affect price. The importance of rarity is not necessarily #1. I think people ascribe high importance to rarity because rarity is the easiest thing to measure. Our estimates of rarity may be flawed, but rarity is still easier to estimate than the number of collectors and the depths of their desires.

A paradoxical twist

No matter how much we understand about the flawed and indirect relationship between rarity and price, I do not believe we can change our behavior or thinking about rarity. I suggest that the next time we evaluate a collectible for purchase, rarity will remain one of the first things we think about. It doesn't matter whether we know better or not. I think all collectors, myself included, unconsciously believe The Myth that "rare means valuable." The concept seems "hard-wired."