Collectible Stocks and Bonds from North American Railroads     by Terry Cox

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Cox's Corner
June, 2007

Scripophily 2007-06

This article appeared in:
Scripophily, Jun, 2007

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We are delighted to tell you that Terry Cox will be writing a regular column for 'Scripophily'. Terry was once a collector of paper and at various times he has collected and dealt in fractional currency and other obsolete paper money, Confederate money, souvenir cards, Confederate bonds and railroad and coal company stocks, but now the only things he actively collects are engravings by the 19th century engraver Herbert Bourne. Having largely given up collecting tangibles, but still a collector at heart, Terry's specialization now is collecting information. He is building a database on www.coxrail.com that currently lists more than 21,000 certificates from railroads from the whole of America from Panama northwards and including the Caribbean. He is the leading authority on the market prices of North American railroad stocks and bonds, and is the author and publisher of the price guide 'Collectible Stocks and Bonds from North American Railroads.'

In the course of pursuing his collecting passions, Terry has developed principles and theories about collecting generally, and he has chosen to write on such a theme for his first Cox's Corner.

Why specialize?

Some collectors tell me they have neither a collecting specialty nor much money. I hate to break the bad news, but the less money they have, the more they need to watch their spending. The more they need to watch spending, the more they need a specialty.

It will probably not surprise you to learn that most beginners tell me they don't want a specialty because they intend to own one of every variety ever printed. Owning an example of every variety would be wonderful. There's just one teensy, weeny problem...it is impossible!

Collector are doubtlessly misled by the erroneous idea that prices reflect rarity. They naturally assime that sub-$1000 items cannot possibly be rare. I apologize for failing to communicate this fact more clearly, but there are hundreds of genuinely rare certificates that have sold for less than $50. In the coin hobby, equally rare items might sell for tens or hundreds of thousands of dollars!

Collectors prove day after day that they do not appreciate the super-rarities of our hobby. Speaking strictly about railroad certificates, I can testify that hundreds of varieties are represented by only one or two examples. A thousand varieties, maybe two thousand, are represented by fewer than ten examples! Owning one of those rarities is an achievement and honor. Trying to own them all is a recipe for failure.

I am not against dreaming, but how can collectors enjoy a hobby when the first thing they do is set themselves up for failure? A satisfying and achievable result might be to own some of the earliest certificates ever printed in the United States. Another satisfying result might be owning a few of the rarest certificates from a particular state, region, or company. Some collectors find it satisfying to own the signatures of all major railroad executives. I know one person who collects certificates with autographs of historic stock operators. I know many collectors who find enjoyment trying to collect certificates from companies located in their home states.

Regardless of the specialty, the more clearly collectors identify the results they want, the greater their liklihood of gaining satisfaction. When they precisely identify the results they desire, they discover their specialties. When collectors make this crucial discovery, their collecting goals become crystal clear. For instance, maybe they want their collection to represent one certificate of every ancestral company of today's Union Pacific. Then why do they have a Boston & Providence certificate in their collection? If they want to own an example of every certificate ever issued in the state of Kansas, then why did they buy a Blue Ridge bond from South Carolina?

Specialization is about money. If a collector is a billionaire, the need for specialization is unimportant. However, according to the book The Millionaire Next Door, even millionaires need to watch their checkbooks once in a while. The more limited a collector's resources, the more he needs to watch his purchases. There are a couple of ways to uncover the results you want.

I bet you probably already have the framework of a specialty started. Narrow it down by going through your collection and looking hard at every certificate. Imagine separating everything into three or four piles. What piles would you make? States? Companies? Streetcars? Engravers? Vignettes? Transitional certificates? Bonds? Dates? Autographs? If you can force yourself to group everything into just a few piles, you will discover your specialties.

Another trick is the 'justification strategy.' Imagine talking with a non-judgmental collector and justifying why you bought every certificate. As diverse as your collection may be, I bet the act of justification will tie most of your collection together into specialties.

As you self-discover more about your true collecting interests, the more likely you will notice that some of your purchases were ill-planned. Maybe you should get rid of those certificates. Not this year. Not next year. But some time after prices improve. Once you discover your specialty (or specialties), you will be able to look at your future purchases more clearly. You will be able to ask, "If I buy this new certificate, will it help take me closer to my goal of ...........................?"

Discovering a specialty will be liberating ... and it will save you money.

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