Portfolio Diversification Benefits of Investing in Stamps

Abstract

In November 2002, Stanley Gibbons, a large British stamp dealer, introduced the SG 100, an index for stamp investments. This index is used to study whether there are diversification benefits for British and American stock investors to invest in stamps. The Capital Asset Pricing Model regression of the mean monthly stamp index excess returns on the excess returns of stock indexes yields positive alphas for both British and American investors. This means that adding stamps to stock portfolios can improve the investment performance of both groups of investors.

Keywords: alternative investments, stamps, diversification benefits

JEL Classification: G11, G15