After several years of development, I have just rolled out a new rarity system for railroad stocks and bonds. You may see it in action by searching for any certificate in your collection.
After many conversations with dealers, collectors and authors, I decided to use a 7-point system arrayed from most common to most rare.
The system is arranged like this:
R1 = likely to appear more than 10 times per year
R2 = likely to appear 4 to 10 times per year
R3 = likely to appear 1 to 4 times per year
R4 = likely to appear once every 1 to 3 years
R5 = likely to appear once every 3 to 5 years
R6 = likely to appear once every 5 to 10 years
R7 = likely to appear less than once every 10 years
R? = Rarity unknown. I reserve this designation for certificates priced under $50 which are suspected of being substantially scarcer than their prices would otherwise indicate. For instance, I would use this designation in the case where a certificate has been seen only once or twice in 30 years, but it sold for only $15. Why so cheap? Is there an unreported hoard somewhere? Was the $15 sales price a very lucky fluke for some collector?The system does not measure populations. We can NEVER know the numbers of certificates that exist. Instead, the system measures historic appearances over the last thirty years. It gives you hints on rarity by estimating how often certificates come up for sale. The system is database-driven, so rarity estimates represent appearances as recently as the last database upload. There are currently about 980,000 appearance in the database.
See http://www.coxrail.com/Rarity.htm for a further discussion of the system and its accepted shortcomings.
3 comments:
Hi Terry, a very innovative rarity system that had me rushing to see if I had any R6's and R7's! Would it possible to have a breakdown of the number of stocks/bonds in each rarity class? I'm sure this would be of interest to other colletors too. many thanks.
Thanks for the inquiry.
I need to stress - in the strongest possible way - that my rarity system does NOT predict the number of certificates that might exist.
Instead, it predicts how often varieties might appear in the future based on how often they have appeared in the past.
The rarity system counts the number of days that have elapsed since July 1, 1980 divided by the number of times certificate varieties have appeared in the marketplace. With the exception of times when hoards appear, results change very slowly, but they change every day.
If a certificate is rated as R7, then the certificate is predicted to appear no more frequently than once every ten years. If a certificate appeared four times in the past, then 30 years divided by four appearances would give an appearance rate of once every 7.5 years. That means that R7 certificates cannot have appeared more than three times since mid-1980.
Using similar reasoning, R6 certificates cannot have appeared more than six times, and R5 certificates no more than twelve times.
Remember, we are NOT counting certificates; we are counting appearances. Appearances can certainly reflect the number of certificates in existence, but appearances can also reflect minimum offering prices. A single certificate might exist, but if an auction house's starting price has been absurdly high, a single certificate may have appeared for sale five or more times.
Hi Terry, it's fairly clear that your system doesn't predict the number of certificates (which begs the question why call it a rarity sytem?) but it would still be interesting to know how many stocks are in the R5/R6/R7 categories. I appreciate this would be a snapshot of your database but should be easy to compile. thanks, Adam
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