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General Philatelic/Gen. Discussion : Mystic Stamp Company Changes Ownership

 

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DouglasGPerry
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APS Member #196859

06 Apr 2016
05:45:01pm
Linn's Stamp News reports that the Mystic Stamp Company is transitioning to employee ownership. The article gives some details of the change, but does not provide any explanation as to why it happened. I'm curious about this business decision. It doesn't seem to happen very often. Thinking

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MikeyToo
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06 Apr 2016
06:29:13pm
re: Mystic Stamp Company Changes Ownership


I hate to say this but I use them for reference all the time. I just can't afford to buy anything they sell.

Maybe they'll lower some of their prices.

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In loving memory of Carol, my wife for 52 years.

06 Apr 2016
07:16:54pm

Auctions - Approvals
re: Mystic Stamp Company Changes Ownership

Mystic has been around a long time and has a good reputation. They are one of the few that actually pay decent money for collections. A local dealer's widow turned down a reasonable offer for her late husband's stock and had it sold by a large auction company. All that work and hassle and she ended up with about 50 per cent of Mystic's offer.

My guess, and it is only a guess, is that they want the company to continue to prosper and maintain a presence in the local community (pop @ 5000). Should something happen to either of them at present the future of the company (and it's employees) would be questionable. The ESOP offers protection to the community and the employees. It is win-win and it is good to see them willing to share in their good fortune,

Just my two cents.


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youpiao
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07 Apr 2016
03:27:20am
re: Mystic Stamp Company Changes Ownership

I agree it is a win-win situation for the employees and for the Sundmans. Sundman sells all his shares in the company to the ESOP (Employee Stock Ownership Plan) and he gets the price he wants, rather than shopping the company and settling for less. He also keeps his (salary-drawing) position as president of the firm.


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Tom in Exton, PA

07 Apr 2016
06:42:15am
re: Mystic Stamp Company Changes Ownership

I don't know the folks involved but...

the owners have 'cashed out'. That means they sold the business for a value they determined today. Should the market decline (as we all worry as our aging herd dies off daily) that loss is now on the employees.

Many years ago there was a pharma company that had an operation they no longer wanted. They had no buyers so they set up an employee owned company to buy it, and put a lot of their employees in this new venture. It fizzled and died in a few years.

I worry about the business climate in this country right now. Corporations are all sitting on their hands waiting for the outcome of the election. If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes. No new investment, expansions or new jobs.

Luxuries like hobbies will be the first to suffer.

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07 Apr 2016
07:08:15am

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re: Mystic Stamp Company Changes Ownership

Time will tell of course but my guess is that if they continue the same conservative business model and contributions to both the stamp hobby and local community events the employees will make out very well.

They have recruited over 5,000 new members for APS. The catalog and mail order business is the "tip of the iceberg" that you see, there is a lot more to the company.

Yes, many employee take-overs don't work out. By the same token many do, some in spectacular fashion (first hand experience here).

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cdj1122
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Silence in the face of adversity is the father of complicity and collusion, the first cousins of conspiracy..

07 Apr 2016
08:10:42am
re: Mystic Stamp Company Changes Ownership

" ... If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes. ..."

I hope you are not counting of the party that has been promising us for some forty years that investors and corporations will soon open the flood gates and we will all be rich.

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DouglasGPerry
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APS Member #196859

07 Apr 2016
09:17:20am
re: Mystic Stamp Company Changes Ownership

I'm not a businessman, so please allow me to ask a naive question. In an ESOP transition such as this, who is ultimately responsible for the company? An employee-staffed board, perhaps? I would find it surprising if the president could go his own way without having to answer to those who now hold financial liability for the company.

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ThomasGalloway
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07 Apr 2016
09:21:44am
re: Mystic Stamp Company Changes Ownership

"the owners have 'cashed out'. "

Can someone explain to me where the "cash" comes from for this buyout?

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07 Apr 2016
10:08:11am

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re: Mystic Stamp Company Changes Ownership

A good basic primer on ESOP's - it's a quick read.

https://www.nceo.org/articles/esop-employee-stock-ownership-plan

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DouglasGPerry
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APS Member #196859

07 Apr 2016
10:16:42am
re: Mystic Stamp Company Changes Ownership

A very helpful link, Webpaper. Thank you.

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amsd
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Editor, Seal News; contributor, JuicyHeads

07 Apr 2016
11:01:55am

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re: Mystic Stamp Company Changes Ownership

there are ups and downs in taxation in this country, and their impact is, ummm, counter-intuitive. One would expect, and it has been promised quite often (as Charlie notes), that reduced corporate taxes and reduced taxes on those who could invest in corporate expansion would result in business expansion, increased tax revenues from increased exchange of funds, and, above all, increased employment based on the new demand from all this money floating about. One would also expect economic constriction during periods of increased taxation.

That's what one would expect.

And that's what's been, and continues to be, sold to us, even in the face of evidence to the contrary.

I know we're getting off Mystic's sale, but since the topic was raised....


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youpiao
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07 Apr 2016
01:26:04pm
re: Mystic Stamp Company Changes Ownership

"If trickle-down economics worked, then Reagan's lower tax rates should have helped all income levels. In fact, the exact opposite occurred. Income inequality worsened. Between 1979 and 2005, after-tax household income rose 6% for the bottom fifth of income earners. That sounds great until you see what happened for the top fifth -- an 80% increase in income. The top 1% saw their income triple. Instead trickling down, it appears that prosperity trickled up! (Source: Steven Greenhouse, The Big Squeeze, pp.6-9)

Why Trickle-Down Economics Is Relevant Today

Despite its shortcomings, Republicans use trickle-down economics to guide policy."



http://useconomy.about.com/od/Politics/p/Trickle-Down-Economics-Does-It-Work.htm


Ted
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TribalErnie

07 Apr 2016
03:21:20pm
re: Mystic Stamp Company Changes Ownership

" A TAX CUT means higher family income and higher business profits and a balanced federal budget. Every tax payer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."




President John F. Kennedy, 1963

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HungaryForStamps
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07 Apr 2016
05:03:48pm
re: Mystic Stamp Company Changes Ownership

Employee buyouts are typical end-stage maneuvers for failing companies, but not always.

A chart of presidential debt might help the political/economic discussion

Debt by Presidency

GOP Presidents Have Been the Worst Contributors to the Federal Debt

""If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes.""



Probably not true. What business wants is a deadlock, so presidency in one party and congress/senate in another. Certainly if an alleged serial-business and value destroyer wins, such as Drumpf, then the economy is doomed. But that won't happen.

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cdj1122
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Silence in the face of adversity is the father of complicity and collusion, the first cousins of conspiracy..

07 Apr 2016
05:11:57pm
re: Mystic Stamp Company Changes Ownership

RE: the Kennedy quote cited above.

The problem is that I do remember the 1950s and '60s.
The marginal tax rate, meaning the taxes on the top categories of income earned was more than 90% and Kennedy was talking about lowering those high rates to the mid-60s, not the drastic 14% average that the very wealthy now pay. (Remember Romney's return ?)
The corporate tax rate was in the 50% range and Kennedy wanted it lowered about 5% to the high 40%, again not to the point where hundreds of major corporations pay zero and get rebates.
I remember that because I thought it was a great idea at the time. And during the 1960s and '70s I recall a general good feeling about the future despite those tax rates.
It may have been since the nation managed to run the space program, build the interstate highways, pay for a ten year war, out build the Soviet Union, maintain a vibrant economy without creating a phenomenal federal debt.
But about 40 years ago, after Kennedy and Johnson, some people decided that further lowering would be even better and that is when this version of
Voodoo economics gained support.
(Near the end of the 1980s, Reagan began to panic at the direction the economy was going and for a while raised business tax rates.)
Today we have a crumbling national infrastructure, we have trimmed space exploration, we have an economy that has struggled to recover over the last six years, we have been unable to get out from a massive debt, and we have been assaulted by a crippling recession.
And instead of a general good feeling, I see people worried about what is happening and what will happen to their children.

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HungaryForStamps
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07 Apr 2016
05:37:36pm
re: Mystic Stamp Company Changes Ownership

Exactly true about Kennedy. He sure was the rich man's friend, reducing top tax rate from 91% to 70%. The GOP dominated 1980's oversaw the top marginal rate cut from 70% to 28%.

From the above links I posted you can see how debt increased substantially under Reagan and Bush as a consequence.

Its not hard to find charts that show the change in share of wealth between different economic classes in the US (from 1980's to 2010) favors the wealthy.

Wealth Inequality in US

So by all means, if you are in the top 10% of US earners and holders of wealth, vote for tax decreases.

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philatelia
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07 Apr 2016
05:52:32pm
re: Mystic Stamp Company Changes Ownership

No matter how many economic charts or statistics one can cite, it seems to be very difficult for many voters to actually look at the data and vote accordingly. It is like trying to change a person's religious belief's using logic - you either 'believe' or you don't and trying to convince a person otherwise is almost futile.

Folks have this almost mystical belief that if they vote for the person who talks the way they talk or prays the way they pray that all their problems will be solved. Add in the fact that many people are deluged with propaganda on a daily basis that confirms their beliefs and there is not much of a chance that they will seriously consider the actual facts if they do not conform to their idea of what is 'right.'

Healthy skeptical thought is in the decline in modern America.


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ikeyPikey
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07 Apr 2016
06:07:06pm
re: Mystic Stamp Company Changes Ownership

After seeing what happened to Harris after it was bought by disinterested corporate interests, I am happy to see Mystic transiting to an ESOP.

Anyone else acquiring the company might look to brilliantly boost the bottom line by, say, cutting staff. Look! Instant profit growth!

In an entirely unrelated note, the NYTimes recently published a brilliant piece on what happens to hot start-ups when their next financing round values the company at less than their most recent financing round. Guess who gets hurt the most?

When a Unicorn Start-Up Stumbles (20151223) NYTimes

Cheers,

/s/ ikeyPikey

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michael78651

07 Apr 2016
06:08:23pm
re: Mystic Stamp Company Changes Ownership

"it seems to be very difficult for many voters to actually look at the data and vote accordingly."



...because they say that all the other politicians, except theirs is the crooked one, and they keep voting the incumbents in over and over again. There's no reason why a politician should be in office for 50 years.

According to national standards, I'm in the top 25 percentile of those who pay the most taxes. I'm on a pension, and not yet getting Social Security! Something definitely wrong here. Don't forget that Jeffrey Inmelt (General Electric) pays no taxes either... Is it really a rebate or refund if you never paid anything to begin with? Freebies to everyone except the middle class.

"Now middle class, open your check books to the next check and write, 'Payable to Uncle Sugar in the amount of...'"
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HungaryForStamps
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07 Apr 2016
06:29:34pm
re: Mystic Stamp Company Changes Ownership

"According to national standards, I'm in the top 25 percentile of those who pay the most taxes. I'm on a pension, and not yet getting Social Security! Something definitely wrong here. Don't forget that Jeffrey Inmelt (General Electric) pays no taxes either... Is it really a rebate or refund if you never paid anything to begin with? Freebies to everyone except the middle class.

"Now middle class, open your check books to the next check and write, 'Payable to Uncle Sugar in the amount of...'""



Given that the top 25th percentile pays around 87% of the tax and really IS the middle class that probably makes sense. I don't know what you earn, deduct etc. or how you file, but a large percentage of the US population does not earn enough to contribute meaningfully to federal taxes. That the US is in that state is a shame.

Personally, I feel my tax burden is too low and I'm also in the top 25th percentile (i.e., above the 75th percentile). If I were in the top 1% I'd have a huge estate with a wall and armed guard/dogs like Mr. Burns. Unfortunately I pay taxes so I can leave peacefully with the other 99% of my countrymen. If the top 25% don't pay, we won't have a country.
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TribalErnie

07 Apr 2016
06:49:33pm
re: Mystic Stamp Company Changes Ownership

I appreciate the friendly discussion. Charlie, I'm super impressed with your grasp of tax policy proposals from 50 years ago! That does put the quote I posted into perspective for me.

Here's a more recent, and for me, concrete situation. My dad, before he passed, gave my 15 year old son his older nissan pick up. On a good day it may be worth 2500 dollars. My son was thrilled to have it because it is his first vehicle and it belonged to grandpa. When we went to the tax collectors office to put it on the road I was shocked to find out how much it cost. We didn't have to pay taxes but just to transfer the title and buy a tag it was $500 dollars!

So that means that if some guy is working a low wage job and scrapes together the $2500 to buy something like this old thing he STILL has to cough up another $675 to drive it! I'm sorry, that's too much.

I feel bad for the struggling people of this country. More taxes can't be the answer.

Ernie

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Tom in Exton, PA

07 Apr 2016
07:32:55pm
re: Mystic Stamp Company Changes Ownership

"Here's a more recent, and for me, concrete situation. My dad, before he passed, gave my 15 year old son his older nissan pick up. On a good day it may be worth 2500 dollars. My son was thrilled to have it because it is his first vehicle and it belonged to grandpa. When we went to the tax collectors office to put it on the road I was shocked to find out how much it cost. We didn't have to pay taxes but just to transfer the title and buy a tag it was $500 dollars! "



That varies state by state. Was the truck from out of state? I heard that Florida was charging $500 to import a car from another state.
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TribalErnie

07 Apr 2016
07:36:39pm
re: Mystic Stamp Company Changes Ownership

Tom, I think we missed that one!

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philatelia
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07 Apr 2016
07:49:27pm
re: Mystic Stamp Company Changes Ownership

Florida doesn't have an income tax so has high rates on other taxes to compensate.

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Tom in Exton, PA

07 Apr 2016
08:59:26pm
re: Mystic Stamp Company Changes Ownership

"Florida doesn't have an income tax so has high rates on other taxes to compensate."



They get ya one way or another. A friend of mine from Virginia was bragging how cheap his property taxes were... then I find out they have a personal property tax! That's where they inventory all your stuff and tax you on their estimate of value

Same with PA, my property taxes are less than they were in New Jersey, but nobody mentioned that every town has an income tax of 1%

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keesindy
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07 Apr 2016
09:05:07pm
re: Mystic Stamp Company Changes Ownership

HungaryForStamps:

re: Mystic Stamp Company Changes Ownership


A chart of presidential debt might help the political/economic discussion

Debt by Presidency

GOP Presidents Have Been the Worst Contributors to the Federal Debt


A fallacious argument! We've all heard about various presidents' budgets being "dead on arrival" at Capitol Hill. Congress is responsible for federal budgets; not the president. You need to look at who controlled Congress rather than the president in office to determine which party has a greater effect on budget deficits and the federal debt.

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michael78651

07 Apr 2016
09:26:52pm
re: Mystic Stamp Company Changes Ownership

To be specific, all spending bills have to originate in the House of Representatives.

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youpiao
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08 Apr 2016
02:05:46am
re: Mystic Stamp Company Changes Ownership

"trying to convince a person otherwise is almost futile.

Folks have this almost mystical belief that if they vote for the person who talks the way they talk or prays the way they pray that all their problems will be solved."



I would disagree with one point, Theresa. It is not "almost" futile, it is "definitely" futile. For the vast majority of people (I believe), voting for president is not about choosing the best candidate for the position, but rather about showing loyalty to your gang colors, right or wrong (which these voters can't seem to discern, anyway). And they don't let facts get in the way of their opinions.

For many years, my sister's mantra was, "We're voting republican so David's job (in the defense industry) is safe." It didn't matter that, in 1985, I was laid off from my job with a defense contractor, under a republican president, nor that, 5 years later, under another republican, I was laid off again, this time from the same company, General Dynamics, as her husband. All that mattered was that David was still working, so the republican was obviously the right choice.

Ted
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Editor, Seal News; contributor, JuicyHeads

08 Apr 2016
08:30:48am

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re: Mystic Stamp Company Changes Ownership

a couple of things

Ernie, Theresa is correct to point out that Florida has no income tax and therefore must generate money in other ways. In addition, Florida, like all states, gets to harvest its residents money in all ways having to do with cars; that's not the fed's money but Florida's, where you haven't had a Democrat in the executive mansion this millenium

I also want to commend Theresa for bringing us back, nominally at least, to the topic:

"this almost mystical belief "

. See how she incoporporated mystical into the conversation

Kennedy did indeed help move the country away from the extremely high upper rates we had through the Eisenhower administration. But, as others have said, with those high rates we went to the moon, built an interstate system, and enjoyed robust economic expansion that fed the entire country, not just an elite.

While the House is responsible for passing the budgets, and the taxes, it's often the president who takes command. Bush, the compassionate conservative, and Reagan, co-star to Bonzo, both defined the tax rates of their terms. Oddly, Reagan was more the realist, and actually raised taxes 14 times, otherwise the deficit he left us would have been much worse.

Thomas asked for charts of debt, deficit: here you go: https://www.washingtonpost.com/news/the-fix/wp/2015/01/07/the-story-behind-obama-and-the-national-debt-in-7-charts/. of course, there are always extenuating circumstances and everything is in context. Obama's debt might be looked at in conjunction with the economic disaster he inherited and W's could be looked at having just inherited a balanced budget. But it's a start.

Of course, as Ted and others indicate, facts often just get in the way of our beliefs.

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philb
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08 Apr 2016
08:53:05am

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re: Mystic Stamp Company Changes Ownership

i stopped buying approvals by mail 60 years ago..but Donald Sundman is the top recruiter for the American Philatelic Society..in 2015 he recruited 215 new members...think what they would have without him. I changed political parties when "W" ran for a second term and never looked back !

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philatelia
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08 Apr 2016
10:20:42am
re: Mystic Stamp Company Changes Ownership

"See how she incoporporated mystical into the conversation"



Wink wink nudge nudge!

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TribalErnie

08 Apr 2016
10:27:12am
re: Mystic Stamp Company Changes Ownership

Gotcha David,
My gripe wasn't so much with Kennedy, Nixon, Carter, Obama, the federal government, Florida Governor Rick Scott or any of them so much as it was that I didn't want to part with the green backs. The average guy on the street trying to put reliable transportation on the road doesn't care where the money goes he just knows it's gone. When you consider every type of tax and fee that the people pay it's a tremendous amount. People pay too much.

I'm amazed that Mystic employs upwards of 150 people. I keep hearing that the stamp hobby is in serious decline but how does the Mystic juggernaut continue? It seems that such a company would be the first to go belly up if the hobby was truly "in decline". You think they're (Mystic) in serious trouble?

Ernie

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In loving memory of Carol, my wife for 52 years.

08 Apr 2016
10:47:50am

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re: Mystic Stamp Company Changes Ownership

"It seems that such a company would be the first to go belly up if the hobby was truly "in decline". You think they're (Mystic) in serious trouble?"

There is a link to a brief history of the company below. It is 90 years old, always headquartered in Camden, NY (pop 5000). The current owners father formed Littleton Stamp Company - remember that name? They were among the first to advertise in the popular press. They bought out the original owner of Mystic in 1974. He made his son (Don) president that year at the age of 19. It's a great story and explains why they are still in business today and why it would appear that the ESOP was benevolent in nature. They have personally hired every employee over the years and in a town of 5000 there is no place to hide.

https://www.mysticstamp.com/info/about-mystic-stamp-company-2/



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amsd
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08 Apr 2016
11:53:55am

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re: Mystic Stamp Company Changes Ownership

Ernie,

I understand. Tis a pity that most fees are, essentially, regressive. Only income tax could be progressive, if left to its own devices and devoid of deductions, loop holes, and the like.

I don't know that philately is in trouble, but our numbers ARE declining as evidenced by any set of statistics: storefronts were dwindling even before the internet; subscribers are declining for the few papers still printing; membership in most clubs and organizations are both declining and aging. AND, the way we do stuff is clearly changing. The former is cause for concern; the latter for celebration.

Mystic and other approval services represents one segment of the hobby. They do the work for you, and you pay the price for that. That's fair. Mystic is also, as Phil noted, one of the great recruiters; and it generates wonderful, free material. Its catalogue is a marvel.

I wish Mystic continued and great success; they are good for the hobby. they aren't everyone's cup of tea, but they are very good at what they do, and I hope they continue doing as well under their own staff

David

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HungaryForStamps
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08 Apr 2016
12:40:56pm
re: Mystic Stamp Company Changes Ownership

BenFranklin1902 (Tom),


"They get ya one way or another. A friend of mine from Virginia was bragging how cheap his property taxes were... then I find out they have a personal property tax! That's where they inventory all your stuff and tax you on their estimate of value

Same with PA, my property taxes are less than they were in New Jersey, but nobody mentioned that every town has an income tax of 1%"



I live in Virginia and the personal property tax is not what you think. You have misrepresented that tax. They do not "inventory all your stuff". The only thing a non-business owner pays is a personal property tax on vehicles. So, your typical Virginian, at least in my neighborhood, will have a couple cars on which they pay a moderate tax. Maybe one in a few hundred will have a trailer or mobile home on which they pay a moderate tax. Its no big deal really. This helps defray costs for our infrastructure among other things. And Northern Virginia in particular is a fantastic place to live with a great community, plenty of services, and some of the best Elementary and High Schools in the country.

Take Prince William Country for example (not where I live). Here is what their website says:

"In Prince William County, a personal property tax is assessed annually (as of January 1) on automobiles, trucks, motorcycles, trailers, and mobile homes. Business are also assessed a business tangible property tax on items such as furniture and fixtures, computers, and construction equipment.

All other property; including: personal effects, household items, monies, securities, and livestock are not subject to the personal property tax.

The County maintains registration information on boats, personal watercraft, outboard motor watercraft, and boat trailers; although, the tax on these items was eliminated beginning in 1998."



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ikeyPikey
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08 Apr 2016
12:55:28pm
re: Mystic Stamp Company Changes Ownership

So, like, I'm the only one who thinks that the macroeconomic theory bits should be moved to a thread of their own?

suggested title: "2016 infestation relocated"

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"I collect stamps today precisely the way I collected stamps when I was ten years old."
TribalErnie

08 Apr 2016
01:02:59pm
re: Mystic Stamp Company Changes Ownership

Wasn't me this time! Coke is 100x better than Pepsi. Pepsi drinkers are crazy, eh David?


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amsd
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08 Apr 2016
03:46:28pm

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re: Mystic Stamp Company Changes Ownership

you know me, Ernie, it's tough for me not to rise to the bait, and I hear concerns about the coming elections and fiscal ramifications, well.....

personally, give me a Dr Brown's cream soda or, if I'm down your neck of the woods, an RC Cola or Dr Peep will do

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philb
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08 Apr 2016
03:48:15pm

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re: Mystic Stamp Company Changes Ownership

I'm from Brooklyn...Pepsi gave you twice as much for a nickle as Coca Cola but then who remembers that far back ?Big Grin

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08 Apr 2016
03:56:16pm
re: Mystic Stamp Company Changes Ownership

OK. My effort to get back on track...

"Mystic and other approval services represents one segment of the hobby. They do the work for you, and you pay the price for that. That's fair. Mystic is also, as Phil noted, one of the great recruiters; and it generates wonderful, free material. Its catalogue is a marvel.

I wish Mystic continued and great success; they are good for the hobby. they aren't everyone's cup of tea, but they are very good at what they do, and I hope they continue doing as well under their own staff"



I don't participate (or even understand) that segment of the market. But perhaps Mystic's success is proof there is life in the hobby in some unfamiliar segment of the market.

Re-reading the original article on the ESOP, it does appear this is a good thing for the employees and the owners. The owners can slowly cash out, possibly with deferred taxes, but the other employees will presumably be given shares gradually and retain their existing benefits. Hopefully the company does not or cannot borrow to purchase the owner's shares.

Here's another article on using ESOPs for business transition: esop-business-continuity

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philb
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08 Apr 2016
05:56:50pm

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re: Mystic Stamp Company Changes Ownership

i agree with Anglophile..its a different world out there in the workplace today. I see the changes in my company IBM in the last 25 years and its not pretty. Back in the day we felt as long as we did our job we were protected and entitled to pension and health benefits for life. Sorry i am off track from Mystic.

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Al
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09 Apr 2016
08:14:48am
re: Mystic Stamp Company Changes Ownership

If David Sundman decided to retire the company's new management could take a different approach unless he is grooming someone else to continue it.

Al

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10 Apr 2016
08:46:22pm
re: Mystic Stamp Company Changes Ownership

There's no reason to assume the worst. In fact, perhaps we should assume the best for Mystic employees.

It sounds to me like the ESOP was set up to give employees a share in the company, probably a small one. If we are to believe the article linked at the top of the thread, the existing benefits will continue (IRA contributions and bonus). Granted, more important employees will probably receive more shares in the ESOP, as that is common, but that doesn't always happen. It depends on the company.

If the employer (the controlling employees) were to "cash out", the cash has to come from somewhere. Hopefully they do not borrow to "cash out" or cannot borrow for this purpose. Perhaps they are not cashing out. I don't fully understand where the cash would come from anyway, as it could only come from borrowings or current assets of the company. Borrowings would be the biggest worry. I assume the controlling shareholders will remain in control with the bulk of the shares in the ESOP, as they are also employees.

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10 Apr 2016
10:02:21pm

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re: Mystic Stamp Company Changes Ownership

Thank goodness i did not cash out..thank you T.Rowe Price !

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10 Apr 2016
11:28:48pm
re: Mystic Stamp Company Changes Ownership

I continue to suspect that the owners' biggest motivator was avoiding a situation where new owners chose to lay-off their friends & neighbors, instantly improving the bottom line at the expense of so much more.

Watch for the movie on The Hallmark Channel.

Cheers,

/s/ ikeyPikey

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11 Apr 2016
05:01:12am

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re: Mystic Stamp Company Changes Ownership

It is truly disappointing that we live in a world where it is always assumed that ALL businesses are evil and think only about the well being of their owners / stockholders. How did we get to this point?

There is a difference between the stereotypical big business managed by a CEO hired to maximize profit at all costs and a small rural company under current ownership (and management) for the past 42 years. In the 90 years the company has existed it has had only 2 owners. It prides itself in being an ambassador for the hobby and has brought APS over 5000 members. I have been an active member of the Central New York stamp community since 1985, first as a dealer and now just trying to find a good home for all but a few areas of current interest. I have never heard anyone say anything negative about Mystic or their operation.

I've noticed that friends with a positive attitude seldom find disappointment in life. Friends with a negative attitude seem to move from one problem to another, their life always in turmoil. Try seeing the good - it is there.

Just my two cents.






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11 Apr 2016
12:11:58pm
re: Mystic Stamp Company Changes Ownership

Carol, I nominate you as Goodwill Ambassador of Stamporama. Applause


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12 Apr 2016
08:56:03am
re: Mystic Stamp Company Changes Ownership

Webpaper:

As a manager of a stamp shop in Canada (there are ten shops across the Dominion that we know of), I agree with you.

In retail we have what is called the five percent rule. It assumes that five percent of all the folks who come into your store are convinced you are out to cheat them. I would argue the number is higher.

No wonder no one wants to work in a store anymore.

David
Ottawa, Canada


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12 Apr 2016
09:55:32am
re: Mystic Stamp Company Changes Ownership

"... five percent of all the folks who come into your store are convinced you are out to cheat them ... No wonder no one wants to work in a store anymore ..."



A pal with a Ye Old Collectibles Shoppe sort of thing cannot believe that people will walk in, say nothing until he greets them, walk around, and then walk out without saying a word.

That they do not greet him, and wait for him to greet them, he can understand, or sympathize with, or tolerate.

That they walk out like he was not even there? Not even "Have a nice day"? Drives him nuts!

We have become so accustomed to anonymous anodyne retail that we no longer have any sense that a place of business can also be a personal space. In fact, landmark civil rights rulings (the 'public accommodations rule', if memory serves), kinda says exactly that, so maybe the customers are right.

Cheers,

/s/ ikeyPikey (who still exits the front of the bus so that he can thank the driver)
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TribalErnie

12 Apr 2016
11:00:28am
re: Mystic Stamp Company Changes Ownership

IkeyPikey said:


"We have become so accustomed to anonymous anodyne retail that we no longer have any sense that a place of business can also be a personal space."



I'm a firm believer in being courteous and cordial with all I come into contact. I'm with you IkeyPikey, these interactions make our society more civilized.


My wife takes this a step further. She feels obligated to make a purchase at EVERY BUSINESS where she has even the most casual, brief conversation. It drives me nuts. It's one thing if the salesperson or merchant invests CONSIDERABLE time and effort and but then I only feel MARGINALLY guilty for not buying. If the sale doesn't work it doesn't work. However, I have made purchases with dealers of collectibles for the sole purpose of building relationships.

-Ernie

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BermudaSailor
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12 Apr 2016
12:08:16pm
re: Mystic Stamp Company Changes Ownership

Ernie,

I have a wife like that too.


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12 Apr 2016
01:24:33pm
re: Mystic Stamp Company Changes Ownership

" ... That they do not greet him, and wait for him to greet them, he can understand, or sympathize with, or tolerate.

That they walk out like he was not even there? Not even "Have a nice day"? Drives him nuts! ..."


I can understand that, but as a partial defense, There are many people who once the courtesies are complete will "Hover" around asking questions about what a person might want and suggesting alternatives hat aren't in the same ballpark.
And then there are the car salesman types who can be absolutely irritating.
Id like to suggest that if I managed to find the front door without a guide, I am competent to look at what is on display and smart enough to formulate a question all by myself.
.
The best thing is a balance between being helpful and available to assist and allowing someone to see what is available.

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12 Apr 2016
04:49:55pm
re: Mystic Stamp Company Changes Ownership

Walking into a failing brick-and-mortar store can be uncomfortable for both parties (not that I assume all stamp stores are failing, but its been my experience). I have made attempts to visit the local stores near me with little success, except for a few supply purchases.

As a customer, when I know I can purchase just about anything the store has to offer at cheaper prices from an online store, its awkward. If the owner doesn't greet me or have a cheerful attitude, that makes it worse. If the store is not well organized and I have no clue what is for sale, I wonder why I bothered.

I have experienced all those things at one local stamp store, that is now closed. The other two nearby stores have some of these problems. A local (board) game store was in a similar boat, but at least the place was well organized and the owner was cheerful given the circumstances (now closed).

At the games store or when I was at a stamp store shopping for supplies, sometimes the owner would ask if they could order something for me. I knew I could get it faster online at a cheaper price. When I mention that to them they get upset. I learned its better to say nothing. Don't ask the stamp dealer if he sells online unless you want an earful.

I do feel its the owner's obligation to greet me first when I walk into their store. If they don't acknowledge my presence and I have no questions, I don't think its discourteous to leave without saying anything. But, I usually at least say goodbye in the local shops if the owner is within earshot and not busy.

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michael78651

12 Apr 2016
05:17:18pm
re: Mystic Stamp Company Changes Ownership

Hobby shops run by old curmudgeons deserve to close. I don't know what it is, but they complain that things are bad, but when hobbyists walk into the store, they scowl and are gruff with them, if they don't simply ignore them. Makes one just want to go over to a corner of the store, pee, and then walk out.

It's the same with other hobbies as well. Recently, a friend and I took a day trip to Houston to check out a couple of model railroad hobby shops that we had never been to. The first one we went to had three old men behind the counter. They wouldn't get off their duffs to help us find anything, nor would they even respond to most of what we asked. I guess we were too much of a bother to them. The next store we went to was run by a mid-thirtyish couple. They engaged us as soon as we walked into the store, and it continued that way until we found a bunch of things to buy and then left. If I go to Houston again to visit a hobby shop, which one do you think I'll go to? (Well, unless I have to go to the bathroom, of course.)

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12 Apr 2016
05:59:04pm

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re: Mystic Stamp Company Changes Ownership

Good one Michael, what you suggest actually happened to an Uncle of mine who had a little walk down radio/tv shop in Bed-Stuy . A man walked in and asked if he could use the toilet and my Uncle said he did not have one..so the guy used the floor. My parents thought it was funny and that he had it coming.

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12 Apr 2016
08:04:48pm

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re: Mystic Stamp Company Changes Ownership

Strange, my husband had an antique shop in a small upstate NY town (Cazenovia)for about a year and a half back in the 90's. One woman who was always out shopping with her 4 kids (between 3 and 6 or so) stopped in one day and asked if one of her kids could use the toilet. No problem.

She stopped in often with her kids in tow and never bought anything - but her friends did. They thought it wonderful that we were so thoughtful. Most of the other shops in town were upscale high end and wouldn't dream of being "thoughtful".

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Tom in Exton, PA

12 Apr 2016
08:42:01pm
re: Mystic Stamp Company Changes Ownership

"Hobby shops run by old curmudgeons deserve to close. I don't know what it is, but they complain that things are bad, but when hobbyists walk into the store, they scowl and are gruff with them, if they don't simply ignore them. Makes one just want to go over to a corner of the store, pee, and then walk out.

It's the same with other hobbies as well. Recently, a friend and I took a day trip to Houston to check out a couple of model railroad hobby shops that we had never been to. The first one we went to had three old men behind the counter. They wouldn't get off their duffs to help us find anything, nor would they even respond to most of what we asked. I guess we were too much of a bother to them. The next store we went to was run by a mid-thirtyish couple. They engaged us as soon as we walked into the store, and it continued that way until we found a bunch of things to buy and then left. If I go to Houston again to visit a hobby shop, which one do you think I'll go to? (Well, unless I have to go to the bathroom, of course.)"



I've been to my local coin and stamp shop ONCE. It's in a shopping center and is mainly a coin shop with a few stamp things. But the moment you walk in you are hit by a wall of smoke. Two nasty old chimneys so self absorbed in a conversation where the F word was used as punctuation, that they never greeted me. I looked around and they watched me suspiciously. I knew anything I bought there would reek of smoke. There weren't any prices marked on anything anyway so I left.

I also agree that hobby shops are their own worse enemies. Each one specializes in what the owner is into and they don't have the brains to understand they're ticking off customers. I was at one in NJ where I know the guy is a military modeler. I bought about $50 worth of plastic scratch building supplies to work on a truck idea of mine. As I walked up to the counter he smiled and asked, "What are we scratch building?" When I told him, his smile turned to a frown and he scowled, "oh cars!" and finished the transaction without speaking.

Idiot! If I owned a hobby shop I don't care if the customer collected bottle caps... that would enthusiastically be the best hobby in the world!

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TribalErnie

12 Apr 2016
09:02:26pm
re: Mystic Stamp Company Changes Ownership

Michael and Tom,

I've definitely been in shops like those. Sounds like a guy on the westside of Jacksonville. Been there for 35 years. He has to "buzz you in" and he carries a hand gun on his hip. I was always a broke kid going in there and I've only gotten him to loosen up a bit in the last few years. Maybe he's mellowing with age!

The opposite is true with my good friend Sue Rowan of Rowan's Antique Mall. She's got a HUGE antique mall in downtown Lake City, Florida. She's a (long since) retired school teacher who sells all manner of collectibles. She's got antique florida postcards with alligator borders they aren't cheap. I've picked up all kinds of stuff from her. She's such a great lady, real gem. Shes, also one heck of a business woman. That one won't be fooled! Haha She's very active in the annual festival surrounding the reenactment of Florida's major civil war action, the battle of Olustee. I've been going in there talking to her for 15 years. What a wonderful lady. Haven't been in there in quite a while since I don't work out there a anymore but that reminds me, I gotta drop in and see Sue.
-Ernie

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18 Apr 2016
10:46:38am
re: Mystic Stamp Company Changes Ownership

.
Tech Companies Face Greater Scrutiny for Paying Workers With Stock (20160418)

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18 Apr 2016
01:42:22pm
re: Mystic Stamp Company Changes Ownership

Tech companies have been doing this since the late 90's and every few years someone writes an article about the apparent financial engineering involved. I'm a software developer and witnessed first-hand the destruction of tech employee wealth from overvalued stock options and grants hitting bottom during the 2000 bust. Many employees didn't exercise their options or sell their stock for fear they would miss even more upside. Those that failed to exercise their options ended up with a huge tax bill because the options were valued at the inflated value when they were granted.

However, some tech employees, myself included, expect to receive a shares/grants as part of compensation, especially when working for small companies. But, when buying shares of public companies on the open market, I avoid companies that engage in these earnings shenanigans.

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18 Apr 2016
05:15:03pm
re: Mystic Stamp Company Changes Ownership

"... Those that failed to exercise their options ended up with a huge tax bill because the options were valued at the inflated value when they were granted ... "



My (unqualified) understanding is that an unexercised stock option is not income, and is not taxable.

Cheers,

/s/ ikeyPikey

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18 Apr 2016
08:50:49pm
re: Mystic Stamp Company Changes Ownership

"My (unqualified) understanding is that an unexercised stock option is not income, and is not taxable.

Cheers,

/s/ ikeyPikey"



That's true. Sorry. They (some employees) exercised the options (I think because they were to expire) and then held them in company accounts in expectation the shares would continue to rise. Of course the share values fell by 90% and employees ended up with a tax burden well above the value of the shares. Of course, not everyone was in the same boat, and some sold a portion. However, the employees were not savvy with regard to investing and ended up with more pain than gain.
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18 Apr 2016
11:49:55pm
re: Mystic Stamp Company Changes Ownership

I know one fellow who got creamed because he had unexercised stock options - and stock from exercised options - all in a company account - and worth a total of five million dollars.

After the dot com collapse and his lay-off, the whole lot was pretty much worth next to nothing.

Sadly, he had been living pretty well, and had set aside very little because, after all, he had a net worth of five million dollars.

You might think that the obvious solution is that people exercising a stock option should immediately sell enough of their stock to cover their tax, so that only the 'profit' is at risk.

However, people who have been in this position, and faced this decision, and understood the risks, tell me that selling your company stock is a bonus killer & a promotion killer, so they dare not ... never mind those poor souls that have drunk the Kool-Aid, and think that the stock/options can only be worth more next year.

Cheers,

/s/ ikeyPikey (who knows from his years near the markets that a profit is not a profit until you get out and take it home with you)

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19 Apr 2016
09:01:45am
re: Mystic Stamp Company Changes Ownership

"never mind those poor souls that have drunk the Kool-Aid, and think that the stock/options can only be worth more next year."



Thus the old Wall St axiom: Bulls can make money, and bears can make money, but the hogs always get slaughtered.


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19 Apr 2016
06:21:36pm
re: Mystic Stamp Company Changes Ownership

Its the nonqualified stock options (NQSOs) that were a killer because tax on capital gains were due when the options were exercised. I don't know if its common anymore for companies to award NQSOs. The incentive stock options (ISO) have preferential treatment provided they meet certain IRS conditions (as long as they aren't disqualified).

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DouglasGPerry

APS Member #196859
06 Apr 2016
05:45:01pm

Linn's Stamp News reports that the Mystic Stamp Company is transitioning to employee ownership. The article gives some details of the change, but does not provide any explanation as to why it happened. I'm curious about this business decision. It doesn't seem to happen very often. Thinking

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MikeyToo

06 Apr 2016
06:29:13pm

re: Mystic Stamp Company Changes Ownership


I hate to say this but I use them for reference all the time. I just can't afford to buy anything they sell.

Maybe they'll lower some of their prices.

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06 Apr 2016
07:16:54pm

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re: Mystic Stamp Company Changes Ownership

Mystic has been around a long time and has a good reputation. They are one of the few that actually pay decent money for collections. A local dealer's widow turned down a reasonable offer for her late husband's stock and had it sold by a large auction company. All that work and hassle and she ended up with about 50 per cent of Mystic's offer.

My guess, and it is only a guess, is that they want the company to continue to prosper and maintain a presence in the local community (pop @ 5000). Should something happen to either of them at present the future of the company (and it's employees) would be questionable. The ESOP offers protection to the community and the employees. It is win-win and it is good to see them willing to share in their good fortune,

Just my two cents.


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youpiao

07 Apr 2016
03:27:20am

re: Mystic Stamp Company Changes Ownership

I agree it is a win-win situation for the employees and for the Sundmans. Sundman sells all his shares in the company to the ESOP (Employee Stock Ownership Plan) and he gets the price he wants, rather than shopping the company and settling for less. He also keeps his (salary-drawing) position as president of the firm.


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Tom in Exton, PA
07 Apr 2016
06:42:15am

re: Mystic Stamp Company Changes Ownership

I don't know the folks involved but...

the owners have 'cashed out'. That means they sold the business for a value they determined today. Should the market decline (as we all worry as our aging herd dies off daily) that loss is now on the employees.

Many years ago there was a pharma company that had an operation they no longer wanted. They had no buyers so they set up an employee owned company to buy it, and put a lot of their employees in this new venture. It fizzled and died in a few years.

I worry about the business climate in this country right now. Corporations are all sitting on their hands waiting for the outcome of the election. If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes. No new investment, expansions or new jobs.

Luxuries like hobbies will be the first to suffer.

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07 Apr 2016
07:08:15am

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re: Mystic Stamp Company Changes Ownership

Time will tell of course but my guess is that if they continue the same conservative business model and contributions to both the stamp hobby and local community events the employees will make out very well.

They have recruited over 5,000 new members for APS. The catalog and mail order business is the "tip of the iceberg" that you see, there is a lot more to the company.

Yes, many employee take-overs don't work out. By the same token many do, some in spectacular fashion (first hand experience here).

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07 Apr 2016
08:10:42am

re: Mystic Stamp Company Changes Ownership

" ... If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes. ..."

I hope you are not counting of the party that has been promising us for some forty years that investors and corporations will soon open the flood gates and we will all be rich.

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DouglasGPerry

APS Member #196859
07 Apr 2016
09:17:20am

re: Mystic Stamp Company Changes Ownership

I'm not a businessman, so please allow me to ask a naive question. In an ESOP transition such as this, who is ultimately responsible for the company? An employee-staffed board, perhaps? I would find it surprising if the president could go his own way without having to answer to those who now hold financial liability for the company.

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ThomasGalloway

07 Apr 2016
09:21:44am

re: Mystic Stamp Company Changes Ownership

"the owners have 'cashed out'. "

Can someone explain to me where the "cash" comes from for this buyout?

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07 Apr 2016
10:08:11am

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re: Mystic Stamp Company Changes Ownership

A good basic primer on ESOP's - it's a quick read.

https://www.nceo.org/articles/esop-employee-stock-ownership-plan

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DouglasGPerry

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07 Apr 2016
10:16:42am

re: Mystic Stamp Company Changes Ownership

A very helpful link, Webpaper. Thank you.

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amsd

Editor, Seal News; contributor, JuicyHeads
07 Apr 2016
11:01:55am

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re: Mystic Stamp Company Changes Ownership

there are ups and downs in taxation in this country, and their impact is, ummm, counter-intuitive. One would expect, and it has been promised quite often (as Charlie notes), that reduced corporate taxes and reduced taxes on those who could invest in corporate expansion would result in business expansion, increased tax revenues from increased exchange of funds, and, above all, increased employment based on the new demand from all this money floating about. One would also expect economic constriction during periods of increased taxation.

That's what one would expect.

And that's what's been, and continues to be, sold to us, even in the face of evidence to the contrary.

I know we're getting off Mystic's sale, but since the topic was raised....


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youpiao

07 Apr 2016
01:26:04pm

re: Mystic Stamp Company Changes Ownership

"If trickle-down economics worked, then Reagan's lower tax rates should have helped all income levels. In fact, the exact opposite occurred. Income inequality worsened. Between 1979 and 2005, after-tax household income rose 6% for the bottom fifth of income earners. That sounds great until you see what happened for the top fifth -- an 80% increase in income. The top 1% saw their income triple. Instead trickling down, it appears that prosperity trickled up! (Source: Steven Greenhouse, The Big Squeeze, pp.6-9)

Why Trickle-Down Economics Is Relevant Today

Despite its shortcomings, Republicans use trickle-down economics to guide policy."



http://useconomy.about.com/od/Politics/p/Trickle-Down-Economics-Does-It-Work.htm


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TribalErnie

07 Apr 2016
03:21:20pm

re: Mystic Stamp Company Changes Ownership

" A TAX CUT means higher family income and higher business profits and a balanced federal budget. Every tax payer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."




President John F. Kennedy, 1963

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HungaryForStamps

07 Apr 2016
05:03:48pm

re: Mystic Stamp Company Changes Ownership

Employee buyouts are typical end-stage maneuvers for failing companies, but not always.

A chart of presidential debt might help the political/economic discussion

Debt by Presidency

GOP Presidents Have Been the Worst Contributors to the Federal Debt

""If one party wins, companies will open the flood gates of investment and the economy will flourish. If the other party wins, they will take defensive measures and brace for increased taxes.""



Probably not true. What business wants is a deadlock, so presidency in one party and congress/senate in another. Certainly if an alleged serial-business and value destroyer wins, such as Drumpf, then the economy is doomed. But that won't happen.

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07 Apr 2016
05:11:57pm

re: Mystic Stamp Company Changes Ownership

RE: the Kennedy quote cited above.

The problem is that I do remember the 1950s and '60s.
The marginal tax rate, meaning the taxes on the top categories of income earned was more than 90% and Kennedy was talking about lowering those high rates to the mid-60s, not the drastic 14% average that the very wealthy now pay. (Remember Romney's return ?)
The corporate tax rate was in the 50% range and Kennedy wanted it lowered about 5% to the high 40%, again not to the point where hundreds of major corporations pay zero and get rebates.
I remember that because I thought it was a great idea at the time. And during the 1960s and '70s I recall a general good feeling about the future despite those tax rates.
It may have been since the nation managed to run the space program, build the interstate highways, pay for a ten year war, out build the Soviet Union, maintain a vibrant economy without creating a phenomenal federal debt.
But about 40 years ago, after Kennedy and Johnson, some people decided that further lowering would be even better and that is when this version of
Voodoo economics gained support.
(Near the end of the 1980s, Reagan began to panic at the direction the economy was going and for a while raised business tax rates.)
Today we have a crumbling national infrastructure, we have trimmed space exploration, we have an economy that has struggled to recover over the last six years, we have been unable to get out from a massive debt, and we have been assaulted by a crippling recession.
And instead of a general good feeling, I see people worried about what is happening and what will happen to their children.

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HungaryForStamps

07 Apr 2016
05:37:36pm

re: Mystic Stamp Company Changes Ownership

Exactly true about Kennedy. He sure was the rich man's friend, reducing top tax rate from 91% to 70%. The GOP dominated 1980's oversaw the top marginal rate cut from 70% to 28%.

From the above links I posted you can see how debt increased substantially under Reagan and Bush as a consequence.

Its not hard to find charts that show the change in share of wealth between different economic classes in the US (from 1980's to 2010) favors the wealthy.

Wealth Inequality in US

So by all means, if you are in the top 10% of US earners and holders of wealth, vote for tax decreases.

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philatelia

07 Apr 2016
05:52:32pm

re: Mystic Stamp Company Changes Ownership

No matter how many economic charts or statistics one can cite, it seems to be very difficult for many voters to actually look at the data and vote accordingly. It is like trying to change a person's religious belief's using logic - you either 'believe' or you don't and trying to convince a person otherwise is almost futile.

Folks have this almost mystical belief that if they vote for the person who talks the way they talk or prays the way they pray that all their problems will be solved. Add in the fact that many people are deluged with propaganda on a daily basis that confirms their beliefs and there is not much of a chance that they will seriously consider the actual facts if they do not conform to their idea of what is 'right.'

Healthy skeptical thought is in the decline in modern America.


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ikeyPikey

07 Apr 2016
06:07:06pm

re: Mystic Stamp Company Changes Ownership

After seeing what happened to Harris after it was bought by disinterested corporate interests, I am happy to see Mystic transiting to an ESOP.

Anyone else acquiring the company might look to brilliantly boost the bottom line by, say, cutting staff. Look! Instant profit growth!

In an entirely unrelated note, the NYTimes recently published a brilliant piece on what happens to hot start-ups when their next financing round values the company at less than their most recent financing round. Guess who gets hurt the most?

When a Unicorn Start-Up Stumbles (20151223) NYTimes

Cheers,

/s/ ikeyPikey

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michael78651

07 Apr 2016
06:08:23pm

re: Mystic Stamp Company Changes Ownership

"it seems to be very difficult for many voters to actually look at the data and vote accordingly."



...because they say that all the other politicians, except theirs is the crooked one, and they keep voting the incumbents in over and over again. There's no reason why a politician should be in office for 50 years.

According to national standards, I'm in the top 25 percentile of those who pay the most taxes. I'm on a pension, and not yet getting Social Security! Something definitely wrong here. Don't forget that Jeffrey Inmelt (General Electric) pays no taxes either... Is it really a rebate or refund if you never paid anything to begin with? Freebies to everyone except the middle class.

"Now middle class, open your check books to the next check and write, 'Payable to Uncle Sugar in the amount of...'"
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HungaryForStamps

07 Apr 2016
06:29:34pm

re: Mystic Stamp Company Changes Ownership

"According to national standards, I'm in the top 25 percentile of those who pay the most taxes. I'm on a pension, and not yet getting Social Security! Something definitely wrong here. Don't forget that Jeffrey Inmelt (General Electric) pays no taxes either... Is it really a rebate or refund if you never paid anything to begin with? Freebies to everyone except the middle class.

"Now middle class, open your check books to the next check and write, 'Payable to Uncle Sugar in the amount of...'""



Given that the top 25th percentile pays around 87% of the tax and really IS the middle class that probably makes sense. I don't know what you earn, deduct etc. or how you file, but a large percentage of the US population does not earn enough to contribute meaningfully to federal taxes. That the US is in that state is a shame.

Personally, I feel my tax burden is too low and I'm also in the top 25th percentile (i.e., above the 75th percentile). If I were in the top 1% I'd have a huge estate with a wall and armed guard/dogs like Mr. Burns. Unfortunately I pay taxes so I can leave peacefully with the other 99% of my countrymen. If the top 25% don't pay, we won't have a country.
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TribalErnie

07 Apr 2016
06:49:33pm

re: Mystic Stamp Company Changes Ownership

I appreciate the friendly discussion. Charlie, I'm super impressed with your grasp of tax policy proposals from 50 years ago! That does put the quote I posted into perspective for me.

Here's a more recent, and for me, concrete situation. My dad, before he passed, gave my 15 year old son his older nissan pick up. On a good day it may be worth 2500 dollars. My son was thrilled to have it because it is his first vehicle and it belonged to grandpa. When we went to the tax collectors office to put it on the road I was shocked to find out how much it cost. We didn't have to pay taxes but just to transfer the title and buy a tag it was $500 dollars!

So that means that if some guy is working a low wage job and scrapes together the $2500 to buy something like this old thing he STILL has to cough up another $675 to drive it! I'm sorry, that's too much.

I feel bad for the struggling people of this country. More taxes can't be the answer.

Ernie

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BenFranklin1902

Tom in Exton, PA
07 Apr 2016
07:32:55pm

re: Mystic Stamp Company Changes Ownership

"Here's a more recent, and for me, concrete situation. My dad, before he passed, gave my 15 year old son his older nissan pick up. On a good day it may be worth 2500 dollars. My son was thrilled to have it because it is his first vehicle and it belonged to grandpa. When we went to the tax collectors office to put it on the road I was shocked to find out how much it cost. We didn't have to pay taxes but just to transfer the title and buy a tag it was $500 dollars! "



That varies state by state. Was the truck from out of state? I heard that Florida was charging $500 to import a car from another state.
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TribalErnie

07 Apr 2016
07:36:39pm

re: Mystic Stamp Company Changes Ownership

Tom, I think we missed that one!

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philatelia

07 Apr 2016
07:49:27pm

re: Mystic Stamp Company Changes Ownership

Florida doesn't have an income tax so has high rates on other taxes to compensate.

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BenFranklin1902

Tom in Exton, PA
07 Apr 2016
08:59:26pm

re: Mystic Stamp Company Changes Ownership

"Florida doesn't have an income tax so has high rates on other taxes to compensate."



They get ya one way or another. A friend of mine from Virginia was bragging how cheap his property taxes were... then I find out they have a personal property tax! That's where they inventory all your stuff and tax you on their estimate of value

Same with PA, my property taxes are less than they were in New Jersey, but nobody mentioned that every town has an income tax of 1%

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keesindy

07 Apr 2016
09:05:07pm

re: Mystic Stamp Company Changes Ownership

HungaryForStamps:

re: Mystic Stamp Company Changes Ownership


A chart of presidential debt might help the political/economic discussion

Debt by Presidency

GOP Presidents Have Been the Worst Contributors to the Federal Debt


A fallacious argument! We've all heard about various presidents' budgets being "dead on arrival" at Capitol Hill. Congress is responsible for federal budgets; not the president. You need to look at who controlled Congress rather than the president in office to determine which party has a greater effect on budget deficits and the federal debt.

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michael78651

07 Apr 2016
09:26:52pm

re: Mystic Stamp Company Changes Ownership

To be specific, all spending bills have to originate in the House of Representatives.

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youpiao

08 Apr 2016
02:05:46am

re: Mystic Stamp Company Changes Ownership

"trying to convince a person otherwise is almost futile.

Folks have this almost mystical belief that if they vote for the person who talks the way they talk or prays the way they pray that all their problems will be solved."



I would disagree with one point, Theresa. It is not "almost" futile, it is "definitely" futile. For the vast majority of people (I believe), voting for president is not about choosing the best candidate for the position, but rather about showing loyalty to your gang colors, right or wrong (which these voters can't seem to discern, anyway). And they don't let facts get in the way of their opinions.

For many years, my sister's mantra was, "We're voting republican so David's job (in the defense industry) is safe." It didn't matter that, in 1985, I was laid off from my job with a defense contractor, under a republican president, nor that, 5 years later, under another republican, I was laid off again, this time from the same company, General Dynamics, as her husband. All that mattered was that David was still working, so the republican was obviously the right choice.

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amsd

Editor, Seal News; contributor, JuicyHeads
08 Apr 2016
08:30:48am

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re: Mystic Stamp Company Changes Ownership

a couple of things

Ernie, Theresa is correct to point out that Florida has no income tax and therefore must generate money in other ways. In addition, Florida, like all states, gets to harvest its residents money in all ways having to do with cars; that's not the fed's money but Florida's, where you haven't had a Democrat in the executive mansion this millenium

I also want to commend Theresa for bringing us back, nominally at least, to the topic:

"this almost mystical belief "

. See how she incoporporated mystical into the conversation

Kennedy did indeed help move the country away from the extremely high upper rates we had through the Eisenhower administration. But, as others have said, with those high rates we went to the moon, built an interstate system, and enjoyed robust economic expansion that fed the entire country, not just an elite.

While the House is responsible for passing the budgets, and the taxes, it's often the president who takes command. Bush, the compassionate conservative, and Reagan, co-star to Bonzo, both defined the tax rates of their terms. Oddly, Reagan was more the realist, and actually raised taxes 14 times, otherwise the deficit he left us would have been much worse.

Thomas asked for charts of debt, deficit: here you go: https://www.washingtonpost.com/news/the-fix/wp/2015/01/07/the-story-behind-obama-and-the-national-debt-in-7-charts/. of course, there are always extenuating circumstances and everything is in context. Obama's debt might be looked at in conjunction with the economic disaster he inherited and W's could be looked at having just inherited a balanced budget. But it's a start.

Of course, as Ted and others indicate, facts often just get in the way of our beliefs.

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philb

08 Apr 2016
08:53:05am

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re: Mystic Stamp Company Changes Ownership

i stopped buying approvals by mail 60 years ago..but Donald Sundman is the top recruiter for the American Philatelic Society..in 2015 he recruited 215 new members...think what they would have without him. I changed political parties when "W" ran for a second term and never looked back !

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philatelia

08 Apr 2016
10:20:42am

re: Mystic Stamp Company Changes Ownership

"See how she incoporporated mystical into the conversation"



Wink wink nudge nudge!

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TribalErnie

08 Apr 2016
10:27:12am

re: Mystic Stamp Company Changes Ownership

Gotcha David,
My gripe wasn't so much with Kennedy, Nixon, Carter, Obama, the federal government, Florida Governor Rick Scott or any of them so much as it was that I didn't want to part with the green backs. The average guy on the street trying to put reliable transportation on the road doesn't care where the money goes he just knows it's gone. When you consider every type of tax and fee that the people pay it's a tremendous amount. People pay too much.

I'm amazed that Mystic employs upwards of 150 people. I keep hearing that the stamp hobby is in serious decline but how does the Mystic juggernaut continue? It seems that such a company would be the first to go belly up if the hobby was truly "in decline". You think they're (Mystic) in serious trouble?

Ernie

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In loving memory of Carol, my wife for 52 years.

08 Apr 2016
10:47:50am

Auctions - Approvals

re: Mystic Stamp Company Changes Ownership

"It seems that such a company would be the first to go belly up if the hobby was truly "in decline". You think they're (Mystic) in serious trouble?"

There is a link to a brief history of the company below. It is 90 years old, always headquartered in Camden, NY (pop 5000). The current owners father formed Littleton Stamp Company - remember that name? They were among the first to advertise in the popular press. They bought out the original owner of Mystic in 1974. He made his son (Don) president that year at the age of 19. It's a great story and explains why they are still in business today and why it would appear that the ESOP was benevolent in nature. They have personally hired every employee over the years and in a town of 5000 there is no place to hide.

https://www.mysticstamp.com/info/about-mystic-stamp-company-2/



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amsd

Editor, Seal News; contributor, JuicyHeads
08 Apr 2016
11:53:55am

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re: Mystic Stamp Company Changes Ownership

Ernie,

I understand. Tis a pity that most fees are, essentially, regressive. Only income tax could be progressive, if left to its own devices and devoid of deductions, loop holes, and the like.

I don't know that philately is in trouble, but our numbers ARE declining as evidenced by any set of statistics: storefronts were dwindling even before the internet; subscribers are declining for the few papers still printing; membership in most clubs and organizations are both declining and aging. AND, the way we do stuff is clearly changing. The former is cause for concern; the latter for celebration.

Mystic and other approval services represents one segment of the hobby. They do the work for you, and you pay the price for that. That's fair. Mystic is also, as Phil noted, one of the great recruiters; and it generates wonderful, free material. Its catalogue is a marvel.

I wish Mystic continued and great success; they are good for the hobby. they aren't everyone's cup of tea, but they are very good at what they do, and I hope they continue doing as well under their own staff

David

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HungaryForStamps

08 Apr 2016
12:40:56pm

re: Mystic Stamp Company Changes Ownership

BenFranklin1902 (Tom),


"They get ya one way or another. A friend of mine from Virginia was bragging how cheap his property taxes were... then I find out they have a personal property tax! That's where they inventory all your stuff and tax you on their estimate of value

Same with PA, my property taxes are less than they were in New Jersey, but nobody mentioned that every town has an income tax of 1%"



I live in Virginia and the personal property tax is not what you think. You have misrepresented that tax. They do not "inventory all your stuff". The only thing a non-business owner pays is a personal property tax on vehicles. So, your typical Virginian, at least in my neighborhood, will have a couple cars on which they pay a moderate tax. Maybe one in a few hundred will have a trailer or mobile home on which they pay a moderate tax. Its no big deal really. This helps defray costs for our infrastructure among other things. And Northern Virginia in particular is a fantastic place to live with a great community, plenty of services, and some of the best Elementary and High Schools in the country.

Take Prince William Country for example (not where I live). Here is what their website says:

"In Prince William County, a personal property tax is assessed annually (as of January 1) on automobiles, trucks, motorcycles, trailers, and mobile homes. Business are also assessed a business tangible property tax on items such as furniture and fixtures, computers, and construction equipment.

All other property; including: personal effects, household items, monies, securities, and livestock are not subject to the personal property tax.

The County maintains registration information on boats, personal watercraft, outboard motor watercraft, and boat trailers; although, the tax on these items was eliminated beginning in 1998."



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ikeyPikey

08 Apr 2016
12:55:28pm

re: Mystic Stamp Company Changes Ownership

So, like, I'm the only one who thinks that the macroeconomic theory bits should be moved to a thread of their own?

suggested title: "2016 infestation relocated"

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TribalErnie

08 Apr 2016
01:02:59pm

re: Mystic Stamp Company Changes Ownership

Wasn't me this time! Coke is 100x better than Pepsi. Pepsi drinkers are crazy, eh David?


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amsd

Editor, Seal News; contributor, JuicyHeads
08 Apr 2016
03:46:28pm

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re: Mystic Stamp Company Changes Ownership

you know me, Ernie, it's tough for me not to rise to the bait, and I hear concerns about the coming elections and fiscal ramifications, well.....

personally, give me a Dr Brown's cream soda or, if I'm down your neck of the woods, an RC Cola or Dr Peep will do

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philb

08 Apr 2016
03:48:15pm

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re: Mystic Stamp Company Changes Ownership

I'm from Brooklyn...Pepsi gave you twice as much for a nickle as Coca Cola but then who remembers that far back ?Big Grin

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HungaryForStamps

08 Apr 2016
03:56:16pm

re: Mystic Stamp Company Changes Ownership

OK. My effort to get back on track...

"Mystic and other approval services represents one segment of the hobby. They do the work for you, and you pay the price for that. That's fair. Mystic is also, as Phil noted, one of the great recruiters; and it generates wonderful, free material. Its catalogue is a marvel.

I wish Mystic continued and great success; they are good for the hobby. they aren't everyone's cup of tea, but they are very good at what they do, and I hope they continue doing as well under their own staff"



I don't participate (or even understand) that segment of the market. But perhaps Mystic's success is proof there is life in the hobby in some unfamiliar segment of the market.

Re-reading the original article on the ESOP, it does appear this is a good thing for the employees and the owners. The owners can slowly cash out, possibly with deferred taxes, but the other employees will presumably be given shares gradually and retain their existing benefits. Hopefully the company does not or cannot borrow to purchase the owner's shares.

Here's another article on using ESOPs for business transition: esop-business-continuity

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philb

08 Apr 2016
05:56:50pm

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re: Mystic Stamp Company Changes Ownership

i agree with Anglophile..its a different world out there in the workplace today. I see the changes in my company IBM in the last 25 years and its not pretty. Back in the day we felt as long as we did our job we were protected and entitled to pension and health benefits for life. Sorry i am off track from Mystic.

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angore

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09 Apr 2016
08:14:48am

re: Mystic Stamp Company Changes Ownership

If David Sundman decided to retire the company's new management could take a different approach unless he is grooming someone else to continue it.

Al

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HungaryForStamps

10 Apr 2016
08:46:22pm

re: Mystic Stamp Company Changes Ownership

There's no reason to assume the worst. In fact, perhaps we should assume the best for Mystic employees.

It sounds to me like the ESOP was set up to give employees a share in the company, probably a small one. If we are to believe the article linked at the top of the thread, the existing benefits will continue (IRA contributions and bonus). Granted, more important employees will probably receive more shares in the ESOP, as that is common, but that doesn't always happen. It depends on the company.

If the employer (the controlling employees) were to "cash out", the cash has to come from somewhere. Hopefully they do not borrow to "cash out" or cannot borrow for this purpose. Perhaps they are not cashing out. I don't fully understand where the cash would come from anyway, as it could only come from borrowings or current assets of the company. Borrowings would be the biggest worry. I assume the controlling shareholders will remain in control with the bulk of the shares in the ESOP, as they are also employees.

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philb

10 Apr 2016
10:02:21pm

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re: Mystic Stamp Company Changes Ownership

Thank goodness i did not cash out..thank you T.Rowe Price !

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ikeyPikey

10 Apr 2016
11:28:48pm

re: Mystic Stamp Company Changes Ownership

I continue to suspect that the owners' biggest motivator was avoiding a situation where new owners chose to lay-off their friends & neighbors, instantly improving the bottom line at the expense of so much more.

Watch for the movie on The Hallmark Channel.

Cheers,

/s/ ikeyPikey

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In loving memory of Carol, my wife for 52 years.

11 Apr 2016
05:01:12am

Auctions - Approvals

re: Mystic Stamp Company Changes Ownership

It is truly disappointing that we live in a world where it is always assumed that ALL businesses are evil and think only about the well being of their owners / stockholders. How did we get to this point?

There is a difference between the stereotypical big business managed by a CEO hired to maximize profit at all costs and a small rural company under current ownership (and management) for the past 42 years. In the 90 years the company has existed it has had only 2 owners. It prides itself in being an ambassador for the hobby and has brought APS over 5000 members. I have been an active member of the Central New York stamp community since 1985, first as a dealer and now just trying to find a good home for all but a few areas of current interest. I have never heard anyone say anything negative about Mystic or their operation.

I've noticed that friends with a positive attitude seldom find disappointment in life. Friends with a negative attitude seem to move from one problem to another, their life always in turmoil. Try seeing the good - it is there.

Just my two cents.






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youpiao

11 Apr 2016
12:11:58pm

re: Mystic Stamp Company Changes Ownership

Carol, I nominate you as Goodwill Ambassador of Stamporama. Applause


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DavidG

APS member since 2004
12 Apr 2016
08:56:03am

re: Mystic Stamp Company Changes Ownership

Webpaper:

As a manager of a stamp shop in Canada (there are ten shops across the Dominion that we know of), I agree with you.

In retail we have what is called the five percent rule. It assumes that five percent of all the folks who come into your store are convinced you are out to cheat them. I would argue the number is higher.

No wonder no one wants to work in a store anymore.

David
Ottawa, Canada


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ikeyPikey

12 Apr 2016
09:55:32am

re: Mystic Stamp Company Changes Ownership

"... five percent of all the folks who come into your store are convinced you are out to cheat them ... No wonder no one wants to work in a store anymore ..."



A pal with a Ye Old Collectibles Shoppe sort of thing cannot believe that people will walk in, say nothing until he greets them, walk around, and then walk out without saying a word.

That they do not greet him, and wait for him to greet them, he can understand, or sympathize with, or tolerate.

That they walk out like he was not even there? Not even "Have a nice day"? Drives him nuts!

We have become so accustomed to anonymous anodyne retail that we no longer have any sense that a place of business can also be a personal space. In fact, landmark civil rights rulings (the 'public accommodations rule', if memory serves), kinda says exactly that, so maybe the customers are right.

Cheers,

/s/ ikeyPikey (who still exits the front of the bus so that he can thank the driver)
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TribalErnie

12 Apr 2016
11:00:28am

re: Mystic Stamp Company Changes Ownership

IkeyPikey said:


"We have become so accustomed to anonymous anodyne retail that we no longer have any sense that a place of business can also be a personal space."



I'm a firm believer in being courteous and cordial with all I come into contact. I'm with you IkeyPikey, these interactions make our society more civilized.


My wife takes this a step further. She feels obligated to make a purchase at EVERY BUSINESS where she has even the most casual, brief conversation. It drives me nuts. It's one thing if the salesperson or merchant invests CONSIDERABLE time and effort and but then I only feel MARGINALLY guilty for not buying. If the sale doesn't work it doesn't work. However, I have made purchases with dealers of collectibles for the sole purpose of building relationships.

-Ernie

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BermudaSailor

12 Apr 2016
12:08:16pm

re: Mystic Stamp Company Changes Ownership

Ernie,

I have a wife like that too.


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Silence in the face of adversity is the father of complicity and collusion, the first cousins of conspiracy..
12 Apr 2016
01:24:33pm

re: Mystic Stamp Company Changes Ownership

" ... That they do not greet him, and wait for him to greet them, he can understand, or sympathize with, or tolerate.

That they walk out like he was not even there? Not even "Have a nice day"? Drives him nuts! ..."


I can understand that, but as a partial defense, There are many people who once the courtesies are complete will "Hover" around asking questions about what a person might want and suggesting alternatives hat aren't in the same ballpark.
And then there are the car salesman types who can be absolutely irritating.
Id like to suggest that if I managed to find the front door without a guide, I am competent to look at what is on display and smart enough to formulate a question all by myself.
.
The best thing is a balance between being helpful and available to assist and allowing someone to see what is available.

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HungaryForStamps

12 Apr 2016
04:49:55pm

re: Mystic Stamp Company Changes Ownership

Walking into a failing brick-and-mortar store can be uncomfortable for both parties (not that I assume all stamp stores are failing, but its been my experience). I have made attempts to visit the local stores near me with little success, except for a few supply purchases.

As a customer, when I know I can purchase just about anything the store has to offer at cheaper prices from an online store, its awkward. If the owner doesn't greet me or have a cheerful attitude, that makes it worse. If the store is not well organized and I have no clue what is for sale, I wonder why I bothered.

I have experienced all those things at one local stamp store, that is now closed. The other two nearby stores have some of these problems. A local (board) game store was in a similar boat, but at least the place was well organized and the owner was cheerful given the circumstances (now closed).

At the games store or when I was at a stamp store shopping for supplies, sometimes the owner would ask if they could order something for me. I knew I could get it faster online at a cheaper price. When I mention that to them they get upset. I learned its better to say nothing. Don't ask the stamp dealer if he sells online unless you want an earful.

I do feel its the owner's obligation to greet me first when I walk into their store. If they don't acknowledge my presence and I have no questions, I don't think its discourteous to leave without saying anything. But, I usually at least say goodbye in the local shops if the owner is within earshot and not busy.

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michael78651

12 Apr 2016
05:17:18pm

re: Mystic Stamp Company Changes Ownership

Hobby shops run by old curmudgeons deserve to close. I don't know what it is, but they complain that things are bad, but when hobbyists walk into the store, they scowl and are gruff with them, if they don't simply ignore them. Makes one just want to go over to a corner of the store, pee, and then walk out.

It's the same with other hobbies as well. Recently, a friend and I took a day trip to Houston to check out a couple of model railroad hobby shops that we had never been to. The first one we went to had three old men behind the counter. They wouldn't get off their duffs to help us find anything, nor would they even respond to most of what we asked. I guess we were too much of a bother to them. The next store we went to was run by a mid-thirtyish couple. They engaged us as soon as we walked into the store, and it continued that way until we found a bunch of things to buy and then left. If I go to Houston again to visit a hobby shop, which one do you think I'll go to? (Well, unless I have to go to the bathroom, of course.)

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philb

12 Apr 2016
05:59:04pm

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re: Mystic Stamp Company Changes Ownership

Good one Michael, what you suggest actually happened to an Uncle of mine who had a little walk down radio/tv shop in Bed-Stuy . A man walked in and asked if he could use the toilet and my Uncle said he did not have one..so the guy used the floor. My parents thought it was funny and that he had it coming.

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In loving memory of Carol, my wife for 52 years.

12 Apr 2016
08:04:48pm

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re: Mystic Stamp Company Changes Ownership

Strange, my husband had an antique shop in a small upstate NY town (Cazenovia)for about a year and a half back in the 90's. One woman who was always out shopping with her 4 kids (between 3 and 6 or so) stopped in one day and asked if one of her kids could use the toilet. No problem.

She stopped in often with her kids in tow and never bought anything - but her friends did. They thought it wonderful that we were so thoughtful. Most of the other shops in town were upscale high end and wouldn't dream of being "thoughtful".

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Tom in Exton, PA
12 Apr 2016
08:42:01pm

re: Mystic Stamp Company Changes Ownership

"Hobby shops run by old curmudgeons deserve to close. I don't know what it is, but they complain that things are bad, but when hobbyists walk into the store, they scowl and are gruff with them, if they don't simply ignore them. Makes one just want to go over to a corner of the store, pee, and then walk out.

It's the same with other hobbies as well. Recently, a friend and I took a day trip to Houston to check out a couple of model railroad hobby shops that we had never been to. The first one we went to had three old men behind the counter. They wouldn't get off their duffs to help us find anything, nor would they even respond to most of what we asked. I guess we were too much of a bother to them. The next store we went to was run by a mid-thirtyish couple. They engaged us as soon as we walked into the store, and it continued that way until we found a bunch of things to buy and then left. If I go to Houston again to visit a hobby shop, which one do you think I'll go to? (Well, unless I have to go to the bathroom, of course.)"



I've been to my local coin and stamp shop ONCE. It's in a shopping center and is mainly a coin shop with a few stamp things. But the moment you walk in you are hit by a wall of smoke. Two nasty old chimneys so self absorbed in a conversation where the F word was used as punctuation, that they never greeted me. I looked around and they watched me suspiciously. I knew anything I bought there would reek of smoke. There weren't any prices marked on anything anyway so I left.

I also agree that hobby shops are their own worse enemies. Each one specializes in what the owner is into and they don't have the brains to understand they're ticking off customers. I was at one in NJ where I know the guy is a military modeler. I bought about $50 worth of plastic scratch building supplies to work on a truck idea of mine. As I walked up to the counter he smiled and asked, "What are we scratch building?" When I told him, his smile turned to a frown and he scowled, "oh cars!" and finished the transaction without speaking.

Idiot! If I owned a hobby shop I don't care if the customer collected bottle caps... that would enthusiastically be the best hobby in the world!

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TribalErnie

12 Apr 2016
09:02:26pm

re: Mystic Stamp Company Changes Ownership

Michael and Tom,

I've definitely been in shops like those. Sounds like a guy on the westside of Jacksonville. Been there for 35 years. He has to "buzz you in" and he carries a hand gun on his hip. I was always a broke kid going in there and I've only gotten him to loosen up a bit in the last few years. Maybe he's mellowing with age!

The opposite is true with my good friend Sue Rowan of Rowan's Antique Mall. She's got a HUGE antique mall in downtown Lake City, Florida. She's a (long since) retired school teacher who sells all manner of collectibles. She's got antique florida postcards with alligator borders they aren't cheap. I've picked up all kinds of stuff from her. She's such a great lady, real gem. Shes, also one heck of a business woman. That one won't be fooled! Haha She's very active in the annual festival surrounding the reenactment of Florida's major civil war action, the battle of Olustee. I've been going in there talking to her for 15 years. What a wonderful lady. Haven't been in there in quite a while since I don't work out there a anymore but that reminds me, I gotta drop in and see Sue.
-Ernie

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ikeyPikey

18 Apr 2016
10:46:38am

re: Mystic Stamp Company Changes Ownership

.
Tech Companies Face Greater Scrutiny for Paying Workers With Stock (20160418)

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HungaryForStamps

18 Apr 2016
01:42:22pm

re: Mystic Stamp Company Changes Ownership

Tech companies have been doing this since the late 90's and every few years someone writes an article about the apparent financial engineering involved. I'm a software developer and witnessed first-hand the destruction of tech employee wealth from overvalued stock options and grants hitting bottom during the 2000 bust. Many employees didn't exercise their options or sell their stock for fear they would miss even more upside. Those that failed to exercise their options ended up with a huge tax bill because the options were valued at the inflated value when they were granted.

However, some tech employees, myself included, expect to receive a shares/grants as part of compensation, especially when working for small companies. But, when buying shares of public companies on the open market, I avoid companies that engage in these earnings shenanigans.

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ikeyPikey

18 Apr 2016
05:15:03pm

re: Mystic Stamp Company Changes Ownership

"... Those that failed to exercise their options ended up with a huge tax bill because the options were valued at the inflated value when they were granted ... "



My (unqualified) understanding is that an unexercised stock option is not income, and is not taxable.

Cheers,

/s/ ikeyPikey

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HungaryForStamps

18 Apr 2016
08:50:49pm

re: Mystic Stamp Company Changes Ownership

"My (unqualified) understanding is that an unexercised stock option is not income, and is not taxable.

Cheers,

/s/ ikeyPikey"



That's true. Sorry. They (some employees) exercised the options (I think because they were to expire) and then held them in company accounts in expectation the shares would continue to rise. Of course the share values fell by 90% and employees ended up with a tax burden well above the value of the shares. Of course, not everyone was in the same boat, and some sold a portion. However, the employees were not savvy with regard to investing and ended up with more pain than gain.
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ikeyPikey

18 Apr 2016
11:49:55pm

re: Mystic Stamp Company Changes Ownership

I know one fellow who got creamed because he had unexercised stock options - and stock from exercised options - all in a company account - and worth a total of five million dollars.

After the dot com collapse and his lay-off, the whole lot was pretty much worth next to nothing.

Sadly, he had been living pretty well, and had set aside very little because, after all, he had a net worth of five million dollars.

You might think that the obvious solution is that people exercising a stock option should immediately sell enough of their stock to cover their tax, so that only the 'profit' is at risk.

However, people who have been in this position, and faced this decision, and understood the risks, tell me that selling your company stock is a bonus killer & a promotion killer, so they dare not ... never mind those poor souls that have drunk the Kool-Aid, and think that the stock/options can only be worth more next year.

Cheers,

/s/ ikeyPikey (who knows from his years near the markets that a profit is not a profit until you get out and take it home with you)

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youpiao

19 Apr 2016
09:01:45am

re: Mystic Stamp Company Changes Ownership

"never mind those poor souls that have drunk the Kool-Aid, and think that the stock/options can only be worth more next year."



Thus the old Wall St axiom: Bulls can make money, and bears can make money, but the hogs always get slaughtered.


Ted
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HungaryForStamps

19 Apr 2016
06:21:36pm

re: Mystic Stamp Company Changes Ownership

Its the nonqualified stock options (NQSOs) that were a killer because tax on capital gains were due when the options were exercised. I don't know if its common anymore for companies to award NQSOs. The incentive stock options (ISO) have preferential treatment provided they meet certain IRS conditions (as long as they aren't disqualified).

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