Crash conspiracy missing the scarcity factor

[Rob]

(Was "Re: high grade is not fun anymore" Didn't want to keep hijacking that thread.)

 

I think what we're missing is the scarcity factor. Value is derived from scarcity (or perceived scarcity). In sports cards, you have inserts, or chase cards. I was into football cards, and a common Michael Vick rookie card isn't worth much, if there's no sense of scarcity to it. Maybe $10. But a Michael Vick SP Authentic rookie, serial numbered to only 250, sells for $1000. And within the 250 cards, if you can find one with a unique patch, that makes it even more scarce, and worth 40% more. And we're talking about a 3 year old card. So this would be comparable to a modern comic.

 

There will always be a greater value associated with high grade comics, because of their scarcity. I think CGC has allowed us to quantify that scarcity, which was anyone's guess in the past. Of course, it's not 100% accurate, because every book hasn't been submitted. But in previous crashes, we weren't dealing with comics that had a population of <10 in the world. Valiant was considered "scarce" because it had a low print run of 10,000. Not 10.

 

Scott Travers said in a recent article that when PCGS started, common MS65 Morgan dollars were trading for thousands, and that they can be picked up for less than $100 today. I think that was a case of a misperception of scarcity. So our question should be, will that happen to CGC? In 5 years, how many more early silver 9.4's will there be? What kind of increase will we see with modern high grade comics? If the 5 Hulk 181's in 9.8 increase to 10 total, will it's value be cut in half? I think if it remains around 5-8, there will always be 8 people in the world willing to spend thousands for it. I just can't see the market agreeing that it's only worth $700. And in an auction, it only takes 2 buyers to get the price going.

 

I'm not a CGC fan, but I just thought this idea should be factored into the conversation.

[Aman619]

youre right. And this is t e argument vis-a-vis the census: Is it as it now stands indicative of where populations in grades will settle out at in 5 years? Or just a a snapshot with no bearing on reality.

 

We can only guess. But, it can be an educated guess . As in your sportscards analogy, we can look at the numbers that were printed as a starting point for supply (and in SA comics we didnt have limited edition sales gimmicks) and then surmise just how many survived in high grade. And obviously, the newer the book, the more were saved and preserved in better condition.

 

New comics also parallel sportscards in that new comics become HOT and are right away valued at prices that will slowly drop back to cover price as new HOT books take their place on collectors "gotta have it" wantlists.

[delekkerste]

The "crash conspiracy", as you put it, is most certainly NOT "missing the scarcity factor". You can have a "crash" even when the population is ONE, let alone 5 to 10 as in your Hulk #181 CGC 9.8 example. An excellent case of that are the prices paid during the height of the art bubble in 1990 for Van Gogh's "Portrait of Dr. Gachet ($82.5 million) and Renoir's "Au Moulin de la Galette" ($78.1 million). The owner, Japanese industrialist Ryoei Saito, died six years later, wheelchair-bound and broke. That's what happens when you put your money in assets with totally ephemeral values while requiring very real dollars to service your liabilities. Let this be a lesson to all those speculating on comics instead of paying off their credit cards.

 

Gene

[Rob]

Let this be a lesson to all those speculating on comics instead of paying off their credit cards.

 

Please tell me no one is paying hundreds of dollars on comic books, and carrying credit card debt too!!!! Surely you're not serious.

 

But my post was referring to those (like myself) who were anticipating a crash, based on previous crashes, like the Valiant crash of the early 90's, or slabbed coins in the 80's. And my point was that it's not apples to apples. Those other commodities weren't as scarce as a 9.8 Hulk 181. I would like to know if values for slabbed coins with a population of 10 or less retained their value.

 

I know the 1804 silver dollar and the five 1913 Liberty nickels (or is it 6 now?) have not seen a crash in value.

[joe_collector]

If you ever start drawing a firm line between scarcity and value, then you are on a quick path to ruin.

[Rob]

If you ever start drawing a firm line between scarcity and value, then you are on a quick path to ruin.

 

What do you mean? Value is defined by scarcity. It's all about supply and demand.

[FlComicFan]

even the low # census cards dropped like stones Michael Jordan Star 1984 in gem Mint lost 80% of its value and that card easily equates in scarcity and popularity to a Hulk 181 Values go up too fast too high there will be a correction. I do agree that early silver age will probably fare the best. However those who pay insane prices on post 1968 books (with a few exceptions) are going to really take a beating at least short term till some time passes. Gotta go eat, I'm curious where this thread will go?

[joe_collector]

Value is defined by scarcity. It's all about supply and demand.

 

Your two sentences do not compute.

[delekkerste]

Please tell me no one is paying hundreds of dollars on comic books, and carrying credit card debt too!!!! Surely you're not serious.

 

Is this some kind of joke? If you've heard even half of what I have, you'd delete this post immediately out of sheer embarassment. Judging from your post, I'd say you'd be absolutely mindboggled to hear what some of your fellow collectors have done to support their high grade comic buying habits.

 

Gene

[Rob]

Value is defined by scarcity. It's all about supply and demand.

 

Your two sentences do not compute.

 

You're confusing me!!

If demand exceeds supply (the case with a scarce collectible), value will be higher than an item with greater supply.

[JiveTurkeyMoFo]

Please tell me no one is paying hundreds of dollars on comic books, and carrying credit card debt too!!!! Surely you're not serious.

 

Oh, I don't doubt he is, and Gene offers very wise advice on this topic. I'm sure there are a few folks out there who don't mind paying the 15-20% interest to their credit card company, as long as they believe their comic investments earn them a substantially higher percentage return.

 

Last week, I spent some time talking with a fellow who lost his shirt in the Valiant craze of the 90s. While innocently joking with him that early Valiants are making a come-back, he shot me the "Look of Death". Apparently, he had maxed out on three cards buying and selling Valiants by the bushel. He did well for the first year, but didn't know when to quit and took a bath when the whole market collapsed. Took quite a while to make amends with his creditors...those high interest rates kill you if you can't afford to take large chunks out of the principal and all he had to show for his debt was a storage space full of now worthless comics. Needless to say, he doesn't buy comics with credit cards anymore.

[Rob]

Please tell me no one is paying hundreds of dollars on comic books, and carrying credit card debt too!!!! Surely you're not serious.

 

Is this some kind of joke? If you've heard even half of what I have, you'd delete this post immediately out of sheer embarassment. Judging from your post, I'd say you'd be absolutely mindboggled to hear what some of your fellow collectors have done to support their high grade comic buying habits.

 

Are you serious? That's sick! That's what keeps me from spending too much on comics - remembering the debt I have. My wife and I are a dual-income household, so I can afford some nice comics. But how can I justify spending $5000 on a 9.8 Comic #1, when I'm paying interest on credit card debt, car loans, etc? If anything, I should put it towards my home, to eliminate mortgage insurance. Man, that is the sign of a collecting addict!

 

I just figured these collectors have high six-figure incomes.

[joe_collector]

If demand exceeds supply (the case with a scarce collectible), value will be higher than an item with greater supply.

 

IF is the important word. Trust me, there is absolutely no direct link between scarcity and value, and only the foolish speculator would think otherwise.

 

Demand has always driven luxury, non-essential goods like pop collectibles, and when demand drops precipitously, even one-of-a-kind items can take a serious tumble. Del brought up a great example with paintings, which are the definition of rare, yet this market has crashed multiple times and is currently on life support.

 

It's a tough concept to grasp, as the unwashed masses have been taught that anything rare must also be valuable like it's some universal principle, but there are millions of one-of-a-kind pop culture items that are worth absolutely nothing.

[joe_collector]

I just figured these collectors have high six-figure incomes.

 

That is a fallacy, as in each and every "collectibles crash" the big money is usually selling, while the general public takes the fall.

 

After all, you don't get rich by being a insufficiently_thoughtful_person, do you?

[Rob]

If demand exceeds supply (the case with a scarce collectible), value will be higher than an item with greater supply.

 

IF is the important word. Trust me, there is absolutely no direct link between scarcity and value, and only the foolish speculator would think otherwise.

 

Demand has always driven luxury, non-essential goods like pop collectibles, and when demand drops precipitously, even one-of-a-kind items can take a serious tumble. Del brought up a great example with paintings, which are the definition of rare, yet this market has crashed multiple times and is currently on life support.

 

It's a tough concept to grasp, as the unwashed masses have been taught that anything rare must also be valuable like it's some universal principle, but there are millions of one-of-a-kind pop culture items that are worth absolutely nothing.

 

Exactly. Which is why Hulk 181 in 9.8 is more likely to retain it's value than ROM #4 in 10.0.

[joe_collector]

Exactly. Which is why Hulk 181 in 9.8 is more likely to retain it's value than ROM #4 in 10.0.

 

Hey, you proved my point. Scarcity does not, by itself, determine value.

[CompleteRunComics]

IF is the important word. Trust me, there is absolutely no direct link between scarcity and value, and only the foolish speculator would think otherwise.

 

Are you saying if there's no demand then there's no direct link between scarcity and value, or there's no direct link no matter what?

 

 

CRC

[Rob]

Exactly. Which is why Hulk 181 in 9.8 is more likely to retain it's value than ROM #4 in 10.0.

 

Hey, you proved my point. Scarcity does not, by itself, determine value.

 

Well, I wouldn't call a common, less-than-cover-price comic in 10.0 scarce. There are thousands of them.

[Rob]

IF is the important word. Trust me, there is absolutely no direct link between scarcity and value, and only the foolish speculator would think otherwise.

 

Are you saying if there's no demand then there's no direct link between scarcity and value, or there's no direct link no matter what?

 

Without demand, scarcity doesn't mean much. I imply demand when I mention scarcity. Joe was nit-picking.

[CompleteRunComics]

Without demand, scarcity doesn't mean much. I imply demand when I mention scarcity. Joe was nit-picking.

 

 

Ahh, gotcha.

 

CRC