1985-1989 Coin Market = 2000-2004 Comic Market?

[drbanner]

My dear Banner, I'm afraid you're still wrong. On balance, the structural changes you have cited greatly increase, not decrease, the likelihood of a severe boom/bust cycle. I'm sorry, but a few Brits and Frenchies armed with some pounds and euros do not even come close to outweighing the overriding dynamics that I and CentaurMan have cited.

 

Gene

 

Mr. Del,

 

I thank you for your return to cordiality in this matter, and will agree to disagree at this juncture in time as only said time will reveal the answer as to the disposition of comic book futures, and the effects of ebay, the internet, and CGC there upon.

 

Good evening, Banner

[FlComicFan]

Some very good points raised by all here.

[ninanina]

Some very good points raised by all here.

 

ditto

[FFB]

Comics are not commodities. Gold, grain, pork bellies, and other unprocessed or partially processed raw goods available in quantity from a number of different sources are commodities. Comics may be "luxury" items or "discretionary purchases" (and as such, be susceptible to general economic booms and malaise), but they are not commodities.

 

Comics are not even fungible, not even when you're talking about two CGC 9.6 graded copies of the same book. How many threads have we seen where someone says "That 9.8 with the miswrap doesn't look as good as so-and-so's 9.6 with perfect QP" or "That 9.8 has a dinged corner, so it can't be a real 9.8"? A ton. Although CGC has gone a long way toward creating something of a sense of fungibility among the same issue numbers of a given comic in the identical grade, any seasoned collector will be able to pick one of the two books when given a choice between two 9.6s of the same comic.

 

Finally, there is not enough supply in the HG golden age or even early silver age market for the comics market to act like any commodities or stock market. When someone decides he wants a NM copy of a Golden Age key, there are usually only one or two people in the world who can help him. The prospects are only slightly better for early silver age. It isn't like calling one's broker and saying "buy 5,000 shares of Microsoft at market." And is sure as hell isn't possible to "short sell" comics and create the illusion of a mass shareholder capitulation as happens with some stocks. All of this discussion about comparisons to the coin market or stock market is interesting, but I don't buy the basic premise because I don't believe that anyone who believes these theories has spent half as much time analyzing the differences between these markets as they have analyzing why their theory "might" be right.

 

Timely, you're missing a key element... pride in ownership. Who's to say if Lucy's finest, rarest, and most valuable Franklin is of any more or less importance to her than your finest, rarest, and most valuable Timely issue. It all comes down to pride, interest (for whatever reason), sentiment, and perception.

 

The comic market, regardless of the reasons why collectors collect, is a market of commodities. Non-essential items. There is no reason to believe that it is immune to Elliot Wave theories and rises/falls based on it being Nostalgic. When discussing trends, manipulation, cause and effect, outcome due to public perception, it's a marketplace based on dollars and cents, first and foremost, like any other commodities market in matters of investment.

 

And a coin may be very nostalgic to some. I'm quite sure that to many, a coin is as beautiful an artisitc object (take a look at the $50 Octogonal) to a coin collector as great artwork and story is to a comic collector.

[NoImSpartacus]

Cheers on the great article. I posted about this quite some time ago mentioning how the 1881-S Morgan is a nice market indicator of market going up or down. Contrary to what has been said, I believe the coin and comic market run very closely to each other. What has happened with the coins IS what is happening exactly to comics now. A year ago we talked of other grading companies coming into existence. It may be slow but within 2 years we will probably have 5 or 6 of them. In the coin world when one quotes a price they usually had tried to add in the extra money for slabbing. Buyers baulked at this and said why should I pay for the coin to be slabbed. In comics its common place where its just assumed that the slab shouldnt cost the buyer anything extra. So, the seller basically eats the cost up out of the profits. Two years from now if comics are anything like coins, it will be who can slab them for the cheapest price and at the same time have consistency in the grade. Not necessarily the best grading but the best for the Best Price. I dont know about you all but Im a little sick of shelling out 29 dollars for books from years 1970 to 1974. Someone will come along and remedy this. What concerns me more than anything is the price dictomy which is ever in creasing between low and high grade books. Good to Fine books going lower in price and basically being ignored for high grade material. Its like saying the majority of books from comic stores 6 years ago has just gone down in inventory worth by 30% while 9.8s are few and far between in comic stores. If the lower grade books continue lower, then there goes the majority in what makes up most comic store inventory. The owner makes money on his 9.0s and up but has already lost a tremendous amount in his back issue bins. Not something that is readily apparent.

A year ago one could take a common book like Amazing Spidey 298 and at a 9.4 it would pull real well. Now, that same book makes its $ 15.00 slabbing fee plus maybe an extra $ 10 or $ 12.00. The question that we ask is where is the market going? I think the question to ask is where has the market already been over this past 1 1/2 years. The changes are very apparent. In the past 4 months, has there been an upswing? Past 6 months an upswing? Past year and upswing?

Maybe I am wrong but I dont see anything great in this market compared to 1 year ago. Alas, slabbing is becoming routine, just like the coins. Eventually just like at coins shows when someone says "But this coin is an MS70" it will probably be the same at the comic shows 2 years from now when a dealer says "But its a 9.8". Same routine just a different time period and collectible.

[FFB]

Yes, the internet has been huge for the comic market. I think that this thing, above all else, is what will prevent a "crash" from occurring due to "natural causes." When the comic market crashed back in 1994, there was no "internet" for comic store owners to which they could turn in order to sell otherwise unsaleable back issue stock. Now, any LCS owner can log onto ebay and sell his VG copy of X-Men 48 to any number of collectors all over the globe. And if he puts up huge scans and has a good return policy and good feedback, he'll probably get close to full VG guide for it, if not more. Regional "softness" in the back issue market is alleviated by buyers from other geographical areas fulfilling the demand for a particular book.

 

This is not to say that a crash "couldn't" occur. If CGC were implicated in some huge grading scandal (such as giving preferential treatment or BLU slabbing books that were known to have resto), then the CGC market would get ugly and the whole market would feel it, slabbed and raw alike. But barring something like that, I just don't see anything more than the general ebb and flow of prices that we have been seeing, with a general upward trend as the economy improves, and a slowing of that trend if the economy worsens.

 

Trying to campare comics to other hobbies is not viable.

 

I find it to be higly viable and more than worthy of the comparison, but there are two primary factors in the current comics market which fundamentally differentiates it from the 1989-1992 coin market--the Internet increasing collector liquidity, and less involvement from external investors. That second statistic is tough to measure, and I agree with Gene that JP has been trying to get external investors in since probably before CGC even opened its doors, but we haven't seen anyone like a Merril-Lynch suggesting comics as a viable investment, so I find that huge spike in the coin graph to be a minor exaggeration of what to expect from the comics market. The press has thrown out some articles, but that doesn't seem as legitimate as an investment firm making the suggestion.

[Aman619]

Spartacus, you seem to bemoan the loss of profit and liquidity in slabbed recent books like Spidey 298. I know Im older and my tastes run older etc, but why SHOULD such book sbe worth so much? They are common (in 9.4...youre not even talking about 9.8 which should be the cutoff for such books) Its this segment if the comics spectrum that went totally out of whack price vs quality wise.

 

I also dont think the storeowners are looking to their inventory of these book sfor much income. They have them cause they overordered them...and are stuck with them, and just keep them around until they finally sell. And the copies that they have that they bought in collections from former collectors were (probably) bought for pennies apiece. Stores today are (except for Lighthouse!)primarily new book sellers.

 

Interesting point about who pays for the slabbing in both fields. If dealers decide they want to cut costs for slabbing, it will be a competition for th echeapest slabber, i fnot the best. But, I personally dont think theres enough business for another grading company...and the existing graders realize this, or they would have made their move by now!

[BachelorOfComix]

Man reading all this doom & gloom has got me depressed ..........again. I quit comic books, someone give me a shout when I can buy good stuff for dirt cheap compared to today's bizarro world prices.

[AtomicPaul-migration]

Yes, the internet has been huge for the comic market. I think that this thing, above all else, is what will prevent a "crash" from occurring due to "natural causes." When the comic market crashed back in 1994, there was no "internet" for comic store owners to which they could turn in order to sell otherwise unsaleable back issue stock

 

When the entire bottom literally fell out of the sportscard, unopened box, unopened wax, vend, cello and rack case highly speculative (and at one time extremely lucrative) investment market, based mostly on the value of which rookie card was a component of that case, there was no Ebay. However, there was a highly visible entity in the early to mid 90s known as CARDnet. that most high rollers, dealers and investors alike subscribed to. It was a forerunner of Ebay.

 

Cardnet in itself did not factor into helping thousands of investors to not lose fortunes on unopened material as prices plummeted. If anything, it became more evident how quickly the prices dropped because of it being state of the art, new buy and sell prices being posted and changed daily!

 

You know, we lose sight of the fact that certain markets run hot and cold based on sometimes just a handful of buyers. We see some big numbers associated with a few books and we think that everyone on earth is clamoring for these items. In some cases, it's painfully few buyers that actually create the perception of being the overall cause and effect.

 

As an example, about 20 years ago there was a gentleman named Dennis Walker who decided to take his incredible sports memorabilia collection and try to start a museum, not unlike the HOF, but on the West Coast. Oddly enough, in Oregon.

He also promoted his idea to others to join him in a partnership to purchase additional material for his museum and started a limited partnership. He managed to raise approx. 7 million dollars from several investors and set about buying sports memorabilia.

At that time, you'd be surprised, by current levels, the prices that he was able to buy items like World Series Rings (from Frankie Frisch's 1922 World Series ring, the first ever issued! to present day, at the time, pieces, Press Pins back to the early 1900s, All star Rings, MVP rings, Retirement watches, Player League presented Trophies, etc., etc. Incredible stuff for a baseball fan.

 

All of a sudden the prices that dealers were charging and asking for these game issued jewelry pieces doubled in price. He kept buying. Then doubled again. He kept buying, Then doub...etc.etc.

 

Of course, there were others that took his cue. "look what this guy is paying for that 1953 Yankees Ring. If I can buy a 1956 ring for X dollars, (Mantle's MVP year), for that same price, I'll be doing great!!!". Collectors quickly jumped on the bandwagon and prices/demand on Sportsrings and Press Pins escalated.

Dennis was the man that many of the buyers on these rings eventually sold to as well when the fascination with owning a ring, signifying a victory that was not a personal one, faded vs. the amount of profit that now could be realized as prices continued to escalate because Dennis kept buying and buying.

 

Sadly, Dennis Walker was found dead in a bathtub. Unfortunately, the ring and presspin market died for quite awhile as well, drowned as well without his money to keep it afloat.

[Aman619]

Your sports rings story reminds me of the Great Lint Crash of '37. It was a terrible surprise. There too, was one man - - Harry Chichester, an immigrant from Britain, whose family specialized in trouser hems. They invented radical stitching techniques that today are still used on 57% of all pants worldwide!. He had an affinity for average pocket lint, and collected samples from EVERY type of pants in existence. You name it: short pants, long pants, Bermudas, hot pants (for men, no less), jeans, chinos and even antique pantaloons.

 

Harry arrived on our shores in 1935 and immediately took a shine to American Baseball. And started getting into baseball uniforms. Really getting into them. He wore a Cardinals uniform under his business suit every day, as well as a cup. It was very hot but, he loved it. ANyway, he set out to collect a lint sample from EVERY player on every team. And as other baseball fans saw him in action, reaching deep into players pockets as he pretended to ask for autographs.... the mania started. Soon there were dozens of collectors grabbing for lint. Within a year, the infamous LGC Corporation showed up offering to slab lint samples. They were later accused of cleaning and pressing the lint, and the owners resigned in disgrace and were never heard from again. It was rumored that they moved to Florida....

 

But it all ended badly for Harry. They found him face down in the pressing room in a dry cleaners in Yonkers that had the Yankees account. Very sad.... You ever hoid that story??

[AtomicPaul-migration]

Here's some online info on Dennis Walker, a real person whose purchases single-handedly created a manipulated market that died soon after his own death:

 

http://www.highbeam.com/library/doc0.asp?docid=1G1:3876748&refid=ink_overture_fin

[lou_fine]

I think the liquidity offered by the 'net and the collector-to-collector selling dynamic will be a moderating factor preventing drastic price reductions like outlined in the article. Nobody has seemed to mention this facet of today's market when comparing it to the "crashes" of yore, so I thought I'd mention it for your ponderance!

 

NOOOOOOO!!!!!!! For the umpteenth time, the real-time action of eBay, e-commerce, e-mail and all other electronic communications will only FACILITATE a decline. Has eBay "moderated" the parabolic price rally we've seen? NO IT HASN'T. Will it "moderate" any price decline? ABSOLUTELY NOT. When prices fall, EVERYONE will see it and act on it. It will only accelerate and exaggerate any movements of the market, just as it has done on the way up.

 

Gene

 

YEESSSS!!!! The intersection of the 'net, ebay, and CGC all combined simultaneously to result in the parabolic increases, it wasn't due to just one factor. The point being, you would have to take away ebay, the internet, and CGC to have such a comparable dramatic drop in the price/value of the good stuff. If you (in a generic sense) didn't have access to these venues, you would certainly expose yourself to the whims of an offer from the LCS or a big mail-order dealer, but in 5 minutes I can put a book on ebay that will be available to tens of thousands of collectors world-wide instantaneously.

 

Please feel free to hypothesize as to what MIGHT happened in the future Gene, but don't tell me what WILL happen b/c despite what HAS happened in the past, we're not living in the past, we're living in the present and the collectible infrastructure has changed dramatically in the last 10 years.

 

Banner;

 

I believe the point Gene is trying to make here is that the advent of eBay and the Internet will allow everybody to see a negative change in the marketplace much more quickly than before and act upon it accordingly. As a result, the market will be flooded with a lot of sellers at the same time with only a dwindling number of buyers out there.

 

Take a look at the drop in the Nasdaq a couple of years ago. A lot of specualators and sellers selling off at the same time. Where did all the buyers go to that was trying to buy the same stock at substantially higher prices just a few short months ago?

[blowout]

You know, we lose sight of the fact that certain markets run hot and cold based on sometimes just a handful of buyers. We see some big numbers associated with a few books and we think that everyone on earth is clamoring for these items. In some cases, it's painfully few buyers that actually create the perception of being the overall cause and effect.

 

[comicartfan]

I may not have a business or economics degree, and i haven't been involved in comics for all that long...but i certiantly have an opionion.

 

I agree with some of the items that were pointed out, but i also think that people fail to see the bigger picture. Pointing to real estate or the stock market (which is not even a fair comparison) and saying the Great Crash is coming is insane. Comics are a "hobby" that is not related to "gossip of Marvel is buying Cross Gen....sell " or "interest rates are good, buy more comics" ! - Does anyone realize how stupid that sounds ?!

 

Comics are more like the toy market than coins or stamps...or baseball cards. As someone else pointed out, there is a great deal of nostalgia involved in collecting comics..of being a kid and reading about Batman or Spider-man and having that feeling of watching the cartoons on Saturday morning. Same with toys. I was watching an auction that was for a Green Arrow Mego MIB - Green Arrow . I remember getting these as a kid and they were the coolest things on the planet. Some of the younger members may not know them, but there is a big market for them. And these collectors aren't looking at the "this three thousand dollar figure will be worthless in 5 years " - It's driven by the same desire that comic collectors have to obtain a 9.6 of a certian title....bragging rights, satisfaction of knowing that this book is in their collection and they can look at it anytime they want, and the hunt of looking for that rare item and finding it.

 

And I have to say something to Gene. If you're convinced that the market is going to crash and that we are all doomed..that we are going to be victims of our own greed, ignorance or whatever you believe, then why don't you get out, cash out your art work, comics and etc...and leave the hobby ?!! - It's the same old song and dance with you. Endless posts of your theories and economic nonsense that goes on for post, after post, after post.....Yet i fail to see that comics are getting any cheaper. When CGC first came out, people were going nuts. 800 for a Spawn 1 was just one example. Then the market cooled a tiny bit. Dealers and collectors were convinced that this was the "drop in the insanity" that they were saying was inevitable. Well, Heritage comes along and the comic book movie becomes a genre all it's own. Prices go back north. And there will be small flucations , with particular changes in "hot" books ...yet the silver age and golden age books , particularly higher graded will be constant. There won't be a Spider -man 40 cgc 9.4 going for 200 bucks or a Hulk 5 9.2 for a thousand. not today, not in 5 years, not in 20 .....

[dam60]

Wasn't there a recession in 1991? (correlation to declining coin prices perhaps? ) Didn't comics undergo a huge run up in the recession of 2001-2003?

 

Also, let's be honest - what occurs in the mainstream to get people excited about coin collecting? The only thing I can think of would be the introduction of the new state quarters. I personally think those are cool but that doesn't have me buying slabbed coins. A relevant comparison might be the movie hype, but let's too put this in perspective - whether people bought a damn comic or not, the Spider-Man movie grossed $400mm DOMESTICALLY and is the best selling DVD ever! The intellectual property of comic super-heros is as vibrant as ever.

 

Let me also bring out this disclaimer lifted from a fidelty perspectus: "Returns (before and after taxes) are based on past results and are not an indication of future performance. " Fidelity link

 

While I do think that the coin and sports card markets provide relevant comparables to the comic book market no one has a crystal ball. The future is unbeknownst to us and while I wouldn't bet the ranch on comics, I am not building a bomb shelter either.

 

While I think that some of the prices being paid now for some of the absolute top of the line graded books is crazy, I do think that a "crash" is impossible AS THERE ISN'T ENOUGH LIQUIDITY. The census numbers aren't high enough to cause a crash! I can see that there will be far fewer COMPLETED SALES as sellers not wanting to take a loss will put up unrealistic reserves but a crash? No. I would also say this much - the HG collector is a different beast altogether. Even if all cgc comics traded at 10 cents on the dollar effective immediately, how many people would really be affected? Even on this board people talk about liberating books and reading new books and not keeping an extensive CGC stock (of course the oppossite is accounted for on here as well). I really think that come what may there is not going to be a CRASH because as I stated previously there aren't enough of these slabbed uber HG books to allow for that to happen.

 

Also, how would you describe the "crash" on lower grade cgc books from 1965 and up? In my mind a CORRECTION has already happened (note - see the first sentence of your fourth paragraph: "Then prices started to decline as more coins got slabbed") and personally I think that another one is due for the uber prices being paid on books but a widespread the sky is falling type of conclusion doesn't seem to be a valid conclusion from the coin article.

 

The times have changed and the factors have changed. While I will certainly not deny that there are investors in the comic marketplace the market has tested some amazing infusions these past three months and is still strong! I would think of both Bob's FF sale and HooDeeDoo's sale of his collection as two prime examples of some super awesome stuff hitting the market and the market licking its lips for more. Look at that AF 15 cgc 9.6A that sold in HOURS on Comiclink for DOUBLE what it sold for literally six months ago!!

 

Economically I do feel that the country is in a delicate spot but that's such a interesting little relationship. We talk about consumer debt (and let's be honest here - it seems that people are willing to go into hock to fund their comic books) and low interest rates and how the interest rate hike will spell death for many but Greenspan will NOT raise the interest rates until there is JOB GROWTH!!! With job growth and correspondingly real income growth people would be better able to handle their debts!

 

This is a SUPER HOT time for the BEST in comics, that much is unquestionable. Will it continue? My answer - no. Will it crash? My answer - no. There are too many unknowns and a different underlying playing field for the comic market to burn up like the coin market did.

 

My two cents, (is this now a coin pun? )

 

DAM

[dam60]

But from all accounts the coin market is on fire right now. Also older comics are, for the most part much more rare in high grade than coins. New comic market is susceptible (and has alredy cooled off duite a bit) but pre-1965 market is insulated.

Vincent

 

V - in my crystal ball I see the multiples of guide cooling a bit for these pre 1965 books but would agree that the new comic market has already crashed and has seemed to be stable currently.

 

I personally can't justify paying huge multiples of guide pre 1965 or not when I know that I can get a lesser copy for a FRACTION of the cost. As these prices continue to escalate I feel that more people will adopt my mind set.

 

DAM

[dam60]

Again, I agree with you and Gene on the crash for high grade slabbed books, but I think you're both widecasting too much. One great big tree falling down doesn't take out a whole forest. It may take out a few other trees, but the rest of the trees are fine.

 

Exactly. Remember, even during the Nasdaq crash of 2000, a ton of stocks in other sectors (most anything not tech or telecom related) did fine, primarily because their valuations hadn't gotten out of whack with where they had traded over the past decades.

 

Can someone please tell me where all these books are coming from that are going to cause this CRASH??? Even if 100% of the books off the printer survived in mint shape and sold for 5x OS guide the total dollar amount wouldn't equal an hours worth of trading on the Nasdaq on the worst day in 2000. THERE ISN'T ENOUGH SUPPLY (LIQUIDITY) IN COMICS TO CAUSE A CRASH.

[dam60]

Here are a few examples of liquidity taken from Gene's article: (notice the lack of relevance to comics)

 

It got so there were more coins certified than uncertified.

 

PCGS graded their three millionth coin last month. 98 of every 100 pieces they have certified is generic.

 

3 MILLIONTH coin!?!?!?!?!?!?!?!? How many comics have CGC graded to date? 500K? (Valiantman . . . Valiantman . . . )

[delekkerste]

Comics are not commodities...Comics are not even fungible...All of this discussion about comparisons to the coin market or stock market is interesting, but I don't buy the basic premise because I don't believe that anyone who believes these theories has spent half as much time analyzing the differences between these markets as they have analyzing why their theory "might" be right.

 

Spoken like a true fanboy. Of course there are major differences between comics and coins, and I don't think the comic market will follow the exact same path as coins. However, there are also uncanny similarities in the two markets' behavior to date following the introduction of the slabbing phenomenon. Are we to just ignore these because we, personally, think coins are boring and comics are exciting? I'm sorry, but I don't buy into this comic-centric view that comics are some sort of high artform that can inspire nostalgia and passions that other hobbies can't hope to compete with. That is ludicrous, particularly when you see how much money is being shelled out in other hobbies versus our own. We all know FF is a staunch defender of the comic market, but he's intellectually honest and rigorous enough to admit that the comparison with coins is a more than fair comparison. Are you?

 

As for stocks, real estate and other non-collectible markets, of course there are even greater differences. But if you look at them without your comc blinders on, you'll realize that they are driven by the same mass investor participation, greed and fear that drives comics and any other market. Keep an open mind and the truth will set you free.

 

Gene

[delekkerste]

I agree with some of the items that were pointed out, but i also think that people fail to see the bigger picture. Pointing to real estate or the stock market (which is not even a fair comparison) and saying the Great Crash is coming is insane. Comics are a "hobby" that is not related to "gossip of Marvel is buying Cross Gen....sell " or "interest rates are good, buy more comics" ! - Does anyone realize how stupid that sounds ?!

 

Stupid to a dyed-in-the-wool fanboy, perhaps. Greed and fear drives all markets, whether for slabbed funny books or the price of tea in China. Comics are most certainly not immune to cultural mood or macroeconomic considerations, either. The sooner people wake up to this, the better.

 

 

And I have to say something to Gene. If you're convinced that the market is going to crash and that we are all doomed..that we are going to be victims of our own greed, ignorance or whatever you believe, then why don't you get out, cash out your art work, comics and etc...and leave the hobby ?!!

 

Maybe because I didn't "invest" in these items for their monetary value in the first place? Maybe because I buy books and artwork because I enjoy them? Maybe because I didn't spend so much on books that it would be worth my valuable time to make the effort of selling them off? By the way, I've bought all of 2 slabbed books in the last year (for a total cost of $200) and have sold off a lot more than that. I have been, by far, a net seller. Don't presume to know my actions or motivations.

 

Gene