Comics Investing Club

[gyro-1]

Forming partnerships with total strangers that require thousands of hours of work to bring from found to sold cant end well .

Way to many bad things could happen

 

[Transplant]

Once addressing the sourcing problem, there are a myriad of ready options to cost effectively monetize that inventory - with intelligent administrative structure and good governance ensuring that payoffs yield returns at above-average rates.

You haven't addressed the "sourcing issue" at all. It's the end-all, be-all for anyone looking to flip some books. You have to find them first. How are you going to determine whether a collection lead came to the group or to an individual member of the group?

 

How happy will you be when one of your elite group members announces that they located a $500,000 collection and partnered with GAtor to buy it. Are you going to sign people to exclusivity clauses? Will that prevent them from digging through boxes at a show? Must they offer every book to the club first? For how long?

 

How are you going to deal with the specter of the regulatory hurdles if you're determined to be providing investment advice? Is someone/the group willing to make all the necessary state or federal filings?

 

How will you allocate the net profits? Some people paid more because they did more work? Found the collection? Good luck not having people pull out when the group can't decide whether to buy a particular collection or spend $50k advertising for collections. Maybe they don't like the restaurant you meet at?

 

Seems like a simple premise, but dealers and collector team up financially all the time on deals. My guess is the larger your group, the larger your headaches.

[G.A.tor]

Once addressing the sourcing problem, there are a myriad of ready options to cost effectively monetize that inventory - with intelligent administrative structure and good governance ensuring that payoffs yield returns at above-average rates.

You haven't addressed the "sourcing issue" at all. It's the end-all, be-all for anyone looking to flip some books. You have to find them first. How are you going to determine whether a collection lead came to the group or to an individual member of the group?

 

How happy will you be when one of your elite group members announces that they located a $500,000 collection and partnered with GAtor to buy it. Are you going to sign people to exclusivity clauses? Will that prevent them from digging through boxes at a show? Must they offer every book to the club first? For how long?

 

How are you going to deal with the specter of the regulatory hurdles if you're determined to be providing investment advice? Is someone/the group willing to make all the necessary state or federal filings?

 

How will you allocate the net profits? Some people paid more because they did more work? Found the collection? Good luck not having people pull out when the group can't decide whether to buy a particular collection or spend $50k advertising for collections. Maybe they don't like the restaurant you meet at?

 

Seems like a simple premise, but dealers and collector team up financially all the time on deals. My guess is the larger your group, the larger your headaches.

you are so smart

[Keysnruns]

Will try to address in order...

 

You haven't addressed the "sourcing issue" at all. It's the end-all, be-all for anyone looking to flip some books. You have to find them first. How are you going to determine whether a collection lead came to the group or to an individual member of the group?

 

We will have a custom phone number, email and website (thanks Google!) to track incoming leads and sources.

 

How happy will you be when one of your elite group members announces that they located a $500,000 collection and partnered with GAtor to buy it. Are you going to sign people to exclusivity clauses? Will that prevent them from digging through boxes at a show? Must they offer every book to the club first? For how long?

 

Plenty of fish in the sea. If a lead comes in from advertising, phone or web, we will track it. If it comes verbally from a member, its based on trust. No one has to work within the club if they don't want. Don't care if a deal gets done without us. We just want to make money on the deals we're willing to do.

 

How are you going to deal with the specter of the regulatory hurdles if you're determined to be providing investment advice? Is someone/the group willing to make all the necessary state or federal filings?

 

We will have an appropriate legal structure, and in fact our 2/23 meeting in Atlanta will have counsel available for better info on these questions than I can provide now. We will not provide investment advice nor recommend investments (a key distinguishing factor between investment clubs and other regulated entities). Members will simply vote yes/no on opportunities the Board presents, within a timeline. Majority rules. That's the current plan.

 

How will you allocate the net profits? Some people paid more because they did more work? Found the collection? Good luck not having people pull out when the group can't decide whether to buy a particular collection or spend $50k advertising for collections. Maybe they don't like the restaurant you meet at?

 

These items are still under discussion. The vision is that % of contributions to the the total pool of capital equal % of payout. Only money matters - time, goodwill, etc. would not yield any extra payback in the Investment Club. And, all investing decisions will be based on estimated paybacks, not if Spidey is sexier than Deadpool (no contest).

 

Hypothetical (and subject to change based on group and legal feedback): if a) we raised $100K total and 1 investor contributed $50K and 5 others contributed $10K each, and b) made a $10K buy that was then turned into $22K, and c) at the payout time a hypothetical overhead of $2K was deducted, then d) $10K hypothetical profit would be split, with $5K going to investor 1 and $1K would go to the other 5 investors.

 

Leaving the Club will be straightforward, but can only be based upon conditions (TBD) clearly stated in the rules.

 

Thanks for your good luck wishes during our hypothetical challenges.

 

[paul747]

Buy Stocks..... read comics.... leave the ponzi's and airplanes to Wall street. Not to be negative but it only makes sense with people you really know. Also you will become a Dealer ! I don't understand the difference from what you are proposing and what several Dealers already do. There are a lot of dealers out there, If you know them that will let you invest with them in collections.

 

Hypothetical: Your group buys a collection and there are 7 members. You find a AF #15 ! WOW.

 

2 of the group do not believe it should be pressed.

3 of the group think grade and hold for 5 years.

1 guy says dump that NOW !

1 guy says We have to hold 10 years....

 

Help me out, how can you figure out all of these scenarios that could arise with a product with so many options.

[Quicksilver Signs]

Buy Stocks..... read comics.... leave the ponzi's and airplanes to Wall street. Not to be negative but it only makes sense with people you really know. Also you will become a Dealer ! I don't understand the difference from what you are proposing and what several Dealers already do. There are a lot of dealers out there, If you know them that will let you invest with them in collections.

 

Hypothetical: Your group buys a collection and there are 7 members. You find a AF #15 ! WOW.

 

2 of the group do not believe it should be pressed.

3 of the group think grade and hold for 5 years.

1 guy says dump that NOW !

1 guy says We have to hold 10 years....

 

Help me out, how can you figure out all of these scenarios that could arise with a product with so many options.

 

Looks like the one with 3 votes win

[Tony S]

b) made a $10K buy that was then turned into $22K

 

I see way more issues than this - but I'll go ahead and ask about this one . Do you realize turning a 10K comic purchase into 22K takes a lot of hard work, time and money? Most of it UPFRONT. This is why being a comic book dealer is a job. Who is going to provide all this hard work and time? Are they going to get paid? If no, then why should anyone do it? if yes, how much do they get paid?

 

If you could purchase nothing but "nice" books, then you could just ship them off to Comic Link for them to do their "slab and list at auction" process. Very little work with that. But as a dealer, I have never seen a collection that was only nice stuff. Most collections are about 90% so-so to books and 10% good stuff. Hell, I'm picky and my own collection is probably 60% easily marketable and 40% .

 

This is just one of many issues.

 

The straightforward investment group will be much easier to manage. And for however long you hold the book(s), you can have the satisfaction of "owning" - for a time - a grail type book that most collectors never close to.

 

[Flaming_Telepath]

I honestly believe you'd have more success reinventing the wheel.

 

Oh, wait a min...

[Jimmy Linguini]

b) made a $10K buy that was then turned into $22K

 

I see way more issues than this - but I'll go ahead and ask about this one . Do you realize turning a 10K comic purchase into 22K takes a lot of hard work, time and money? Most of it UPFRONT. This is why being a comic book dealer is a job. Who is going to provide all this hard work and time? Are they going to get paid? If no, then why should anyone do it? if yes, how much do they get paid?

 

If you could purchase nothing but "nice" books, then you could just ship them off to Comic Link for them to do their "slab and list at auction" process. Very little work with that. But as a dealer, I have never seen a collection that was only nice stuff. Most collections are about 90% so-so to books and 10% good stuff. Hell, I'm picky and my own collection is probably 60% easily marketable and 40% .

 

This is just one of many issues.

 

The straightforward investment group will be much easier to manage. And for however long you hold the book(s), you can have the satisfaction of "owning" - for a time - a grail type book that most collectors never close to.

 

+100

[Sqeggs]

Fascinating. I hope it turns out well for you, whatever you decide to do.

 

One other point you may want to bear in mind (my favorite hobby horse ): There is a case to be made that after a long bull market in comic prices, we are at a market peak. You don't want to be forming the equivalent of an investment club to buy condos in Miami in 2005.

[oakman29]

I'm in for tree fiddy. ( my cool speculator look )

[Flaming_Telepath]

Fascinating. I hope it turns out well for you, whatever you decide to do.

 

One other point you may want to bear in mind (my favorite hobby horse ): There is a case to be made that after a long bull market in comic prices, we are at a market peak. You don't want to be forming the equivalent of an investment club to buy condos in Miami in 2005.

 

Strangely, apart from keys and the latest speculator love-in, I'd say that the general back issue market is at a 15 year low, certainly on anything even remotely common.

[THE_BEYONDER]

Fascinating. I hope it turns out well for you, whatever you decide to do.

 

One other point you may want to bear in mind (my favorite hobby horse ): There is a case to be made that after a long bull market in comic prices, we are at a market peak. You don't want to be forming the equivalent of an investment club to buy condos in Miami in 2005.

 

Strangely, apart from keys and the latest speculator love-in, I'd say that the general back issue market is at a 15 year low, certainly on anything even remotely common.

 

Yup. Movie hype is really all that's left at the moment.

[Columbia Comics]

I'm in for tree fiddy. ( my cool speculator look )

 

Send me your tree fiddy...in 6 months I'll send you tree back (and you'll be way ahead of this game)

[oakman29]

I'm in for tree fiddy. ( my cool speculator look )

 

Send me your tree fiddy...in 6 months I'll send you tree back (and you'll be way ahead of this game)

[Sqeggs]

Fascinating. I hope it turns out well for you, whatever you decide to do.

 

One other point you may want to bear in mind (my favorite hobby horse ): There is a case to be made that after a long bull market in comic prices, we are at a market peak. You don't want to be forming the equivalent of an investment club to buy condos in Miami in 2005.

 

Strangely, apart from keys and the latest speculator love-in, I'd say that the general back issue market is at a 15 year low, certainly on anything even remotely common.

 

Really? The typical GA book, say, is worth less today than 15 years ago? You would know better than me, but that surprises me.

 

In any event, I was thinking more of keys. If part of the plan were to buy, for instance, copies of AF 15, hold them for a few years, and then sell them for a profit, that strikes me as a risky proposition, given current prices.

[Keysnruns]

Good thoughts in this thread, and thanks again all for sharing.

 

Here are my general takeaways from those providing constructive feedback (not necessarily agreeing/disagreeing, just restating as I understand them from the thread):

 

- Better to keep the Investing Club small (10 or fewer people)

- Better if members are local/know each other

- A good legal structure (in line with SEC regulations on investment clubs) and relationship with legal counsel is crucial

- Rules on Investing/putting $ in/taking $ out need to be crystal clear, so everyone knows how decisions are made to avoid disagreements/disruptions (even then there may be challenges)

- The ability to source books in some advantageous manner should be well understood, since it is assumed those with great books are likely to sell to "recognized dealers" first

- The ability to track leads coming in to the Club will also be important

- The "collections" to be invested in need to be small, to keep things simple/reduce effort (as low as 1 key issue)

- Processing acquired books is time-intensive, so the Club needs volunteer or paid labor to handle it (the more paid labor, the lower the profits and the higher the burden on volunteer members)

- Decisions on collection processing (e.g., investing further in pressing, grading, etc.) also need to be done according to clear rules and be well-communicated

- There is a risk that we are at a "peak" in prices, so any investing - buying too much drek or holding AF15 at too-high prices - could create a loss

 

Please let me know if I am overlooking other major points, much appreciated.

[Balham's Finest]

Essentially Club finds would be (selectively cleaned, pressed, graded, scanned, grouped into lots and) auctioned internally (using the CGC Boards rules as a model) at some starter reserve significantly below guide/GPA (TBD), then delivered with free shipping, Club guarantees of returns, bonus goodies and other benefits not available in the open market.

 

So you're going to sell books to your First Look club for prices potentially significantly under GPA while at the same time offering guaranteed returns to the Club?

 

Not only selling below GPA, but also incurring costs of sourcing, pressing, cleaning, grading, shipping, whatever else...?

 

 

[Keysnruns]

Not sure how First Look sales will work, or how much processing (pressing/grading/etc.) will be done before offering at a First Look stage. However, some thoughts follow...

 

As regards GPA prices, there is often a lot built in to that price besides a book's "true" value, such as cost recovery for the seller. In many cases, the seller does not actually recover all of his/her costs.

 

Here are the assumed cost components for an OO book going from an OO collection to becoming a "sold item data point" on GPA which, as I understand it, only tracks CGC graded sales (implying a spend on grading) on major auction/selling platforms (implying one or more fees to the auction house):

 

- Cost of packing for CGC

- Cost of shipping to CGC for Grading

- Cost of insurance shipping to CGC

- Cost of pressing (optional)

- Cost of Grading (~$40, up to 3% FMV depending on book)

- Cost of return shipping from CGC for Grading

- Cost of insurance for return shipping from CGC

- Cost of sale (sellers premium) on auction platform reporting to GPA (10%+)

- "Lost opportunity" cost because buyer paid a buyers premium (e.g., 19%+ for HA auctions)

- Cost of packing for buyer

- Cost of shipping to buyer

 

While I am not suggesting we can avoid some of these costs, it probably is likely to avoid ALL of these costs for EVERY book, thereby permitting many books to be sold by "accredited" sellers to "accredited" buyers below GPA, so long as the proper guarantees were in place (e.g., returns accepted on ungraded books if they receive a purple label).

[joe_collector]

This sounds like a great idea - you fools invest and I'll club you all later.