Comics Investing Club

[oakman29]

I think I would like to own my own grails,and cut out the middle man.

Let me guess something like, "A bird in the hand"....or "Holding physical is the way to go".

[Columbia Comics]

Not wanting to be the guy who rains on your parade...but I'll be the guy who rains on your parade.

 

In my opinion, this pretty much has a zero percent chance of success. In fact, I could see this as a money losing venture.

 

First off, you'd need some sort of legal structure to protect your "investors." That would take time...and lawyers, which bill by the hour. Then you'd have to decide which state to domicile this entity in, leading to more time...and lawyers.

 

Second, how many people would you want? 10? 100? 10,000?

 

What amount of capital would you consider: 10 people with $10k each or 10,000 with $10?

 

Would you want everyone to be friends? What are the odds you're not friends when this is over?

 

What prevents the point of contact from "stealing" the collection when they get a phone call?

 

You'll find more disagreement on what to buy, what price to pay, what the grade is..how to divide the purchase (some will want cash, others comics). The more people you add, the more convoluted it gets.

 

This proposed venture reminds me of that company who is trying to sell shares in professional athletes "future earnings." It just sounds so bad..and is fraught with risk, it screams run away.

 

Most collection buys (if substantial) involve two parties...usually two who have known each other (and dealt w/each other) for years. I've partnered up with some individuals on deals but they were small and I had complete authority to procure and dispose of said items when I felt the time was right. they just got their share of profits.

 

if you were able to get it work, I'd be very interested in hearing how it came about. If you attempt something like this, I think you'll be changing your username to agonynpain

 

[ItsJustRyan]

I agree (and have been thinking about this ideas since the thread start).

 

Starting this kind of venture is a bad idea (for all the reasons CC mentioned).

 

I will add that if you (the OP) were to do you're own research, plan your buys, and slowly build a collection, you'll get just as much out of it (or not) as you would with a "club." For example, let's say that if you are in said club and invest $10k, that would entitle you to $10k worth of the books you are buying for the club. It's not different than taking your $10k and buying your own personal books and going from there.

 

The only draw backs by going it alone is not being able to purchase massively expensive books. In my opinion though, if you can't afford to roll with ultra high end books, then focus your efforts in other niche areas of the hobby.

 

There's opportunities at every level of the hobby, from rags (low grade) to rich (high).

 

Going it alone gives you all the power and potential profits, but also all he risk.

 

In brief:

 

(1) do your homework

(2) buy the best you can afford (quality)

(3) be patient (rush costs more)

(4) avoid chasing flavors of the week

(5) make a written plan / know your goals

(6) enjoy the hobby (beyond investing)

 

[dgarthwaite-migration]

I've met the OP in Atlanta, and I believe he has a knowledge base to make this kind of arrangement work if he had like minded individuals involved. Unfortunately, I'm not like minded because the whole structure of such an organization would deplete 90% of the fun I have in the hobby. I'd rather get a comic on my own terms rather than seek an equilibrium and gamble on the odds each time. I'm perfectly content with owning nothing and risking nothing. If I find a deal next week on my own and succeed, I'd be far happier than if I joined a group and strategized with others over how to make everyone come out ahead. Perhaps if the stakes were something more dire than owning a comic book, I might reconsider.

 

DG

[G.A.tor]

my question to the OP is , how do you source these comics over all the established and "known" entities that already advertise (and compete) for major collections...

 

anyone can run a "wanted" ad in their local paper (which, my understanding no one reads these days), but my guess is the fruits of that effort will be 1990s drek ....anyone can run an add in OSPG, but it will have poor placement compared to the established quo, and will have little chance of "getting that call"...

 

anyone can try to set up websites, and get goggle hits, etc...but again, the pecking order for a serious collection is long and rocky...

 

I think the logistics are too daunting to make such an adventure work, which is likely why so few have tried, and likely why we don't know of any real success stories

[Pike's Comics]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

[Fan Boy]

There's opportunities at every level of the hobby, from rags (low grade) to rich (high).

 

Going it alone gives you all the power and potential profits, but also all he risk.

 

In brief:

 

(1) do your homework

(2) buy the best you can afford (quality)

(3) be patient (rush costs more)

(4) avoid chasing flavors of the week

(5) make a written plan / know your goals

(6) enjoy the hobby (beyond investing)

 

 

True for opportunities at every level of hobby. It's all in depending in what kind of comic book to get the best buck out.

 

As for forming a club. While this idea is good but also come with high risk. I would prefer it be a small group - like 3 or 4 people max. That way there is less agrues ... but also come higher risk of relationships. The bigger more number invites higher risk.

 

The points (#1-6) above is how I did exactly that way since. I use that and it works well. Recently I scored 2 SA marvel comics for $50, I know I can triple my money out of them with no problem.

 

The key is to keep an eye for good deals daily.

[mackenzie999]

Only way this could work, is if several collectors that live near each other, and are friends. Get together and pool their money, wisdom and effort.

 

It would not work with strangers from all parts of the country, trying it.

 

IMO.

 

I don't know. Seems like a good way to lose friends, which I value more than money.

[G.A.tor]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

Brings me back to my original question. Where's this awesome collection coming from? And why's this group being offered it and not the known status quo? There are so many folks out there that can afford virtually any collection, Seems a seller with this kind of Collection would be more apt to seek these buyers out than some newly formed group

[comicwiz]

my question to the OP is , how do you source these comics over all the established and "known" entities that already advertise (and compete) for major collections...

 

anyone can run a "wanted" ad in their local paper (which, my understanding no one reads these days), but my guess is the fruits of that effort will be 1990s drek ....anyone can run an add in OSPG, but it will have poor placement compared to the established quo, and will have little chance of "getting that call"...

 

anyone can try to set up websites, and get goggle hits, etc...but again, the pecking order for a serious collection is long and rocky...

 

I think the logistics are too daunting to make such an adventure work, which is likely why so few have tried, and likely why we don't know of any real success stories

 

Good points Rick.

 

I see the primary benefits of "networking" with like-minded collectors pursuing a similar goal found in delegating duties in the area of mining leads and finding collections.

 

For instance, I have no problem harvesting opportunities from the Web, but screening them, doing the leg work, and actually devoting the kind of time required to do a proper job are challenging for a one or two man operation.

 

If I had a couple of people who I could trust, and who were located in 3 or 4 major cities in Canada, and a dozen in the US I would have a response to your question of how to compete with known entities for major collections.

[comicwiz]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

Brings me back to my original question. Where's this awesome collection coming from? And why's this group being offered it and not the known status quo? There are so many folks out there that can afford virtually any collection, Seems a seller with this kind of Collection would be more apt to seek these buyers out than some newly formed group

 

I've stumbled onto a pretty major collection several hours from me. To my knowledge, no one knew anything about it, but I have a customer who lives nearby who heard about it through a high school friend that the person is moving and is looking to clear out his stuff. The impediment is that the "friend" wants a cut of the action but doesn't have the capital to go after it himself, so he might not care to do a solid for his buddy by relaying my info to him. My contact suggests the owner recently posted some images online in the last 24 hours, so here's an example of how the "known" status quo mentality of "what's in it for me" actually frustrates and impedes enough for the new guard to scoop it by harvesting this info online.

[G.A.tor]

Most of the time it is all about who you know not what you know

[G.A.tor]

I will go on record as saying if anybody finds that collection they can't afford just call me !

you only need one partner

[Keysnruns]

Warning... wall of text...

 

First, I want to thank each of you responding to this point. I am aware that many of you are respected dealers (that I admire) and I appreciate the thoughtful input, positive and negative.

 

The goal of this Club is simple - generate above-average financial returns by uniquely sourcing (preferably OO) comic collections and benefitting from expertise in the comics market. It is NOT a way to find cheap books for personal collections, or pay back cash in with comics out. It is also not a substitute for growing a personal collection the "hard but personally rewarding way," e.g. through treasure-hunting. All books found through the Club would be sold eventually (periods of selling TBD). We would use the right resources for the right books, from auction houses to CGC Boards to MCS to NewKadia to Craigslist, depending on the grade/value/lots. BTW, this would also include early sales to Club members - more on this below.

 

To address concerns that this could take the fun out of the hobby, it depends on your definition of fun. To me, the fun is meeting other collectors (most of whom are hidden), seeing great collections, flipping through (and smelling) great OO pedigrees (even if collections are small), and reading esoteric stories and discovering talented artists while books are in my possession for a limited time. In addition, my attitude is that most higher grade comics are rented anyway - bought, held and sold, rather than kept forever - making purchase prices no more than expensive Netflix fees for comics. If I am willing to enjoy all of the forgoing and let comics pass through my possession for a shorter time than "forever" the model begins to make more sense, especially if collecting is seen as a social, not just private activity.

 

The next concern around conflicts, bickering, etc. would come from, in my estimation, unclear goals. In this model, comics are an input, only cash is the output. If goals are clearly stated that no one can have books as a payback, the risk of fighting disappears.

 

So how then would anyone enjoy the finds? Initially, the books would be "escrowed" for some time as we grade/process, enabling some viewing/reading sessions for privileged members. The amount of time is TBD. Yes, some trust will be involved in terms of sharing and ensuring conditions/grades don't suffer from handling. But this is manageable.

 

Then, there is another angle, that I am just sharing now. I envision TWO clubs - an Investing Club with "accredited" investors only (in the 10's of people) that capitalize the investments, with an entry level at roughly 5 figures per year. The second would be a First Look Club (in the dozens of people), entry level at two figures per month, cancel at any time. The First-Lookers would be able to experience books while in "escrow" and buy Investing Club finds pre-market.

 

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. Those in the first Club would be entitled to complimentary membership in the second, though they would have to follow the same rules as everyone else. While the actual prices realized may not be at true market (since the bidding pool would be smaller) Investing Club members would also collect some returns from First Look Club membership fees. Net result, Investors make a little more and First Lookers pay a little less per transaction, with some added convenience and the thrill of treasure hunting remains to some degree.

 

To address the concern that this model needs lawyers, indeed it does. There will be a charter, rules and contracts at the Investing Club level to ensure it is clear how to get in/out, and under which terms. Also, there are SEC rules to follow - but if done well could minimize taxes, which is another huge win for those of you doing things right. The First Lookers Club would have a lower legal burden, but would need some clickwrap agreements for online registrations. After some initial setup costs, thereafter counsel should only be needed for dispute resolution, which great contracts and clear rules should minimize. 

 

There will also need to be a Board of Directors, with regular voting/turnover, to govern these activities. The Board members would be responsible for collection bid structures (following predefined templates) though it is imagined that all Investor Club members would be presented with an internal prospectus for each collection purchase opportunity. Investors may need to be "on call" to vote however, as we all know that sometimes there is not a lot of time between when you see a collection and when you need to bid on it to snag it. The Board would also be responsible for marshalling volunteer activities or outsourcing for collection processing. You all are of course invited to nominate yourselves for future Board positions if you wish to participate. 

 

As regards sourcing of collections, that is the secret sauce. You will need to attend the live event in Atlanta on Sunday 2/23 to learn more details (see posting in Events Forum for Southeast High Grade Comic Collectors). In general, we will advertise in some conventional (more expensive) and many unconventional (much less expensive) locations. We will also partner with others who may become aware of OO comic collections in the context of their daily activities. Lastly, we will use online data mining (my day job.)

 

We also expect to draw out OO collectors, by being a branded group known for education, openness and comaraderie. Not every collector wants to maximize a full collection sale in today's market by developing scar tissue through experiences with HA/CC/CL, eBay and (ha ha) the CGC Boards. We expect many collectors will want to sell to other collectors who educate them and share their passions. Our network and brand is expected to create the educational programming and develop these relationships to get the "first call" for new collections to market, to the benefit of all.

 

Net net, our competitve advantage will be scale. More people, more capital, more resources directed at the biggest problem in the hobby - reliably obtaining new high grade inventory with low transaction costs, while not being dreaded "dealers." Seriously, how many ads begin with, "I'm a collector, not a dealer?" 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.

 

To make this work, we need engagement, capital and room to walk before we run. Thanks to every poster in this thread, the engagement has begun. Over time, we hope to incorporate seasoned feedback and deploy investment capital in a new and profitable way that overcomes the "every man for himself" sourcing and marketing problem. There will need to be some patience with startup costs, marketing expenses and processing resources. Nonetheless, I believe this will work, since comic collectors are among the most patient - yet financially savvy - group of hobbyists in collectibles.

 

[G.A.tor]

The premise sounds good on paper. I fear the practical and actual execution will face a myriad of obstacles and ultimately thwart success. But I wish any and all luck

[Columbia Comics]

If goals are clearly stated.....the risk of fighting disappears.

 

Um....highly doubtful, even with clear, precise goals.

 

Not every collector wants to maximize a full collection sale in today's market

 

Really? So then why do HA/CC/CL continue to get massive collections year after year??

 

Net net, our competitve advantage will be scale. More people, more capital, more resources

 

I know 4 to 5 people I can speak to with one phone call that can always outspend you...scale isn't an advantage, it will be a disadvantage...

[paul747]

The challenge with doing grail books only is that they may need to be purchased at market rate, with market transaction costs, then held for a period of years, then sold with market transaction costs. Sourcing collections may get books acquired below market (but still for more than any single dealer would pay), with faster liquidations/returns, thus minimizing transaction costs on at least one side of the deal (and perhaps the other, if the group had enough volume to get preferred pricing with an auctionhouse or two). However, such a strategy will take more work than a "buy AF15 7.0 from HA now, sell on CC later" plan. Would think that the talents/resources/capital of the group would make the extra effort cost less/yield more - and do it more often- than going it alone.

 

This is a pipe dream ! dealers out there are established and have funds... lots of funds and a history to make the sellers feel comfortable selling to them.

 

@cond what your saying is alot, ALOT of work ! sorting thru thousands of books deciding the best way to maximize profit and all of the different opinions about specific books... what a potential nightmare.

 

Third- The grading, pressing and whatever costs would rack up so initial cash out of pocket could be staggering.

 

4th- It would be fun with friends and proximity not with distant board friends

 

5th- You buy the collection and then come on the boards and let us know whats in the collection and you handle the work and try to sell silent shares of the collection to cover your costs and make your silent partners some cash if they sign up. CONTRACTs !

 

all that being said it is a fun idea and i respect your opinion.

[paul747]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

Brings me back to my original question. Where's this awesome collection coming from? And why's this group being offered it and not the known status quo? There are so many folks out there that can afford virtually any collection, Seems a seller with this kind of Collection would be more apt to seek these buyers out than some newly formed group

 

I've stumbled onto a pretty major collection several hours from me. To my knowledge, no one knew anything about it, but I have a customer who lives nearby who heard about it through a high school friend that the person is moving and is looking to clear out his stuff. The impediment is that the "friend" wants a cut of the action but doesn't have the capital to go after it himself, so he might not care to do a solid for his buddy by relaying my info to him. My contact suggests the owner recently posted some images online in the last 24 hours, so here's an example of how the "known" status quo mentality of "what's in it for me" actually frustrates and impedes enough for the new guard to scoop it by harvesting this info online.

plus there are guys out there that think there is cash in 90's books and spawn #1 is the mess.

[Tony S]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

Brings me back to my original question. Where's this awesome collection coming from? And why's this group being offered it and not the known status quo? There are so many folks out there that can afford virtually any collection, Seems a seller with this kind of Collection would be more apt to seek these buyers out than some newly formed group

 

I've stumbled onto a pretty major collection several hours from me. To my knowledge, no one knew anything about it, but I have a customer who lives nearby who heard about it through a high school friend that the person is moving and is looking to clear out his stuff. The impediment is that the "friend" wants a cut of the action but doesn't have the capital to go after it himself, so he might not care to do a solid for his buddy by relaying my info to him. My contact suggests the owner recently posted some images online in the last 24 hours, so here's an example of how the "known" status quo mentality of "what's in it for me" actually frustrates and impedes enough for the new guard to scoop it by harvesting this info online.

 

Having a little trouble following what you are saying about this collection. If I understand it correctly, I think the offer of a finder's fee may have been in order - something fairly common in the industry for a nice material.

 

Which brings me to something else I would add. After throwing in with a few dealers one other time - if I had it to do over again I'd either come up with the cash myself to do the deal. OR - if that is impossible - I'd call one of the big dealers - who offer a finder's fee - and turf the deal off to them.

 

A few investors throwing in together to purchase a Tec 27 - with a clear agreement to sell in xx number fo years - is fairly straightforward. A large group of people looking for collections to purchase, process and resell has so many obvious problems I'm not sure why anyone would try.

[comicwiz]

I could see this working in the short term to buy a known collection that none in the group could afford alone... Otherwise I'd think something like a S corp might work better...

Brings me back to my original question. Where's this awesome collection coming from? And why's this group being offered it and not the known status quo? There are so many folks out there that can afford virtually any collection, Seems a seller with this kind of Collection would be more apt to seek these buyers out than some newly formed group

 

I've stumbled onto a pretty major collection several hours from me. To my knowledge, no one knew anything about it, but I have a customer who lives nearby who heard about it through a high school friend that the person is moving and is looking to clear out his stuff. The impediment is that the "friend" wants a cut of the action but doesn't have the capital to go after it himself, so he might not care to do a solid for his buddy by relaying my info to him. My contact suggests the owner recently posted some images online in the last 24 hours, so here's an example of how the "known" status quo mentality of "what's in it for me" actually frustrates and impedes enough for the new guard to scoop it by harvesting this info online.

 

Having a little trouble following what you are saying about this collection. If I understand it correctly, I think the offer of a finder's fee may have been in order - something fairly common in the industry for a nice material.

 

I'm all for that, except I'm of the opinion that it's way too premature to be discussing a finders fee until you've had a chance to personally examine everything and to ensure it's not a waste of time.