Comic Book Investing

[RockMyAmadeus]

There are holes in both arguments. A stock broker does not own a basket of stocks, they strictly earn commissions based on transactional volume. A baker or contractor provides the public with a service or a product they make themselves. A comic book dealer will invest his capital in inventory hoping that market conditions justify selling at a higher price. Regardless of whether the items they purchase were mispriced by the seller, the dealer is banking on moving inventory they have poured money into. This by definition, is investing. Dealers also often buy out entire collections in hopes of annuitizing the income. If I can invest $10,000 in books, and sell off $400 worth of books from the collection each month for the next 5 years, I have provided myself with the equivalent of a 5 year annuity at what should amount to a much higher rate of return than my investment guy could offer me. Whether or not you think comics are a good investment is irrelevant. The facts are clear. A comic dealer and a comic investor are one and the same. The dealer simply does more volume. Investments can be both long and short term in nature.

 

Oh boy.

 

Seriously.

 

This is an odd analogy. A dealer is, by definition, a flipper. He buys, perhaps in bulk, perhaps in other shrewd ways, below market value and then flips for the profit. Doesn't matter if he deals in GA, SA, CA, MA, or brand new books. By widget for x amount, sell for 2x (or something like that). Wal-Mart does the same thing. To equate this to an annuity is ridiculous. It is a job, not an investment strategy.

 

Regardless of whether or not a dealer buys a single book or ten thousand in a collection, or holds them for an hour or ten years, either way they are still INVESTING money in inventory. I mean come on already guys.

 

-J.

 

I'm still waiting for the names of the posters you claimed had "real life experience that have directly refuted (my) claims."

 

Unless, upon further investigation, you've discovered you'd rather retract that statement.

 

 

And as for the above, you seem to have confused the concept of INVESTING in a BUSINESS venture, with INVESTING in COMMODITIES themselves.

[RockMyAmadeus]

So, when Wal Green buys 50 toilet brushes, that is an investment? Because they all aren't going to sell right away. Could take months.

 

IMO, if a dealer sees his inventory as long-term investments, he's doing it wrong.

 

On so many levels, for so many reasons. Such a "dealer" will shortly be out of business; or, if he has other wealth, will treat his inventory like he's running a museum, rather than a retail establishment.

 

I've seen both.

[HighStakesComics]

How do you think an annuity works? Ill tell ya. The actuary and manager will get together, crunch the numbers and figure out that by taking x dollars they can invest in any number of investments in order to outperform the 2% rate of return they promised the owner of the contract. Typically it's a blend of treasuries, municipals, mortgages, a few dividend stocks and commercial real estate. Now visualize replacing those diversified investments with comics because that's how most dealers do it. Instead of a basket of mortgages, treasuries; etc we are investing in xmen, Spidey, black Goliath and Kamandi. Structured differently? No. Same basic concept? Yes.

[RockMyAmadeus]

How do you think an annuity works? Ill tell ya. The actuary and manager will get together, crunch the numbers and figure out that by taking x dollars they can invest in any number of investments in order to outperform the 2% rate of return they promised the owner of the contract. Typically it's a blend of treasuries, municipals, mortgages, a few dividend stocks and commercial real estate. Now visualize replacing those diversified investments with comics because that's how most dealers do it. Instead of a basket of mortgages, treasuries; etc we are investing in xmen, Spidey, black Goliath and Kamandi. Structured differently? No. Same basic concept? Yes.

 

You've convinced me.

 

Ok, so how many copies of Kamandi are available for purchase, and where do I purchase them in sufficient quantity to make the investment worthwhile....?

 

I've got $100,000 to spend, and I'd like to park it all in Kamandi. How much will that buy me? Does grade matter? What do you expect to be my annual ROR?

 

I'm working on a retirement strategy, I'm 42, and I need $5,000,000 by the time I'm 67. How many Kamandis will I need to purchase to make that happen?

[MediumLover]

[RockMyAmadeus]

(2% is terrible. When I was working for a stock broker in the late 90's, he was getting average returns of 15-25% annually for his variable annuities. John Hancock, Vanguard, etc. Different times.)

[rjrjr]

Marvel Premiere #1, Strange Tales #180 and the Star Wars Empire Strikes Back run are really great books to invest in.

 

[HighStakesComics]

When I was training for my series 7, my sales manager for a middle aged man would have recommended a portfolio of roughly 50% Us Stock 25% fixed income 10% international stock, 10% precious metals and 5% art. That same manager also wanted me to pursue clients with net worths between $25-$100,000,000. The way I interpret that now, is that guys like me, worth far less than that, can substitute the 5% art with comics. Whether you want to put that 5% in a Decent AF 15 & X-Men 1 or 500 Kamandi#1's in 9.8 is up to you. Say you pissed away your entire comic allocation on a GL 76 9.6, your portfolio would only suffer a 4% loss to the carnage. It's important to have a small portion that you can manage and you can enjoy. That makes the concept of saving and investing seem more adventurous and less laborious. Even if you lose on the comics, the other 95% will make you money since it is now your passion that is encouraging you to save.

[bronze_rules]

When I was training for my series 7, my sales manager for a middle aged man would have recommended a portfolio of roughly 50% Us Stock 25% fixed income 10% international stock, 10% precious metals and 5% art. That same manager also wanted me to pursue clients with net worths between $25-$100,000,000. The way I interpret that now, is that guys like me, worth far less than that, can substitute the 5% art with comics. Whether you want to put that 5% in a Decent AF 15 & X-Men 1 or 500 Kamandi#1's in 9.8 is up to you. Say you pissed away your entire comic allocation on a GL 76 9.6, your portfolio would only suffer a 4% loss to the carnage. It's important to have a small portion that you can manage and you can enjoy. That makes the concept of saving and investing seem more adventurous and less laborious. Even if you lose on the comics, the other 95% will make you money since it is now your passion that is encouraging you to save.

 

I think there's wisdom in this scenario; maybe not the way you intended. Imagine, investor A followed some broker, put all his money in stocks and bonds, and lost 90% of his net worth in a crash, investor B (the insufficiently_thoughtful_person) just put 50% in the stocks and bonds, and decided to buy comics with the other 50%. Who would be happier today?

 

One may laugh, but anyone who's lost a large amount of money in intangible assets could relate to that.

 

Of course, I'm digressing here... carry on.

[RockMyAmadeus]

500 Kamandi#1's in 9.8 is up to you. .

 

Where do I go to buy 500 Kamandi #1s in 9.8?

 

Is there like a store or something, or just a website?

[Underground44]

The class of '14 annoy me. Just sayin'.

[shadroch]

There are holes in both arguments. A stock broker does not own a basket of stocks, they strictly earn commissions based on transactional volume. A baker or contractor provides the public with a service or a product they make themselves. A comic book dealer will invest his capital in inventory hoping that market conditions justify selling at a higher price. Regardless of whether the items they purchase were mispriced by the seller, the dealer is banking on moving inventory they have poured money into. This by definition, is investing. Dealers also often buy out entire collections in hopes of annuitizing the income. If I can invest $10,000 in books, and sell off $400 worth of books from the collection each month for the next 5 years, I have provided myself with the equivalent of a 5 year annuity at what should amount to a much higher rate of return than my investment guy could offer me. Whether or not you think comics are a good investment is irrelevant. The facts are clear. A comic dealer and a comic investor are one and the same. The dealer simply does more volume. Investments can be both long and short term in nature.

 

You know, I just realized that I feel sorry for comic dealers after reading this. When I buy stocks, my money is working for me. It's a very passive way of investing. When I buy comics, it seems the real work is just beginning. Luckily most dealers love comics, so they can enjoy what they are doing.

 

 

When I choose which books to sell each month, it takes about fifteen minutes to pack them up and ship them to whichever auction house does the best with that particular book. Then in about three months, I do have to deposit the checks. Tough work, but someone has to do it.

[delekkerste]

I'd think there are a bunch of fine art / antiques / coins millionaires out there (not to mention folks in entertainment/sports), but yes, it's not the conventional way to get rich, not that being a millionairre is rich, particularly if you count home equity and retirement accounts. if you do that there can be some pretty broke millionaiires out there.

 

I'm not talking about how many millionaires there are who collect these things. I'm talking about how many people became millionaires because of what they collect, as opposed to making it first in entertainment, sports, Wall Street, real estate, etc.

[delekkerste]

Either way, there have been plenty of posters that have come on here with real life experience that have directly refuted your claims...

 

I guess "past performance is not necessarily an indication of future results" does not mean anything to you? Of course some people have done very well in the past, and especially in the past 10-15 years as it's been the best of all possible worlds (with the rise of online distribution, third party grading, cheap money, asset bubbles, blockbuster Hollywood films, nostalgia demographics hitting their sweetest spot, etc.) I don't know about you, but I don't do my investing looking in the rear-view mirror - I look at what's coming ahead. You have to look at your starting point to get a handle on potential future returns - extrapolating past performance indefinitely into the future is for fools and charlatans.

[delekkerste]

500 Kamandi#1's in 9.8 is up to you. .

 

Where do I go to buy 500 Kamandi #1s in 9.8?

 

Is there like a store or something, or just a website?

 

RMA, I know we've had our differences recently, but I'm starting to feel some serious bromantic man-love for you in this thread.

[Sqeggs]

Let's say Earth 2 rjrjr invested in comics rather than his 401k and retired with 1.5-2 million instead of 3-4 million. Would that then be considered a poor investment? Maybe I'm misunderstanding what you are trying to say, but I think doubling or tripling or quadrupling your original investment is an extremely successful end result.

 

 

From reading a lot of the postings here since last night, I am starting to think that many of the posters here believe that comic investing means funding your retirement entirely based only upon the proceeds from your comic book collection, exclusive of any other investment assets.

 

Nothing could be further from the truth as this line of thinking makes absolutely no sense at all. From my point of view, retirement funding means deriving income from various sources such as your company pension plan, your government pension plan, your own personal registered savings plans (ie. RRSP's, TFSA's, 401K's, etc), your secondary real estate holdings, your own personal savings, plus any other investment assets which you can dispose of in order to acquire cash without having a negative impact on your lifestyle or quality of life (i.e. means not selling off your personal home, any of your bodily organs, etc.)

 

Other investment assets could indeed include your investment comics or any other investment collectibles which you might have. First and formost, however, it should be noted that comic collecting is meant to be a hobby for fun and any additional financial gain which you can derive from it should be seen as a bonus. In this sense, your comic investments should be seen only as a supplement to funding your retirement and not the end all and be all that many of you are trying to suggest.

 

Of course, if you are spending a thousand dollars or more on a particular comic book, I certainly do hope you are also keeping one eye open to hopefully getting some form of positive financial return on the book instead of haphazardly losing your shirt on the purchase.

 

 

Wonderful post. Perhaps key comics will continue to increase in value or perhaps they won't. Counting on them to be a wonderful investment is very risky. Pension plans, IRA/RRSP/TFSA and all of the other investment instruments should be the focus of anyone who expects to live a long life.

 

Of course one should max out their IRA or 401 each year.That should go without saying. My comic investments are made with money I have after all my obligations are taken care of. When all is going right and I have extra money, I look to buy something I like that has a better than average chance of making a profit. Could be a comic, could be OA, might be a Peter Max Litho, might be a coin or an ounce of precious metal.

 

Unfortunately, it seems evident that a number of people in this thread are arguing that investing in comics is an alternative to this conventional investment strategy rather than a supplement to it. In doing so they are offering very bad advice.

 

 

[Sqeggs]

Comics can be excellent investments if you use common sense. You made money on your Joker covers. They were a solid investment then. They were an obvious investment to me even after Schumacher killed the movie franchise because it was Batman. Spider-Man, Batman, and Superman are icons and cornerstones of the hobby that will always be in demand as long as people collect comics. You are correct that no one knows the future, and knowing the optimal time to sell is mostly luck, but why would Golden Age Batman prices drop into the dumpster unless the market itself did?

 

.... Historically, many comic books have been excellent investments, and it did not require any great supernatural ability to deduce this.

 

With respect to the first bolded point, if common sense were enough you should be wealthy as a result of your comic investments. It's very easy -- we all do it -- to confuse lucky investments (or lucky comic purchases) with shrewdness.

 

Once again, it's not necessary for Joker covers, AF 15, or any other book to go into the dumpster to be a poor investment.

 

Sure, historically, all kinds of things were great investments. It may not take supernatural ability to detect what these things were but no one can do it consistently on the scale required to make, say, comics a good long term investment. There is a reason that no fund manager -- no matter how bright or hard working -- can consistently beat the market averages over the long run.

 

I think we just have very different definitions of what constitutes a good investment. I like to set the bar extremely low so as to allow me to leap over it.

 

rjrjr made an excellent investment while enjoying his collection at the same time. Not too many people would be unhappy with that result. Great choice on his part.

 

Let's say Earth 2 rjrjr invested in comics rather than his 401k and retired with 1.5-2 million instead of 3-4 million. Would that then be considered a poor investment? Maybe I'm misunderstanding what you are trying to say, but I think doubling or tripling or quadrupling your original investment is an extremely successful end result.

 

And aren't there multiple examples of people on these boards who have done that very thing repeatedly? That's why I disagree when you say that "no one can do it consistently". I know quite a few people who have successfully invested in comics - which by my definition means that they either make a living buying and selling vintage books, or they have a collection of books worth far more than what they originally paid, or both. If your definition requires that they retire on comics alone and buy a small private island with the profits, then yes, I do agree that does not happen often.

 

I'm exaggerating for comedic effect because I'm hilarious, but you get the idea. I don't understand why people keep using the words "no one" when anyone who has ever been to a comic convention has met numerous people who have done quite well for themselves with vintage books. Once again, I'm not talking about getting rich, although that certainly has been a possibility in the past, but simply making money with comic books as investments.

 

Leaving aside dealers because we are talking about people who invest in comics, not people who buy and sell comics for a living, here is the main point: Of course there are many people who have made significant money off the past run up in comic prices. I've made money off the run up in comic prices. The question is what will happen from here.

 

Just to repeat: Over the past 30 years the stars have been aligned in a way that produced a huge increase in comic prices. None of you comic book bulls have even offered an argument about what the sources of demand will be that will drive comic prices higher going forward.

 

There are people who will tell you that it was obvious that Tesla was a great buy at $20. They will also tell that you they have the ability to pick stocks that will experience similar increases going forward. Don't believe them.

 

We have people in this thread telling us it was obvious 20 years ago that certain books would have big increases in prices. They are telling us that they can pick books today that will experience big increases in prices going forward. Don't believe them either.

[delekkerste]

I've made lots of money on comics over 4 decades. I think that qualifies as a "long term" investment. I'm pleased as punch with the ROI I've gotten from collecting, investing and enjoying comics. Not all ROI is monetary, but the monetary return has been exceptional. I believe this will continue for years to come.

 

Not surprising that you feel this way - the comic market has been good to you, so naturally you feel that it can and will be good to others for years to come. But, let's face it - the comic market went from nowhere to having 7-figure sales, online distribution, worldwide shipping, third party grading and a huge tailwind from demographics and Hollywood blockbuster films over the past 4 decades. It was basically the equivalent of buying desert real estate at $15 an acre which turned into Beverly HIlls real estate rentable at $575/sq. foot per year on Rodeo Drive. All that time was really just half a cycle in the grand scheme of things.

 

How much of that is repeatable, though? And how have buy and holders fared in more recent years? I mean, sure, there has been good money made by people who hustle to discover new collections and those playing the CPR game. But have people really done well just buying graded books in 2010, 2011 and 2012 and holding them 'til now (i.e., playing the market as opposed to playing the game)? I mean, overall, not just selectively choosing the early SA Marvel keys? From what I can tell, it's definitely been a mixed bag, and much of the market remains on the wrong side of peak pricing (everyone I've talked to said that Schmell could have timed his exit better had he sold much of his collection a year or two earlier, for example). It really isn't what you buy, it's when you buy it (and when you sell it) that counts.

 

Buying certain comics in 1974, 1984, 1994 and 2004 might have been a great bargain (certainly not for all comics, though). Not so sure if that's still true for the most part in 2014. It's a mature market now, and many of the factors which led the revaluation of the past 10-15 years are now fully embedded in prices. Not sure what edge someone buying today has over all the other people who are convinced that prices can only go up, up and away.

 

 

You tell 'em Gator. These pikers don't have a clue about what they are talking about. Truly clueless I tell you.

 

This is so cute that I had to copy it and save it for posterity.

[delekkerste]

Just to repeat: Over the past 30 years the stars have been aligned in a way that produced a huge increase in comic prices. None of you comic book bulls have even offered an argument about what the sources of demand will be that will drive comic prices higher going forward.

 

Exactly. It's not what you buy, it's when you buy (and when you sell) that determines financial performance. I remember my mom went to work for a biotech company in the '90s. The founders of that company had made a fortune working at a big pharma co. prior to starting this firm. Feeling a bit envious, my mom sank a lot of money into a big pharma stock hoping to replicate their success. Keep in mind that this company had been in an uptrend that pre-dated the publication of Action #1.

 

That company was Eli Lilly. It had been in an uptrend since the 1800s. But, by the late '90s it was selling for 46x earnings and 22x book value. The stock peaked at $109 in 2000 and now trades at $63 fifteen years later. Some people will say that's stocks and this is comics, but that's missing the point. The point is that the return on any investment depends on your entry point, and at this point, the entry point for comics is a lot higher than it was in the past.

 

What informational edge do the bulls have now that is not known by the rest of the market that is going to push prices higher and higher from present levels?

[1Cool]

My - Investing in comics is a really bad move in almost all scenarios I look at. Buying and flipping books looks to be a viable option for the next 10 - 20 years but I've really qualms about putting any of my retirement money into comic books. I'm feeling a lot more confident in rental properties (real estate) and international stocks right now.