Comic Book Investing

[RockMyAmadeus]

Where do you think a portfolio of top SA Marvels will be in five years?

 

My base case is that a lot of things, not just comics, will be worth around what they are worth now in 5-10 years. Maybe nominally higher inline with inflation, but showing very little real (i.e., inflation-adjusted) rate of return. And, why should that be surprising? Every asset in the world today is priced to near-zero interest rates, making the value of a future dollar not much different from a present one. As such, most assets have likely borrowed from future returns in their past 3-5 year performance, so it would be perfect normal, logical, rational, expected that future returns are going to be mediocre.

 

Most people think it's what you buy that counts. More important, though, is when you buy and when you sell. It drives me up the wall when people talk about the stock market returning 10% a year or whatever on average. If you bought at high valuations (like at the end of 1999), you're averaging less than 4% a year (included reinvested dividends). If you bought at low valuations (like at the end of 2008), you're averaging nearly 18% a year. If you bought AF 15 a decade or two ago, you're doing great. If you bought a 9.6 for $1.1 million before the Census ratcheted higher, you'd almost surely have done better investing that money elsewhere.

 

I don't know what edge people have buying the top 25 Marvel keys now. We've probably seen the peak popularity for Marvel superhero films, even if they remain generally popular for some time (and who's to say whether if these franchises will be as popular in 2019 or if fickle audiences will have moved on). We've priced in easy money. We've long ago priced in third party grading and online distribution. We've already been enjoying all of the above coinciding with peak nostalgia for Gen X. Why should the market reward people with anything more than modest returns (at best) on these books from here? Isn't it priced in? Now, if people want to spec on Rom #1 or FP #1 or whatever because they think they are foreseeing something others don't, well, at least that's something, but I don't see why the market should reward anyone any excess return for buying what everybody already knows and likes.

 

You did see where I asked for a brief, yes or no answer, correct?

 

If you're going to be openly contentious, having a conversation will be difficult.

[Silver Surfer]

Nothing takes the fun out of comics like a comic book investing thread.

[delekkerste]

You did see where I asked for a brief, yes or no answer, correct?

 

Yes, which is why I posted a very succinct response prior to the post that you quoted. The latter was my follow-up to your follow-up and was not subject to any asked-for constraints.

[shadroch]

For thirty plus years, everyone has known that the key books are the ones to collect, and yet they continue to rise. Someone once told me buying Ditko Spideys was like playing softball. No challenge at all. I don't see that changing in the next couple of years.

[delekkerste]

If the US economy remains stable, you will probably make modest returns.

 

If the US economy does not remain stable, you will experience severe losses.

 

It is pretty amazing that most people don't see how the risk/reward equation changes (for the worse) as prices escalate and a market matures over time. I don't disagree that there is asymmetric risk (skewed to the downside) in a lot of assets at current levels, and with comics the risk is both secular (market maturing) and cyclical (prices overly inflated along with everything else). People who think stocks are overinflated because of the Fed while comics and other assets are not...well, stop it you're killing me.

 

Coca-Cola stock returned 15% a year (including reinvested dividends) in the 30-year period ending at the end of 1999. In the 15 years since then, it has returned about 5% a year compounded (and it's only that high because of the raging bull market of the past 5 years). It was a global growth stock that overshot the mark as it grew into maturity and paid for it with years of mediocre returns (mean reversion) going forward. I believe the vintage comic book market is where Coca-Cola was in the mid-to-late '90s and future returns will similarly mean revert.

 

The parallels aren't exact, of course - despite its relative downfall in the financial community and loss of market share to other beverage brands and categories, Coke is bigger now than it was in 1999 as the size and scope of its market has increased; I doubt the vintage comic book market will be stronger in 2029 than it is today. Again, no need for people to be pedantic; smart people should be able to see my point, even if they may not necessarily agree.

[Aweandlorder]

For thirty plus years, everyone has known that the key books are the ones to collect, and yet they continue to rise. Someone once told me buying Ditko Spideys was like playing softball speedball. No challenge at all. I don't see that changing in the next couple of years.

 

Fixed

[delekkerste]

For thirty plus years, everyone has known that the key books are the ones to collect, and yet they continue to rise. Someone once told me buying Ditko Spideys was like playing softball. No challenge at all. I don't see that changing in the next couple of years.

 

Who knows if that will change in two years. But, I bet it eventually will change, and that those who think of the softball analogy as some kind of truism will be disappointed at some point. Just like Coke shareholders post-1999.

 

I bet there was some wiseguy back then who said that buying Coca-Cola was like playing softball - no challenge at all. Buy it, forget about it, and collect your 15% a year like clockwork. And, it worked for thirty solid years (and probably longer - that's just all the data I could pull off of Bloomberg). Until, suddenly, that was no longer the case.

[shadroch]

While my friends were buying Coke, I was buying Pepsi. Got my first share in 1967, and been buying it faithfully since. Dont drink it, but its been pretty good to me. So far.

[HighStakesComics]

I think the change in grading standards, while having some merit, just distracts from the key point at hand. Which, as RMA says, is that "those conditions no longer exist".

 

Yes, comics have gone up for the past 30+ years. I think the wrong interpretation is to assume that comics will always go up. I think all we have seen is approximately one half of the life cycle of a pop culture collectible - the positive up-cycle. 30 years ago, comics were in their childhood, if not their infancy. It's surely at least in late maturity or middle age by now. If I'm not mistaken, the most valuable books of any kind published in the 20th century are now comic books (maybe there's an exception or two, but the point holds). Doesn't sound like a collectible that is in its adolescence to me.

 

Tim (tth2) is always saying how the market has always looked expensive and yet it has always gone up (at least for the cream of the crop). Yes, prices may have always looked expensive, but almost every comic was theoretically affordable for adult collectors back in 1982. Most key books were in the 2 and 3 figures, and even the MH Action #1 was only $25K back then. Which I'm sure seemed beyond absurd, but, mathematically, was still within peoples' grasp. Now, it and many other books are not even mathematically possible for people to afford - and yet, now everyone seems to think they're great buys! We've come full circle.

 

The early stages of a market is where the biggest % gains are made - prices are low relative to potential and risk is high. As a market matures, generally speaking, the prices get higher, the risk gets lower and returns moderate. There's a reason why US 10-year Treasury notes yield 2.5% and Venezuela's yield 11.3% (actually there are many reasons, but you get the point if you're not a pedantic individual_without_enough_empathy). There's no reason why anyone should expect anything but modest returns at best from buying a bluer than blue chip book like AF #15 at prevailing market prices.

 

Of course, for comics, the CGC era ushered in a second period of revaluation and price appreciation. But people should realize that, like Bill (Woogie, not Shad) pointed out, many of the factors behind this growth (online distribution, third-party grading, superhero movies, easy credit/money, demographic cycle) are largely priced in and/or are not permanent. Not to mention mean reversion - whoever said in the comics/car thread that nothing goes up for 20% a year indefinitely is right. It may happen for a long time, so long that it even seems perpetual, but eventually mean reversion kicks in. There is no reason that it won't kick in for comics. It already has for much of the market. I have little doubt that when we finally get to the overall inflection point in the lifecycle of the hobby ("peak nostalgia" as it were), the rest of the market will follow.

 

I'm with Warren B. - over the long-run, I'd rather be invested in productive, cash-generating enterprises than things. That said, if people want to spec a little in comic books or whatever else strikes their fancy, that's cool too. I just think people who are betting the farm or otherwise punching above their weight in their buying habits, or are relying on past performance to continue indefinitely into the future, are going to wind up disappointed. Besides, to paraphrase Gordon Gekko, it's not good to get emotional about your investments. I have one friend in the hobby who probably left a lot of money on the table by not selling when he should have (though, thankfully he did before prices totally crashed on the ultra high-grade Bronze books he was holding before the Census exploded in the CPR/soft grading era).

 

The scary thing is, after reading your well written analysis, if you substitute the word "stocks" every time you use the word "comics" you could just about reach the same conclusion. The prices of everything could drop, or they could inflate, but both stocks and comics for the most part move in tandem. My conclusion? Passive income=higher prices.

 

Shad, I'm think SA keys are flat with inflation 5 years from now. GA keys, not the Action 1's and DC 27's but the affordable tier 2's, should outperform books that are much more common and driven by movie hype and speculation.

 

Gene, you make a great point about comics being the most expensive books in the 20th century. I recently bid on a 1st edition 1st print Huck Finn, a 19th century book, at a local auction. It looked VG with moderate restoration. The sale price? $780. About the same as a 7.5 GSX 1.

[ComicConnoisseur]

For thirty plus years, everyone has known that the key books are the ones to collect, and yet they continue to rise. Someone once told me buying Ditko Spideys was like playing softball. No challenge at all. I don't see that changing in the next couple of years.

 

Who knows if that will change in two years. But, I bet it eventually will change, and that those who think of the softball analogy as some kind of truism will be disappointed at some point. Just like Coke shareholders post-1999.

 

I bet there was some wiseguy back then who said that buying Coca-Cola was like playing softball - no challenge at all. Buy it, forget about it, and collect your 15% a year like clockwork. And, it worked for thirty solid years (and probably longer - that's just all the data I could pull off of Bloomberg). Until, suddenly, that was no longer the case.

I think what happened with Coke and other soda pops was the younger generation figured out that it isn`t healthy for them. Coke is loaded with High Fructose Corn Syrup that makes people put on weight, and who knows how many cavities it has caused? I think there is a good number of consumers who are much more health conscious, then their parents or grandparents ever were. Wouldn't`t water be a better investment going forward then these sugary like sodas?

 

[shadroch]

Coke didn't diversify the way Pepsi has. Never keep all your eggs in one basket.

[Bookery]

Of course, we keep talking about investing in "comic books", when what we really mean is investing in pop culture icons. Comics are simply one means of expressing those icons... it's sort of like saying are books a good investment for the next 5/10/20 years. Some will be, certainly... but most will just be used books.

 

That said, I put together a casual longevity list of certain popular fictional characters, with the years that I would say they maintained mass-popular status. That doesn't mean nobody knows who these characters are anymore... but that there is a point they ceased being heavily marketed or sought after in a variety of mediums. Some characters have always gotten a boost from movies or TV at a point they may have lost popularity... 1880s Pinocchio certainly got a rebound in the '40s with Disney's movie. It's interesting how many icons dopped out of mass-favor after just a generation or two, despite being as huge in their time as any popular characters are today in ours. I don't know if it proves anything or not-- but I just thought it was kind of interesting. Some of course, are still continuing today, so the length of their popularity is unknown.

 

Harry Potter (2000s-on) (15+ years)

Popeye (1930s-1950s) (30 years)

Buck Rogers (1930s-1950s) (30 years)

Green Hornet (1940s-1960s) (30 years)

Luke Skywalker (1980s-on) (35+ years)

The Brownies (1890s-1920s) (40 years)

Mickey Mouse (1930s-1960s) (40 years)

Lone Ranger (1930s-1960s) (40 years)

Flash Gordon (1930s-1960s) (40 years)

Wolverine (1970s-on) (40+ years)

Spider-Man (1960s-on) (50+ years)

Tarzan (1920s-1970s) (60 years)

Superman (1940s-on) (70+ years)

Pinocchio (1880s-1960s) (90 years)

Hercule Poirot (1920s-on) (90+ years)

Sherlock Holmes (1890s-on) (110+ years)

 

 

 

 

 

[Gatsby77]

I think what happened with Coke and other soda pops was the younger generation figured out that it isn`t healthy for them. Coke is loaded with sugar that makes people put on weight, and who knows how many cavities it has caused? I think there is a good number of consumers who are much more health conscious, then their parents or grandparents ever were. Wouldn't`t water be a better investment going forward then these sugary sodas?

 

True. People drink less soda than they did a decade ago, just like people smoke less than they did a decade ago.

 

And there's likely some truth to that last statement - one of the craziest things I ever saw was in the Congress-only section of the Congressional Research Service's library -- there was a whole four drawer file cabinet devoted to U.S. strategic responses to the potential rise of Canada as a superpower if water displaced oil as a strategic commodity in the 21st century.

 

Seriously - some very smart people have been thinking about such as a scenario for a very long time.

[ComicConnoisseur]

I think what happened with Coke and other soda pops was the younger generation figured out that it isn`t healthy for them. Coke is loaded with sugar that makes people put on weight, and who knows how many cavities it has caused? I think there is a good number of consumers who are much more health conscious, then their parents or grandparents ever were. Wouldn't`t water be a better investment going forward then these sugary sodas?

 

True. People drink less soda than they did a decade ago, just like people smoke less than they did a decade ago.

 

And there's likely some truth to that last statement - one of the craziest things I ever saw was in the Congress-only section of the Congressional Research Service's library -- there was a whole four drawer file cabinet devoted to U.S. strategic responses to the potential rise of Canada as a superpower if water displaced oil as a strategic commodity in the 21st century.

 

Seriously - some very smart people have been thinking about such as a scenario for a very long time.

I agree and believe you about that.

I also was looking at COCA-COLA collectibles comparing price guides from 15 years ago to today`s prices, and the prices on all these COCA-COLA collectibles have dropped significantly like 50 percent or more. A perfect example of what was popular with one generation might not be popular with a future generation.

 

[HighStakesComics]

Good think KO is in the bottled water business

[HighStakesComics]

Of course, we keep talking about investing in "comic books", when what we really mean is investing in pop culture icons. Comics are simply one means of expressing those icons... it's sort of like saying are books a good investment for the next 5/10/20 years. Some will be, certainly... but most will just be used books.

 

That said, I put together a casual longevity list of certain popular fictional characters, with the years that I would say they maintained mass-popular status. That doesn't mean nobody knows who these characters are anymore... but that there is a point they ceased being heavily marketed or sought after in a variety of mediums. Some characters have always gotten a boost from movies or TV at a point they may have lost popularity... 1880s Pinocchio certainly got a rebound in the '40s with Disney's movie. It's interesting how many icons dopped out of mass-favor after just a generation or two, despite being as huge in their time as any popular characters are today in ours. I don't know if it proves anything or not-- but I just thought it was kind of interesting. Some of course, are still continuing today, so the length of their popularity is unknown.

 

Harry Potter (2000s-on) (15+ years)

Popeye (1930s-1950s) (30 years)

Buck Rogers (1930s-1950s) (30 years)

Green Hornet (1940s-1960s) (30 years)

Luke Skywalker (1980s-on) (35+ years)

The Brownies (1890s-1920s) (40 years)

Mickey Mouse (1930s-1960s) (40 years)

Lone Ranger (1930s-1960s) (40 years)

Flash Gordon (1930s-1960s) (40 years)

Wolverine (1970s-on) (40+ years)

Spider-Man (1960s-on) (50+ years)

Tarzan (1920s-1970s) (60 years)

Superman (1940s-on) (70+ years)

Pinocchio (1880s-1960s) (90 years)

Hercule Poirot (1920s-on) (90+ years)

Sherlock Holmes (1890s-on) (110+ years)

 

 

 

 

 

Hercule Poirot made the cut, eh? Agatha Christies still selling like hotcakes? Murder of Roger Ackroyd does have a classic ending.

[ComicConnoisseur]

Of course, we keep talking about investing in "comic books", when what we really mean is investing in pop culture icons. Comics are simply one means of expressing those icons... it's sort of like saying are books a good investment for the next 5/10/20 years. Some will be, certainly... but most will just be used books.

 

That said, I put together a casual longevity list of certain popular fictional characters, with the years that I would say they maintained mass-popular status. That doesn't mean nobody knows who these characters are anymore... but that there is a point they ceased being heavily marketed or sought after in a variety of mediums. Some characters have always gotten a boost from movies or TV at a point they may have lost popularity... 1880s Pinocchio certainly got a rebound in the '40s with Disney's movie. It's interesting how many icons dopped out of mass-favor after just a generation or two, despite being as huge in their time as any popular characters are today in ours. I don't know if it proves anything or not-- but I just thought it was kind of interesting. Some of course, are still continuing today, so the length of their popularity is unknown.

 

Harry Potter (2000s-on) (15+ years)

Popeye (1930s-1950s) (30 years)

Buck Rogers (1930s-1950s) (30 years)

Green Hornet (1940s-1960s) (30 years)

Luke Skywalker (1980s-on) (35+ years)

The Brownies (1890s-1920s) (40 years)

Mickey Mouse (1930s-1960s) (40 years)

Lone Ranger (1930s-1960s) (40 years)

Flash Gordon (1930s-1960s) (40 years)

Wolverine (1970s-on) (40+ years)

Spider-Man (1960s-on) (50+ years)

Tarzan (1920s-1970s) (60 years)

Superman (1940s-on) (70+ years)

Pinocchio (1880s-1960s) (90 years)

Hercule Poirot (1920s-on) (90+ years)

Sherlock Holmes (1890s-on) (110+ years)

 

 

 

 

Looking at that list of characters. Most didn't make the big transition to modern TV and the modern movie screen well.

The ones that did seem to still be big like Batman and Spider-Man as opposed to Buck Rogers(better example) and The Brownies.

Let`s look at Buck Rogers a little more in depth. At one time there was Buck Rogers mania across America. Buck Roger`s popularity was off the charts in the 1930s. Some say he even inspired Star Wars. Now ask someone under the age of 35 who Buck Rogers is. Buck Rogers is the poster boy that could not maintain mass-popular status.

btw. I like how my favorite character Sherlock Holmes is still relevant after 110+ years!

(thumbs u

 

[HouseofComics.Com]

For thirty plus years, everyone has known that the key books are the ones to collect, and yet they continue to rise. Someone once told me buying Ditko Spideys was like playing softball. No challenge at all. I don't see that changing in the next couple of years.

 

Btw, since I just looked this up, guide price of ASM 10 in VG three years ago, $200. Two years ago, $200. One year ago, $192. New guide comes out Wednesday and we'll see where it's at.

 

I believe FN is the same ratio as GD and VG on that book.

[delekkerste]

I think what happened with Coke and other soda pops was the younger generation figured out that it isn`t healthy for them. Coke is loaded with High Fructose Corn Syrup that makes people put on weight, and who knows how many cavities it has caused? I think there is a good number of consumers who are much more health conscious, then their parents or grandparents ever were. Wouldn't`t water be a better investment going forward then these sugary like sodas?

 

You mean like how the younger generation is figuring out that comics, baseball cards, stamps, 1st edition books and other paper collectibles are becoming more anachronistic by the year?

 

Anyway, Coke topped out because it overshot its underlying fundamentals (including the impending shift to healthier options, including water) while compounding at 15% per annum when it didn't merit it. A long period of mean reversion has followed. I suspect the same will happen to a lot of art and collectibles that have gone nuts over the past 5 years on top of earlier gains.

[delekkerste]

Don't forget James Bond!!