Are key comics good investments?

[Jeffreykli]

One thing I would like to point out is that something can be a good investment while not being liquid. Many terrible investments are extremely liquid, and many good investments require a good deal of work to buy and sell. Real estate is a classic example of a relatively illiquid investment. It's lack of liquidity is a drawback, but it doesn't prevent real estate from being an investment.

 

Are you really serious when you are saying that real estate is illiquid? Especially when you are talking about it relative to the buying and selling of comic books.

 

Actually, I guess when it comes to real estate, it really depends on the location of the property in question. When it comes to comic books, it really depends on the investment quality of the comic book in question.

 

You think real estate in 2008 wasn't illiquid?

 

Yes, definitely not as liquid as today's real estate market where properties can sell in less than a day.

 

Yet, definitely still a much better return as compared to stock equities back in 2008.

 

How long does it take to go from deciding to sell a piece of real estate to having the sale closed with the payment in hand? It's not a day or two, it's generally at least a month, even in a hot market where properties are selling as soon as they are listed.

 

You have to list the property, someone has to make an offer. That offer is usually contingent on a home inspection, and a lender, who does an appraisal, title search, etc.

 

Real estate is not liquid like a stock that you can sell in a minute and generally have the cash in your hand within a few days, depending on your brokerage.

 

I wasn't saying that it is less liquid than comics (although I'm pretty sure I could sell a stack of Hulk 181s faster than I could sell my house). I was saying that something can be illiquid and still be a good investment.

 

While generally true, here in the SF Bay Area which is in it's own world with respect to real estate, I've seen homes go for 30-40% over asking with all-cash, no contingency offers and 10-14 day closes.

[AlexanderM]

But, it does suggest that looking at historical growth patterns from a minuscule base, over the course of three decades where the hobby matured from a fragmented cottage industry to a mature hobby with Internet distribution, third party grading, huge demographic and financial tailwinds, etc. is probably pretty meaningless.

 

I'm interested in understanding what you mean by this, particularly the demographic part... Can you elaborate?

 

That both the demographic and financial climate has been beneficial for the (price) development of the hobby. Demographically the people who grew up with these characters are perhaps more likely to buy when they are better off in their 40ties or later. In 1980 few people really had early memories of Spiderman.. and at the same time was at an age where they could afford to splash out... this is the situation today, and will continue to be the situation.

 

But of course delekkerste can say if these are some of the things he was thinking - and elaborate further.

[Darkowl]

 

Comics are not a "good" investment long term from this point in time on.

 

Why?

 

some of the many reasons include

!. they are not liquid,

2. they are fragile, even graded.

3. they are currently at historic highs

4.there is no interest or dividend of initial investment

5. reasons 5 through 10 are even more obvious than 1-4

 

Except that some comics are in fact good investments,they are liquid. Maybe not 50's war comics,but I think I made a pretty good investment back in 1983 when I purchased my AF15 for 500.00.What does a 5.0\5.5 going for now? 25-28K? I am pretty sure I can sell that book in a heartbeat if I needed to. Let me see....at the least I made 24,500.00 on that initial 500.00,not bad I'd say!

 

Is it insured? do you have environmental controls? do you store it?

I think you grossly over-estimate your return, unless you intend to cheat the tax man as well.

 

[Darkowl]

Comics are not a "good" investment long term from this point in time on.

 

Why?

 

some of the many reasons include

!. they are not liquid,

2. they are fragile, even graded.

3. they are currently at historic highs

4.there is no interest or dividend of initial investment

5. reasons 5 through 10 are even more obvious than 1-4

 

Except that some comics are in fact good investments,they are liquid. Maybe not 50's war comics,but I think I made a pretty good investment back in 1983 when I purchased my AF15 for 500.00.What does a 5.0\5.5 going for now? 25-28K? I am pretty sure I can sell that book in a heartbeat if I needed to. Let me see....at the least I made 24,500.00 on that initial 500.00,not bad I'd say!

You need to work on your tenses, the question is ARE, not WERE. Unless you know somebody who's going to sell me a mid-grade AF 15 for $500 now.

 

Point is - we cannot know that.

 

When you bought your AF15 for $500 it was not the case that people said "now is a geat time to buy comics - this is going to skyrocket!". If people believed that - the price would not have been $500.

 

People thought that comics were already expensive. Just like today - because comics have gone up fo many years there is a tendency to think they are expensive now. Reality is, we don't know - and some book bought today for $500 might be worth 20k+ in 35 years from now - we just don't know which one(s) - or if it will happen. Just like we didn't know 35 years ago.

 

[shadroch]

How many people here lost money when the Savings And Loans went under because of their bad investments? They got away SCOTT FREE,... but you lost!

 

How many people here think the $50,000 they have built up in their 401k isn't going to go under 5 years from now because Vanguard or some other 401k institution makes bad investments?

 

These people have their bases covered,.. and you lose!

 

If I had $50,000 to drop on an investment, it would most definitely be a cherry AF15. At least I have a sure thing investment in my hands and it's not in some thieving *spoon* hole's pocket.

 

 

 

 

I think I can guess why you don't have 50,000 to invest, with this sort of thinking.

[LordRahl]

For those that think an AF 15 is a sure fire investment, consider this. All else being equal, you have a book which now costs 5 figures in anything above a 3.0 grade. In VF and above it's almost always 6 figures. There are FAR fewer people willing and able to drop $20K (and it just keeps shrinking as you approach $100K and above) on a comic book than there are people willing to spend $2K. So you have a shrinking pool of buyers and an ever expanding supply as new copies are dug up in collections and brought to market. You do the math on that one.

 

This of course doesn't even consider the fact that we are in a bubble currently and we all know how those work out long term.

[Darkowl]

For those that think an AF 15 is a sure fire investment, consider this. All else being equal, you have a book which now costs 5 figures in anything above a 3.0 grade. In VF and above it's almost always 6 figures. There are FAR fewer people willing and able to drop $20K (and it just keeps shrinking as you approach $100K and above) on a comic book than there are people willing to spend $2K. So you have a shrinking pool of buyers and an ever expanding supply as new copies are dug up in collections and brought to market. You do the math on that one.

 

This of course doesn't even consider the fact that we are in a bubble currently and we all know how those work out long term.

 

Wanna know a sure fire investment?...

 

 

 

[Brock]

But, it does suggest that looking at historical growth patterns from a minuscule base, over the course of three decades where the hobby matured from a fragmented cottage industry to a mature hobby with Internet distribution, third party grading, huge demographic and financial tailwinds, etc. is probably pretty meaningless.

 

I'm interested in understanding what you mean by this, particularly the demographic part... Can you elaborate?

 

That both the demographic and financial climate has been beneficial for the (price) development of the hobby. Demographically the people who grew up with these characters are perhaps more likely to buy when they are better off in their 40ties or later. In 1980 few people really had early memories of Spiderman.. and at the same time was at an age where they could afford to splash out... this is the situation today, and will continue to be the situation.

 

But of course delekkerste can say if these are some of the things he was thinking - and elaborate further.

 

Thanks, Alexander... I understand the point he's making, but am interested in the evidence/thinking behind it.

 

What you're outlining is really Flying Donut's "Rule of 25" - but that will always be a factor, because there are always people who were collecting 25 years ago.

 

Nostalgia changes what is sought after, certainly, but delekkerste seems to be suggesting that some larger demographic "tailwind" is pushing the market forward. In contrast, several previous posters have suggested the opposite - and they've cited the inevitable exit from the market of the (very large) demographic cohort of baby boomers as their rationale.

 

I'm wondering what delekkerste's rationale for proposing the opposite is...

[delekkerste]

It would be great to have a map to follow, but we don't. Sans a map, I am forced to use past experience as a guide. While past performance is no indication of future results, would you pick Mike Trout or Stephen Drew to pinch hit for you?

 

I use past experience all the time. If I didn't, I wouldn't know what a boom and bust looked like.

 

The analogy about pinch-hitters doesn't make any sense in this context. You can look at batting averages from the current season or recent seasons to make an educated guess about how an individual will perform if you put him in now. On the other hand, the comic book market has gone from early stages (yes, it had been around for a long time, but it was a fragmented, undeveloped mess with AF #15s trading for 2 cents on today's dollar) to maturity over the past 30 years. The next 30 years will show the market go from maturity to late maturity or maturity to decline. Either way, it won't look anything like the past 30 years - you can throw out your historical roadmap and bet your bottom dollar on that.

[thunsicker]

Ten years ago a poll there was a "how old are you" thread on the boards and most people were in their 30's and 40's. Five years ago there was another thread and the ages seemed to be mostly in the 40's and 50's. Another thread this year and we're back to 30's and 40's. It seems that people who buy comics are generally in their late 30's to early 50's. Peak earning years.

 

On the one hand this is promising as it says we are getting new people into (back into?) the hobby. On the other hand it would seem to speak to an issue with baby boomers getting to the selling age through retirement from the hobby or retirement from this world. They bought their collections for thousands and they are now worth tens or hundreds of thousands. There is just not enough money to buy up those collections without a pyramid type of number of new collectors coming into the hobby. Mitch has suggested that foreign collectors could be the next thing that expands the base and allows prices to rise, but I'm not sure. And once they are in what next? Further we are getting to the point where people in their 40's weren't comic readers anymore. After the big independent/variant push of the 90's video games and cable kind of gobbled up all the kids time.

 

There has been a perfect storm in the last 20 years of third party grading, internet auctions, and movie exposure to explain the growth of the last 20 years. I have yet to see a convincing explanation of where the similar growth will come from in the next 20 years.

 

EDIT: Darn it i wasted my 4000th post on this.

[Brock]

 

EDIT: Darn it i wasted my 4000th post on this.

 

Not a waste at all - a cogent (and appreciated!) post!

[delekkerste]

Nostalgia changes what is sought after, certainly, but delekkerste seems to be suggesting that some larger demographic "tailwind" is pushing the market forward. In contrast, several previous posters have suggested the opposite - and they've cited the inevitable exit from the market of the (very large) demographic cohort of baby boomers as their rationale.

 

I'm wondering what delekkerste's rationale for proposing the opposite is...

 

I'm not arguing the opposite - I'm saying that there has been a tailwind to date, not that it's going to continue indefinitely. Quite the opposite. IMO, there is no chance that the Millennials will have the aggregate interest and financial resources to clear the market in the future at the prices people think will prevail. The math just doesn't add up. Prices will fall almost across the board to clear the market when that happens. Now, that might not be for another 20-30 years, though, I'm pretty sure it won't take that long for mortality-related selling to creep in - I think a lot of Gen Xers will be cashing out in the next 10-15 years (if not sooner) to finance their retirements, kids' college educations, etc., and the Millennials won't be there in sufficient numbers to pick up the slack.

 

I think it's a mistake to just extrapolate past experience indefinitely into the future. After 1995 or so, peoples' interests got fragmented into thousands of different directions with the advent of the Internet and other technology and media. Many kids in the '40s, '50s, '60s, '70s, '80s and early '90s grew up reading comics. That has not been the case for some time since then, though. Today's younger generations are growing up in a very different environment than the Baby Boomers and Gen X - their interests have been pulled in a near-unlimited number of directions whereas previous generations grew up with a relatively limited subset of potential interests, including comics. Sure, some are still into comics. Many are into comic characters. But, no longer are their options limited to reading and collecting the actual comic books. Nowadays, they are expressing their fandom through movies, TV, cosplay, fansites/blogs, social media, paper TPBs, digital comic subscriptions, etc. Even collecting itself does not come as naturally to Millennials, who often prefer the social and experiential over the material.

 

Things that we once thought to be permanent are being disrupted all the time, whether it's the publishing industry (e-books, digital media), or the taxi industry (Uber, Lyft), or the fast food industry (better options, healthier options), or the lodging/hospitality industry (Airbnb), or the beverage industry (exponential growth in both alcoholic and non-alcoholic beverage brands and categories), etc. We are spoiled for choice these days - it's no wonder that venerable brands are losing customers to upstarts or that the youth are moving away from Gen X music, preferences and hobbies to those of their own. Extrapolate past trends at your peril, folks! Don't look to the past as your guide, think about the demographic, technological, cultural, economic, etc. pieces in place now and how they are likely to evolve going forward.

 

Yes, some of these young salmon will still manage to find their way upstream and become full-fledged comic collectors. But, their aggregate numbers and financial resources (their employment and investment outlooks as a cohort are not as bright as previous generations - duh) won't be enough to replace the collectors that eventually drop out. Might not be now or a year from now or even five. But, for those of you buying and holding now at record prices and planning to cash out with big gains in 10, 15, 20+ years...I think you're going to end up being a Bag-Holder .

[delekkerste]

Ten years ago a poll there was a "how old are you" thread on the boards and most people were in their 30's and 40's. Five years ago there was another thread and the ages seemed to be mostly in the 40's and 50's. Another thread this year and we're back to 30's and 40's. It seems that people who buy comics are generally in their late 30's to early 50's. Peak earning years.

 

On the one hand this is promising as it says we are getting new people into (back into?) the hobby. On the other hand it would seem to speak to an issue with baby boomers getting to the selling age through retirement from the hobby or retirement from this world. They bought their collections for thousands and they are now worth tens or hundreds of thousands. There is just not enough money to buy up those collections without a pyramid type of number of new collectors coming into the hobby. Mitch has suggested that foreign collectors could be the next thing that expands the base and allows prices to rise, but I'm not sure. And once they are in what next? Further we are getting to the point where people in their 40's weren't comic readers anymore. After the big independent/variant push of the 90's video games and cable kind of gobbled up all the kids time.

 

There has been a perfect storm in the last 20 years of third party grading, internet auctions, and movie exposure to explain the growth of the last 20 years. I have yet to see a convincing explanation of where the similar growth will come from in the next 20 years.

 

EDIT: Darn it i wasted my 4000th post on this.

 

Great post. I collect original comic art (OA), and people always like to point to how the OA market absorbed the massive Tony Christopher Collection of Jack Kirby (and other) art maybe 15 years ago (plus or minus a couple years). The market sagged under the weight of all that supply, but bounced back before too long, leading many to believe that the market will always be able to absorb high quality art that gets thrown at it.

 

Naturally, I disagree. You're talking at this point about ONE collection that was sold at maybe nickels or dimes on today's valuation at a time that preceded a massive boom in wealth, just as the last great generation of people who grew up reading comics in the pre-Internet age were hitting their stride and coming of age. Back then, the median age of OA collectors was in the 30s. Now it's clearly at least 40. 20 years from now, the average will probably be somewhere in the 50s (best case). And, logic, math and mortality tables suggest that we'll get not one Tony Christopher collection hitting the market per decade, but more than one such collection hitting the market every year at some point. At valuations an order of magnitude higher - or even more in some cases! Will there be enough 20 and 30 somethings, with the aggregate financial firepower, to absorb all that supply at those prices at that time? Unequivocally, I say no. Not a chance in hell. You can paint a similar story for comics and probably most Gen X collectibles like sports cards as well.

 

Again, this may take a while to play out. And it's not like prices will tank overnight when it happens. It will very much be like boiling a frog - the market at some point will turn and start a long, secular decline and people won't even realize it's happening until it's well underway. Not that crude oil and comics have much in common, but, back in the '60s, US domestic crude oil production had been rising steadily for more than half a century. People thought it would continue indefinitely. And then, abruptly, production peaked out of nowhere in 1970, and it probably took another 5 years for people to realize that it was in decline (production proceeded to tank for 35 years until revived by the shale boom). Something similar will likely happen with comics. Decades of rising prices and then the underlying supply/demand balance gets thrown off by an underlying generational changeover and the market goes into a long-term secular decline out of nowhere.

[JazzMan]

Ten years ago a poll there was a "how old are you" thread on the boards and most people were in their 30's and 40's. Five years ago there was another thread and the ages seemed to be mostly in the 40's and 50's. Another thread this year and we're back to 30's and 40's. It seems that people who buy comics are generally in their late 30's to early 50's. Peak earning years.

 

On the one hand this is promising as it says we are getting new people into (back into?) the hobby. On the other hand it would seem to speak to an issue with baby boomers getting to the selling age through retirement from the hobby or retirement from this world. They bought their collections for thousands and they are now worth tens or hundreds of thousands. There is just not enough money to buy up those collections without a pyramid type of number of new collectors coming into the hobby. Mitch has suggested that foreign collectors could be the next thing that expands the base and allows prices to rise, but I'm not sure. And once they are in what next? Further we are getting to the point where people in their 40's weren't comic readers anymore. After the big independent/variant push of the 90's video games and cable kind of gobbled up all the kids time.

 

There has been a perfect storm in the last 20 years of third party grading, internet auctions, and movie exposure to explain the growth of the last 20 years. I have yet to see a convincing explanation of where the similar growth will come from in the next 20 years.

 

EDIT: Darn it i wasted my 4000th post on this.

 

You should edit your custom title to this now. Remember, I gave you the idea for the one you're using....

[BarryAllen]

Two things I take away from all of this:

 

1) comics are not a reliable source of long-term investment when buying now and moving forward

2) if I wait +20 years I will be able to buy every book I want at a discount

 

Makes me want to cash in and come back in 25 years.

 

:shrug:

[thunsicker]

Ten years ago a poll there was a "how old are you" thread on the boards and most people were in their 30's and 40's. Five years ago there was another thread and the ages seemed to be mostly in the 40's and 50's. Another thread this year and we're back to 30's and 40's. It seems that people who buy comics are generally in their late 30's to early 50's. Peak earning years.

 

On the one hand this is promising as it says we are getting new people into (back into?) the hobby. On the other hand it would seem to speak to an issue with baby boomers getting to the selling age through retirement from the hobby or retirement from this world. They bought their collections for thousands and they are now worth tens or hundreds of thousands. There is just not enough money to buy up those collections without a pyramid type of number of new collectors coming into the hobby. Mitch has suggested that foreign collectors could be the next thing that expands the base and allows prices to rise, but I'm not sure. And once they are in what next? Further we are getting to the point where people in their 40's weren't comic readers anymore. After the big independent/variant push of the 90's video games and cable kind of gobbled up all the kids time.

 

There has been a perfect storm in the last 20 years of third party grading, internet auctions, and movie exposure to explain the growth of the last 20 years. I have yet to see a convincing explanation of where the similar growth will come from in the next 20 years.

 

EDIT: Darn it i wasted my 4000th post on this.

 

You should edit your custom title to this now. Remember, I gave you the idea for the one you're using....

 

[NP_Gresham]

 

 

[Hamlet]

Yes, some of these young salmon will still manage to find their way upstream and become full-fledged comic collectors. But, their aggregate numbers and financial resources (their employment and investment outlooks as a cohort are not as bright as previous generations - duh) won't be enough to replace the collectors that eventually drop out. Might not be now or a year from now or even five. But, for those of you buying and holding now at record prices and planning to cash out with big gains in 10, 15, 20+ years...I think you're going to end up being a Bag-Holder .

 

One flaw I see in the idea that future generations having less buying power is that eventually the buying power of the Boomers will get transferred down to the next generations. Sure the Boomers will be selling comics for money, but they will ultimately be transferring that money back to younger generations, either thru purchases or inheritances. They can't take it with them.

 

That buying power will be there in some form, unless you think that the economy will actually produce less in the future than it does today. It may be more concentrated among the ultra-wealthy, in which case you better own very rare items that they want. It may become less concentrated, in which case those very rare items may take a pretty serious hit, but more run-of-the-mill items may prosper.

 

This all assumes that future generations will have the same strong interest in collecting comics. I suspect that they will be less interested, and that we are going to see a decline in prices over the next 20 years. However, I don't think it will be because future generations can't pay higher prices if they are actually so inclined.

 

 

[JazzMan]

Two things I take away from all of this:

 

1) comics are not a reliable source of long-term investment when buying now and moving forward

2) if I wait +20 years I will be able to buy every book I want at a discount

 

Makes me want to cash in and come back in 25 years.

 

:shrug:

 

I don't think that's the takeaway here. And I think the point was lost somewhere.

 

Almost any collectible (and I mean, almost - remember Beanie Babies) will appreciate over time from their original price/cost. The main question is, compared to other investment options which will appreciate at a higher yield over a particular period of time. As in any investment where losing money is a possibility, one needs to assess the risks and choose the one which is suits the needs at the time.

[delekkerste]

One flaw I see in the idea that future generations having less buying power is that eventually the buying power of the Boomers will get transferred down to the next generations. Sure the Boomers will be selling comics for money, but they will ultimately be transferring that money back to younger generations, either thru purchases or inheritances. They can't take it with them.

 

Not a flaw - already took that into consideration. (thumbs u

 

Remember, it's not just the spending power side of the equation, but also the fact that you'll see nearly every comic book out there (or every piece of OA) turn over at least once in, say, the next 30 years. Right now, books are only getting turned over at the margin, because there isn't a net exodus of collectors (who are primarily Gen Xers and Baby Boomers) holding the more valuable books. But, eventually, that's not going to be the case. So, what happens when all of these books turn over in the marketplace at current/future values. The market won't clear without lower prices.

 

The fact is, even the current generation of collectors doesn't have the buying power to turn everything over at current prices, because prices have gone up so much. I mean, yes, theoretically, there is enough money out there to do so, but I'm talking about within the existing collector base. It doesn't take a rocket scientist to see the math isn't going to work once we reach that generational inflection point.