Tracking the invisible hand of the market... 1 1

[valiantman]

Six years ago, I proposed the idea of "market cap" for CGC slabbed comics.

http://boards.collectors-society.com/ubbthreads.php?ubb=showflat&Number=3277046&fpart=1

 

The general idea is that the total number of slabs for a book multiplied by the market price for that book gives you a "total market cap" (capitalization) for a comic.

 

The true market cap would be the value of all 10 plus the value of all 9.9 plus the value of 9.8 plus the value of all 9.6 plus the value of all 9.4, etc.

Let's make our lives easier and estimate the market cap by using the value of the average graded copy and multiplying by the number slabbed.

It's not perfect, but it's a heckuvalot easier than trying to figure out every price for every grade based on actual sales and rough estimates for the gaps where there are no recent sales at certain grades.

 

What is of particular interest about this idea is that it appears to reflect the "general concensus" (invisible hand?) of the market when it comes to "total value" for a comic situation, such as a first appearance.

This is true even when comics have vastly different CGC census numbers and vastly different CGC market prices.

 

For example:

 

Amazing Fantasy #15 has 1,727 copies graded as Universal or Signature Series.

The average grade is CGC 3.7, and the average Universal price for CGC 3.7 (between 3.5 and 4.0) would be about $11,000.

Multiply $11,000 by 1,727 copies and you get $18,997,000 as a rough estimate of the "market cap" for 1st appearance of Spider-man.

 

Action Comics #1 has 36 copies graded as Universal (no Signature Series).

The average grade is 4.25 and the average Universal price for CGC 4.25 is about $500,000.

Multiply $500,000 by 36 and you get $18,000,000 as a rough estimate of the "market cap" for 1st appearance of Superman.

 

Despite the ridiculously different number of slabs (1,727 vs 36), and the ridiculously different prices for an average copy ($11,000 vs. $500,000), the first appearance of Spider-man has essentially the same "total market value" as the first appearance of Superman.

 

Does this make sense? I think so.

Doesn't the market (and the general public) recognize Spider-man and Superman at about the same popularity? Yes --- it's easy to argue who is more popular, Spider-man or Superman. They're about 50/50.

 

What about Batman, you ask?

 

Let's check.

 

There are 31 Universal graded copies of Detective Comics #27 with an average Universal grade of 4.76.

The average Universal price for CGC 4.76 (between 4.5 and 5.0) would be about $550,000.

Multiply $550,000 by 31 and you get... $17,050,000.

 

So, when it comes to this rough market cap calculation, that's:

 

1st appearance of Spider-man = $19,000,000.

1st appearance of Superman = $18,000,000.

1st appearance of Batman = $17,000,000.

 

Makes sense to me... the "invisible hand of the market" values all 3 first appearances roughly the same.

If someone believes that Batman should be $18,000,000 or $19,000,000 then the market price of the average copy of Detective Comics #27 is too low (in their opinion).

The $550,000 average should $580,000 to $613,000, if the total value should be equal to Superman or Spider-man.

 

If someone else believes that Spider-man should be less than Superman and Batman, let's say, they think it should be $16,000,000, then the market price of the average copy of Amazing Fantasy #15 should be $9,265... instead of $11,000.

 

Of course, the number of copies on the CGC census is very important.

If there were two more average copies of Detective Comics #27 added to the census, the total value would be $18,000,000...

even though the average price would not be changing.

 

For Amazing Fantasy #15 to increase its total value from $19,000,000 to $20,000,000...

we need to see the CGC census grow by 91 average copies with no change to the market price... OR...

we need to see the market price of an average copy go from $11,000 to $11,580.

 

At any rate, I'm amazed that the TOP 3 characters' first appearances are basically the same total market value.

Despite the difference in age between Amazing Fantasy #15 and Action #1 and DC #27...

and despite the difference in the CGC census... the total market value is basically the same.

 

The invisible hand of the market has "spoken".

 

Here's what the "invisible hand" has to say about other important first appearances:

(notice the size of the gap between the Big 3 and the next 2, then a gap, then 2, then another gap, etc.)

 

 

If any of these look too low to you, maybe there is an opportunity to invest in a CGC graded average Universal copy at the current market price.

If any of these look too high to you, maybe the average CGC graded copy market price is too high and is due for a correction.

 

If anyone believes I've missed an important comic whose "market cap" would be high enough to make this list... post it here and we'll check it out.

 

(thumbs u

 

EDIT: Revised the numbers to correct for Signature Series Restored comics (removed them).

 

Added all comic books (even if they don't have a first appearance) which are worth $1,000,000 market cap (or more).

 

Added a chart from the revised numbers.

Edited June 27, 2015 by valiantman

[ItsJustRyan]

Interesting stuff

[Iceman399]

Very cool.

 

Brave 28

Showcase 22 (wonder how this fairs against AA16)

[valiantman]

TL;DR version:

 

What would it cost to buy EVERY CGC slabbed Universal and Signature Series copy of a book?

(If you could buy them all for the current market price of an average copy...)

 

Edited June 27, 2015 by valiantman

[valiantman]

Very cool.

 

Brave 28

Showcase 22 (wonder how this fairs against AA16)

Good suggestions... they've been added to the first post. (thumbs u

 

EDIT: Showcase #22 dropped off the list when I switched to the chart and the $1,000,000 minimum.

 

Showcase #22 is at $921,000.

Edited June 27, 2015 by valiantman

[Red_Hood]

Interesting data, Fantastic Four #1 is very undervalued and your

theory also helps support that statement.

Very simple formula and an easy way to look

for those inefficiencies in the market.

[valiantman]

Interesting data, Fantastic Four #1 is very undervalued and your

theory also helps support that statement.

Very simple formula and an easy way to look

for those inefficiencies in the market.

 

Thanks... I also think it's an interesting way to estimate the "relative popularity" of characters, according to the market.

 

Spider-man, Superman, and Batman are relatively the same.

These Big 3 are about twice as popular as Hulk, Wolverine, and X-Men.

 

The Big 3 are about three times as popular as Captain America, Iron Man, Fantastic Four, and The Avengers.

Hulk, Wolverine, and X-Men are about twice as popular as Captain America, Iron Man, Fantastic Four, and The Avengers.

 

You can do whatever combos you like... just comparing the dollar amounts to each other.

 

Thor is about the same as Punisher.

 

If that's not a good reflection of what a particular collector believes, they should consider the first appearance of whichever one they like better as undervalued... or the one they like less as overvalued.

 

It's an interesting way to let the market speak with numbers we can calculate...

rather than rely solely on impassioned arguments from fans which are hard to put into numbers.

 

(thumbs u

[miraclemet]

wonder if there are some books, or eras of books, or types of books that...

 

...are more often sold privately

...are held raw more often than other books

 

that would skew the comparative value of those books versus others.

 

I also wonder if there are books that are more often sold at fixed prices (where the seller sets the market to a degree) vs being auctioned (where the seller has no control of where the market ends).

 

If most sale totals are a 60/40 mix of auction to fixed price but Action 1 has it's sales total based on a 20/80 mix of auction to fixed prices I think that makes it harder to compare it to other books that hit the market in a "normal" auction/sale mix.

[valiantman]

wonder if there are some books, or eras of books, or types of books that...

 

...are more often sold privately

...are held raw more often than other books

 

that would skew the comparative value of those books versus others.

 

I also wonder if there are books that are more often sold at fixed prices (where the seller sets the market to a degree) vs being auctioned (where the seller has no control of where the market ends).

 

If most sale totals are a 60/40 mix of auction to fixed price but Action 1 has it's sales total based on a 20/80 mix of auction to fixed prices I think that makes it harder to compare it to other books that hit the market in a "normal" auction/sale mix.

Valid arguments... which are impossible to know. Regrades that aren't taken off the census are impossible to know as well.

 

Hopefully these impossible to know factors have been addressed by:

 

Using the average CGC grade, which sits between all the higher and lower copies.

Using the average CGC price for the average CGC grade, which is likely to have reasonable sales records since it's "in the middle" and possibly the most common grade.

With multiple sales, we get a blend of fixed price and auction standard.

Using the whole CGC census, which represents the best estimate for the "total number of shares" (slabs) currently in existence (whether they're buried in a vault or flipped every month).

 

In other words, we can't know everything... but if there's no reason to assume one type of first appearance has an extremely different market from another... then the things we don't know should "cancel out" when we compare books.

 

Good enough is always better than personal anecdote.

Imagined perfection is always the enemy of good enough.

Imagined perfection is impossible to achieve.

 

I'm just trying to get us moved up to "good enough" because we'll never get to perfection.

[greenhoody]

One of the best posts in a while. Quality stuff! Thanks

[Red_Hood]

wonder if there are some books, or eras of books, or types of books that...

 

...are more often sold privately

...are held raw more often than other books

 

that would skew the comparative value of those books versus others.

 

I also wonder if there are books that are more often sold at fixed prices (where the seller sets the market to a degree) vs being auctioned (where the seller has no control of where the market ends).

 

If most sale totals are a 60/40 mix of auction to fixed price but Action 1 has it's sales total based on a 20/80 mix of auction to fixed prices I think that makes it harder to compare it to other books that hit the market in a "normal" auction/sale mix.

Valid arguments... which are impossible to know.

Regrades that aren't taken off the census are impossible to know as well.

 

Hopefully these impossible to know factors have been addressed by:

 

Using the average CGC grade, which sits between all the higher and lower copies.

Using the average CGC price for the average CGC grade, which is likely to have reasonable sales records since it's "in the middle" and possibly the most common grade.

With multiple sales, we get a blend of fixed price and auction standard.

Using the whole CGC census, which represents the best estimate for the "total number of shares" (slabs) currently in existence (whether they're buried in a vault or flipped every month).

 

In other words, we can't know everything... but if there's no reason to assume one type of first appearance has an extremely different market from another... then the things we don't know should "cancel out" when we compare books.

 

Agreed, there are many variables involved with the questions posed. But taking it for what it is. I think it's a very useful calculation.

It's simple and it's using data readily available which provides a very good snapshot of the market.

Anomalies would be the new hot books based on speculation but this formula works like a leading indicator to the market for people willing to put in the work to do the calculations and mining some undervalued books.

[Filter81]

That is a really unique way of looking at the market. Kudos for all the time this must have taken to do. Very interesting that when you multiply the number of copies available times market value you wind up with a list that values the first appearances of Spider-man, Superman, Batman, Wolverine, Hulk, X-men as 1-6. I wouldn't have thought the market would be that efficient. Very cool...

 

(A few of the later issues seem unusually low though. I don't think you could buy every slabbed Marvel 1 for $1mil)

[greenhoody]

So TMNT #1 is not the king of copper! Case closed

[valiantman]

So TMNT #1 is not the king of copper! Case closed

Unless it's undervalued... or unless its competitors are overvalued.

[valiantman]

That is a really unique way of looking at the market. Kudos for all the time this must have taken to do. Very interesting that when you multiply the number of copies available times market value you wind up with a list that values the first appearances of Spider-man, Superman, Batman, Wolverine, Hulk, X-men as 1-6. I wouldn't have thought the market would be that efficient. Very cool...

Just a quick correction... the list currently puts Hulk (slightly) ahead of Wolverine. (thumbs u

 

(A few of the later issues seem unusually low though. I don't think you could buy every slabbed Marvel 1 for $1mil)

Right. It wouldn't be possible to buy every slabbed copy of any of these books without the market reacting to the decreasing supply as you try to catch 'em all.

But, the same thing is true about trying to buy every outstanding share of a particular stock... it wouldn't work with the market price changing.

Market cap is a calculation that people like to use in stocks even if the reality is that you can't buy 'em all at that price. (thumbs u

 

Books like Marvel Comics #1 are interesting though... because there just aren't any on the CGC census.

Why not? Are there truly none available to slab?

If so... is the price due for a significant increase, or is the market too high for the number of buyers in that stratosphere?

[valiantman]

Anomalies would be the new hot books based on speculation but this formula works like a leading indicator to the market for people willing to put in the work to do the calculations and mining some undervalued books.

Definitely... the biggest factor to consider is whether the CGC census has the potential to change drastically.

 

For the newest books, the CGC census could double in a month.

If the average market price doesn't drop as a result of the census doubling...

that's either a huge demand that is still increasing or a market price that's due for correction.

 

It's very hard to see the CGC census numbers changing drastically at the top of our list...

the first appearance of the Big 3, or even the Top 10... the numbers grow, but not overnight.

But for the hot new books that suddenly spike, if they push their own market cap too high...

the "invisible hand" may eventually provide a slap.

[valiantman]

One of the best posts in a while. Quality stuff! Thanks

Thanks!

 

I'm always afraid of three things:

 

1) These posts are too long, so no one will read them.

2) These estimates aren't perfect, so the responses are just complaints for not knowing the unknowable.

3) These posts are not reaching the supernerd-takes-comics-too-seriously audience for which they are intended.

 

[valiantman]

There are some other interesting situations...

 

For example:

 

Batman #1 is the first appearance of the Joker. So, on one hand, the first appearance of the Joker is worth $6,110,000... which would put it at #7 on our list.

 

But... is that whole $6,110,000 because the market is recognizing the first appearance of the Joker?

Or... more likely... is the market also recognizing the first issue of Batman's first title?

What portion of the $6,110,000 is due to the first appearance of the Joker?

 

Very hard to say. Right now, books like Batman #1 aren't on this "first appearances" list... even though the market cap is significant.

 

We probably should expand the list to all comics, not just those which are recognized and famous "first appearance" comics.

But for now, I'm looking at first appearances. (thumbs u

 

EDIT: The first post has been expanded to all comics, not just first appearances.

Edited June 27, 2015 by valiantman

[miraclemet]

oh and dont take my thoughts as critique... I love a good deep dive into the data pool!

[valiantman]

oh and dont take my thoughts as critique... I love a good deep dive into the data pool!

No worries... it's important to review the methodology... I just know that I can't achieve a perfect calculation that includes everything, and I hope people won't dismiss something that's good just because it isn't great.

 

It's like batting average... doesn't tell the whole story for every player... but it does tell a story that helps understanding.