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

[valiantman]

I guess we should call this calculation the "Average Market Cap".

 

It's the average price for the average graded copy multiplied by the total number of graded copies.

 

"True Market Cap" would calculate the value of all 10, plus the value of all 9.9, plus the value of all 9.8, etc, all the way to 0.5.

That is very hard to do because we do have the CGC census numbers for every grade, but we don't have good market prices for every grade based upon recent sales for every grade for every comic we want to review.

 

We usually have a recent sales average for an average slabbed copy, and we know the total number of slabs on the CGC census.

 

Restored and qualified grades have their own market situations, usually much smaller than the Universal market, and they are not included in this calculation for "Average Market Cap".

 

Signature series are being treated like Universal, and included in the total slabs count, but the market price is using the Universal average.

The average Signature Series grade is usually lower than the average Universal grade, but the value of Signature Series is usually higher than Universal, so for now, we're considering that an offsetting difference... treating all Signature Series (non-restored) as if they were Universal.

[valiantman]

Amazing Spider-man #300 is an interesting case as well. It is the first full appearance of Venom, and that is its primary focus for collectors, but it is also an anniversary issue which would be important to collectors even if Venom did not appear.

 

There are many books that hold multiple significance, particularly X-Men #1, which is the first appearance of many household names.

On the other hand books like Avengers #1 are the first appearance of... no one... but it's a team first.

 

Fun stuff.

[valiantman]

Added another one:

 

Giant-Sized X-Men #1 $3,600,800

[InvstmntComcSuply]

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.

 

I was wondering if anyone would address the volume of raw books.

Thus, the caveat is that you are only measuring the slabbed market.

There are likely significant differences in the percentage of extant books which have been graded. Additionally, some books would likely see significant drops in average market price if the extant copies were slabbed, whereas others probably would not.

[BarryAllen]

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.

 

 

The only caveat is that you are only measuring the slabbed market.

There are likely significant differences in the percentage of extant books which have been graded. Additionally, some books would likely see significant drops in average market price if the extant copies were slabbed, whereas others probably would not.

 

+1

 

I like the analysis and have cited a similar argument before. However, for it to be more accurate, all books would need to be accounted for. A market cap definition only works when all existing "shares" are valued in market. Net, to ICS's point, this really is only a definition of the stabbed copies of the book. The older and rarer the book, the higher degree of accuracy. However in books like IH 181, ASM 300 or NM 98; there are tens of thousands (or more) of these books unslabbed and in many cases not even included in "traded" market (hoarded by dealers, speculators, sitting in warehouses, etc). For their market cap to really be known, all copies would have to be accounted for and attributed the new average value - which due to laws of supply and demand - would decrease. The extent of the decrease could be heavily debated and it would be hard to tell if the decrease would reduce the total "market cap," but the average price certainly would come down, perhaps dramatically.

 

Since we can never likely know this, we can only speculate. Personally, I would contend any book on this list post-1970 is subject to inflation with this type of valuation.

 

 

Overall still a cool way to view the hobby though! (thumbs u

[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...

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?

 

I didn't look at the others as closely, but I mentioned the Marvel 1 specifically because the $1mil value seemed off. Just a really quick look at the census I think even if every copy on the census hit the market all on the same day all at fair market value I'm not sure $3mil would buy them all. (Change 3mil to 2mil if you're only counting universal, but if you're looking at universal only that adds one more variable in that certain books are more likely to be restored than others which could skew the results on some books/eras compared to others)

 

I still think it's really cool how all the biggest 1st appearances work out to just about the same amount. Either the comic market is a lot more efficient than it would seem at first glance or that is one really crazy coincidence.

[thunsicker]

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.

 

And conversely Incredible Hulk #1 is vastly overvalued. (IMHO) The reason has always been that it's so rare, but this seems to put the lie to that excuse.

 

And I'm neither the owner of nor in the market for an Incredible Hulk #1. Just calling it as I see it.

[FormerReader]

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.

 

 

What no charts?

 

 

[valiantman]

I still think it's really cool how all the biggest 1st appearances work out to just about the same amount. Either the comic market is a lot more efficient than it would seem at first glance or that is one really crazy coincidence.

 

It's even more efficient than I originally calculated.

 

I had 1,727 slabbed copies of Amazing Fantasy #15 at $11,000 average. That's $18,997,000.

 

I just checked again, and there are a number of Signature Series Restored copies in that 1,727.

Take those out and there are 1,653 copies at $11,000 average. That's $18,183,000.

 

Action #1 is $18,000,000.

Detective #27 is $17,050,000.

 

It's really incredible that they're all so close.

 

EDIT: A more accurate current value for CGC 3.66 Amazing Fantasy #15 would be around $11,500... not $11,000. That puts the Market Cap for Amazing Fantasy #15 back at $19,000,000.

Edited June 27, 2015 by valiantman

[RustyStaple]

Great thread. Kudos

[valiantman]

What no charts?

 

 

[makeminemego]

Really interesting to look at. Thanks for posting.

[valiantman]

I realize you are working with known information, but should the outliers be included (either far too few or far too many) or should you be looking at the books that fall at least within two standard deviations?

Think of it like stocks.

 

If there are 50,000 outstanding shares for a company, and the current price per share is $10, then the company has a "market cap" of $500,000.

We don't care if some people bought in at $1 a share and others paid $250... or how many standard deviations those prices represent.

The current price is $10 and we apply it to all the 50,000 shares.

If we could know all the prices that everyone paid for all 50,000 individual shares and add all 50,000 by hand, we might get another number, but what would it represent?

Is it still possible to buy for $1? Not if the current price is $10.

Would anyone buy for $250 again if the current price was $10?

All we need to know is 50,000 shares and $10 current price. Then multiply.

 

For slabbed comics, we're taking an average grade from the CGC census to represent all slabs for a comic.

Then we get the current price for that average grade.

Multiply that one price by the number of slabs and we get a dollar amount.

For Amazing Fantasy #15, that's about $19,000,000... which is 1,653 slabs at $11,500 average price.

No need to check the history of every copy that ever got slabbed or try to guess all the private sales numbers we'll never get.

 

All the other complications that we could add might give us a better number...

but if we would have to make lots of assumptions about unknowns and complicate the calculation...

we haven't gained anything.

 

Spending a lot of extra effort on calculations to get very little benefit is just mathturbation.

[valiantman]

I am also not looking at what someone paid or individual values. I'm looking at population. There are 36 slabbed universal Action 1's. There are thousands of slabbed ASM 300s.

 

So to use your example-- I am looking at you comparing values based on stock shares in one case of less than 40 total and giving them the same treatment (so to speak) as one with 8506 outstanding shares.

 

My point being that if you only looked at books that had total slabbed "shares" in a range of say 1000- 4000 or some other similar range (1000-2000), that makes the market cap information seem more like comparing apples to apples. I base that on the assumption that those meeting the criteria have similar demand, availability, and general total population.

Wal-Mart stock is $72 per share. Berkshire Hathaway is $210,000 per share.

Wal-Mart has more than 2,000 times the outstanding shares of Berkshire.

 

Market cap is the same calculation for both. No special rules are needed.

It's an apples to apples comparison no matter how insane it might appear.

 

Wal-Mart is ASM #300. Berkshire Hathaway is Action #1.

ASM #300 has more than 200 times the outstanding shares of Action #1.

 

Market cap is the same calculation for both. No special rules are needed.

It's an apples to apples comparison no matter how insane it might appear.

 

Keeping it simple.

[G.A.tor]

The only real "issue" is that with comic books there is an exponential value growth at higher grades versus a more arithmetic growth for the lower grades. And they are not equivalent for each book. So I believe this formula either undervalues or potentially over values market cap fairly significantly , but does offer some comparison

 

For example, easy enough to take 30+ copies of action 1 and figure out the market cap is over 21million. 10% higher than the af15 est. May or may not be the same differential if we were to expand 1700+ af15 copies. But neat none the less

[BarryAllen]

I realize you are working with known information, but should the outliers be included (either far too few or far too many) or should you be looking at the books that fall at least within two standard deviations?

Think of it like stocks.

 

If there are 50,000 outstanding shares for a company, and the current price per share is $10, then the company has a "market cap" of $500,000.

We don't care if some people bought in at $1 a share and others paid $250... or how many standard deviations those prices represent.

The current price is $10 and we apply it to all the 50,000 shares.

If we could know all the prices that everyone paid for all 50,000 individual shares and add all 50,000 by hand, we might get another number, but what would it represent?

Is it still possible to buy for $1? Not if the current price is $10.

Would anyone buy for $250 again if the current price was $10?

All we need to know is 50,000 shares and $10 current price. Then multiply.

 

For slabbed comics, we're taking an average grade from the CGC census to represent all slabs for a comic.

Then we get the current price for that average grade.

Multiply that one price by the number of slabs and we get a dollar amount.

For Amazing Fantasy #15, that's about $19,000,000... which is 1,653 slabs at $11,500 average price.

No need to check the history of every copy that ever got slabbed or try to guess all the private sales numbers we'll never get.

 

All the other complications that we could add might give us a better number...

but if we would have to make lots of assumptions about unknowns and complicate the calculation...

we haven't gained anything.

 

Spending a lot of extra effort on calculations to get very little benefit is just mathturbation.

 

Whether we can get to the information or not, the difference between Action 1 and Spiderman 300 and its impact on the calculations isn't "very little benefit" it would be staggering.

 

At best we could assume that there are only a handful of Action 1s not stabbed. However; for argument's sake, let's say the number would double if every copy in existence was stabbed and accounted for. ASM 300, that number is closer to 50 times (or more) the existing stabbed copies. That is a HUGE difference in terms of Supply and Demand.

 

Stock market cap calculations only work because every share of the stock is accounted for at all times. So when a purchase is made, people have an exact idea of the total number of shares among other things. Without that vital piece of data the analysis becomes less accurate.

 

Again, I think it is a neat way of looking at valuation, but on post 1970 comics is isn't accurate. There are just too many unslabbed copies of the books in circulation to draw a straight correlation. Half of the reason some of those books are so expensive is the false sense of security the census creates in market (i.e. people believe the books are somewhat rare because only a small fraction of available copies are stabbed, and the assume or are falsely informed that the census represents the total market).

 

Again, I find the concept very interesting, but it cannot be taken as an absolute. For the reason I stated and other arguments posed in the thread as well.

Edited June 27, 2015 by rfoiii

[1950's war comics]

Thanks for nice analysis and graph

[Comicopolis]

Great thread

[bc]

I am also not looking at what someone paid or individual values. I'm looking at population. There are 36 slabbed universal Action 1's. There are thousands of slabbed ASM 300s.

 

So to use your example-- I am looking at you comparing values based on stock shares in one case of less than 40 total and giving them the same treatment (so to speak) as one with 8506 outstanding shares.

 

My point being that if you only looked at books that had total slabbed "shares" in a range of say 1000- 4000 or some other similar range (1000-2000), that makes the market cap information seem more like comparing apples to apples. I base that on the assumption that those meeting the criteria have similar demand, availability, and general total population.

Wal-Mart stock is $72 per share. Berkshire Hathaway is $210,000 per share.

Wal-Mart has more than 2,000 times the outstanding shares of Berkshire.

 

Market cap is the same calculation for both. No special rules are needed.

It's an apples to apples comparison no matter how insane it might appear.

 

Wal-Mart is ASM #300. Berkshire Hathaway is Action #1.

ASM #300 has more than 200 times the outstanding shares of Action #1.

 

Market cap is the same calculation for both. No special rules are needed.

It's an apples to apples comparison no matter how insane it might appear.

 

Keeping it simple.

 

So wait until the 10 billionth Spawn #1 gets slabbed and it's worth $0.09, the market cap of $900 Million blows these all away.

 

In all seriousness - FASCINATING analysis - a true mathletic accomplishment ! Thanks for your effort putting this all together!

-bc

 

[valiantman]

The only real "issue" is that with comic books there is an exponential value growth at higher grades versus a more arithmetic growth for the lower grades. And they are not equivalent for each book. So I believe this formula either undervalues or potentially over values market cap fairly significantly , but does offer some comparison

 

For example, easy enough to take 30+ copies of action 1 and figure out the market cap is over 21million. 10% higher than the af15 est. May or may not be the same differential if we were to expand 1700+ af15 copies. But neat none the less

That's correct --- the estimate does undervalue the entire CGC census value due to the premiums paid for the higher grades.

 

If the values for the books were perfectly balanced, then taking the average grade and the average price for that one average grade should result in 100% of the true market value for all CGC slabs at all grades.

 

In other words, if there were no premiums for higher grades, the market price of any book should be the grade times some single number. For example, if a CGC 1.0 for some book is $100, then a CGC 3.0 would be $300, and a CGC 9.8 would be $980. Each CGC point is $100 regardless of grade in this scenario, and we have an imaginary perfect balance for prices and grades.

 

If that ever happened, we would have a book where the average price of the average grade method gives us the exact market value for all prices for all grades. The averaging method I'm using would be 100% true... if that ever happened.

 

We know that our averaging estimate is going to be wrong for any book where a premium is being paid for the higher grades... and that's pretty much every book.

 

So, this averaging method isn't a 100% match to the true market cap. But... how wrong are we?

 

I've attempted to figure out the amount of error, based on some best estimates for each current market price needed for each CGC graded. It's a whole lotta work... it basically requires everything in GPAnalysis for each issue... it requires some guesswork where there aren't recent sales, and it's not something that could be easily automated (because George-of-GPA and I have already talked about it for years).

 

In the case of Amazing Fantasy #15 and Amazing Spider-man #300, the average price of the average grade method results in a total that is only 60% of the average price of each grade method. The premiums that are paid for the higher grades have us undervaluing the total, as expected.

 

What's interesting is that both books are 60%... even though they're very different books in terms of age, number slabbed, and the average price of the average grade.

 

The amount of error in our estimate for these two books is equal... so it cancels out if we compare them to each other. We're comparing 60% of one to 60% of the other. That's actually fair. I would have expected very different books to have very different results calculating all the grade prices vs. just their one average copy price. Are even the premiums paid (by the invisible hand) following a similar (or off-setting) pattern? For AF #15 and ASM #300, it would seem so.

 

The total from the average price of the average grade method is 80% of the average price for each grade method for Action Comics #1.

 

This seems to be a situation where the premium paid for the higher grades is closer to zero. Obviously, there are still premiums being paid for higher grades of Action #1, because we only get 80% of the more correct number...

but it's half as much premium as AF #15 and ASM #300 because 80% is halfway between 60% (AF #15, ASM #300) and 100% (imaginary perfect balance).

 

Interesting.

 

I'll keep working on a few more... see if 60% is a standard "most of the time" or if we just happened to pick three very different books where two matched.

 

(thumbs u