What would it REALLY take for the Comic OA market to 'Correct?'

[thethedew]

Hello all -

 

The ongoing conversation in another thread inspired me to think what it would really take for our hobby's market to (using investment advisor terms) 'correct.'

 

I have a hard time envisioning a near-term scenario where that might happen. And I say that somewhat regretfully, as I'm one of those who'd like to see prices calm down somewhat.

 

Assuming simple supply and demand, we have two fairly immutable forces at work in Our Market.

 

1) Supply of OA is pretty close to static. There is only so much Golden Age / Silver Age / Bronze Age / Copper Age art, as obviously those books are long since published and no more is being produced. Collectable Modern Age art is being produced in dwindling numbers, as traditional methods of producing comics gives way to global, faster and more artist-convenient digital methods of generating artwork.

 

2) Demand is growing. Increasing prices are not absolute proof of true growing demand, but in addition to that I point to Bill Cox's recent posting in this forum that membership in ComicArtFans has been growing strongly. In addition, I am an admin for a FB group following one particular artist, and membership requests have been on the upswing for some time. Circumstantial evidence, I know, but taken together I'm comfortable saying demand is real and growing.

 

With supply static and demand growing, prices rise. Easy.

 

What would it honestly take for the market to modify?

 

A) Decrease or at least Leveling Off of Demand. I can only see this happening if all worldwide potential collectors successfully enter the market (unknowable). In addition, there would have to be tremendous pressure on the market to direct it's funds elsewhere. Considering we've gone through the worst financial downturn since the Great Depression, and it's effect on the OA market was pretty minimal, well...

 

B) Increase in (Available) Supply. This would only happen if there was a fairly massive, simultaneous divestment by a large number of (probably black hole) collectors. This would have to hit the open market, and not merely change hands quietly behind-the-scenes. Who here actually thinks THAT would ever happen?

 

C) Massive Loss of Faith in the Hobby. I don't know what it would take for this to happen. Nostalgia is still clearly, clearly driving most of the OA market purchases, and disappointment with other player's behavior seems to have little effect aside from griping. For (as an example) 'dealer shilling' to have a real market-wide effect, it would have be so massive and systemic as to be unlikely to accomplish by the players we know.

 

It's hard to think that any market might continue to grow without some ceiling. Smarter people than I might have other views or suggestions on what might make a dent in the hobby. I'd love to hear.

 

Have other 'Art' markets ever seen a dip in prices?

 

Andrew

[AKA Rick]

I think the general assumption of the term "correct" implies that the market has gone through artificial unwarranted inflation, much like how some stocks with poor P/E ratios surge and the stock market reacts positively or negatively yet impulsively dramatically to certain news that has little to do directly with the companies themselves.

 

I don't think the Original Art market has gone up at unwarranted levels. If anything, the market correction from being undervalued hidden gems and adjusting to a market value with more players in the game has happened as a direct result of the supply and demand chain.

 

So, I think the question posed sounds more of a doomsayer stance of asking "what events would make the OA market crash and plummet"

 

I think as with most collectibles, once you get a bunch of investors and speculators entering the hobby to exploit and horde in hopes of either holding material hostage to sell at higher prices or think they're so smart to buy and mark up immediately for the resell, that's usually an indicator that the prices you're seeing may not be fair nor reasonable. It's happened to beanie babies, sports cards, comic books, action figure toys and other pop culture artifacts.

 

If you start seeing certain dealers win pieces at major auction houses and then posting them on their websites at much higher prices and those pieces still remain unsold on their sites through the year, then that's when you might start thinking that the prices realized at auctions and the prices listed on websites are no longer fair market value.

 

Then, that's when the prices may start to dip.

 

 

[Meeley Man]

You missed one other factor that could cause it:

 

Stratospheric prices cause large number of potential buyers to be priced out of the hobby. With trends that I'm seeing now, this is the most likely option for causing a market correction. If too many potential buyers are priced out of the market, then the smaller and smaller pool of ones who are will not be able to keep the pace up for continuing higher prices. Sure, some A-list stuff would still get the prices, but mid-rage and lower-tier stuff would just sit on dealer and artist's websites. No one will pay the astronomical prices they are expecting on such stuff. Eventually, even A-List stuff will start to stagnate. And then it is either "market correction" or the end of the hobby.

 

And, personally speaking, I think this is exactly where it is headed.

 

Nostalgia is still clearly, clearly driving most of the OA market purchases, and disappointment with other player's behavior seems to have little effect aside from griping.

 

Oh, I don't know. I think many in this hobby are always up to push a good vendetta against a particular "target" at times. Usually one they think will never be of value to them, mind you, but I am sure that it happens.

[aardvark88]

A couple of divorces among the Comic OA Illuminati of vendors may cause the inflated OA market to 'correct.' I remember seeing a nice SA Gene Colan ToS splash (twice up) unsold at $35k. 18 months later, that same splash with the same vendor magically inflated to $65k.

 

Foreign buyer's are now totally priced out of the market especially after you add the exchange rate and importation taxes of the OA entering the non-USA country. Would say a price plateau or wall was reached at SDCC July, 2016 with vendor/collectors doing more OA swapping and offering less greenbacks.

[Peter G]

A cataclysmic stock market/bond market/real estate meltdown in the broader economy would end this party.

 

Short of that, I dont see the fundamental underpinnings of the hobby as a whole suffering any slowdown or even the faintest fatigue right now.

[mister_not_so_nice]

I usually stay out of the "OA finance" talk for multiple reasons. Mostly it's because the art/figures have nothing to do with my collecting.

 

I don't think a market wide correction is ever going to happen. I think corrections will happen, but in niches, just as people collect in niches. One day "artist A" art will see a correction for one reason or another. Then "title B" will fall out of favor. Its happening already, or has happened and you just didn't notice because it's not in your niche.

 

o.k., I return you now to the endless back and forth, quoting, hypothesizing, pontificating, and drawing of similarities to other things

 

[delekkerste]

1) Supply of OA is pretty close to static. There is only so much Golden Age / Silver Age / Bronze Age / Copper Age art, as obviously those books are long since published and no more is being produced. Collectable Modern Age art is being produced in dwindling numbers, as traditional methods of producing comics gives way to global, faster and more artist-convenient digital methods of generating artwork.

 

I think you've missed the mark on this point. Yes, the supply of older art is, by definition, not growing. But, what matters to the market is not the STOCK (total supply) of older art, but the FLOW of that art to the marketplace. And, there is no doubt that the large leap in prices beginning in about 2012 has been bringing out both more and better art to the marketplace, both publicly and privately, so the flow has definitely been increasing. So far, the market has absorbed this supply with considerable aplomb, but it would be 100% wrong to characterize the supply of vintage art as static. I can tell you that Wrightson collectors certainly don't believe the supply of vintage Wrightson art is static, even though the total stock of such is fixed.

 

As for newer Modern art, all this talk about traditional methods giving way to digital is waaaaaaaaaay overblown when it comes to the OA collecting hobby. While obviously this trend is happening, that still leaves THOUSANDS of brand new pen & ink pages being created literally each and every month.

 

 

2) Demand is growing. Increasing prices are not absolute proof of true growing demand, but in addition to that I point to Bill Cox's recent posting in this forum that membership in ComicArtFans has been growing strongly. In addition, I am an admin for a FB group following one particular artist, and membership requests have been on the upswing for some time. Circumstantial evidence, I know, but taken together I'm comfortable saying demand is real and growing.

 

Yes, demand has been growing. However, for vintage material (call it pre-1997 art, before the Marvel bankruptcy at the end of 1996 and before the widespread shift to decompressed storytelling and digital lettering), all the signs I see is that this increased demand is coming from the same age groups (mostly 40-60 somethings), whether they be existing collectors, lapsed collectors returning to the fold because of the media properties or the hot market, or new collectors shifting over from slabs or whatnot. This tells me that the demographic issues and eventual secular decline that I discussed in the latest Felix Comic Art podcast is still very much on track for a decade or two, max, down the line.

 

Though, I suspect it won't take nearly that long for Gen Xers to change their spending/collecting habits and for it to manifest itself in market prices - it's not like this generation is likely to keep spending full-bore and then suddenly start liquidating. More likely their spending will taper off, they'll sit on what they have and futz around buying or selling a little, and then eventually become deeper and deeper net sellers (the whole process taking a good number of years). It's not like we haven't seen that with a number of older collectors who have exited (or are in the process of exiting) the hobby, so this is very much based on empirical evidence.

 

 

Have other 'Art' markets ever seen a dip in prices?

 

Yes, fine art prices collapsed by between 1990 and 1996 (I believe on the order of 60%, but I don't remember the exact figure) after the Japanese stock and property bubble burst. The broad art market did not regain its 1989 peak until 2003. The "best of the best" was not spared and, in many cases, suffered among the largest declines as much of the worst of the speculative froth was focused on these trophy pieces. Similarly, the art market took a dive in 2008-09 (it was down at least 35% from peak) and much of the market hasn't yet fully recovered (and, like much of the worst-hit art in the '90s bear market, probably never will).

 

As I discussed in the podcast, I think it's a total myth that the OA market was unaffected by the 2008 financial crisis - I got several of my best-ever OA deals in the first half of 2009. The reality is that the OA market didn't crash, but it froze up around then. Some people needed cash and there were some deals to be had. But, mostly, people just sat on their hands, frozen like deer in headlights. People didn't panic sell, that is true, but, neither did moneyed collectors come swooping in trying to pry loose bargains.

 

The bottom line is that this down period didn't last very long - it was less than 6 months between the collapse of Lehman and the bottoming of the broader stock market (and many stocks and asset classes actually bottomed within 2-3 months of the Lehman collapse) before powerful reflationary forces were unleashed on the world. I have no doubt that if the downturn had gone on another, say, 6 months, you would have seen much more obvious evidence of a softening in OA prices. As it was, Heritage put on an Illustration Art auction in early 2009 and it was nothing short of a bloodbath. And yet, by their summer Illo art sale, prices had rebounded to new highs. Like I said - short downturn, powerful reflation. If the next downturn is more prolonged, you will definitely see a knock-on effect in our hobby, especially since prices have gone parabolic over the past 4 years. We simply have not taken the time to digest and adjust to these price levels, which means there will be a lot less psychological support if we should roll over into the next economic downturn.

[Bill C]

1) Supply of OA is pretty close to static. There is only so much Golden Age / Silver Age / Bronze Age / Copper Age art, as obviously those books are long since published and no more is being produced. Collectable Modern Age art is being produced in dwindling numbers, as traditional methods of producing comics gives way to global, faster and more artist-convenient digital methods of generating artwork.

 

I think you've missed the mark on this point. Yes, the supply of older art is, by definition, not growing. But, what matters to the market is not the STOCK (total supply) of older art, but the FLOW of that art to the marketplace. And, there is no doubt that the large leap in prices beginning in about 2012 has been bringing out both more and better art to the marketplace, both publicly and privately, so the flow has definitely been increasing.

 

 

In my case as a Valentino GOTG collector- not so much due to high realized prices, but that first GOTG movie- which unleashed about 5 large Valentino GOTG collections into the wild, where for years before that there was an absolute drought.

 

Which brings me to Andrew's first post:

 

"What would it honestly take for the market to modify?"

 

I'd add (to a lesser extent than the other reasons):

 

D) Superhero movies tanking/ loss of interest from the general public.

 

I think a lot of frenzy has been going on in the OA world having to do with art related to hot (or not so hot) TV and movie properties. Things may cool a bit when the public reaches a point that they are over comic movies.

 

[delekkerste]

A cataclysmic stock market/bond market/real estate meltdown in the broader economy would end this party.

 

Short of that, I dont see the fundamental underpinnings of the hobby as a whole suffering any slowdown or even the faintest fatigue right now.

 

There doesn't appear to be fatigue anywhere right now. Which, to a rational person, should be worrisome in and of itself, because after more than 7 years of valuation for ALL asset classes being totally distorted by bizarro central bank policies (which has led to $13.4 trillion of sovereign debt trading at a NEGATIVE yield now), years of future returns have been pulled forward and embedded in current prices (re: overvaluation) for ALL asset classes (at least the ones that haven't suffered meaningful corrections).

 

As I mentioned in another post, it's not like people necessarily look up the level of global interest rates before they buy a piece of OA. Though, you might be surprised at how many people have told me they've bought more art because they're not earning anything in the bank. In any case, given what low interest rates have done to stocks, bonds and property markets, I think it's fair to say that the psychology/mind-set has spilled over into everything from art to collectibles as well. So, yes - a large reversal in interest rates or other shock would almost certainly impact our hobby if it led to a prolonged downturn in asset prices.

 

That said, what nobody can seem to figure out is whether this is something that is imminent or years away. It really is a confidence game in its most literal definition. Personally, I hope things continue to ramp to stupid levels for a while so I can continue to pare down the pieces in my collection which no longer fit my long-term collecting goals.

[The-Collector]

 

Yes, demand has been growing. However, for vintage material (call it pre-1997 art, before the Marvel bankruptcy at the end of 1996 and before the widespread shift to decompressed storytelling and digital lettering), all the signs I see is that this increased demand is coming from the same age groups (mostly 40-60 somethings), whether they be existing collectors, lapsed collectors returning to the fold because of the media properties or the hot market, or new collectors shifting over from slabs or whatnot. This tells me that the demographic issues and eventual secular decline that I discussed in the latest Felix Comic Art podcast is still very much on track for a decade or two, max, down the line.

 

 

Gene you don't see those 40-60 year old collectors being replaced by a new generation?

[Dick O.]

Gene you don't see those 40-60 year old collectors being replaced by a new generation?

 

The late-20s to 40 year olds are coming on strong, but I don't see another generation of OA collectors beyond that. Simply not enough critical mass of children who grew up reading comic books from the late-'90s on.

 

- Not Gene

[vodou]

The ongoing conversation in another thread inspired me to think what it would really take for our hobby's market to (using investment advisor terms) 'correct.'

Gene's posts are pretty good, but he forgot one aspect, a pretty important one that I think everybody can apply and scale to their own situation: credit contraction.

 

Credit contraction can occur in two ways. The first is rising rates, which Gene alluded to (in contrast to zero/negative "ZIRP/NIRP" rates) which makes just about everybody go into a cooling down period to consider any spending they have to carry a balance on. The second is actual lender reduction/elimination of new and existing lines of credit. This former is voluntary (on the part of borrowers), the latter involuntary.

 

So, if you want to know the effect this might have on you (forget "the hobby" for now) just ask yourself:

 

1. What would happen to your hobby spending if all your credit carry cost (interest amounts and minimum payments) went up 10%, 15%, 20%?

2. What would happen to your hobby spending if your credit lines were cut back to whatever your balance is today, or 25-50% was simply eliminated (in whatever way)?

 

Not everybody "lives" on credit but most do use it for short term liquidity until payday, if nothing else. Those that use it extensively would be the most affected and if they don't have significant net worth/income then they would be rather rate sensitive and fear lack of liquidity the most...as it pertains to "spending the same or even more on art because prices are static or even going down a bit right now" (which is what usually happens in a credit crunch -broadly).

 

Deflation of the notable kind is usually only a party for the cash 'n carry buyers.

[Peter G]

A cataclysmic stock market/bond market/real estate meltdown in the broader economy would end this party.

 

Short of that, I dont see the fundamental underpinnings of the hobby as a whole suffering any slowdown or even the faintest fatigue right now.

 

That said, what nobody can seem to figure out is whether this is something that is imminent or years away. It really is a confidence game in its most literal definition.

 

"Confidence game" is such a nice euphemism for Ponzi scheme. We are just a recession or two away from oblivion.

 

 

 

 

 

[theflashunc]

1) Supply of OA is pretty close to static. There is only so much Golden Age / Silver Age / Bronze Age / Copper Age art, as obviously those books are long since published and no more is being produced. Collectable Modern Age art is being produced in dwindling numbers, as traditional methods of producing comics gives way to global, faster and more artist-convenient digital methods of generating artwork.

 

I think you've missed the mark on this point. Yes, the supply of older art is, by definition, not growing. But, what matters to the market is not the STOCK (total supply) of older art, but the FLOW of that art to the marketplace. And, there is no doubt that the large leap in prices beginning in about 2012 has been bringing out both more and better art to the marketplace, both publicly and privately, so the flow has definitely been increasing. So far, the market has absorbed this supply with considerable aplomb, but it would be 100% wrong to characterize the supply of vintage art as static. I can tell you that Wrightson collectors certainly don't believe the supply of vintage Wrightson art is static, even though the total stock of such is fixed.

 

As for newer Modern art, all this talk about traditional methods giving way to digital is waaaaaaaaaay overblown when it comes to the OA collecting hobby. While obviously this trend is happening, that still leaves THOUSANDS of brand new pen & ink pages being created literally each and every month.

 

 

As someone who's mainly collecting modern stuff, I agree with your general sentiment, but the wrinkle here is several notable and high profile modern series are not being created on paper. Saga is all digital. Spider-Gwen (maybe the most notable new Big Two character in a decade) has zero original pages created by Robbi Rodriguez. His work on the series is also all digital.

 

So while the stock of volume is there, what would be the cream of the crop in terms of buyer interest and demand simply doesn't exist in some cases.

[delekkerste]

Gene you don't see those 40-60 year old collectors being replaced by a new generation?

 

The short answer is no. But, it's a little more nuanced than that, so I'll try to dissect the argument down into various parts.

 

First, will there be a new generation? Yes. Will that new generation have the aggregate numbers, interest and financial resources to clear the market at ever-escalating prices? I think this is the one of the surest bets you can possibly make, bordering on metaphysical certainty: no.

 

Aggregate numbers and interests: Yes, there will be new collectors. No, there will not be enough to replace the existing collector base in either comics or comic art. Why do I say that? Because several things happened in the mid-to-late 1990s. First, the comics industry imploded (too much product, too low quality, too many better alternatives). Comic shops closed by the hundreds. We lost the next generation. Second, technology disrupted traditional media and entertainment. Post-1995, the next generation's interests became splintered in a nearly infinite # of different directions. Even without the industry implosion, people would have gravitated towards other things, just as they have done with all traditional media (look at what has happened to newspaper and magazine circulations, network TV ratings, etc. in the age of infinite entertainment options).

 

And, no, you can't just look at the aggregate revenues from the comic industry (which have been on an upward rebound in recent years) - much of that is due to speculation (hundreds of variant covers, reboots, crossovers, etc.) and higher unit (cover) prices. The vast majority of books out there have circulations that would have been cancellation levels in another era.

 

Aggregate financial resources: There's virtually zero chance that the next generation will have the financial resources to take out Gen X's collections at ever-escalating prices. First, that generation is, very plainly, not going to be better off financially than we are. Second, as I said on the Felix Comic Art podcast, most Gen Xers couldn't even buy back their own collections at current inflated prices (with the benefit of having made more money and riding the appreciation of art bought cheap) - the next generation has no chance of doing either. NONE.

 

Remember what this means mathematically. Virtually every piece of comic art out there will change ownership at least once over the next 30 years. Right now, high prices are maintained (and getting higher) because Gen X is still a net buyer as a cohort, and so sales are only occurring at the margin for the most part. However, when Gen X becomes a net seller, and new money has to take out these collectors en masse at ever-escalating prices...I'm sorry, there is only one way for the market to clear, and that is for prices to fall. Now, that can happen in different ways. Prices might fall across the board. Or, maybe the very best of the best stays elevated while the second and third tier stuff falls by the wayside. But, what's considered the best of the best and most desirable to the next generation will undoubtedly surprise people. IMO, for example, I think the Millennials will have very little interest in things like Cosmic Starlin or Frank Frazetta; I would expect mainstream Silver Age hero art to hold up relatively better from an interest standpoint.

[delekkerste]

And, speaking of changing interests, as Felix has pointed out to me, he's seeing a lot of interest in 20-somethings for the kind of art he sells (Modern OA). However, I think we both agree that these Millennials who are interested in Manhattan Projects or Scott Pilgrim are not likely to cross over into vintage art to a meaningful degree (and they are virtually a non-factor right now). We are also seeing it somewhat among different eras of vintage art collectors - it seems that many of the 30-somethings are more attracted to Lee and McFarlane and Vertigo art than Kirby and Ditko, for example.

 

The counter-arguments to what I wrote above usually fall along the lines of the following: that we will eventually get crossover from fine art collectors, that foreigners will take a strong interest in this material and/or that the movies/media will hook people into collecting OA just as physical comics were one the gateway. I have explained many times why I think none of these is likely to occur. But, I do agree that one or more of these factors would have to occur to prove me wrong, because right now we are on a path that will almost surely lead to secular decline within 15-20 years and very possibly a lot sooner.

[tth2]

You really need to change your name to Maltherste.

[delekkerste]

You really need to change your name to Maltherste.

 

[DeadpoolJr.]

And, speaking of changing interests, as Felix has pointed out to me, he's seeing a lot of interest in 20-somethings for the kind of art he sells (Modern OA). However, I think we both agree that these Millennials who are interested in Manhattan Projects or Scott Pilgrim are not likely to cross over into vintage art to a meaningful degree (and they are virtually a non-factor right now). We are also seeing it somewhat among different eras of vintage art collectors - it seems that many of the 30-somethings are more attracted to Lee and McFarlane and Vertigo art than Kirby and Ditko, for example.

 

The counter-arguments to what I wrote above usually fall along the lines of the following: that we will eventually get crossover from fine art collectors, that foreigners will take a strong interest in this material and/or that the movies/media will hook people into collecting OA just as physical comics were one the gateway. I have explained many times why I think none of these is likely to occur. But, I do agree that one or more of these factors would have to occur to prove me wrong, because right now we are on a path that will almost surely lead to secular decline within 15-20 years and very possibly a lot sooner.

Where would I go in your predictions, an outlier? I'm in my early 20's, and started in my late teens. I have some pieces of modern art, but the vast amount of my collection is older from between 70s-90's work. I like many of the earlier stuff also, with just the prices that keep me out of some of the nicer pieces.

 

Is it not possible that more modern work will increase in price in the future, since many of the people from the 80's to present will have those items as their sweet nostalgic spot? With just the older examples going down in price, but still of interest to the younger collectors, that could just not afford them before they were lowered?

[delekkerste]

Where would I go in your predictions, an outlier? I'm in my early 20's, and started in my late teens. I have some pieces of modern art, but the vast amount of my collection is older from between 70s-90's work. I like many of the earlier stuff also, with just the prices that keep me out of some of the nicer pieces.

 

Again, I didn't say that there are no new, younger collectors. Just that there won't be enough of guys like you to clear all the vintage art out there owned by the Gen Xers at ever-escalating prices that people expect. How many guys like yourself will be required to absorb even one of the 40-60 something BSD's collections? Because, like it or not, mortality will play a role in this hobby; almost every piece of art out there is likely to trade hands at least once over the next, say, 30-40 years, including all the massively appreciated BSD collections out there.

 

 

Is it not possible that more modern work will increase in price in the future, since many of the people from the 80's to present will have those items as their sweet nostalgic spot? With just the older examples going down in price, but still of interest to the younger collectors, that could just not afford them before they were lowered?

 

I think what happens to Modern work is a subject in and of itself; the focus of my argument is on what happens to the pre-1997 vintage art the farther out we go. I'm sure some modern work will increase in price in the future, but, overall, I see many reasons why it won't as a whole. But, again, I think it's a separate topic.