What percent of existing copies of Action 1, Detective 27, Superman 1, and Batman 1 are already CGC graded? 1 1

[sfcityduck]

To beat the horse even deader than it is. 

When you state:  "The $6,000 you paid for it has zero relevance in calculating the risk (although, obviously, it is relevant in calculating your capital gain should you decide to sell)."  

Exactly.  The only money you ever have at risk is what you paid.  Your gain (or loss) is calculated from the starting point of what you paid.  You break even if you get your money back, you profit if you get more, you suffer loss if you get less (ignoring any other values of ownership).  That is the way that the IRS and accounting firms look at financial gain and loss.  

You are looking at the risk of losing out on maximising gain.  You are not looking at the risk of taking a loss on the investment.  The later is the correct view of risk in this situation.  A collector who paid $6,000 for an Action 1 in 1980 faces ZERO financial risk of taking a loss.  ZERO.  

In contrast, their risk of failing to maximise their gain is impossible to define.  The pricing history would suggest that as long as they hold the item they have a ZERO risk of failing to maximise their profit because Action 1 has never declined in value.  But, that's inherently speculative and not a rationale view of financial risk. Your day trader perspective is also not rationale as it based on the assumption that Action 1 will never increase in value.  

The only rationale view of financial risk starts with the purchase price (but, feel free to factor in time value of money/inflation).

[Dr. Love]

Astute collectors are bringing fantastic collections to market, starting perhaps with Schmell a few years ago, not because of their low basis in the books but because of the increasing risk of holding the bag as the market reaches blow off proportions.  Sqeggs is a domain expert in this area of finance; you would do well to listen to what he is trying to tell you. 

[sfcityduck]

36 minutes ago, Dr. Love said:

Astute collectors are bringing fantastic collections to market, starting perhaps with Schmell a few years ago, not because of their low basis in the books but because of the increasing risk of holding the bag as the market reaches blow off proportions.  Sqeggs is a domain expert in this area of finance; you would do well to listen to what he is trying to tell you. 

I understand the risk that comic prices could decline in the future.  I have long voiced the opinion that it is a possibility that is increased by the potential decrease in supply and increase in demand as the collectors who started in the 60s sell off collections that have been sitting off the market for the past 50 years or more.  

The disagreement between Sqeggs and I concerns this statement by him:  "Putting $1 million to $2 million or more into an Action 1 or Detective 27 strikes me as an investment whose expected return is too low to offset the risk you are taking on, unless you truly are very wealthy, so you can ignore the risk.  But that's the investment you are making if you hold on to these books rather than sell them."

I agree with the first sentence:  "Putting $1 million to $2 million or more into an Action 1 or Detective 27 strikes me as an investment whose expected return is too low to offset the risk you are taking on, unless you truly are very wealthy, so you can ignore the risk."

I disagree with his second sentence: "But that's the investment you are making if you hold on to these books rather than sell them."  That's blatantly untrue.  The only money you invested if you bought an Action 1 in 1980 for $6,000 (or better yet for $200 in the mid-60s) is the amount you paid.  The notion that the amount of your "investment" is the amount of paper profit you could achieve on any given day you don't sell is contrary to how the IRS, accountants, and rationale folks view what an "investment" is.  Prices fluctuate, the amount you have invested does not.

Edited August 3, 2018 by sfcityduck

[sfcityduck]

18 minutes ago, Dr. Love said:

Astute collectors are bringing fantastic collections to market, starting perhaps with Schmell a few years ago, not because of their low basis in the books but because of the increasing risk of holding the bag as the market reaches blow off proportions.   

I don't know why Schmell sold off, but I do know that he was selling off pedigree comics which he bought relatively recently in the 2000s (Pacific Coast) and even into the 2010s (Twin City).  He is not the type of black hole collection collector that this thread is about.  Personally, I am talking about folks like Bangzoom who bought many great comics long long ago, including un-entombed mega-keys, and have held them since.

[Ryan.]

There is more risk in holding a $1 million physical commodity than just market fluctuations. Flood, fire, theft, bug infestation, etc.

Or you keep it in a vault with insurance to lessen these risks but that requires overhead and the initial purchase price becomes just one data point in the total cost of ownership.

[sfcityduck]

16 minutes ago, Ryan. said:

There is more risk in holding a $1 million physical commodity than just market fluctuations. Flood, fire, theft, bug infestation, etc.

Or you keep it in a vault with insurance to lessen these risks but that requires overhead and the initial purchase price becomes just one data point in the total cost of ownership.

Most long term collectors store in safety deposit boxes.  Cost is cheap, $25 a year is standard.  Not a big expense, especially since they hold more than one book.  But, your point is well made.  Bad things happen.  It is a risk.  But, one that matters less (or not at all) to collectors' whose purchase price was low.

[N e r V]

I have my collection covered in a separate policy. As far as I know everyone  I know with a sizeable collection of value does too. I won’t say I have every single book covered but the lions share is covered for theft and/or damage. Certainly all my big high value books are covered now. 

It’s an additional cost yearly but nothing that breaks the bank and totally worth it. I just adjusted my policy recently to account for increased values before renewal. I have a lot of other collectible items of value besides comics that the policy covers too.

Edited August 3, 2018 by N e r V

[lou_fine]

1 hour ago, sfcityduck said:

Most long term collectors store in safety deposit boxes.  Cost is cheap, $25 a year is standard.  Not a big expense, especially since they hold more than one book.  But, your point is well made.  Bad things happen.  It is a risk.  But, one that matters less (or not at all) to collectors' whose purchase price was low.

What bank is your safety deposit box at?  

Based upon the $25 price tag, that sounds more like a standard size (i.e. tiny size) safety deposit box which in no way would be able to hold a comic book unless you folded it into a cone.  Now, if you can get a big enough safety deposit box that can stored mylared comic books safely and flatly for only $25, please let the rest of us know so that we can allocate more money for our comic book purchases instead of handing it over to the greedy banking institutions.  

[Mr bla bla]

4 hours ago, sfcityduck said:

You are defining financial risk the way a day trader does, not the way a collector does.  Because you are ignoring what is being purchased.

When you purchase stock, all you are purchasing is an expected return in the form of increased value (or increase plus dividends).  The purpose of the purchase is to maximise return, consequently those who purchase stock stress over the timing of the decision to sell.  Sell too early or too late, and you don't maximise return.  The sole purpose is to maximise return. That appears to be your mentality.  

BUT, when you buy a piece of art or a comic, you are buying far far more if you are a collector. You are paying for the benefits of owning the collectable:  The ability to appreciate and display the piece, the enhanced reputation that can come from ownership, the joy of reading, the entertainment value, the emotional uplift, etc. etc.  All of these benefits are "returns" that you enjoy commencing the moment you purchase the piece.  Heck, some collectors even make money off displaying their collections.

So.  If you pay $6,000 for a piece in 1980, what you bought was all of the above identified benefits (plus the prospect of a future return - an uncertain benefit).  When, in 2018, 34 years later, your Action 1 is worth $1M, you've already received benefits that probably far exceed the measly $6,000 original purchase price.  You have received full value for your purchase price.  You will lose absolutely nothing if you don't sell because you still have all of the above identified benefits (plus the prospect of a future return).  The amount of the return is not the driving benefit because the purpose of the purchase was not to maximise return.  If the return, which is a paper gain or loss until the date the piece is sold, fluctuates ... so what?  You haven't lost that you will get a return of some sort.  

Which is why your "fundamental rule" that "if you wouldn't buy an asset at its current price, they you should sell it" is a fundamentally flawed view of art and comics.  You are ignoring the daily returns the purchase provides the owner and the fact that the owner has zero opportunity cost at all in holding on to the piece.  They aren't re-buying the piece each day.  They bought it 38 years ago (in my example), so the question of whether they'd pay the present value to buy the piece is entirely irrelevant (and most could not afford to do so anyway).

In short, it is your attitude towards the piece which defines the nature of the financial risk.  And most old collectors don't share your attitude.  If they did, they'd have sold many many many years ago (like Mitch Mehdy did) and missed out on the paper gain which is causing you so much stress at the prospect of losing it.  Your day trader attitude is the opposite of the buy and hold (and most importantly enjoy) attitude which motivates collectors.

This, this ...

[sfcityduck]

1 hour ago, lou_fine said:

What bank is your safety deposit box at?  

Based upon the $25 price tag, that sounds more like a standard size (i.e. tiny size) safety deposit box which in no way would be able to hold a comic book unless you folded it into a cone.  Now, if you can get a big enough safety deposit box that can stored mylared comic books safely and flatly for only $25, please let the rest of us know so that we can allocate more money for our comic book purchases instead of handing it over to the greedy banking institutions.  

I don't use one.  Regional banks and credit unions have good rates, which I admit are a bit more for the bigger sizes, but not prohibitively so.  Here's an example where $30 to $50 would do it:

SAFE DEPOSIT BOX RATES

The annual rental for various sizes safe deposit boxes is listed below. All rent is payable in advance.

3 x 5 x 21 . . . . . . . . . . . . $ 20.00
5 x 5 x 21 . . . . . . . . . . . . $ 25.00
3 x 10 x 21 . . . . . . . . . . . $ 30.00
5 x 10 x 21 . . . . . . . . . . . $ 50.00
10 x 10 x 21 . . . . . . . . . . $100.00

[Chicago Boy]

4 hours ago, sfcityduck said:

I don't use one.  Regional banks and credit unions have good rates, which I admit are a bit more for the bigger sizes, but not prohibitively so.  Here's an example where $30 to $50 would do it:

SAFE DEPOSIT BOX RATES

The annual rental for various sizes safe deposit boxes is listed below. All rent is payable in advance.

3 x 5 x 21 . . . . . . . . . . . . $ 20.00
5 x 5 x 21 . . . . . . . . . . . . $ 25.00
3 x 10 x 21 . . . . . . . . . . . $ 30.00
5 x 10 x 21 . . . . . . . . . . . $ 50.00
10 x 10 x 21 . . . . . . . . . . $100.00

I asked this elsewhere but since we r on the topic ......what do you do for insurance with books you keep in a safe deposit box ?

[rob_react]

18 hours ago, N e r V said:

I have my collection covered in a separate policy. As far as I know everyone  I know with a sizeable collection of value does too. I won’t say I have every single book covered but the lions share is covered for theft and/or damage. Certainly all my big high value books are covered now. 

It’s an additional cost yearly but nothing that breaks the bank and totally worth it. I just adjusted my policy recently to account for increased values before renewal. I have a lot of other collectible items of value besides comics that the policy covers too.

 Insurance is cheap. I insure comics, art, wine and books under a separate policy. To sfcityduck's point, I could never be made whole if something happened to my comics or art. While I'd be able to recoup the monetary value, there's no replacing, for example, the hundreds of pedigree comics I have. Still, it's nice to know if something does happen, I won't be left totally empty-handed. 

(this reminds me I need to update my policy )

[Chicago Boy]

1 hour ago, rob_react said:

 Insurance is cheap. I insure comics, art, wine and books under a separate policy. To sfcityduck's point, I could never be made whole if something happened to my comics or art. While I'd be able to recoup the monetary value, there's no replacing, for example, the hundreds of pedigree comics I have. Still, it's nice to know if something does happen, I won't be left totally empty-handed. 

(this reminds me I need to update my policy )

Whom do you use. I’ve found collectiables insurance to be too expensive for my taste once you hit 6 figures.  on the other hand proving appraisal on a ever changing market is tough for home owners insurance   

 

 

 

 

 

[N e r V]

5 hours ago, Chicago Boy said:

Whom do you use. I’ve found collectiables insurance to be too expensive for my taste once you hit 6 figures.  on the other hand proving appraisal on a ever changing market is tough for home owners insurance   

 

 

 

 

 

Check your regular insurance company (whomever that might be) first and tell them what you’re looking for. I roll all my policies together (home, auto, collectibles) because by doing so I get a better rate. So you have to shop first to get someone who can make all of them work for you.

I assume you meant one of those collectible insurance policies like Metro advertises on their web site being prohibitive in cost? I’d be more concerned with them as a long term partner. The insurance carriers I use have a history and at least some record of stability in the market. Not sure about those speciality providers that advertise for insuring comics.

[sfcityduck]

11 hours ago, rob_react said:

 Insurance is cheap. I insure comics, art, wine and books under a separate policy. To sfcityduck's point, I could never be made whole if something happened to my comics or art. While I'd be able to recoup the monetary value, there's no replacing, for example, the hundreds of pedigree comics I have. Still, it's nice to know if something does happen, I won't be left totally empty-handed. 

(this reminds me I need to update my policy )

I am shopping around for art insurance.  What company are you using?

[rob_react]

I use https://americancollectors.com/plans/collectibles/what-we-insure/

Customer service is great.

As a note, I'm not sure that they would actually insure paintings. They insure prints and multiples, so I can piggyback on my comics collection for that category. 

[Chicago Boy]

Metropolis puts in writing, “there are less than 100 copies of Action 1 out there “.  Just thought it was interesting to see in writing from them and would add this to our discussion.  

Edited August 11, 2018 by Chicago Boy

[sfcityduck]

1 hour ago, Chicago Boy said:

Metropolis puts in writing, “there are less than 100 copies of Action 1 out there “.  Just thought it was interesting to see in writing from them and would add this to our discussion.  

Metropolis told me the Action 1 9.0 was over graded  when I asked them their opinion of it at SDCC BEFORE hey bought it for a record price..  I believe Vincent was also quoted in the press talking it down before they boughtt it.  Like many other dealers, they tend to change their opinions based on the situation - puffing up here, talking down there.

[lou_fine]

48 minutes ago, sfcityduck said:

2 hours ago, Chicago Boy said:

Metropolis puts in writing, “there are less than 100 copies of Action 1 out there “.  Just thought it was interesting to see in writing from them and would add this to our discussion.  

Metropolis told me the Action 1 9.0 was over graded  when I asked them their opinion of it at SDCC BEFORE hey bought it for a record price..  I believe Vincent was also quoted in the press talking it down before they boughtt it.  Like many other dealers, they tend to change their opinions based on the situation - puffing up here, talking down there.

Well, this only makes good business sense and is perfectly understandable to talk down the attributes (i.e. potential value) of a particular book if you are planning to bid on it.  

Especially if you think this tactic will help to discourage competing bidders from raising their bids too high and therefor, allowing you to scoop it up at a lower price.  

Edited August 11, 2018 by lou_fine

[lou_fine]

2 hours ago, Chicago Boy said:

Metropolis puts in writing, “there are less than 100 copies of Action 1 out there “.  Just thought it was interesting to see in writing from them and would add this to our discussion.  

Read the latest Scoop that came out just yesterday and noticed Vinnie's comment that "they had sold more copies of the world's most valuable comic than anybody, with the notable exception of National Periodical Publications (DC Comics)".  

Don't you just love their spin on their things.