How have label chasers affected the hobby

[delekkerste]

I`ll even make it easy to establish a floor by stating for the record that no matter how bad it gets, I will be willing to buy the Church Action #1 and the Allentown Detective #27 for $100,000 each.

 

Obviously, the Allentown 'Tec 27 isn't going to fall the same percentage as a Marvel Spotlight #5 CGC 9.6. There will be people who always want the best. Though, I suspect the amount people are willing to pay to pry it away from the owner isn't going to be rising, either.

 

I'm all for people buying what they like if they can afford it. I don't understand, however, why people would choose comic books as a store of value or investment. Comic books do not generate any income, so they must continually rise in value to make it worthwhile to hold them for those purposes (and, given that real incomes are stagnating, people are saving 0.4% of their incomes, are up to their eyeballs in debt, the housing market is slowing and the collector base is aging, please tell me where the money is going to come from?) Comics have a limited appeal to a niche audience and, in many cases, you are only talking about a handful of potential buyers for a book, so liquidity even in the best of times is going to be suspect.

 

Worse still, though, is that all but a few people are very, very emotionally attached to their comics! Do you really want to have that kind of attachment to your investments (even if you don't consider yourself to be a collector only, if you are counting on your collection to provide cash flows to you in the future through sales, you have an investor's stake in the market)? Will people act rationally if bad news should hit the comic market? Will they be willing to part with their collecting gems if the market turns? Will they even be objective enough to recognize a market turn or will they just remain in a perpetual state of denial? Dollars to donuts, people will be reluctant to sell until they think it's too late and, even then, it won't really be too late.

 

Perhaps equally bad is, do people really think comics will be the BEST investment class going forward given all of the financial, economic, demographic, geopolitical and other risks that I have cited, especially from today's steroidal price levels? If people do manage to make money buying and holding comics over the next decade, it will be in spite of these strong headwinds. How much do you really expect to make in a non-income producing niche asset with an aging and shrinking collector base in an environment where cash is getting harder and harder to come by?

 

People are scared to look outside of their comfort zone - they know and love comics, so they think they can make money with it and hang onto it even if the market turns, just like every other guy in the same boat. Me, I like to go where the opportunity is. 5 years ago, I didn't know the Canadian tar sands from Neil Gaiman's Sandman, but I'm glad that I took the time to find out. There's no doubt that energy will be a huge theme for the next 10 years or more, though there may be some large hiccups along the way. Water, too. China and India (of course, you'll have to do your homework to find out when and where the best opportunities lie). There'll probably be a bull market in the debt collection and repo business here in the U.S. before long, unfortunately. Why not think big and go where the opportunity is?

 

Even those of you gloating about how there hasn't been a broad-based crash yet - how much have comics really appreciated over the past couple of years? And, don't just cherry pick the hot books - what about all the Spidey books that peaked even before GPA started tracking prices or the collapse in values of Modern 9.8s since pre-screening came into vogue. I bet that the median appreciation of CGC books has lagged the stock and real estate markets by double digit percentages. And, anyone who did their homework on oil (anyone with a car should have noticed prices rising inexorably higher; it really wasn't that hard to see) could have earned hundreds of percent on their money investing in small and medium-sized oil companies. Many tech companies, electric utilities and others have rebounded similarly since the 2002-3 lows. And what about the homebuilders, which have gone ballistic during the bubble. Or the steel or shipping companies, which were up 200-400% in 2004. Teen apparel, anyone? I didn't have the wherewithal to do it, but we all know the opportunities that were in the condo markets the past few years. The bottom line is that there were many, many opportunities to make enormous sums of money the past few years. We're talking about missed opportunities to double, triple or quadruple your money. So there was no crash in Silver Age in that time. Big deal. Compared to what else people could have been doing with their money (some of it risky, to be sure, but some opportunities like buying medium-sized oil companies in the single P/Es, not so risky), that seems like a rather pyrrhic victory, indeed.

[drbanner]

And, don't just cherry pick the hot books - what about all the Spidey books that peaked even before GPA started tracking prices or the collapse in values of Modern 9.8s since pre-screening came into vogue. I bet that the median appreciation of CGC books has lagged the stock and real estate markets by double digit percentages. And, anyone who did their homework on oil (anyone with a car should have noticed prices rising inexorably higher; it really wasn't that hard to see) could have earned hundreds of percent on their money investing in small and medium-sized oil companies.

 

The Dow, NASDAQ, and S&P 500 are all currently below where they were when CGC opened their doors. My little graph above shows pretty clearly that people who "invested" in comic books during the summer and fall of 2002 (when you and JC were preaching about the impending crash) could have easily made significant profits flipping slabbed books. I don't know which Spidey books peaked before GPA starting tracking prices, but I previously posted pricing data from Wizard and CBG that illustrated that 2000 and 2001 prices WERE NOT above 2002 and later prices for anything other than possibly a few "hot modern" books like McFarlane's Amazing and "Spider-man" titles. Pre-300 Spideys did not peak before the fall of 2002.

 

As a professional investor, you have apparently done very well in the last 5 years, but you're cherry picking selective investments. Likewise, an educated comic book "investor" could have also done very well. I've never thought comics were a great investment, and never invested in comics, but in retrospect, high-grade gold, silver, and bronze age comics have been a great investment.

[delekkerste]

The Dow, NASDAQ, and S&P 500 are all currently below where they were when CGC opened their doors.

 

When did CGC start - 1999 or early 2000? I don't recall telling people not to buy then. In fact, I *was* buying then! There were good reasons for comic prices to be revalued higher due to the increased liquidity that the Internet and CGC provided. We are not talking about prices then, we are talking about prices in the past 2-3 years and going forward. Also, if you were smart enough to recognize the stock market for the bubble that it was back then, perhaps you should be looking to see the HG comic market for what it has become and be looking for the *next* big opportunity.

 

 

My little graph above shows pretty clearly that people who "invested" in comic books during the summer and fall of 2002 (when you and JC were preaching about the impending crash) could have easily made significant profits flipping slabbed books.

 

Flipping and investing are not the same thing. I don't have the time or energy to flip comics, even if I wanted to. I'm not really sure how much money people are making doing it on a labor cost-adjusted basis (yeah, yeah, I know I spend time here on the Boards, but that's where my marginal unit of time goes - I don't have any more to devote to flipping). I suspect, frankly, that a lot of flippers could do better by taking a 2nd job bagging groceries.

 

 

I don't know which Spidey books peaked before GPA starting tracking prices, but I previously posted pricing data from Wizard and CBG that illustrated that 2000 and 2001 prices WERE NOT above 2002 and later prices for anything other than possibly a few "hot modern" books like McFarlane's Amazing and "Spider-man" titles. Pre-300 Spideys did not peak before the fall of 2002.

 

Hmmm, $763 PPSS #1 CGC 9.8s, anyone? Don't you remember Danten311? I'm quite sure he still hasn't broken even on a lot of his purchases. Anyway, a significant number of ASMs ARE below where they were a few years ago. As an owner of 9.6 copies of ASM #121 and #122 (the latter formerly a $2K+ book), I ought to know. I don't care what Wizard or CBG says. I remember when any 9.0 or better copy of the Wolverine Limited Series #1 would have fetched triple-digits. I remember dumping my X-Men #137 CGC 9.0 for where a 9.6 copy would sell for today.

 

 

As a professional investor, you have apparently done very well in the last 5 years, but you're cherry picking selective investments.

 

Do you live in a home? Do you buy gas? How hard would it have been, really, to recognize the opportunity there. Instead of sinking money into another slab, perhaps the better move would have been to say, "hmmm, I keep paying more and more for gas at the pump. Maybe if I bought an oil stock, it would go up and help defray my gas costs". Even if you weren't able to make that simple connection, even the broad-based averages have been soaring higher - you could have walloped the comic market even in an index fund.

 

And, yes, I may be a professional trader, but investing is not rocket science. There are plenty of regular people who trounce the professionals. But, most people aren't willing to put in the effort to learn. They'd rather stick with the comfort of what they know (like funny books) and take whatever return they can get there. It hasn't been too bad so far, but I don't expect that to last forever.

 

 

Likewise, an educated comic book "investor" could have also done very well.

 

Please define "very well". Real estate seems to have been climbing at a 20+% clip in many areas, and that's not counting the leverage effect! The broad stock averages are up huge since 2003 - the Nasdaq has almost doubled since the bottom. Have your books doubled since 2003? Again, I'm not talking about 1999 or 2000. I was a buying a lot of slabs back then! I also hate to harp on the oil thing, but how hard was it to see that opportunity? Unlike the housing market, that market was both ridiculously undervalued and smokin' hot. But, you know what? Plenty of Joe Six-Packs got that one right and have done quite well the past couple of years. You really did not need to be a professional to see that opportunity. You didn't even need to trade in your CBG for the WSJ. All you had to do was look at your gas costs.

 

 

I've never thought comics were a great investment, and never invested in comics, but in retrospect, high-grade gold, silver, and bronze age comics have been a great investment.

 

I disagree. If you cherry pick, maybe. For the broad market, no. And even on those cherry-picked books, most are still grossly lagging what you could have made elsewhere. Have most books really gone up all that much in percentage terms? Most of the charts I see of prices since 2002 isn't showing that big of a net movement. Also, you could have put significant dollars to work in housing or stocks. How much capital could you have readily deployed into comics? If you have $5K to invest and you have no life, maybe flipping comics is worthwhile for you if you don't want to trade stocks. But I can't imagine that it would be very worthwhile for someone without a lot of spare time and with a good chunk of money to invest (unless you're willing to plunk down 5 or 6 figures for high-end items, though think about what you're giving up there in the way of potential interest or dividend payments alone).

[Norrin_Radd]

I do not believe there is a major cause-and-effect relationship going on here, especially since the timing is somewhat off.

 

I do believe there is a cause-and-effect relationship.

 

The stock market bottomed in 1974 and was up for the rest of the decade.

 

WRONG! Here's the Dow Jones for 74-81.

 

 

 

The '87 crash bottomed rapidly and new highs were made a year later (did all the comic value gains take place in that very brief downturn?)

 

 

You're looking at the correlation all wrong. It's not one or another. Crashes in the stock market give people pause to reflect about diversifying their assets. They look to "alternative investments".

 

I remember the '87 crash. I remember reading about it in the evening newswires in a radio newsroom I was in. After that, collectibles took off. Look what Sotheby's stock did in the late 80's (below). Look what collectible cars did in the late 80's (especially Ferrari). "Alternative investments" took off because people were scared off of the stocks. They wanted something tangible to buy and own that would also provide return.

 

Wouldn't you have been skittish if you went to sell on Oct 19th and the broker wouldn't even answer the phone.

 

 

 

The 2000s saw a big swoon in the stock market, true, but we also saw CGC catch fire then (plus, real estate took off on a rampage as well).

 

The stock and real estate markets swooned in the early 1990s - did we see a huge spike in comic values then? Also, most of the 1990s saw a rampaging bull market across all asset classes. Despite the bankruptcy of Marvel and the crash in new comic sales, I don't recall there being a sharp downturn in back issue or original art prices. No matter what the OS guide says, I'm sure all of us would have liked to buy at 1991, 1993 or 1995 prices in 2000.

 

Again, just because the stock market does well doesn't mean that comics do poorly. There isn't a direct correlation that when one does well the other does badly, just that stock market crashes scare people away from stocks into "alternative investments". The 90's comic book movies may have added a boost of interest.

 

 

As always, it's interesting discussing theories with you, Gene.

[gpanalysis]

I guess it all depends which time points, era, grades, etc you take when you look at this kind of analysis. Internally we produce hundreds of pages of reports that give us an idea on where things might be - unfortunately you do need to look at all the different permutations and combinations of data to get a good overall feel for how your "bundle" of books would perform.

 

Take for example the Silver Age market and look at overall sales for each quarter. I can go back to mid 2002 and then all the way through to mid 2005. Overall sales have generally done well, although there are some dips. Now take these averages across each quarter and remove the top 20 sales. Take this data and average out sales against volume to give you a price per book per quarter. I.e. don't cherry pick books, don't look at specific titles, nor grades, etc. Just hypothesise for a moment that someone has x dollars to spend and spreads that money across the broad spectrum of Silver Age books. For those looking at the "buy and keep" strategy (even though we're only talking about 12 quarters, which could still be seen as short term) then you would be paying on average $249 per book in Q2 2002. If you were selling In Q2 2005 you would make a whole buck, getting $250 for each of your books! However if you had invested in Q2 2003 and sold now, you would be returning a profit of almost $70 per book.

 

The above is someone investing with absolutely no idea in what he/she is buying, purely following a number of indicators.

 

However I doubt there is anyone like that in the comic book market - instead collectors look at specific titles, issues, grades, and a whole lot of emotional factors when buying and selling. And often they (generally speaking) sell when they have to and not when they should (for profit, or to minimize loss). And here is why picking trends in the comic book market is difficult, and why we have differing opinions of not only where the market is heading but where it actually is right now. Collections vary out there and collectors rarely buy in general, broad terms.

[drbanner]

Thanks for the response Gene.

 

I believe, however, that the context of the glasses we're looking at the issue of past performance (2000-2005) through is different - you as what I'll say is an institutional investor (you're not one of these, but you're making it sound like any old non-trader joe could have taken their 401k money and garnered triple digit returns in the stock market since 2003), and my perspective from someone (not me personally, but a part-time collector/dealer/investor) who started buying slabbed comics as an investment when CGC started.

 

It's really undeniable that buying "investment" comic books (which have always been high-grade keys) in 2000-2002 would have been a solid investment if you had subsequently sold them, just like it's apparently undeniable that you, as a professional trader, had great success in the last several years as well.

 

Who knows what the future holds, but you appear to be arguing that comics were not a good investment over the last 5 years, when your facts really appear to support the position that comics haven't done as well as you have...

[delekkerste]

WRONG! Here's the Dow Jones for 74-81.

 

 

Uh, hello, when does your chart say the stock market bottomed? 1974? I rest my case. I didn't say it went up every year, fer chrissakes!

 

Again, I don't see either a cause-and-effect relationship or even a statistically significant relationship. I think there is probably a much better causal and statistical relationship between the level of real interest rates and the appreciation of real assets, much as there is for commodity prices as the opportunity cost of holding a non-income producing asset is reduced. If the 2000-2002 bear market in stocks had set off a deflationary spiral, comic prices would almost certainly have tanked along with stocks. But, with the Fed lowering real rates (nominal rates less inflation) to negative levels and inducing a debt-fueled asset bubble to bail out the economy, comics benefited along with other assets. Given that we're moving away from this type of environment, what does that mean for the future?

 

I doubt many people were thinking seriously about diversifying into comics as investments in the mid-1970s or even the late 1980s. I agree that, with comic prices have risen so much in recent years that there is now more of an investment mindset (though, granted, only among existing collectors - I don't think the public thinks of funny books in the same way as stocks, bonds or real estate).

 

 

As always, it's interesting discussing theories with you, Gene.

 

Likewise.

[Norrin_Radd]

WRONG! Here's the Dow Jones for 74-81.

 

 

Uh, hello, when does your chart say the stock market bottomed? 1974? I rest my case. I didn't say it went up every year, fer chrissakes!

 

But my point is that if you didn't buy at the exact bottom, you didn't see ANY return in the overall stock index for about seven years.

 

( That's bad.)

[delekkerste]

Who knows what the future holds, but you appear to be arguing that comics were not a good investment over the last 5 years, when your facts really appear to support the position that comics haven't done as well as you have...

 

Doc, we're going to have to agree to disagree. As George points out in his post, one's ability to have made money in the comic market over the past few years has been highly variable depending on what and when you've bought. I'm not disputing that pre-2002 was a good time to have speculated in books, to some extent. Heck, I myself have done quite well selling off books that I acquired pre-2002 (not that I was speculating, however), so let's talk about the period that has followed. I think that the perception that comics have been a great place to be since 2003 and that Gene, JC and all the other doubters are insufficiently_thoughtful_persons doesn't quite hold up under scrutiny. There may not have been The Great Crash of 2004 (which, as you know, was not my prediction), but you could have done better in just about any other asset class than comics last year, and you certainly did not have to be a professional to have capitalized on the multitude of better opportunities out there. Like I said, quite a pyrrhic victory for the "bulls".

 

All I'm saying is that I don't see a lot of good reasons why comic values should continue to escalate and that, if you started with a blank slate and then scoured the universe for potential investment opportunities, I doubt comics would rank very high on anyone's list, looking at it objectively. I think people should consider whether it's wise to become emotionally attached to your investments, as it may distort their perception of value and hamper their ability to pull the ripcord and sell, if need be, and also whether they have become financially vested in their collections because it's the best place for their money or whether they've merely rationalized the decision in their minds (again, I'm only talking about those who are looking to earn a return of or on their capital expended on comics).

[Aman619]

clearly to me people 'invest' in comics because they love comics , AND, because historically there is confidence that comics have been a profitable collectible. As such people feel comfortable that they are buying something with a solid base and a proven track record. But I dont think these same people CHOOSE comics as an investment vehicle over all others after a great deal of research. SO the motivation for them (us) is not "what is the absolute BEST investment vehicle out there" since the "man-in-the-street" pretty much knows that even the professional advisors thay have worked with have been no smarter or reliable than weathermen in the past.

 

Rather comics are bought by collectors INSTEAD of investing, although there is the emotional cushion that the comics wont lose value and just might increase pretty well. And many of the BSDs who are accused of investing big money are only spending leftover cash, being very solidly liquid otherwise. They spend money on collectibles like all other art collector/investors, not solely for fun, not solely for profit, but with an eye for getting the most of the latter out of the former.

 

Gene always talks seemingly in general about the coming cataclism in comics prices.. But at heart, Ive come to believe he is speaking MOSTLY about that small segment of us that truly CHOOSES to INVEST in comics rather than seeking out more traditional investment or the areas with the most upside at any given time. I dont think ANY of us here talking about buying comics had an internal debate whether they should buy a 9.4 Tarnishman#2 or put the 4 grand in a oil and gas refinery stock that's only trading at 8x.

 

I think Gene sometimes forgets that few of us here are so worldly wise to the investment world. I mean, lets face it, we're grown men who still read and collect comics!! If we tend to look at how prices have gone up in our little comics world w/o noticing that we have lagged the S&P badly or missed the latest trends in China e.g, welll excuuuuuuse us! Rightly or wrongly, I just dont think too many of us have approached our collections in that light. Comics, to us, arent merely one of a myriad of investment choices... Its what we know and love, and its done fine til now. With caution, taking into consideration the larger picture for comics market, and avoiding the obvious losers (9.8 moderns anyone?) comics can be a fine side investment vehicle thats a lot of fun too. Just dont PLAN on juniors college fund, okay?

[skybolt]

Aman, I completely agree with your post.

 

There are many books in my collection that I've overpaid for with the knowledge that I won't make my money back. However, I still choose to buy these books because I love the hobby. I would never do that with a stock if someone told me it'll remain stagnant or lose money over the next 10 years.

[Aman619]

thanx. Its a recurring and touchy subject, and we all lose proper perspective on it at times.

[drbanner]

All I'm saying is that I don't see a lot of good reasons why comic values should continue to escalate and that, if you started with a blank slate and then scoured the universe for potential investment opportunities, I doubt comics would rank very high on anyone's list, looking at it objectively.

 

I agree with you here and thought books had hit a glass ceiling years ago (and one of my first posts on these boards stated as such).

 

That said, as aman points out, I doubt many comics are bought by disinterested "investors", but are rather bought with mad money as part of an active hobby by emotionally attached collectors. It's sure a lot funner than being a day stock trader, IMHO...

[joe_collector]

No jumping here. I got out of high grade slabs in May. I think the market is just about to disintegrate at the very high end. I might be wrong, but I'll happily take my 1000% profit on my books and go home.

 

That's the key to any investment; if you're smart enough and know the market well, you can "get a feel" for when things don't quite seem right.

 

Does Donut selling and thinking that the ultra high-end market is ready to crumble mean it will happen? Nope, but I'd believe Donut's predictions over some comic dealer or CGC collector, with a HUGE vested interest in the market going up.

[FlyingDonut]

Recent 9.8 sales on FF are much lower than I've seen:

FF 59 9.8 $910 RNM

 

FF 149 9.8 $167.50

 

FF 171 9.8 $112.50

 

FF 186 9.8 $102.50

 

FF 191 9.8 $52

 

FF 191 9.8 $112.50

 

FF 192 9.8 $81.51

 

FF 234 9.8 RNM $0.99 (only bid)

 

FF 253 9.8 $21.50

 

FF 270 CGC 9.8 $11.50

 

and even this one, which I thought would go for MUCH higher than it ended - only 9.9 under 200 in the run (save Doug's sick 9.9 FF 55). FF 194 CGC 9.9 $411

 

Something is happening at the top end, especially in the FF market. I could be very wrong, and it could just be the summer and the slipping in the marketplace, but these prices just feel much lower than they've ever been. $52 for a 9.8 191?

[sfilosa]

While I agree that prices seem a bit softer, I think most of us would agree that investing in these ultra-high grade mid to late BA books is very risky.

 

And issue #59 is extremely common (I have a CGC 9.6 on Pedigree right now and can't get $420, so to me $910 seems like a pretty high price).

 

I do believe late summer is a slow down period, as all the conventions are over and Heritage's had two auctions in the past 3 1/2 months.

 

That said, high quality books (and to me BA books almost never qualifies as high quality, even in ultra high grade), still are commanding top prices.

[THE_BEYONDER]

(and to me BA books almost never qualifies as high quality, even in ultra high grade)

 

Care to elaborate on this point?

[Aman619]

because they are more plentiful than earlier SA and GS books... they were saved in greater numbers in generally better condition by more collectors, who by then were looking at them as collectible investments. A clue is that it takes a 9.8 to get excited about. And, we pretty much all agree that we just dont have a ckear handle on what exactly a 9.8 is in relation to a 9.6 (or a sharp 9.4 sometimes)

[joe_collector]

because they are more plentiful than earlier SA and GS books... they were saved in greater numbers in generally better condition by more collectors, who by then were looking at them as collectible investments.

 

So why do you collect Silver Age then, when by definition, Golden Age collectors could say the exact same thing (and with much more relevance) about Silver Age books.

[sfilosa]

because they are more plentiful than earlier SA and GS books... they were saved in greater numbers in generally better condition by more collectors, who by then were looking at them as collectible investments.

 

Your correct in what I meant with High Quality.

 

There is nothing wrong with buying BA books. And if collectors want them in 9.8, great.

 

But I think we all realize that it's more likely that there are plenty more BA books in HG (say 9.4 and up) to be certified, then SA.

 

I say this for two reasons.

 

1) Many people knew how to store and take care of their books by the BA (especially mid to late BA).

 

2) Many BA books have a lower value and therefore are not the first books one thinks about submitting. I would guess a lot of collectors would submit a mid to high grade SA Amazing Spider-Man over a perfect looking BA, most of the time.

 

Hulk #180 has 65 9.4's certified already where as #179 has only 8. It's not like when the book was printed, Marvel mass produced that issue and collectors hoarded it. No, it's that #180 is worth a lot more than #179.