Combined investment will cause Golden Age (Collectors) to explode 3 3

[sfcityduck]

On 9/1/2021 at 10:43 AM, valiantman said:

a significant number of Golden and Silver Age keys have now traded at a premium to their market value in multiple venues, but the reactions in this topic are that I'm still crazy for suggesting the whole thing.

 

I really don't see how the fact that the total fractional shares of a derivative of a comic book asset trade, when all added together, at a higher value than the market value of the subject comic book proves anything good about fractional shares.  For me, it does the opposite.

Rally Road prices their fractional shares above the market value of the comic book on the day of the offering.   That is how they make money.  The fractional share investors start out having paid well over market value.

That the total fractional share value exceeds the market value of the subject comic book tells you that the people buying those shares are not doing so based on the market value of the comic.  And, for me, that's a problem.  

Yet another thought experiment.  Let's say you have a lot of funds sitting around unused.  What are you going to choose to buy, all other things being equal: (1) An Action 1 from a dealer being offered for a $1.5M price or (2) 100% of the fractional shares in an identical Action 1 being held by Rally Road for $1.8M (a 20% mark-up over "market value")?  The answer is obvious.  

So why is a fractional share purchaser willing to pay 120% of market value for a fractional share of a GA key?  My guess: (1) The share price is so low the overpayment does not seem like a lot of money and (2) they get something for the extra 20% that without fractional ownership they could not claim to have - the boasting rights of "a piece of an Action 1."  

Obviously, a buyer who can afford to pay the $1.5M market value of an Action 1 is not going to pay the extra $300K for 100% fractional ownership because they can get EVERYTHING they want at the lower price.  But, for the peasants (and I'm one of them) who can't afford $1.5M for a comic book, paying an extra, as an example, $20 over the $100 market value of their fractional share in an Action 1 to get something they otherwise could not - the boasting rights - might be worth it because the buyer does not notice or care they are being ripped off for $20.

The problem is that I suspect the value of the "boasting rights" of owning a fractional share of a derivative of an Action 1 is likely to prove fleeting.  To me, it seems like the same mentality that caused folks to buy "pet rocks."  A fleeting hype, founded in FOMO, that ultimately proves to lack staying power as the novelty wears off and people realize they have paid money for nothing.

P.S. I don't think you are crazy.  I do think you are misgauging why a lot of GA collectors collect.  I don't see fractional ownership as collecting at all. I also think you are more interested in the concept as an investment vehicle, and you might find a more receptive reaction in an audience more focused on investing than most here.  Finally, I also think you have a view of technology and technological inevitability that is causing you to gloss over the basic question: "Is this a good idea?"  I see the same problem with driverless car technology.  For me, whether it is a good idea does not hinge on whether it will work, but what will happen if it does.   

Edited September 1, 2021 by sfcityduck

[Flex Mentallo]

Pet rocks

[Gatsby77]

On 9/1/2021 at 4:06 PM, sfcityduck said:

So why is a fractional share purchaser willing to pay 120% of market value for a fractional share of a GA key?

This.

As I noted in one of the other threads more than a year ago, over-paying by 20% is over-paying by 20%, whether it’s $120 for a $100 book or $120k for a $100k book.

And, as Bob Storms noted, when he splits a purchase with a partner, he puts them in at the wholesale rate, not retail, let alone retail+20%.

[valiantman]

On 9/1/2021 at 3:06 PM, sfcityduck said:

On 9/1/2021 at 12:43 PM, valiantman said:

a significant number of Golden and Silver Age keys have now traded at a premium to their market value in multiple venues, but the reactions in this topic are that I'm still crazy for suggesting the whole thing.

 

I really don't see how the fact that the total fractional shares of a derivative of a comic book asset trade, when all added together, at a higher value than the market value of the subject comic book proves anything good about fractional shares.  For me, it does the opposite.

Rally Road prices their fractional shares above the market value of the comic book on the day of the offering.   That is how they make money.  The fractional share investors start out having paid well over market value.

That the total fractional share value exceeds the market value of the subject comic book tells you that the people buying those shares are not doing so based on the market value of the comic.  And, for me, that's a problem.  

Yet another thought experiment.  Let's say you have a lot of funds sitting around unused.  What are you going to choose to buy, all other things being equal: (1) An Action 1 from a dealer being offered for a $1.5M price or (2) 100% of the fractional shares in an identical Action 1 being held by Rally Road for $1.8M (a 20% mark-up over "market value")?  The answer is obvious.  

So why is a fractional share purchaser willing to pay 120% of market value for a fractional share of a GA key?  My guess: (1) The share price is so low the overpayment does not seem like a lot of money and (2) they get something for the extra 20% that without fractional ownership they could not claim to have - the boasting rights of "a piece of an Action 1."  

Obviously, a buyer who can afford to pay the $1.5M market value of an Action 1 is not going to pay the extra $300K for 100% fractional ownership because they can get EVERYTHING they want at the lower price.  But, for the peasants (and I'm one of them) who can't afford $1.5M for a comic book, paying an extra, as an example, $20 over the $100 market value of their fractional share in an Action 1 to get something they otherwise could not - the boasting rights - might be worth it because the buyer does not notice or care they are being ripped off for $20.

The problem is that I suspect the value of the "boasting rights" of owning a fractional share of a derivative of an Action 1 is likely to prove fleeting.  To me, it seems like the same mentality that caused folks to buy "pet rocks."  A fleeting hype, founded in FOMO, that ultimately proves to lack staying power as the novelty wears off and people realize they have paid money for nothing.

P.S. I don't think you are crazy.  I do think you are misgauging why a lot of GA collectors collect.  I don't see fractional ownership as collecting at all. I also think you are more interested in the concept as an investment vehicle, and you might find a more receptive reaction in an audience more focused on investing than most here.  Finally, I also think you have a view of technology and technological inevitability that is causing you to gloss over the basic question: "Is this a good idea?"  I see the same problem with driverless car technology.  For me, whether it is a good idea does not hinge on whether it will work, but what will happen if it does.   

This is a good summary of your points, and suffice it to say, I've already disagreed with most of them throughout this topic.

The two scenarios of buying an Action Comics #1 outright or buying 100% of the shares of an Action Comics #1 at 20% mark-up are a decision that no one would ever make.

It is the inability to afford an Action Comics #1 that would provide a realistic choice of buying less-than-100% or nothing at all.  That's where we differ, because I'm appreciative of having the option at all.

Boasting rights aren't in my consideration.  I have over a thousand CGC slabs, and I bet that no on in this topic who has followed my posts for 19 years on this board could name even a dozen books I own.

If I wanted to boast about my collection, I would mention at least a thousand other CGC slabs that I own outright before I'd mention a fraction of a percentage on a book that isn't in my possession.

Since you're not in the "want to do it" crowd for fractional investing, you can't represent the "why to do it" arguments accurately.

It reminds me of politics, where every political party is absolutely sure the other side is insane for wanting those insane things. 

No one ever represents the other side as reasonable, because that would mean that both answers may be valid.

[valiantman]

On 9/1/2021 at 6:04 PM, Gatsby77 said:

On 9/1/2021 at 3:06 PM, sfcityduck said:

So why is a fractional share purchaser willing to pay 120% of market value for a fractional share of a GA key?

This.

As I noted in one of the other threads more than a year ago, over-paying by 20% is over-paying by 20%, whether it’s $120 for a $100 book or $120k for a $100k book.

And, as Bob Storms noted, when he splits a purchase with a partner, he puts them in at the wholesale rate, not retail, let alone retail+20%.

If I believe something will double, and the only way that I can buy in is at 120% on a fraction, then I either act on the belief or not.

If I would also love to own that fraction forever, whether it doubles or not, then the scenario is a win-win.

The only way it's a loss is if there was an alternative to paying the 20% premium. 

Until Bob Storms (or someone like him) creates that option for the little guy, there isn't.

[Aman619]

On 9/1/2021 at 4:06 PM, sfcityduck said:

I really don't see how the fact that the total fractional shares of a derivative of a comic book asset trade, when all added together, at a higher value than the market value of the subject comic book proves anything good about fractional shares.  For me, it does the opposite.

Rally Road prices their fractional shares above the market value of the comic book on the day of the offering.   That is how they make money.  The fractional share investors start out having paid well over market value.

That the total fractional share value exceeds the market value of the subject comic book tells you that the people buying those shares are not doing so based on the market value of the comic.  And, for me, that's a problem.  

Yet another thought experiment.  Let's say you have a lot of funds sitting around unused.  What are you going to choose to buy, all other things being equal: (1) An Action 1 from a dealer being offered for a $1.5M price or (2) 100% of the fractional shares in an identical Action 1 being held by Rally Road for $1.8M (a 20% mark-up over "market value")?  The answer is obvious.  

So why is a fractional share purchaser willing to pay 120% of market value for a fractional share of a GA key?  My guess: (1) The share price is so low the overpayment does not seem like a lot of money and (2) they get something for the extra 20% that without fractional ownership they could not claim to have - the boasting rights of "a piece of an Action 1."  

Obviously, a buyer who can afford to pay the $1.5M market value of an Action 1 is not going to pay the extra $300K for 100% fractional ownership because they can get EVERYTHING they want at the lower price.  But, for the peasants (and I'm one of them) who can't afford $1.5M for a comic book, paying an extra, as an example, $20 over the $100 market value of their fractional share in an Action 1 to get something they otherwise could not - the boasting rights - might be worth it because the buyer does not notice or care they are being ripped off for $20.

The problem is that I suspect the value of the "boasting rights" of owning a fractional share of a derivative of an Action 1 is likely to prove fleeting.  To me, it seems like the same mentality that caused folks to buy "pet rocks."  A fleeting hype, founded in FOMO, that ultimately proves to lack staying power as the novelty wears off and people realize they have paid money for nothing.

P.S. I don't think you are crazy.  I do think you are misgauging why a lot of GA collectors collect.  I don't see fractional ownership as collecting at all. I also think you are more interested in the concept as an investment vehicle, and you might find a more receptive reaction in an audience more focused on investing than most here.  Finally, I also think you have a view of technology and technological inevitability that is causing you to gloss over the basic question: "Is this a good idea?"  I see the same problem with driverless car technology.  For me, whether it is a good idea does not hinge on whether it will work, but what will happen if it does.   

I bought most of my comics at over market from dealers. And, we don’t have a market value, never have.  Dealers have always stickered their comics higher than recent sales.  Many will give a discount, and sometimes you can make a big pile to get more off the total… but the prices I have always started with when buying was over “market value”.  Of course I know what you mean. With RallyRd valuing the same books they just bought at 1.2 what they paid you start out underwater while they are in the black.

[Gatsby77]

On 9/1/2021 at 7:10 PM, valiantman said:

If I believe something will double, and the only way that I can buy in is at 120% on a fraction, then I either act on the belief or not.

If I would also love to own that fraction forever, whether it doubles or not, then the scenario is a win-win.

The only way it's a loss is if there was an alternative to paying the 20% premium. 

But that's just it. You're not paying for a fractional share of the book - you're paying for a derivative - an abstraction - of it.

Rally Rd.'s fine print states that holding the shares gives you no legal right to the underlying asset (in this case, the comic book) itself.

So it's purely about finance - and there are far better ways to invest than to overpay by 20% on day 1.

Further, whether you want to "own that fraction forever," it's not your choice. A few pages back you yourself noted that most Rally Rd. shareholders vote to sell early - after -- what was it? a 14% gain? -- and in less than 365 days, so you get killed on taxes.

I understand you're arguing for *the concept* - not specifically for Rally Rd. - but theirs is the model at hand, and it's deeply flawed.

Edited September 2, 2021 by Gatsby77

[Cobbledclam]

[Randall Dowling]

On 9/2/2021 at 12:04 AM, Cobbledclam said:

This is awesome but I wonder how many people will understand the reference.  

Man, I loved that show.  

[valiantman]

On 9/1/2021 at 7:34 PM, Gatsby77 said:

But that's just it. You're not paying for a fractional share of the book - you're paying for a derivative - an abstraction - of it.

Rally Rd.'s fine print states that holding the shares gives you no legal right to the underlying asset (in this case, the comic book) itself.

People seem to be caught up on this fine print "problem".  The fine print states that you own shares in a company (LLC) which holds the comic as its asset. 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

[vheflin]

On 9/2/2021 at 10:21 AM, valiantman said:

People seem to be caught up on this fine print "problem".  The fine print states that you own shares in a company (LLC) which holds the comic as its asset. 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

Have you considered running for high office?

[valiantman]

On 9/2/2021 at 9:27 AM, vheflin said:

On 9/2/2021 at 9:21 AM, valiantman said:

People seem to be caught up on this fine print "problem".  The fine print states that you own shares in a company (LLC) which holds the comic as its asset. 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

Have you considered running for high office?

High office politicians have to rally people to do things that no sane person would ever do.  Clearly, I'm not capable.

[sfcityduck]

On 9/2/2021 at 7:21 AM, valiantman said:

 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

Uh .... no.  Not if, as would be expected, the contract of ownership granted a fractional share of the undivided whole.  Probably with a right sell the share, and with the decision to cash out the whole asset subject to a vote.

[valiantman]

On 9/2/2021 at 9:50 AM, sfcityduck said:

On 9/2/2021 at 9:21 AM, valiantman said:

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

Uh .... no.  Not if, as would be expected, the contract of ownership granted a fractional share of the undivided whole.  Probably with a right sell the share, and with the decision to cash out the whole asset subject to a vote.

The rules for membership in an LLC are clear, with decades of legal precedent. 

The rules for trading fractional shares of an undivided whole collectible asset aren't as clear, and it wouldn't matter if you had a billion dollar company, the whole thing could end up like XRP. https://markets.businessinsider.com/news/currencies/sec-says-ripples-xrp-crypto-is-13-billion-unregistered-offering-2020-12

As @Gatsby77 said, there's a difference between the concept and what RallyRd is doing.  RallyRd is deeply flawed, but much like CGC in 2001, it's the only option.

Edited September 2, 2021 by valiantman

[MrBedrock]

On 9/2/2021 at 9:21 AM, valiantman said:

People seem to be caught up on this fine print "problem".  The fine print states that you own shares in a company (LLC) which holds the comic as its asset. 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

So not the comic? You collect whole companies, and you need a fraction of this particular company to make you feel like your collection is complete?

[valiantman]

On 9/2/2021 at 9:56 AM, MrBedrock said:

On 9/2/2021 at 9:21 AM, valiantman said:

People seem to be caught up on this fine print "problem".  The fine print states that you own shares in a company (LLC) which holds the comic as its asset. 

If people legally owned a fraction of the comic itself, they could demand to have their fraction cut/ripped off and mailed to them.  The LLC keeps the comic intact.

So not the comic? You collect whole companies, and you need a fraction of this particular company to make you feel like your collection is complete?

When you put together a group of investors to buy a comic, do you take turns keeping the comic at each other's houses/shops/vaults?  Or are your investors really buying a fraction of a comic that you control 100%?

Edited September 2, 2021 by valiantman

[MrBedrock]

On 9/2/2021 at 9:58 AM, valiantman said:

When you put together a group of investors to buy a comic, do you take turns keeping the comic at each other's houses/shops/vaults?  Or are your investors really buying a fraction of a comic that you control 100%?

Have you ever seen the episode of The Simpsons where Bart and his friends go in together to buy Radioactive Man #1?

That's how we do it.

[valiantman]

On 9/2/2021 at 10:00 AM, MrBedrock said:

On 9/2/2021 at 9:58 AM, valiantman said:

When you put together a group of investors to buy a comic, do you take turns keeping the comic at each other's houses/shops/vaults?  Or are your investors really buying a fraction of a comic that you control 100%?

Have you ever seen the episode of The Simpsons where Bart and his friends go in together to buy Radioactive Man #1?

That's how we do it.

But that's not your main business, right?  Don't you actually make your money selling 2,000 copies of freshly-printed Biclops each week?

[Buzzetta]

[MrBedrock]

On 9/2/2021 at 10:04 AM, valiantman said:

But that's not your main business, right?  Don't you actually make your money selling 2,000 copies of freshly-printed Biclops each week?

Buy the book by the page. It's a new investment scheme we cooked up to bilk readers out of their hard-earned dough. I knew you would like it.