Non-Billionaires Discussing Billionaires They Will Never Meet Who Buy Art To Show Other Billionaires 4 4

[KirbyCollector]

Just a thought exercise for those who remember what happened after the market started cratering in Oct 2007... the collapse of mortgage backed securities/CDOs in 2008... the collapse of the housing market from 2009-2012. Think about your financial situation then and now, your collection then and now, and your cash then and now. The years after 2007 were great for those with stable employment and cash/savings... housing, travel, OA, cars etc were all available at a deep discount... just recognize where we are right now and know that opportunity is coming around again.

EDIT: This has NOTHING to do about politics. The market does what it does regardless of who sits in the White House. This is solely about YOU and managing your collection in what I believe to be a fairly rough patch for the economy starting late this year or early next. Will you be ready to take advantage of buying opportunities? Or will you be the one forced to sell at a loss? 

 

Edited August 8 by KirbyCollector

[shadroch]

In 2007/2008, I was in the wealth-building phase of my investment cycle, and I took advantage of many deeply discounted stocks. I don't recall the numbers, but I know Ford and Sunrise Assisted Living were berry-berry good to me. In 2024, I'm in the wealth preservation phase, and my biggest concern is keeping up with inflation. My core investments won't change, but my mad money is always on the hunt for the next shiny object.

Edited July 4 by shadroch

[Stefanomjr]

I tried this thought exercise when the pandemic was in it's early stages... Wondering the same, and postulated there would be an OA price correction. 

1. I was wrong 

2. The thread got mothballed because it was deemed political. 

 

I wasn't collecting in 2007.  So it's interesting to know there actually was a period where the OA market softened. Only been at this since 2016.

To answer your question, it really depends on what kind of correction in prices we would see. Coming off all-time highs, even a 20% dip in OA market might not be enough of a price drop.

And then you're stuck with that should -you-shouldn't-you fear/greed push/pull. 

Some folks will be ready with available cash but also worried about, either, their own economic security or worried prices haven't fully corrected down... and therefore won't deploy the resources to buy the art.

It's hard to be/stay disciplined.

Edited July 4 by Stefanomjr
Clarity

[gumbydarnit]

Timing the economy is easy breezy… all you have to is ask me when I’m getting out. When I finally decide to cash out THE NEXT SECOND IT TAKES OFF LIKE A ROCKET!

Edited July 4 by gumbydarnit

[vodou]

On 7/4/2024 at 9:23 AM, KirbyCollector said:

Think about your financial situation then and now, your collection then and now, and your cash then and now.

People, or at least responsible people, should be thinking about this all the time as it applies to discretionary spending. Whether it's 2007, 2008, 2016, 2020, or 2024 shouldn't matter a bit. Hopefully, what I'm writing surprises no one because it's redundant; everyone has already been doing it.

If not: get right and sit tight. This will mean different things to different people.

[John E.]

In July 2007 I was 28 and broke. So not much has changed except my age. 

I’ve been living on a ridiculous low budget for so long that another crash doesn't scare me. My collection is built on ebay sales of junk, flipping signed comics and sketches (mostly, until recently) that it is like money thrown away anyway. 

I just watched the movie Du*mb Money and so when answering the question of whether I would sell my OA at a loss— diamond hands, baby.

[gumbydarnit]

On 7/4/2024 at 11:31 AM, John E. said:

 

I just watched the movie Du*mb Money and so when answering the question of whether I would sell my OA at a loss— diamond hands, baby.

Never get your financial advice from a movie! I smartly get mine from comic message boards ; )

[KirbyCollector]

It's not financial advice, just a friendly reminder this is not a good time to be overextended. Big purchases made with debt now can set you back years if something like (or worse than) 2007 repeats... I almost bought a house in spring 07 but didn't pull the trigger b/c things didn't look right... a year later that house was worth $80,000 less. A friend of mine bought a house in 2007 at the height of the market, then got his dream transfer in 2010... but b/c he was upside-down on his mortgage, he had to write the bank a check for 100 grand (defaulting would have meant loss of his security clearance at the time) to close out his loan. Another friend wasn't paying attention to his 401k, it lost 40% between 2007-2008... All I am saying is, recognize where we may be and be honest with your financial situation. 

[gumbydarnit]

Gotcha always be watchful of assets! No prob, no prob with financial advice either… I was just being silly!

[oldwhy]

I started collecting comic art in 2009/2010, so I don’t know how the housing bubble crash affected the comic art market. What happened back then? Did comic art prices crash too? I’d imagine that on one hand many people had to sell to cover for losses in other areas so that should have brought prices down. On the other hand comic art probably is not an asset like others due to the personal/nostalgic feelings we have towards our collections which might have kept people from selling. Would anybody like to share their experiences back then? 

[John E.]

On 7/4/2024 at 2:05 PM, gumbydarnit said:

Gotcha always be watchful of assets! No prob, no prob with financial advice either… I was just being silly!

Heard! And all I meant by diamond hands was a synonym for Hold!

[vheflin]

It could soften and then you jump on it, but what if it doesn't get hard again?

[stinkininkin]

On 7/4/2024 at 6:23 AM, KirbyCollector said:

Just a thought exercise for those who remember what happened after the market started cratering in Oct 2007... the collapse of mortgage backed securities/CDOs in 2008... the collapse of the housing market from 2009-2012. Think about your financial situation then and now, your collection then and now, and your cash then and now. The years after 2007 were great for those with stable employment and cash/savings... housing, travel, OA, cars etc were all available at a deep discount... just recognize where we are right now and know that opportunity is coming around again.

EDIT: This has NOTHING to do about politics. The market does what it does regardless of who sits in the White House. This is solely about YOU and managing your collection in what I believe to be a fairly rough patch for the economy starting late this year or early next. Will you be ready to take advantage of buying opportunities? Or will you be the one forced to sell at a loss? 

 

I actually don't remember the OA market crashing/softening in 2007. Maybe it did in the entry level art which I don't really follow, but on the blue chip good stuff? No crash that I can remember! 

[KirbyCollector]

On 7/5/2024 at 1:30 AM, stinkininkin said:

I actually don't remember the OA market crashing/softening in 2007. Maybe it did in the entry level art which I don't really follow, but on the blue chip good stuff? No crash that I can remember! 

There was no crash. Demand was lower for a while after 2007 and price followed accordingly; I see the same happening again, it's only natural when the economy slows. What is different now is the explosion of values since roughly 2015, a rise which has seen prices double on the low end while the high end has gone up 10X and more. An increase that big in such a short time is unprecedented in OA history, according to some who have been around OA since the 70s-80s. Is where we are now the new normal? Or have we overshot severely? If you are in a position where values don't matter, than great. If you are collecting and have less than $1,000 in the bank, like 50% of Americans, you might be affected more than most.

Edited July 5 by KirbyCollector

[delekkerste]

On 7/5/2024 at 1:30 AM, stinkininkin said:

I actually don't remember the OA market crashing/softening in 2007. Maybe it did in the entry level art which I don't really follow, but on the blue chip good stuff? No crash that I can remember! 

Here's the truth about what happened with the OA market in 2007-09 unlike the revisionist history you will hear in many corners of the hobby nowadays .

The OA market stayed white hot through the summer of 2008. I remember SDCC 2008 where there was a bidding frenzy on the floor for that Steranko S.H.I.E.L.D. #7 cover that was being offered privately and that Albert ended up winning, while everyone was in full buy buy buy mode to an extent that I've never seen outside of parts of the past few years. And why not? Even though some banks had collapsed and housing had already started turning down in parts of the country, NYC housing prices were hitting fresh all-time highs, as was the price of many commodities and hard assets (and the stocks of the companies that produced them). Remember, that was the summer of $147/bbl. crude oil. 

It was not until the fall of Merrill Lynch (bought by BofA) and Lehman Bros. over the course of one fateful week in September 2008 that the Great Financial Crisis really took hold and that all the things that had held out (NYC real estate, commodities, energy & materials shares, etc.) had the rug pulled from under them as well. The (in)famous Damien Hirst direct-to-consumer sale at Sotheby's on the same day of the Lehman collapse proved to be the high water market for the fine art market for several years (and only because his dealers/collectors had a vested interest in propping up his prices, which collapsed in the secondary market along with everything else soon after). Heritage had a record-breaking illustration art sale in the summer of 2008 and then there was an absolute fire sale in early 2009 where prices just imploded.

And now...comic art. Did prices crash? No. Was the market unaffected? Also no. People were nervous and closed their pocketbooks, adopting a wait-and-see attitude. I remember picking up the first Red Sonja page from Conan #23 during this period. I told the seller that I was so confident that he wouldn't find another cash buyer in the market at the time that he should feel free to shop my offer around (he did, I was right, and he sold the page to me after a couple of weeks). 

The reality is that there was only about a 6-month period where this climate persisted because the money printing really kicked into high gear and reflationary forces soon turned every asset class except for real estate (which did not bottom until 2011-12 in most markets) around in dramatic fashion. I have no doubt that if the malaise/recession had lasted another 6 months that we would have seen more of a visible impact in the OA market than we did. As it was, the very real impairment of value was masked by people largely waiting it out. 

All of which is to say that if we get another macro-level downturn, people will very likely pull in their horns first as opposed to dumping their art, especially since there are a lot stronger hands and fewer speculators in this hobby than we saw in comics, sports cards, etc. I agree that anyone who is overextended should get themselves out of that position, because liquidity will dry up quickly in such an environment and you don't want to be a forced seller at a time people are shutting their pocketbooks. That said, I think it would take a much more prolonged downturn than 2007-09 (really just those 6 months in 2008-09 where things actually got to the point of affecting many assets, including comic art) to really bring the sellers out.  

Edited July 5 by delekkerste

[tth2]

On 7/5/2024 at 8:58 PM, delekkerste said:

unlike the revisionist history you will hear in many corners of the hobby nowadays

On 7/5/2024 at 8:58 PM, delekkerste said:

Heritage had a record-breaking illustration art sale in the summer of 2008 and then there was an absolute fire sale in early 2009 where prices just imploded.

Wasn't the "absolute fire sale" primarily in Elvgrens, which had been selling at insanely high and unsustainable prices prior to that?  I don't remember other works/artists getting hit that hard, particularly if you factor in quality and desirability.  2008 of course marked the initial sale of the Charles Martignette collection, which was unprecedented in breadth and quality.

Prices in other top illustration artists like Cornwell, Leyendecker and Rozen certainly never imploded.  I don't remember their prices ever even softening.    

On 7/5/2024 at 8:58 PM, delekkerste said:

I remember picking up the first Red Sonja page from Conan #23 during this period. I told the seller that I was so confident that he wouldn't find another cash buyer in the market at the time that he should feel free to shop my offer around (he did, I was right, and he sold the page to me after a couple of weeks). 

Did he take a loss on the page?   

[delekkerste]

On 7/5/2024 at 11:24 AM, tth2 said:

Wasn't the "absolute fire sale" primarily in Elvgrens, which had been selling at insanely high and unsustainable prices prior to that?  I don't remember other works/artists getting hit that hard, particularly if you factor in quality and desirability.  2008 of course marked the initial sale of the Charles Martignette collection, which was unprecedented in breadth and quality.

Prices in other top illustration artists like Cornwell, Leyendecker and Rozen certainly never imploded.  I don't remember their prices ever even softening.    

Did he take a loss on the page?   

I don't remember what was all in that Heritage sale, just that it was extremely weak. Whether or not those other artists were in that sale is beside the point - does anybody really think that Feb. 2009 was just as good a time to sell a Leyendecker as July 2008 at the peak of the hard asset bubble? Of course there are some rare objects that would still find motivated buyers in just about any macro environment, but, for most items, demand either recedes or evaporates under those conditions and that is the point.

Now, if you have a strong personal balance sheet and diamond hands, you don't have to sell at that time. If we get another macro downturn in the near future, I fully expect most people will just batten down the hatches and try to ride through it. I think to get a real nasty downturn, you will either need (1) a very prolonged macro downturn and/or (2) to be closer to a supply-driven downturn based on demographics (but I don't think we're at that point yet). 

As for whether the seller made money on that page he sold me (which is, to be clear, just one of several examples where as a cash buyer I was able to scoop up some solid buys during the post-Lehman period of the GFC), I'm sure he had the page a long time and did make money on it. Would he have made more in July 2008 than in March 2009? Quite possibly, or, at least there might very well have been multiple buyers at the price instead of just me. To say that the OA market was unaffected during this period is just twaddle, malarkey I say!  

As an aside to this, I have a friend who is a major dealer and he would always push back against my characterization of 2008-09 above saying that his business had never been better than during this time. After hearing this about a half dozen times, I finally pushed back myself and asked him to get more granular about the timing of this "never been better" business. Surprise, surprise - the booming business he enjoyed was all pre-Lehman and during the reflationary period of 2009 and beyond. OF COURSE his business suffered in the fall/winter of 2008 into the early spring of 2009, how could it not have?  

[stinkininkin]

OK, I guess now I better understand the context of a "softening" market in that period. As someone who has bought art off and on since 1980 and only sold very rarely, these 6-12 month blips on the upside or the downside just don't resonate with me. I've got a long term approach to this hobby, so I look at it differently than some others I guess.

[Kevn]

My favorite experience with market timing comes from around late 2008. A couple of years before I had recently read William Bernstein's 'Four Pillars of Investing' book and consolidated all my savings and investments into Vanguard's total stock market fund. I'd also bought a house in LA house around 2004 and seen the value more than double in that time. Then the crash hit. I was talking with a friend who came from a monied family, and who had a lot of money he'd invested. I told him my Vanguard account had dropped by close to 40%, but I'd reacted as per Bernstein's advice and put what extra money I could into that account ("buy when there's blood in the streets"). He laughed at me like I was an insufficiently_thoughtful_person and said he'd known a crash was coming and had pulled all his money out of the stock market. "When did you do that?" I asked. "Oh, I'd seen it coming for a few years. I pulled it all out in 2003." Needless to say, he'd missed out on stock gains that would have far outpaced his loses in 2007/2008.

A few years later, around 2011 (when my Vanguard account was bloated from the bull market that started after the crash, and has continued), I asked him how well he'd done when he jumped back into the stock market. "Oh," he said sagely. "I still haven't. I think the stock market is broken." 

[1classics]

I think the issue here in any asset class is trying to find "timing" of both buying and selling... and the short answer is you just can't time it. Sure you might get lucky in certain instances, but overall buy when you can and what you can that's your comfort zone whether that's $500 of art or $100k+...and that's really it. But since someone above used Albert as a reference when buying during the downturn, he'll be the first to tell you to buy in both markets, just try to buy the best examples (if you can). Scott and others who have been collecting longer than most of us all agree they didn't see much of a downturn in the comic art market like other asset classes, since they're not worried about a 6 months or a 1 year down market, and if anything as he mentioned, the good stuff really doesn't go down or enough to really notice. This is also why if anything people choose to invest in this particular market when other markets are far more volatile. The best analogy is whether it's the comic art or housing market, imagine all those people that dumped their homes when they didn't need to from '08 to 2009-2012? Well I was one of them that rode it out and my property values far surpassed the height of what we saw in '07 by simply holding. The same applies with comic art, if you have good stuff, why worry about the 6 months or even if were a few years, just hold if you can and the graph proves it will more than likely surpass the levels we've recently seen. I wasn't collecting comic art at that time ('07-'11), but those that were and had good stuff I heard never really saw that much of a "drought" through the recession those few years. I guess the overall message I'm saying is don't over extend, buy in your comfort zone and if you love it and plan to hold it, you'll likely see very good returns in this market for years to come. But if you're over extended or buying on credit and are barely making it, that's a whole other issue you should address.

Another great example is the person who bought the entire story to TOS 39 art from Sotheby's in '96 for $35k range(?) listed on eBay before the movie came out in '08 (already in a recession or on our way) and I think I remember it being listed for around $750k? People said he was crazy at the time and he didn't sell it from what I heard. Likely the market wasn't ready for it, but he knew what he had and then waited another 12+ years (more like 14) to sell off each page, I think he's made over $1m+ net and still is holding maybe 5-6 left from the story including the splash page, which is rumored now to be valued at $600-800k+ on it's own??? I'm sure someone will say that was nearly 30 years ago of holding, but the whole point was to hold and the other point is even in '08 when the movie was released and we were on our way or already in a recession overnight at that point, he still thought the 13 pages were 1000%+ more than what he paid just 12 years earlier, and simply put now he's cashing in. Just incredible when you think about it. Point is, hold if you can, or sell when you want, especially if you have A+ art and don't worry about the downturn nonsense LOL!