The Persistence of High Prices for CGC Books

[delekkerste]

The following actually appears in a thread in the "Bronze Comics" Forum, but I

thought it would be interesting to post here as well. This helps explains why it is

taking a long time for CGC prices to come down:

 

Boys, boys. NOTHING IS OVERPRICED. There's a marketplace dynamic here.

Things go for what they go for...the happy "invisible hand" of capitalism eventually

pushes prices to an equilibrium price.

 

Actually, this is only partially accurate. If you read any research papers defending

the practice of short-selling stocks, you will know what I mean. Since there is no

way to "sell short" CGC comic books, prices are set solely by the marginal buyer

and the marginal (long) seller. If there was a short-selling mechanism, people like me

and ComicInvestor would be selling short hopelessly overvalued comics and prices

would fall to more rational levels.

 

As there is no short-selling mechanism, the price of CGC books continues to be

set by the lunatic fringe buyer and either willing dealer sellers or reluctant collector

sellers (the same can be said for the bloated real estate market, by the way), thus

keeping prices artificially inflated. That is not to say that a market with short-sellers

is necessarily efficient (lunatics overwhelmed short-sellers in the stock market of the

late 1990s, for example), but it adds greater efficiency in most cases. No doubt it

would help the price-adjustment mechanism of the CGC market tremendously.

 

Gene

[Bonds25]

All these related threads make me laugh. There is a VERY small % of CGC graded books that are selling for ridiculous multiples of guide. Most of the books I track are selling for less than guide price (unless they're in NM or better condition). I haven't followed the market for a long time, but I'm willing to bet that NM or better copies sold for more than guide before CGC came along, and lower grade books sold for less than guide before CGC came along. This is what is happening NOW. Yes, there are exceptions, but I think in general that the market has slowed dramatically from just one year ago. Agree/disagree?

[delekkerste]

I agree, though a lot of other posters seem to be in denial!

 

BTW, where in San Diego are you from? I grew up in Del Mar but have lived

in Manhattan since the early 1990s.

 

Gene

[FlyingDonut]

The italicized quote above was mine. What everybody continually fails to remember is that 95% of the books being sold are NOT CGC graded. Yes, there's silly prices being paid for CGC books. But on the majority of books, the same pricing dynamic that has been in play for years holds out.

[comicinvestor-migration]

Yes, there's silly prices being paid for CGC books. But on the majority of books, the same pricing dynamic that has been in play for years holds out.

 

You won't get any argument from me on either count, but remember we are on the CGC Forum, and talking about some whacko spending $800 on a CGC Daredevil 131 is far more invigorating and interesting than posting some of my buys.

[FlyingDonut]

Yes, but that's entirely my point. I don't think there's going to be a market-wide crash. There may be a crash in stupidly high-priced CGC books, but on basic everyday Silver Age, for example, the prices are going to stay relatively constant. You may be able to get CGC 9.6 Bronze for pennies on the dollar, but you're not going to be able to get "raw" stuff.

[comicinvestor-migration]

It's all relative to what CGC books are going for now, and like I've been saying for-like-ever, current "hot books" (like DD 131) getting 20-40X Guide will hammer back to Earth after the meltdown and go back to the 1.5X-2X Guide that pristine copies got before CGC.

 

Key issues will still be valuable, but no longer will you see the insanity of past years. CGC books (up to 2-3X Guide for Keys) will be consistent with the raw market (Guide or under) but it's still a huge fall for those who got suckered into believing the hype.

[Guest]

Boys, boys. NOTHING IS OVERPRICED. There's a marketplace dynamic here.

Things go for what they go for...the happy "invisible hand" of capitalism eventually

pushes prices to an equilibrium price.

What don't you like about this quote, Gene? EVENTUALLY prices will hit an equilibrium - one way or another. For many books, the 'lunatic' fringe buyers will get their copies and prices will settle. This process may be slowed by the rate of submissions, but it will happen.

 

The price of DD 171 has settled since you obtained your copy.

[Bonds25]

I just moved back, and live in the Escondido area (north county inland).

[delekkerste]

What don't you like about this quote, Gene? EVENTUALLY prices will hit an

equilibrium - one way or another.

 

Some of the posters on the Board seem to think that since CGC prices haven't

collapsed immediately across-the-board that my bearish view must be wrong.

I've never said that prices would go down immediately or in a straight line! I've

maintained that this could be a process that takes up to 2-3 years - I'm sure about

the direction, less sure about the timing.

 

I just cited the quote so I could provide an explanation for why prices might stay

inflated for a while. If there was an active short-selling outlet for CGC books, I'm

sure that prices would be a lot lower than they are now. However, as the CGC

market is a long-only market, and not very liquid at that (like the real estate market),

the price adjustment process may take a long time.

 

So, my only fault with the quote is that the equilibrium-adjustment process may

take some time given the nature of the CGC market.

 

The price of DD 171 has settled since you obtained your copy.

 

OUCH! Although that ridiculous sale price probably helped bring out subsequent

copies from sellers...only one 9.4 or better copy had been seen on eBay prior to

that one.

 

Gene

[FlyingDonut]

So, my only fault with the quote is that the equilibrium-adjustment process may take some time given the nature of the CGC market .

 

Well, that's basic economics. I agree with you and CI that the price is going to come down on CGC books, because there aren't enough buyers to sustain these price levels on books. However, it is a GREAT time to buy "raw" books right now, as the price on many books has remained constant, and, as money flows out of the high end CGC books, it will eventually find its way down the ladder. If you're looking for a return on investment dollar, slow and steady always wins - I'll take my seemingly meaningless $2-5 return on EVERY book I sell and put it in the bank. Over the course of a year, it allows me to have a nice little pile of cash to spend at Wizard World. (don't tell my wife!)

[Darthdiesel]

I'm telling your son to hit you up for HeroClix! Not just Marvel, but DC and Crossgen as well! BWAHAHAHAHA! That's one way to keep you from buying all the good books....

[murph0]

I just thought I'd mention somewhere that I've finally started to see a slowdown in terms of prices for CGC 9.4 ASM issues...issues 60-95 just ended this past couple days down at least 100 dollars from just a couple weeks ago..

 

Brian

[comicinvestor-migration]

I hope you followed my advice and saved up your coin for some mass-purchases.

[murph0]

I have, but I was too cheap and got out-bidded on all but 1.

Getting ready to head down to Dallas though, so that's okay.

 

Brian

[comicinvestor-migration]

Just pick a price and let the books come to you. In the coming months there will be a lot of "investors" looking to get something back from their paper collectibles, and that's when it's time to pounce.

 

Some can afford to hold, but many more can't and we both know it.

[murph0]

Yeh, I'm holding out for a good price on ASM 1..almost given up on that Nic Cage one as from what I've heard it's going to go for quite a bid more then a normal one. But on another note, I don't think a lot of the ASM 1-20 and possibly 20-30 will really drop a ton, they'll drop some but I don't think it'll be like 60-150 will (with the exception of a couple books).

 

Brian

[comicinvestor-migration]

I think they will all drop from their CGC high-value mark. They'll still be expensive, and the older the issue, the more muted the decline. But you'd be surprised at how low a comic can fall when even 2-3 rich investors drop out of the market.

[murph0]

Yeh but it's almost always been once one jumps out, another jumps in.

If someone has been watching whats been going on, I don't see why someone would see this as a possible "jump on" point.

 

Brian

[Guest]

Smart man! Vintage Juke Boxes, 1960s Ferraris, Vintage Lionels, SILVER...all of these investment vehicles "took it in the teeth" when the MAIN buyer in each respective field, after creating a HUGE artificial demand based on nothing more than his $$$$$SpendingHabits$$$$$ with all the major sellers, cashed in and was never quite replaced in the same manner.