DAM60's Overstreet Comments on the Market Reports

[dam60]

First off, a big congrats to Mr. Overstreet and the boys from Timonium on the guide. As always a pleasure to read and I look forward to the release of the Overstreet as the "High Holy Day" of Comics.

 

Here are some of my comments on the market reports:

 

1 - Robert M Overstreet:

"With gold doubling its value since 1999, and the stock market's year-end rally, is the stage being set for an economic expansion in 2006? Does this mean that discretionary income will be on the rise and will impact the comic book market? 2005 was a healthy year for comics with many record sales occurring all year long. But last year also had its problems, with the hurricanes, high gas prices, political bickering, and a lackluster stock market for most of the year.

In other words, there were plenty of ups and downs to be had, and this was reflected in what our Overstreet Advisors reported"

 

I appreciated Mr. Overstreet's balanced approach to the market and his reference of outside economic and political factors to give some context to the comic markets. Great way to start the reports

 

2 - Kevin A Boyd (Paradise Comics Conventions; CGC - Signature Series Director)

 

Kev - it was great to see your market report in the Overstreet. You are probably the biggest and most influential "behind the scenes" guy in the hobby today and it's great to see you getting some very well deserved recognition. For those who don't know Kevin, he's also one of the nicest guys in the world (comics or otherwise), has encyclopedic knowledge of this hobby, and together with Peter Dixon of Paradise Comics, puts on the MOST fan-friendly show in the business.

 

If anyone is on the fence about the convention this year I give it my ringing endorsement (although I will not be in attendance for personal reasons). I went for the first two shows and had a great time.

 

3 - Steve Mortensen (Colossus Comics)

 

I appreciated the top cgc 9.8 books of the month as they were laid out in this report. I didn't realize that USM had so many production flaws so frequently. I don't really keep my finger on the modern market and it was nice to read more about the current situation in the new release market.

 

I can tell you that I have bought many books from Steve over the years (mostly some 9.8 pre-orders) and Steve is a great guy to buy from. He delivers your product as promised in a timely manner with exemplary customer service. I would recommend to everyone that they give Steve a call.

 

4 - Josh Nathanson (Comiclink)

 

"In November 1995, I watched the small version of Roy Lichtenstein's 1963 comic book image 'In the Car' sell for over $16mm dollars at Christie's while the finest known Batman #1 from 1940 is available for a mere fraction of this amount. Why? Surely an image which is a take off of comic book art is not more significant than one of the most coveted comic books of the one of the most recognizable comic book characters in the world in the best condition possible! The reason for the difference in price is that not enough big money players have entered the comic book market yet to elevate prices to amounts commensurate with a comic book's significance and scarcity. I think it is only a matter of time before this will change."

 

From the next paragraph:

"From where I sit, I see an opportunity for patient collector-investors interested in the genre now to get involved, if not at the ground level, then certainly on the 2nd floor. Relatively soon, important comic book pieces will be much more coveted."

 

This report in particular I would like to spend some time with and solicit some thoughts.

 

I am curious as to why Josh thinks that the "big money players" have yet to enter the comics market in force to make a substantial impact on these prices. Well, from where I sit, the last 5 years has given "big money players" an ABUNDANCE of reasons to enter the market and they haven't yet.

 

Here's a few of them:

 

1 - a search for alternative asset types following the technology bubble burst of the Nasdaq

2 - an enormous rise in home equity values across the country with corresponding amounts of "cash out refinancings" that have allowed the US consumer to keep spending (and apparently not on comics)

3 - the emergence of a third party grading company to validate merchandise

4 - the rise of ebay and other internet venues to allow for transparency for both buyers and sellers

5 - GPAnalysis which shows actual realized prices for over 2 years for all CGC graded books

6 - Blockbuster movies such as Spider-Man, Spider-Man 2, X-Men, X-Men 2, Incredible Hulk, Daredevil, Elektra, Batman Begins, V for Vendetta, League of Extraordinary Gentlemen, etc.

 

The last 5 years seem to be a pretty good time to enter the market for those "big money players"

 

My personal thoughts are that comics will continue to have its niche with the big money players playing with some big money hobbies like original, museum quality art (like the Lichtenstein piece) or with coins. It seems to me that the people with real money go for professional sports teams (think billionaires like Paul Allen and the Seattle Seahawks). Then art. Next stop down is coins. Followed by sports memorabilia and finally by comics. I firmly believe that you can make good money as long as you know who your target audience is and cater to that crowd. The opportunity for the big money has come and gone.

 

The biggest factors facing the overall comic book market at this point would be wage growth (or lack thereof) and demographics (forgetting about the big money players, the biggest tragedy of all in the last 5 years is that we haven't been able to attract the next generation to comics on a meaningful level despite the blockbuster movies and ubiquitous licensing of these characters).

 

And one other comment - cheers to our very own Burntboy. If investors to today's top books are getting in "if not at the ground level, then certainly on the 2nd floor" then props to Harry who must have gotten in, oh probably around the center of the earth. I know and like Harry and sincerely congratulate him on his good fortune. I simply want to point out that getting in today is no where near the ground floor or the 2nd floor - it's probably on the 20 something or 30 something floor on a sky scrapper.

 

So my question becomes - why will the big money players enter the market "relatively soon"? Will they ever enter the market? General thoughts on the future of the hobby? Any comments?

 

All my best wishes to my friends on the forums! I look forward to seeing some of you in Philly!

 

The registered lurker,

 

DAM60

[Foolkiller]

I almost passed out when I saw Dave posted in the forums. I guess the rain made you so bored with internet access we lured you back.

[sterlingcomics]

Nice info!

 

Yeah, Dave's the reason why I joined the boards....the infamous Ghosts #2 CGC 9.4 that I jacked up.....and btw I'm still missing the book from my collection....

[Forbush-Man]

I don't know about all the big money players who've not yet joined in on comic collecting, but I do know that the general population either does not know that comic books have a value, or they just can't concieve that prospect. Given that fact there is a lot of room for new players to join in the future.

[sterlingcomics]

The prospect of collecting as an investment is a paradox to me. I do it because it's fun...no one wants to lose money when selling their collection. As with any discretionary spending it makes sense to research accordingly if protecting the money is paramount. I'm too busy having fun to look at all of the economic indicators. It may very well cost me. But I'll be having fun doing it.

 

Collecting is fun....collecting is fun....collecting is fun....

[dam60]

I almost passed out when I saw Dave posted in the forums. I guess the rain made you so bored with internet access we lured you back.

 

no rain here!

 

Was talking to GP about the above and he suggested that I post it. I figured why not?

[dam60]

Nice info!

 

Yeah, Dave's the reason why I joined the boards....the infamous Ghosts #2 CGC 9.4 that I jacked up.....and btw I'm still missing the book from my collection....

 

Sterling! I still have that book

 

I'm also still buying cheap Ghosts pages and covers when I find them but they have become few and far between.

 

Best,

 

DAM

[sterlingcomics]

Sterling! I still have that book

 

I'm also still buying cheap Ghosts pages and covers when I find them but they have become few and far between.

 

Cool...I know you are into the OA art...please post some of that in the IBAHT or OA section sometime....

 

I sold my 9.2 copy recently...I hope more copies of that ish show up on the census soon....

[jbud73]

Hey Dave nice to see you stop lurking and post a few thoughts on other people's thoughts. If I've said it once, I've said it a thousand times, you must take 90% of the market reports with a mountain of salt.

 

Lets see a few years ago we had the quote 'invest in Bronze now and pay for your kids college with the returns down the road' I think Gene still blows a gasket when he hears that one This year again its a lot of sunshine - even the tempered sunshine has a biased emphasis. I liken the OS Market Reports, not all mind you, to a company talking about its projected earnings. Most of the OS advisors have a direct financial stake in the growth of the comics market, to say that colors, or effects their credibility or at least their prospective impartiality, would be a fair statement to say the least.

 

As for Dam's musings about what big money people with huge discretionary income's do with it That got me thinking - I hate to use specifics to generalize, but I'll use a personal analogy to kinda put a little bit of this into perspective.

 

A college friend of mine went into business school. Just your average middle class kid, blue color parents. Read comics, collected hockey cards, had a BMX, skateboard and a yo-yo. When he graduated they had this job fair of prospective employers at the College. Anyway he chose to go to 3 open houses by closing his eyes and using his finger to point to a list of the companies set up at the school.

 

Long story short he ended up working for a large multinational oil and gas based firm. I think (he doesn't talk about it, which really makes me think he's worth more than he lets on ) he probably makes more in a year than I would 10 lifetimes - 3 houses, the jet etc etc. A year ago I was in NY and we sat down and had lunch and chit chatted about life and how its changed. Things I gleaned from our 2 hour conversation.

 

- Top social status discretionary spending hobby: Breeding and owning race horses (they don't call it the sport of Kings for nothin')

 

- #2 Art: As Dam said museum quality stuff - "the Deader the artist the better" his quote not mine.

 

- #3 Rare Artifacts: Basically stuff that should be in a museum but is in a private collection.

 

Everything else pretty much comes after this and depends on taste. Wine, 1st Edition Books, memorabilia - coins, cars, sports or otherwise. I touched briefly on comics and this was basically the response I got. His opinion was that because 99% of comics were mass produced their status will always be of a Niche level. Even where print numbers are low, people who have virtually unlimited resources are interested in owning one of a kind things tied to historical relevance. He thought that maybe in another 100 years comics could rise to the level of 1st Edition Books from the 18th or 19th century. His take was that for the truly large money, its not about owning the best known in existence. Its about owning the ONLY item in existence guaranteed.

 

What I took from that was that in Comics the only huge money I could ever see thrown out might be for the big 3 books. The drop off after that is a bottomless cavern. And if you think about it I guess the Uber rich are that way for a reason. If you own the only one, then the law of supply and demand is non-existant. Grading Companies, population reports, price guides etc etc. All of these variables are NOT relevant. Further, these items are not usually bought for monetary value anyway, they are bought for STATUS - so until a comic book is hanging in the Louvre, Batman 1 will always be worth a fraction of the Lichtenstein painting.

[AlexH]

Hi Dave

[delekkerste]

1 - Robert M Overstreet:

"With gold doubling its value since 1999, and the stock market's year-end rally, is the stage being set for an economic expansion in 2006? Does this mean that discretionary income will be on the rise and will impact the comic book market? 2005 was a healthy year for comics with many record sales occurring all year long. But last year also had its problems, with the hurricanes, high gas prices, political bickering, and a lackluster stock market for most of the year.

 

The gold comparison is interesting, but Mr. Overstreet just missed the significance that was right under his nose. I like to price all assets in terms of ounces of gold (a.k.a., in terms of real, non-fiat money). By doing so, you would have realized that, for example, steel and base metals prices were woefully underpriced by long-term historical norms and you could have made a fortune in commodities and mining stocks in recent years. I haven't done the same exercise for comics, because comic price data isn't easily accessible in a format that you can manipulate (in terms of being able to analyze it on a spreadsheet, not in the Machiavellian sense of the word), but I think you will find that comic prices in terms of ounces of gold peaked somewhere in the 2002-2004 timeframe and that we are now on the other side of the peak.

 

 

I am curious as to why Josh thinks that the "big money players" have yet to enter the comics market in force to make a substantial impact on these prices. Well, from where I sit, the last 5 years has given "big money players" an ABUNDANCE of reasons to enter the market and they haven't yet.

 

The "big money players" are the proverbial canard, the carrot that people use to get people to buy in at lofty levels. If people haven't gotten in by now, after unprecedented gains in income and investment returns over the past 25 years, especially in the last 10 years which has seen literally TRILLIONS of dollars of wealth created in stocks (Google alone created $100+ billion of wealth), real estate, Hollywood, Silicon Valley, petro-wealth, etc., and with the unprecedented media coverage of the characters with all the movies that have come out, what on God's green earth is going to make people get in now and going forward? PLEASE, FOR THE LOVE OF GOD, SOMEBODY TELL ME WHAT I'M MISSING HERE!!

 

Look, as far as the "market" part of the hobby is concerned, the big money is made buying when blood is running in the streets and/or the market is totally neglected and you can pick up quality items at pennies/dimes on the dollar and wait patiently for valuations to get expensive. Extrapolating the outsized gains of recent years indefinitely into the future, hoping for wealthy Arab or Chinese businessmen who have never picked up an English-language comic book in their lives to start investing in comic books, is just fantasy of the highest order. If the comic-crazy, trophy asset-mad uber-wealthy Japanese didn't storm the U.S. comic book market, I'm not holding out much hope for the oil sheiks! And JP's debacle with comics showed that there's not much interest from the aging coinees here in the U.S. for comics either.

[jbud73]

Gene I thought you'd chime in early and I also suspect that you have more exposure to the same types of people as my friend from University does. Another funny analogy that I forgot to mention. When talking about the emphasis independently weathy people attach to collectible items they purchase he mentioned something called the Indiana Jones principle.

 

Basically if Indy wouldn't go after it then "big money" players are not interested in purchasing it.

 

Indiana Jones and the Last Action Comic #1

 

Hey I love comics, but I'm under NO illusions when it comes to the social status they enjoy with the elite money on the planet.

[delekkerste]

Further, these items are not usually bought for monetary value anyway, they are bought for STATUS - so until a comic book is hanging in the Louvre, Batman 1 will always be worth a fraction of the Lichtenstein painting.

 

You've hit the nail on the head. Unless you were a long-time comic book fan before you made a load of money, you're not going to wake up one day and decide you need the highest graded Fantastic Four #1 in existence, let alone some issue of Journey into Mystery or Tales of Suspense, which might as well be written in a foreign language as far as the non-comic collecting crowd is concerned.

 

It is all about status - when people make a good deal of money, the first thing they do is get a residence they can show off. Vacation homes come soon after, along with the luxury cars. A NetJets contract and exclusive private schools for the kids. After that, they might start with collecting, and fine art is by far the most accessible and popular venue - just look at all of the hedge fund money going into art these days. It's all about status. When Joe Hedge Fund Manager and his wife have Jim & Jane Investment Banker over for dinner at their Manhattan triplex, they want to show off the new Richard Prince (a favorite among the hot money crowd) painting in the foyer, not Joe's Batman #1. I can actually see Josh's point about the Lichtenstein vs. Batman #1 argument - though, to me, that tells me that the Lichtenstein is wildly overpriced more than the Batman is cheap. But, the money keeps flowing into art and it's not about to flow into Batmans in a big way anytime soon, so what is there to do except recognize the reality of the situation and deal with it accordingly?

[tth2]

Dave, great to see you posting again! Thought you were gone from the boards permanently.

[tth2]

His opinion was that because 99% of comics were mass produced their status will always be of a Niche level. Even where print numbers are low, people who have virtually unlimited resources are interested in owning one of a kind things tied to historical relevance.

Very true. Of course, I could point out that stamps and coins were mass produced too, but some very big boys still play in those areas. But I agree with your points.

[tth2]

I like to price all assets in terms of ounces of gold (a.k.a., in terms of real, non-fiat money). By doing so, you would have realized that, for example, steel and base metals prices were woefully underpriced by long-term historical norms and you could have made a fortune in commodities and mining stocks in recent years. I haven't done the same exercise for comics, because comic price data isn't easily accessible in a format that you can manipulate (in terms of being able to analyze it on a spreadsheet, not in the Machiavellian sense of the word), but I think you will find that comic prices in terms of ounces of gold peaked somewhere in the 2002-2004 timeframe and that we are now on the other side of the peak.

Let's be fair, Gene. Regardless of which side of the peak comic prices might be at today, the fact is that the value of HG comics from 1999 until today has significantly outperformed gold.

[Red Hook]

Hail Dam!

[lou_fine]

From the next paragraph:

"From where I sit, I see an opportunity for patient collector-investors interested in the genre now to get involved, if not at the ground level, then certainly on the 2nd floor. Relatively soon, important comic book pieces will be much more coveted."

 

I find this quote from Josh rather laughable since I have heard virtually this exact same comment on many occasions ever since I started buying quality comics in the late 80's. If Josh's comments is true, it seems like we've been stuck on the second floor for almost 20 years now.

 

Actually, from my point of view, serious comics collecting is way past the second floor of the building by a long shot. But on the other hand, it also is nowhere near to being on the edge of the roofftop ready to come crashing back down to earth, as some would try to have you believe.

[buttock]

I agree. This is the same [embarrassing lack of self control] we hear EVERY year from Metropolis, and any other bigwig dealer. Comiclink is just repeating the same. They have to hype up the market to keep suckering people in to drop 6 figures on comic books. Have you ever read a Metropolis report that wasn't dripping with positivity and speculation? Everything sells, everything is hot, everything is undervalued. Once it hits print in OS it's gospel.

[blazingbob]

Gene:

Not that I mind your exercise in educating me about commodity metals and how much I would have made had but how about this.

 

Pick your investment choices for the year. It can be 10 items and it can contain different asset classes (bonds, stocks, precious metals etc) since I believe that is generally the "number" for a balanced portfolio. I'm sure you can come up with the fantasy $$$$ amount of what the portfolio should add up to.

 

Put it down in a thread. Have some board members put in their 10 book porfolio's and and at the end of the year do a comparison who would have done better. The books must be cgc'd and the comic portfolio should use GPAnalysis as the measurement of prices.

 

I am not volunteering for this job