Stocks vs. Comics

[garthgantu]

 

I'm partial to her work in Talk Dirty To Me 3....

 

 

Is that the one where she gets home in her Catholic schoolgirl outfit and has some fun with "Mr. Luigi" the gardener..? I think I saw all her early efforts at one time or another... but tossed 'em upon getting married...what the hell was I thinking?

[lighthouse]

He's out of my jurisdiction so I can't touch him... but a call to one of my friends at the U.S. attorney's office down the street.... hmmmm.... (but he's not selling it, so... unless they qualified it as child pornography because of the age she was performing at, i don't think he should worry).

 

just kidding house ... wouldn't be able to look over your great deals on trades anymore then.

 

Technically they still do qualify her work that way, although prosecutors are far less concerned about her work than they are about stopping scumbags from distributing new material featuring children. The theory that observation of child porn is a gateway crime to more serious criminal acts (in the way that marijuana use is described as a gateway to heroin and cocaine) just doesn't apply here. I defy anyone to suggest with a straight face that watching a Traci Lords film leads someone to start molesting 10-year-olds. The millions of men renting and purchasing her tapes from 1984-1986 certainly didn't...

 

And as I said, I am not distributing the material, nor am I even in possession of it. I wouldn't have brought it up on an open forum if I was. Everyone with a copy of the September 1984 of Penthouse (which includes a Traci pictorial) tucked away in their attic is in possession of "child pornography" and is guilty of a crime. Even if they bought it because of the cover featuring Miss America and George Burns...

 

I have to laugh when I hear Traci's revisionist history in which she claims she was on drugs throughout nearly all of the shooting and didn't know what she was doing. She knows those claims can't be easily refuted because the interviewers can't legally watch the tapes to see for themselves... Nice try, Traci... Nice try...

[Zonker]

I think I saw all her early efforts at one time or another... but tossed 'em upon getting married...what the hell was I thinking?

 

...maybe thinking of an 'overly-optimistic' view of matrimony?

[garthgantu]

Yes, well, I've been told since that I should have read the fine print in the contract... but my eyesight had really gone downhill by that time, for some mysterious reason...

[delekkerste]

At the risk of wearing out my welcome and destroying the goodwill I have built up in recent months from largely avoiding investment-related threads, while also inviting loads of abuse from Pollyannas and trolls alike, let me present this article I wrote for Lyria Comic Exchange:

 

Lyria Comic Exchange Article

 

While some will just point to it as more evidence of self-aggrandizement, I think it is both interesting and informative. If it saves just one person from selling off their entire investment portfolio and putting it into comics, I will be satisfied.

 

Anyway, I would like to thank David (Board member "whet") for extending me the invitation to write for his website, and for having the guts, despite his vested interest and often opposing viewpoint, to run the piece unedited and featured prominently.

 

Gene

[DoubleCovaBrotha]

...who wrote the "About the Author:" section?

[murph0]

Hey, more of the exact same stuff we've already read from you!!! I think I'll pass. But good luck with your article.

 

Brian

[delekkerste]

...who wrote the "About the Author:" section?

 

Let's not turn this is into another "Gene-bashing" mini-thread and let's instead focus on the content of the article. You will never see a dealer or Pollyanna frame the market in this context. If people disagree with me, I'd love to see them articulate their side of the story in a similarly well-thought out manner without resorting to feel-good propaganda or to personal attacks against me.

 

Gene

[backtomarvel]

I agree about flat income growth and crimped disposable income for the emerging generation -- I would also add in increased tax burden with fewer workers supporting retired baby boomers, paying debt and whatnot.

 

I got back into collecting a year ago, gave myself a stipend every two weeks and have stuck to it and bought a variety of books, variety of "ages" in an effort to see what feels best.

 

I also have been thinking about those declining subscription numbers, about who is buying the books and about what kids seek from entertainment today.

 

On folly thought I've had is that publishers will severely cut back on titles and, instead, produce 30-minute cartoons and begin a satellite channel and syndicate the stuff on cable and over the air.

 

In effect, digitize comics as animation and sell the stuff via a channel, as prepackaged programming for stations and as monthly online installments that the recipient receives via e-mail, pays for and "owns." I realize there's hacking, copying and whatnot to crimp value there, but who knows what encryption is coming down the pike?

 

As to the comic market, it all seems murky to me. I simply don't have a handle on the numbers of books, number of high-end books and whatnot. I will say speculation on comics to to replace traditionag retirement investment (not as a professional dealer) is insane.

 

 

[dam60]

I agree about flat income growth and crimped disposable income for the emerging generation -- I would also add in increased tax burden with fewer workers supporting retired baby boomers, paying debt and whatnot.

 

One of my biggest joys right now in the hobby is writing different articles about the history of the hobby and collecting. I have a few that I have distributed to various forum members but one thing that I want to do when I am the only one at the office between Christmas and new year's is to sit down and do a quick graph correlating the rise in personal incomes (on a real and nominal basis if at all possible, but probably just a nominal basis) vs. the growth in guide values for myabe 25 keys. Then I want to do the same with the increase in personal lending as evidenced by a few things (and I have to think this through a bit more carefully but): 1 - overall levels of household debt; household debt less the mortgage burden; increase in the number of credit cards and anything else I can think of (suggestions welcome). A special thanks to TomG for pointing me in this direction!

 

Hopefully by the new year I will have a nice little paper that i can show all you guys

 

DAM

[joe_collector]

Do you know what I'd like to see?

 

A real-world examination of Guide Prices vs. Real-World Prices, as that would be a real eye-opener to the newbie investor.

 

As in 1993's OS price of $6K for a NM AF 15, while that issue was selling at auction for $30K to $50K.

 

Or a 1996-7 ASM 128 OS price, vs. the $10-$20 a NM copy was bringing in.

 

Dealers quote "gone up XXXXX% in the Guide since 19XX" all the time, but long time collectors know this is absolute BS, and it would be nice to see that in print.

[Red Hook]

What is the general opinion on the prices listed at comicspriceguide.com? They seem way high to me, but whenever I feel short of cash I go there and tote up the value of some of my books to feel better.

[Bonds25]

I happen to agree with your article almost whole heartedly Gene. There's really not a whole lot to disagree with, and while I don't think the market is going to "crash", I certainly think the easy money has been made and it will be harder and harder to make a big profit as the years go by.

[delekkerste]

By the way, has everyone seen the Stocks versus Comics video segment featuring Metropolis Comics and Doug Schmell?

 

Link To Metropolis's Press Page Featuring An Interesting Video Segment

 

When you're done seeing that, you might want to check out this interesting thread:

 

Controversy Erupts Over Metropolis Video Segment

 

Gene

[rinnson-migration]

I heard a piece of collecting comics on WOR radio this morining. Anyone catch it?

[gpanalysis]

Hi Gene, I found your article interesting, especially those sections dealing with the speculative aspects of the hobby - in particular, those collectors/investors who feel prices will only keep rising, a common factor in any highly speculative market. I dug through my collection of articles I receive from a few economic/investment agencies here in Australia and found one titled "Three Australian Asset Price Bubbles". Here is a link at the RBA (Reserve Bank of Australia) web site:

 

http://www.rba.gov.au/PublicationsAndResearch/Conferences/2003/Simon.pdf

 

and a discussion paper on the artcile here:

 

http://www.rba.gov.au/PublicationsAndResearch/Conferences/2003/Simon_disc.pdf

 

written by John Simon.

 

Although the article details a number of major bubbles of the past (and in particular technological advances that fuelled speculative excesses), it also goes into some general definitions of speculative market places, and on what the definition of a bubble is. Gene, and those of you with the ability to draw parallels, will find this, and the whole article interesting when drawing conclusion about the comic book market place:

 

------------

 

I approach the question of ‘what is a bubble?’ as one of classification. By considering enough examples it should be possible to identify the common features of all the episodes and thereby arrive at a useful working definition. Given the disagreement as to whether bubbles even exist, I offer one semantic nicety. I intend to classify asset market events that look like the 1929 US stock market and the South Sea ‘event’. I will call this category of events ‘bubbles’. Those readers that object to this use are free to substitute ‘market rises and falls that look like the 1929 US stock market’ wherever they see the word ‘bubble’ in the remainder of this paper.

 

To start with the obvious, the primary thing that draws our attention to bubbles is how high prices rise and how deeply they fall – it is their quintessence. All bubbles involve a rapid price rise and then fall. However, considering the ‘bear trap’ rally on the US market in 1929 or the NASDAQ in 2000, it is clear that the ‘pop’ does not necessarily occur all at once.

 

Bubbles have their genesis in some fundamental change – they do not spring ex nihilo. This is commonly the development of some ‘new’ thing. For railways it was a new transportation technology, for the tech stocks it was the Internet and computers. This ‘new’ element is also what frequently allows the bubble to grow to spectacular proportions – the high level of uncertainty about the implications of the new technology mean that very high valuations can be entertained. Nonetheless, new technology is not a necessary requirement for bubbles and speculative attention can be turned on practically anything – Kindelberger (2000) gives a list that includes metallic coins, tulips, commodities, and foreign exchange among many others. Bubbles occur when the initial reason for investing becomes subsumed in a general demand for assets whose prices have risen in the past, regardless of the initial reason for the rise.

 

This leads to another essential feature of the bubbles – the presence of speculative rather than fundamental reasons for investing. What draws our eye to many bubbles is that, when viewed from a dispassionate distance, the justifications given for investment seem very weak. The rapid collapse of prices for no convincing reason is a feature of bubbles that is closely tied to their speculative nature. The rapid collapse suggests the presence of people in the market who require the price to go up in order for them to continue to buy or hold the asset – in other words, speculators. Another sign of the speculative excess is the surge in new company formation. Bubbles seem to attract ‘entrepreneurs’ trying to cash in on the euphoria. While some solid companies may be founded during bubble periods they seem to be vastly outweighed by the fraudulent or deluded.

 

Bubbles also seem to happen after a period of benign economic conditions – they typically cap a long expansion. The preceding period of benign conditions provides the foundation of optimism on which the bubbles build. Indeed, just five to ten years seems to be enough time for people to forget that prices can fall as well as rise.

 

One final common element in bubbles is easy access to credit. Margin loans, partly paid shares or low deposit home loans are all ways of increasing the demand for the asset that will serve to raise its price. This leveraging is typically what fuels the upward and downward phases. Highly leveraged investors would typically be unable to maintain payments when asset prices fell. Many bubbles have been followed by financial crises as the collapse of the speculators brings down the lending institutions. However, the recent Internet bubble does not seem to have been fuelled by credit. While the level of debt in the US was increasing steadily at the time of the bubble, there is no sign of an acceleration associated with the Internet bubble. Similarly, there have been few stories of highly leveraged investors being caught out by the crash in the NASDAQ – instead people have lost accumulated savings. The Internet bubble seems to have been funded out of wealth rather than debt.

 

To summarise the foregoing discussion, a bubble is an asset market event where prices rise, potentially with justification, rise further on the back of speculation, and then fall dramatically for no clear reason when the speculation collapses. Furthermore, they typically occur in an environment of general optimism, for example, at the end of a long expansion. Commonly associated with these price changes, but not necessarily, are an easy availability of credit, new technology, and an increase in company formation.

 

 

--------

 

The article then goes into examining a number of key bubbles.

 

My opinion is that if you're an investor of anything, you should have intimate knowledge of what has gone on in a number of markets in the past, and hundreds of publications are available which have analyzed and disected previous economic cycles. They are in fact perpetual cycles that unfold in identical manner time and time again.

[delekkerste]

Hi...is this George? I'm not sure on which side you come down on this debate, but thanks for the 2 excellent articles. I was delighted to see that the definition of a bubble was kept somewhat flexible and its diagnosis based on both a qualitative and quantitative analysis of various factors.

 

I've applied the framework from the research papers and applied it to the CGC comic market, to see whether a bubble might be present there.

 

1. Technology - YES. Third-party grading/encapsulation and various Internet-based distribution channels have helped catalyze the rise in the market the past 5 years.

 

2. Expansion of Credit - YES. Consumer debt in the U.S. is at all-time highs (savings rate near all-time lows) and there is no reason to believe that the comic collecting community is immune to this. Interest rates are also at generational lows and I have come across a disturbing amount of stories regarding people forsaking traditional savings & investment plans to invest in comics, taking on debt and/or going on long-term payment plans to finance their comic purchases. This wouldn't have been necessary 10 years ago with comic prices in some cases pennies on today's dollars.

 

3. Optimism - YES. How else does one describe a market where people happily pay between 10x and 200x prices of 13 years ago for books and expect gains to continue? How else does one describe a market where people practically resort to violence at the mere suggestion that GA and SA prices might ever decline in value?

 

4. Company Formation - YES. Look at all the new companies, websites and products that have sprung up during the last 5 years...CGC, CGG, Heritage (getting into comics for the 1st time, that is), GPAnalysis, Overstreet Monthly, etc. Not saying in any way that there is anything wrong with this or that these services aren't useful, just that their introduction into the marketplace is symptomatic of a bubble.

 

5. Fraud - YES. Do you think it is a coincidence that the number of eBay fake auctions and scams is becoming an epidemic? If buyers weren't throwing caution to the wind and prices weren't so high to make it worth a scammer's time, it wouldn't be happening to this extent. Do you think it's coincidence that we saw such Wall Street corruption and rot and scandals at Enron, WorldCom, etc. towards the end of the stock bull market? Corruption and fraud go hand in hand with asset bubbles.

 

I think the necessary and sufficient symptoms and conditions are present in the comic market to justifably call it a bubble. That's not to say bubbles can't persist for a long time (I, for one, will NOT go on the record to say that the market will definitively peak and decline during 2004) and that there aren't opportunities to profit from bubble behavior in the meantime. However, to deny the existence of a bubble and plan for a long-term investment strategy based around high grade CGC comics is likely to be hazardous to your financial future.

 

Gene

[drbanner]

I, for one, will NOT go on the record to say that the market will definitively peak and decline during 2004.

 

I guess that just leaves Joe and the Turtle!

[gpanalysis]

G'day Gene, yes, this is George (I should have signed off on the previous post - a few of us here in the office use the account to post, so apologies).

 

As I stated at the end of that post, I don't think someone can really call themselves an investor of anything unless they have a strong understanding of market forces, world economics/politics, an understanding of the fundamentals of capitalism and the cyclical ups and downs that are inherent in a market economy. Whether you're talking comics or real estate, stocks or fine art, it makes no difference at all when considering the principles of investing.

 

Here in Australia, the real estate market has been the driving force in speculative investment. Basically, land/house prices have sored over the past 5 years, with absolutely spectacular increases in value (properties that were selling for $200-300K are now selling for well over $600-700K, etc). And these price increases are being seen in lower quality property too, a sign of the bubble is-a-coming for the industry. Interest rates here are low, borrowing is at an all time high, houshold credit card debt is at levels unimaginable only a few years ago. And every month there are reports of the amounts of money you can make in buying and selling (and developing) real estate. We have literally dozens of DIY, market-analysis, investment-type shows on TV, publications and never ending hype from real estate agents (who else?) fuelling the whole thing. And the arguments are the same as those in the late eighties that caused the housing melt down: "this is gonna go on forever... there is no end to the housing boom... get in now while you can afford it!" blah blah blah.

 

While many people have made good money through these housing booms, they have adhered to a strict criteria when contemplating investing. You touched on these Gene, including using only disposable funds, not borrowing beyond your means and definately not using high-interest rate loans/credid cards/etc to buy assets that, according to some crystal ball, will one day give you a return. Here in Australia it's called "negative gearing" where according to investment advisors, it's ok to lose money (negative investment return) on the hope that capital gains in the [near] future will get you out of the hole you later realize you've dug for yourself.

 

Shrewd investors, and those who study the obvious cycles can move in and out of the market and make modest profits. Those hoping to make ridiculous returns might well get lucky, but in most cases fail. The housing market here has been fuelled by giving examples of such increases to lure the rest - my parents for example purchased their family home in the mid 80's for a little over $80K in one of the nicer parts of Melbourne. They purchased not to invest, but to live in the house. Today, the LAND value alone of this property is worth in excess of $500K - they were not smart investors, nor did they ever imagine the price increases that would occur (and in fact have only occured in the last 5 years). But many out there use such spectacular growth to say "see, if you had invested then look at the amount of money that you would have made. Invest now and on those figures your property will be worth millions in a few years" - forget the fact that a base salary in the mid eighties was $30K and today it's a little more than $33K - take inflation into account, and the costs of living, and REAL money in your pocket to purchase anything has gone backwards.

 

The same applies to our hobby. Those who purchase comics (firstly for love, as I strongly believe in collecting what you like and not what some investor tells you you should be collecting), use disposable income only, have a modest plan of investment return (if that's a factor at all in you hobby), be patient when purchasing, and be prepared to wait long term at times if you expect to liquidate at some point. Not being in debt means you can afford to do all these things. And would you agree Gene, this goes for stocks too? One difference from stocks though is that we are collecting "things" here that have an inherent value based on the quality/rarerity of the item. As in collecting antiques, look to rarerity, the best examples of what it is you are collecting, especially if you are thinking or returning to the marketplace for resale in the future.

 

And the psychology of collecting comics has a whole lot of other implications as well. As do those of the stock market, real estate, etc.

 

I'll quickly spend a moment commenting directly on the five points you make in your response (hope I haven't ranted on too long...):

 

1. Agreed, however I think having a grading guarantee is not necessarily a bad thing - it may have fuelled speculation, and has certainly brought in people who don't understand/care about the hobby; but for those collectors using the service to help in restoration checks, identifying high-grades, etc I think is a good thing.

 

2. See my comments above. Specualtive markets means borrowed money comes into the hobby where normally it would not be present. What happens when some of this money is pulled out? Does the stock market ring a bell?

 

3. For those having done any business administration/commerce studies, they know that no matter how much math you throw at something, when we talk money we inevitably talk emotional decision making too - beyond my scope of expertese, but there's a lot written out there for those interested (herd mentality, psychology of markets, etc)

 

4. I can only speak on GPA, and not the other publications you mention, but our service was brought about because there was no reporting service on actual sales out there, and not to fuel speculation. If we wanted to fuel speculation, we would have turned it into a guide and told people where to put their money. I can't imagine investing in stocks without a reporting mechanism like the stock exchange and similar services. Likewise, to purchase (and sell) books without some historical information to me seems mad.

 

5. Agree with you. I would add the venue of selling seems never to take responsibility for the scams and fraud that eventuate. They allow any sale to be executed through their selling mechanisms because they make money on the selling and buying process, and have very little concern as to what is happening to the market place due to these transactions. Unfortunately, the comic book market isn't big enough for more to be done in the way of central comic exchange - maybe one day.

 

George

[Mushroom]

No offence George but you guys should stick to what you are doing (tracking Collectables markets) and not giving superficial analysis of the economic drivers in the Australian market.