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Fun With Spreadsheets

Entry posted by Westy Steve · - 206 views

Back when I was collecting coins, I was interested in appreciation.  Yet I kept making the same mistake over and over.  A mistake that collecting Bronze Comics corrects.

Without fail, when presented with a cool looking coin from the early 1800's, vs. a cool looking coin from the modern era for the same price, I would always buy the old coin.  But that was a mistake....and here's why:

Imagine a coin made in the year 1800 worth $100.  Now compare that to another coin made in the year 2000, also worth $100.  Which is a better buy based on appreciation?  It's important to realize that the coin made in 1800 took 217 years to appreciate to a value of $100.  Yet the coin made in 2000 did it in a scant 17 years!   In summary, the newer coin is increasing in value at a much faster rate!

For fun, I played around with a spreadsheet and made some assumptions.  If a bronze age comic book is worth about $250 today, then it is roughly appreciating at a rate of 13% a year.  That's actually a pretty healthy internal rate of return!  Why $250?  Well, that's the general price point I've been dabbling in lately.  I've fleshed out my collection of CGC 9.4 early X-Men at that price point.

OK, so here's something interesting.  A silver age comic book is around 10 years older than a bronze age book.  So assuming it's also growing at a rate of 13% a year, it would need grow to about $1,000 since it's publication date 10 years prior to the bronze era.  .  

What would that $1,000 buy today?  To give you an idea, that's the approximate value of a Spider-Man #50 (1st Kingpin) in CGC 8.0.   Not too shabby!   How many of us would like to jump in a time machine, go back 10 years, and purchase some VF copies of Spidey #50 in VF for around $250?  I know I would!  I'd stockpile them!

So there you go.  Buying higher grade (justified expensive) key bronze is not just fun, but I think it's smart too.

 


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Interesting. Would love to see some of your data. 

How do you account for risk and volatility, though? 

In stock investing, this seems anbalagous to buying a stable blue chip vs. buying an IPO.

Taking your argument to the extreme, one should focus on buying Moderns because they appreciate even more quickly.

It seems like a safer (but potentially less lucrative) approach is to diversify, rather than just buying from one era.

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Thanks for the response.  Really...this area is slow and there is good content in this new area but don't know if it's being seen!

Anyway, I agree with some of your points, but not others. 

All I'm saying is that it makes sense to look at the rate of return on books.  In my spreadsheet, I assumed that book was worth double the cover price in the first month after it was made because people back then were like, "Did you read about this new Spiderman guy?", and the owners of the books expected some kind of "instant" profit.  But after that, barring a book popping up in value due to a movie announcement, one can calculate the rate of return on the books over the years. 

What I've found is that the better books will make 13%, the much better books can make 15 to 16%, and the grails can even make around 20%.  But the problem is TIME.  If a golden age book started at a value of 20 cents (double the cover price) back in 1938, and it grew at a rate of 13% to 20%, it's too darn expensive for me to buy today because it compounded for so many decades.

If a silver age book compounded at 13%, it would be worth about $1,000 after all this time.  I could buy books like that, but there would be so much time in between saving that this hobby wouldn't be satisfying.

But Bronze Age books growing at 13% are still around $250.  I can get one of those every month to two months and they'll look really pretty in the slab.

While I also like Copper books and Modern ones, there are two issues.  I think it's prudent to expect a proven track record, so there aren't a lot of modern books meeting that criteria.  Repeating for emphasis...Modern books need to show a proven track record....there aren't many of those.

I do like the Copper books, but you have to make sure you're not paying for the "plastic boost"....the premium that the book gets for being graded by CGC.  For example, a $200 NM bronze age book grade in a CGC slab isn't going to get that much of a premium (percentage-wise) for being grade.  But a $50 copper age book can have a 100% premium for being in the slab.  That's the only reason why I don't buy too many copper age.  (Though buying them raw in NM/NM+ is probably a great use of funds.)   Moderns also suffer from that "plastic boost", but it's worth it to buy them in the raw. 

Note:  I am talking about NM books here.  Not 9.8.  With a 9.8, you're paying for more than just the book's importance.  It's sort of a plastic premium.

For me personally, Bronze is in that sweet spot.  I can still buy higher grade books that look so dang good in that CGC slab.  And if I pay a justified $250 or more, I'm confident they've been growing at a rate of 13% or more, barring movie hype (which is hard to avoid).

You asked about risk:   Yeah there is risk.  IMHO, it's about the same risk as being in the stock market.  They've had equal number of market crashes, and the reality is that stocks don't always trade on fundamentals either.  Sometimes (like comics) it's hype.  For example, Tesla stock trades at 100 times earnings.  Essentially, the value of Tesla stock is based on the perception of how the Tesla brand will be perceived in the future or people are buying them BECAUSE ITS A HOT STOCK and not because they like the company.  Unfortunately, key comics are also heavily dependent on how people might view them in the future and whether they are HOT RIGHT NOW.  For example, Duck books are absolutely wonderful to read, but people are actually avoiding them because they are concerned about the future consumption of them.  But I like Batman because kids can find Batman stuff in Walmart so we'll have legions of people buying Batman in the future.  See what I mean?

 

Edit:  BTW, lately I've been spending more like $350 to $600 a book.  And by lately I mean I've bought a couple of nice ones that I'll be showing soon.  That means these books increased in value from approximately 40 cents, so they doubled an average of 10 times.  That's an average doubling time of about 4.4 years, which shows a return of about 16% based on the rule of 72s.   Stay tuned for more.

Edited by Westy Steve

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I found this interesting in that this was the exact reasoning I used in making my own purchase of X-men 94 in a 9.2 slab. In my own cave-man words "how long did it take to get to how much?"

Basically I had a certain amount of money to buy a key. So I took a look at a sort of age versus value comparison. I held that up against established value. I have been a fan of X-men for 25+ years and I have marveled at X-men #94 as a sort of grail of grails. All I am saying there is that I understood this book well. It was always a pricey book and as long as there is comicbook collecting it will always be a pricey book.

In terms of established value what you kind of want to look at is the "slope of the curve". If you were to plot out spreadsheet data in a graph it might become obvious. What you would want to see is not too steep and not too shallow. A sort of slow but steady rise. As long as there is a healthy enough economy to support hobbies like collecting then it safe to say that investing in comics relatively safe. If all the worlds markets ever crash then you have bigger problems than comics books.

If we take this reasoning to the extreme this is the type of thing that throws up a flag for me in modern books. If there is a spike in price ,why such a rapid appreciation?Is it just a plastic premium? The hype train?  What sort of stability will the future bring? I just see moderns as the comic/stock  market version of high risk investing. but just like in stocks risk = reward. (Not that paying $300,000 for a comic is not risky but a different type of risk.)

Think of someone who bought a mint condition copy of Walking Dead  #1 for cover price 15 years back.  Really no risk in that one book and when it comes to sell it is going to be all reward. Be it 5x,10x, or 100x of the original investment. The risk there was not the expensive jumping on point, but rather the risk of buying 5 or 10 different titles a month every month is hopes of getting that 1 "golden ticket".  

Same animal-different breed if you will.

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Thanks for the reply.  Yes, the Xmen 94 in CGC 9.2 is an excellent "investment" based on the method I laid out.  Just constant growth in a short amount of time.

Regarding the walking dead, I think you'd have to buy too many books to be in the position where lightning would strike for you to make a big return on your lottery tickets.

With respect to Modern (or perhaps Copper), if you think about it, the TMNT #1 (1st print) is probably a great choice.  I've actually considered partnering on that book.   I guess I could sell my collection to buy one, but what would be the fun in that?

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