Are comics gaining more respect as a valid investment outside of the comic collecting community? 8 8

[Westy Steve]

Can't wait to read this whole thread, because I'm passionate about the subject.  But here's a few tidbits.

1.  I'm in a Facebook forum dedicated to personal finance investment and I broached the topic of investing in collectibles.  I got a ton of "laughing emojis" as a response.  So the answer to the OP's question is a resounding, No.  In fact, that group is hilarious because all they talk about is buying cheap index funds, and their idea of diversification is to buy different funds, or foreign stock funds.  I tried to point out that true diversification comes from buying other asset classes, and that includes 10% of your portfolio in stuff like collectibles, but it fell on deaf ears.  

2.  As some people pointed out here, many collectibles are viable investments if you take the same care in selecting them that you might take in buying the right stock or mutual fund.  You don't just buy any stock, and you shouldn't buy any collectible for investment.  Some comic books are far better investments than others and due diligence is important, just as it is in buying investment real estates, stocks, or even bonds.

3.  All that being said, collectibles really need to be a small percentage of your holdings, and stocks are a great investment vehicle.  It can be relatively cheap to buy them at your day job, and if your company does 401K matching and you're not doing it, you're being stupid.  Start by putting 1% of your salary in there and then bump it up a little bit every time you get a raise...you won't even miss it. 

Edited June 20, 2018 by Westy Steve

[Gatsby77]

11 hours ago, whomerjay said:

Almost no one on these boards except maybe some BSDs or Roy embrace the optimal model. Part of the problem is few want to treat books like widgets. I and many accept a diminished ROI in order to be a collector/investor instead of a pure savvy investor.

This.

Collecting for pure investment would be incredibly boring. Given $50k for investment only, I probably wouldn't buy more than 10 books but I'd buy multiples of them for liquidity sake -- like X-Men 1, GS 1, ASM 129, Daredevil 1, Hulk 1, Hulk 181.

So...assume a total portfolio/collection of 40 books total, comprised entirely of those six books.

Most of these have already had their "movie bump" but should remain solid collectable investments for at least the next decade or so. The key?

- Relatively expensive already (it's easier to sell a $500 book than 10 $50 books)

- Liquid -- Need to sell 15 copies of Hulk 181 or ASM 129? Easy to do in a week.

Sure, you'd miss some minor speculative keys, like not buying 50 copies of Thor 337 and cashing out when Beta Ray Bill (re-)appears on screen, but the blue chips are the blue chips. They're known and they're boring.

[delekkerste]

On 6/19/2018 at 3:11 PM, Pete Marino said:

which is still over a 28x return over inflation, and very few people think of return over inflation vs true returns.

Either way, it's a lot more than the about 4x that people were trying to talk about to start this conversation.

Thank God someone corrected that.  

I ran the numbers on the S&P 500 on Bloomberg.  Including reinvested dividends, the S&P 500 (a better and broader gauge than the very flawed Dow Jones Industrial Average), the S&P returned 34,430% between 10/31/1961 and 05/31/2018.  No, that doesn't account for the effects of inflation or taxes.  But, it's still a f-ton of return.  Nobody has made it to the Forbes 400 by investing in comic books.  Many people have made it by investing in stocks and real estate.  But, you can't just look at % returns.  You could only have put so much money into comics back in the day, whereas no one had so much money that they couldn't find enough stocks or real estate to buy.  I don't think buying 5 copies of Hulk #181 for $1.25 off the newsstand in 1974 qualifies as "investing".  It might have gone up a gajillion percent since then, but, you would have been better off putting more money into something that went up less in % terms, but made you enough $$$ to retire by now.  At the end of the day, you spend $, not %, which is why they teach you to use NPV (net present value) vs. IRR (internal rate of return) in Finance 102 at The Wharton School.  Calculating returns from minuscule starting points when these were not investments nor had the capacity to absorb real amounts of money is nonsensical.  More relevant are examples where real investable money is involved, like buying an Action #1 8.5 in 2010 for $1.5 million and selling it in 2018 for a bit over 2 sticks and barely beating inflation after commissions and taxes.   

It's not just what you buy, it's when you buy (i.e., how much you pay).  No investment is so inherently good that it can't become a bad investment if bought at too high a price.  Markets mature (lower risk = lower expected return) and returns mean revert over time after a period of outperformance (or underperformance).  A lot of stocks and real estate is probably not going to generate great returns from present levels 9 years into a bull market for stocks and 6 years into a bull market for real estate (that has taken us far past the 2000s housing bubble peak in many markets).  While I strongly believe that comics as both a hobby and investment class most likely face insurmountable long-term demographic headwinds (echoing what FSF said), it's also undeniable that a lot of companies/industries (and their shares) are similarly facing secular challenges from demographic changes and technological disruption.  Real estate may also face its own demographic challenges in the future as well with the Baby Boomers and Gen Xers owning so much property relative to what the Millennials and Gen Z are likely to be able to demand and afford in the coming decades.  Just look at Japan's stock and property markets from 1990-present when that country's 1980s asset bubble popped and as the country hit its own demographic brick wall earlier than other developed nations.     

On the other hand, we are clearly not there yet (the demographic tipping point) for the comic market.  And, it's possible that we might not get there for years...maybe even a decade or two.  But, long-term, I have no doubt that there is no way that the Millennials and Gen Zers will be able to clear the market in the future at ever-escalating prices.  Prices have gone up so much that most Baby Boomer and Gen X collectors couldn't even afford to buy their collections over again if they were starting from scratch, even with their resources; the generations coming up behind them will have no chance.  None. Zip. Nada. That's not to say there are no young collectors out there or that the hobby will die out.  I am more optimistic than FSF that interest won't dwindle to a tiny number.  However, it is to say that the younger generations will not have the aggregate interest (people who grew up after the mid-1990s have had their interests splintered in a near-infinite number of directions compared to previous generations) or buying power to keep prices escalating ever-further into the future.

Even before the inevitable demographic tipping point, you are already seeing the focus shift to keys in the comic market; you will likely continue to witness a large portion of the market hollow out over the long run.  Best case scenario I see for, say, 30 years from now, is that the truly important material stays aloft and maybe even continues to appreciate (no guarantees, of course), while most of the market stagnates or declines.  Not unlike what we have seen in other hobbies that have generationally gone out of favor. 

As far as liquidity goes, I have to believe that (higher-end) comics are among the most liquid collectibles - just look at the near-100% sell-through rate in the no-reserve auctions at Heritage for both comics and comic art vs. other art and collectibles verticals.  I have done reasonably well buying original comic art - it was never intended to be an investment, but, as my tastes and focus has changed, I've sold off a number of pieces, both privately and at auction, and have done pretty well (overall, I've done better in stocks, though, some individual pieces have earned me outsized returns).  On the other hand, trying to sell some of the illustration art I've bought would probably entail taking a big hit as the liquidity is a fraction of what it is in comics and comic art.  The ample liquidity for comics (not the 95%+ of comics out there that is uninvestable drek, but the good stuff) and comic art will probably probably change in the long-term, but, there definitely have been opportunities for people to make good money in comics.  I worry about some of my friends who rely on comic dealing and flipping as their primary income source, as I don't think this gravy train is going to see them through retirement, but, I don't begrudge anyone making the most of it for as long as it lasts.

Edited June 22, 2018 by delekkerste

[Mr.Mcknowitall]

A very logical review. Easy to understand, with sound advice and comparisons.

[chrisco37]

Gene has been calling for the end for years now.  It hasn’t happened.  He just doesn’t want to admit he’s wrong.  We’re all going to be rich when we cash out.  

 

[october]

11 minutes ago, chrisco37 said:

Gene has been calling for the end for years now.  It hasn’t happened.  He just doesn’t want to admit he’s wrong.  We’re all going to be rich when we cash out.  

I think he copied and pasted his post from 2006.

[kav]

Chuck Rozanski sunk 100% of his assets into comics and it worked out well for him.

[kimik]

On 6/20/2018 at 7:02 AM, Westy Steve said:

Can't wait to read this whole thread, because I'm passionate about the subject.  But here's a few tidbits.

1.  I'm in a Facebook forum dedicated to personal finance investment and I broached the topic of investing in collectibles.  I got a ton of "laughing emojis" as a response.  So the answer to the OP's question is a resounding, No.  In fact, that group is hilarious because all they talk about is buying cheap index funds, and their idea of diversification is to buy different funds, or foreign stock funds.  I tried to point out that true diversification comes from buying other asset classes, and that includes 10% of your portfolio in stuff like collectibles, but it fell on deaf ears.  

2.  As some people pointed out here, many collectibles are viable investments if you take the same care in selecting them that you might take in buying the right stock or mutual fund.  You don't just buy any stock, and you shouldn't buy any collectible for investment.  Some comic books are far better investments than others and due diligence is important, just as it is in buying investment real estates, stocks, or even bonds.

3.  All that being said, collectibles really need to be a small percentage of your holdings, and stocks are a great investment vehicle.  It can be relatively cheap to buy them at your day job, and if your company does 401K matching and you're not doing it, you're being stupid.  Start by putting 1% of your salary in there and then bump it up a little bit every time you get a raise...you won't even miss it. 

They just buy ETFs? Sounds like they know just a bit more about investing than people still buying higher fee mutual funds only. You should be posting  emojis at all of their conversations.

[kimik]

7 hours ago, delekkerste said:

It's not just what you buy, it's when you buy (i.e., how much you pay).  No investment is so inherently good that it can't become a bad investment if bought at too high a price.  Markets mature (lower risk = lower expected return) and returns mean revert over time after a period of outperformance (or underperformance).  A lot of stocks and real estate is probably not going to generate great returns from present levels 9 years into a bull market for stocks and 6 years into a bull market for real estate (that has taken us far past the 2000s housing bubble peak in many markets).  While I strongly believe that comics as both a hobby and investment class most likely face insurmountable long-term demographic headwinds (echoing what FSF said), it's also undeniable that a lot of companies/industries (and their shares) are similarly facing secular challenges from demographic changes and technological disruption.  Real estate may also face its own demographic challenges in the future as well with the Baby Boomers and Gen Xers owning so much property relative to what the Millennials and Gen Z are likely to be able to demand and afford in the coming decades.  Just look at Japan's stock and property markets from 1990-present when that country's 1980s asset bubble popped and as the country hit its own demographic brick wall earlier than other developed nations.     

On the other hand, we are clearly not there yet (the demographic tipping point) for the comic market.  And, it's possible that we might not get there for years...maybe even a decade or two.  But, long-term, I have no doubt that there is no way that the Millennials and Gen Zers will be able to clear the market in the future at ever-escalating prices.  Prices have gone up so much that most Baby Boomer and Gen X collectors couldn't even afford to buy their collections over again if they were starting from scratch, even with their resources; the generations coming up behind them will have no chance.  None. Zip. Nada. That's not to say there are no young collectors out there or that the hobby will die out.  I am more optimistic than FSF that interest won't dwindle to a tiny number.  However, it is to say that the younger generations will not have the aggregate interest (people who grew up after the mid-1990s have had their interests splintered in a near-infinite number of directions compared to previous generations) or buying power to keep prices escalating ever-further into the future.

Even before the inevitable demographic tipping point, you are already seeing the focus shift to keys in the comic market; you will likely continue to witness a large portion of the market hollow out over the long run.  Best case scenario I see for, say, 30 years from now, is that the truly important material stays aloft and maybe even continues to appreciate (no guarantees, of course), while most of the market stagnates or declines.  Not unlike what we have seen in other hobbies that have gone out of favor. 

 

The trends I have been seeing since 2010 at the local shows is that the average age of comic collectors is dropping, there has been a huge influx of female collectors, and they spend readily on keys at full sticker instead of filling runs. I think that this will keep the hobby run through the Millennials at least. The only difference I can see is that as the older keys get out of reach the money will pour into newer keys that are more relevant to the younger collectors. We have been seeing this the past few years with seemingly any CA book with a 1st appearance of substance hitting the $200+ range in CGC 9.8 even though the prints runs back then dwarf anything today. 

 

[ComicConnoisseur]

3 hours ago, kimik said:

The trends I have been seeing since 2010 at the local shows is that the average age of comic collectors is dropping, there has been a huge influx of female collectors, and they spend readily on keys at full sticker instead of filling runs. I think that this will keep the hobby run through the Millennials at least. The only difference I can see is that as the older keys get out of reach the money will pour into newer keys that are more relevant to the younger collectors. We have been seeing this the past few years with seemingly any CA book with a 1st appearance of substance hitting the $200+ range in CGC 9.8 even though the prints runs back then dwarf anything today. 

 

I have seen this as well. That might be why these books have been consistently top best sellers on Amazon graphic novels charts for a few years now.

    

 

    

 

Edited June 22, 2018 by ComicConnoisseur

[delekkerste]

3 hours ago, kimik said:

The trends I have been seeing since 2010 at the local shows is that the average age of comic collectors is dropping, there has been a huge influx of female collectors, and they spend readily on keys at full sticker instead of filling runs. I think that this will keep the hobby run through the Millennials at least. The only difference I can see is that as the older keys get out of reach the money will pour into newer keys that are more relevant to the younger collectors. We have been seeing this the past few years with seemingly any CA book with a 1st appearance of substance hitting the $200+ range in CGC 9.8 even though the prints runs back then dwarf anything today. 

 

Who's going to be there to prop up all the GA/SA/BA keys while a few younger women collectors are paying full boat for Batman Adventures #12?   

3 hours ago, ComicConnoisseur said:

I have seen this as well. That's why these books have been consistently top best sellers on Amazon graphic novels charts for a few years now.   

 

I think you're overestimating the propensity for people reading $8.99 digital comic TPBs for entertainment to go out and become the big-spending collectors that are needed to clear the market for the Gen Xers and Baby Boomers at ever-escalating prices in the future.  Most investment-grade comics will change ownership at least once over the next, say, 25-30 years, right?  I mean, there are so, so many collectors in their 40s, 50s and 60s - these are the ones who hold the biggest $$$ amount of books.  At some point, people will age out and sell out.  It's already happening in the OA hobby - we've seen a number of big collectors age out or die out in recent years, collectors in their late 50s to early 70s.  Well, guess what - the critical mass of OA holdings is with 45-55 year old collectors now...how much longer 'til that group is in that late 50s to early 70s age range?  15 years is all it's going to take for big collection sales to start occurring not just here or there, but quarter after quarter, year after year, for more than a decade.  

I'm willing to believe that the distribution of comic book wealth has fatter tails than OA, so it may not follow the exact same timeline, but, it'll be similar.  Will there be, IN THE AGGREGATE, enough interest and buying power to clear the market 15-30 years down the line from now?  It's virtually a metaphysical certainty that the answer is no.  Which, when faced with the sheer mathematical impossibility of the situation, people start grasping for straws, talking about kids in China and stuff filling in the gap.  It's not going to happen.  Which is why you're already seeing keys uber alles while interest in runs and such is already probably in a secular decline.  

Search your feelings, Luke, you know it to be true...

[kimik]

3 minutes ago, delekkerste said:

Who's going to be there to prop up all the GA/SA/BA keys while a few younger women collectors are paying full boat for Batman Adventures #12?   

I think you're overestimating the propensity for people reading $8.99 digital comic TPBs for entertainment to go out and become the big-spending collectors that are needed to clear the market for the Gen Xers and Baby Boomers at ever-escalating prices in the future.  Most investment-grade comics will change ownership at least once over the next, say, 25-30 years, right?  I mean, there are so, so many collectors in their 40s, 50s and 60s - these are the ones who hold the biggest $$$ amount of books.  At some point, people will age out and sell out.  It's already happening in the OA hobby - we've seen a number of big collectors age out or die out in recent years, collectors in their late 50s to early 70s.  Well, guess what - the critical mass of OA holdings is with 45-55 year old collectors now...how much longer 'til that group is in that late 50s to early 70s age range?  15 years is all it's going to take for big collection sales to start occurring not just here or there, but quarter after quarter, year after year, for more than a decade.  

I'm willing to believe that the distribution of comic book wealth has fatter tails than OA, so it may not follow the exact same timeline, but, it'll be similar.  Will there be, IN THE AGGREGATE, enough interest and buying power to clear the market 15-30 years down the line from now?  It's virtually a metaphysical certainty that the answer is no.  Which, when faced with the sheer mathematical impossibility of the situation, people start grasping for straws, talking about kids in China and stuff filling in the gap.  It's not going to happen.  Which is why you're already seeing keys uber alles while interest in runs and such is already probably in a secular decline.  

Search your feelings, Luke, you know it to be true...

I agree to a certain point, but you are underestimating the number of collectors, both male and female, in their late teens to early 30s that have come into the hobby. These collectors buy discounted trades or digital comics for reading, and then spend their $$$ on keys at shows and online. Up until 2009 I was worried about the future of the hobby since it was basically males 35 and up that would buy the big books to fill their runs. It almost seems like the more technology oriented we become as a society, the more widely accepted comic book collecting will become.

As far as big collection sales for comics, if you are talking collections that are mostly copper age and newer, then yes, there are plenty out there. However, OO bronze and silver collections have become much harder to find over the past 5 - 6 years. It used to be easy to land 3 or 4 nice OO collections each year here in Alberta. Now, they are either being passed onto the OO's heirs or have been sold off long ago. Even the assembled collections are not surfacing as readily as they used to. 

I think OA is an older market than comics due to one major factor - the cost of OA. You can buy a nice copy of almost any SA or BA key for $10K (except for AF #15, IH #1 and SC #4). That does not really get you into the game for anything of equivalent value in the OA market. You need deep pockets to play the OA game - dropping $2K on a mid grade Hulk #181 gets you the biggest BA book. With OA, that gets you a cover that came out last week.

[delekkerste]

58 minutes ago, kimik said:

I agree to a certain point, but you are underestimating the number of collectors, both male and female, in their late teens to early 30s that have come into the hobby. These collectors buy discounted trades or digital comics for reading, and then spend their $$$ on keys at shows and online. Up until 2009 I was worried about the future of the hobby since it was basically males 35 and up that would buy the big books to fill their runs. It almost seems like the more technology oriented we become as a society, the more widely accepted comic book collecting will become.

As far as big collection sales for comics, if you are talking collections that are mostly copper age and newer, then yes, there are plenty out there. However, OO bronze and silver collections have become much harder to find over the past 5 - 6 years. It used to be easy to land 3 or 4 nice OO collections each year here in Alberta. Now, they are either being passed onto the OO's heirs or have been sold off long ago. Even the assembled collections are not surfacing as readily as they used to. 

I think OA is an older market than comics due to one major factor - the cost of OA. You can buy a nice copy of almost any SA or BA key for $10K (except for AF #15, IH #1 and SC #4). That does not really get you into the game for anything of equivalent value in the OA market. You need deep pockets to play the OA game - dropping $2K on a mid grade Hulk #181 gets you the biggest BA book. With OA, that gets you a cover that came out last week.

I think you are conflating both readers/casual collectors with serious collectors, as well as numbers with buying power.  I think you are dead wrong to think that the Millennials and Gen Zers will have either the numbers OR the aggregate spending ability (along with the requisite interest and intent) to be able to clear the market at ever-increasing price levels indefinitely into the future.  Like I said - even the Baby Boomers and Gen Xers don't have the resources to put their collections back together from scratch; the younger generations, not having had the benefit of growing up in what will likely go down in history as the most fertile period of economic growth and wealth creation in the history of mankind, will have no chance whatsoever.

Your point about OA is exactly the same as my point.  The distribution of OA ownership skews older due to the higher price points.  But, not by so much that it changes the general thesis.  The bell curve of investment grade comic ownership may be flatter with fatter tails, but, it doesn't change the fact that the greatest concentration of value (of the investment grade books) lies with those generations that grew up with this stuff and had the resources to acquire it.  Even if the number of Millennial collectors was sufficient to supplant all the Gen Xers and Baby Boomers (which it definitely isn't), they'd need to be wealthier than the older collectors are to be able to afford all these books at record prices now (let alone if they keep appreciating in value!)  Literally none of these conditions are in place for them to be able to clear the market at the next generational tipping point (which, for the avoidance of doubt for the reading comprehension-challenged, may not be for another decade or two).  Seeing more and more people focusing on keys vs. runs is just the start of it.  Eventually you will see large sections of the market hollow out and fall by the wayside as the collector base (and, more importantly, the buying power of such) contracts and can no longer support the entirety of the market at ever-escalating price levels.

The farther forward in time you go, the greater the cumulative probability that this inevitable scenario will be playing out.   

[grebal]

3 hours ago, kimik said:

underestimating the number of collectors, both male and female, in their late teens to early 30s that have come into the hobby.

+1

Also, growth in the population of international buyers.  Most of the commentary with an unfavorable outlook for the future (the 'finite shelf-life' argument) extrapolates based on assumptions that certain trends (e.g. move from physical to digital) will more than offset certain observed past trends (e.g. tiny but consistent % of population that collects this stuff). 

Of course it could happen.  And certainly seems likelier re: low/mid-grade common stuff.  But I'm not convinced, generally when it comes to conventional wisdom, and particularly when based on logic-grounded-but-data-unsupported extrapolations.

[atomised]

The financial advisors I've spoken to have to idea of the size of the market and price of some of these books.  There's no money to be made in this for advisors so they don't cover it.  An AF15 is a more solid investment than a US Treasury bond.  High end books are a great investment vehicle and for those that are participating it's like belonging to a special club.

[comicnoir]

I have a number of comics I bought around 10 years ago for under a $100.00, sometimes literally nothing if I bought in a lot and sold some off, that are now worth $8K and up. With almost no money into them they are now a small fortune (10 years ago was a good time to buy, as you know). They aren't all like that, but enough to go, "Whoopee!".

[Mr.Mcknowitall]

14 hours ago, kimik said:

there has been a huge influx of female

 

14 hours ago, kimik said:

they spend readily on keys at full sticker instead of filling runs

Blonds?

[paperheart]

9 hours ago, atomised said:

The financial advisors I've spoken to have to idea of the size of the market and price of some of these books.  There's no money to be made in this for advisors so they don't cover it.  An AF15 is a more solid investment than a US Treasury bond.  High end books are a great investment vehicle and for those that are participating it's like belonging to a special club.

paging Gene

[Aman619]

I switched brokers about 12 years ago.  I gave him some money as a test, and mentioned there was more, and that I had always bought comics, not stocks, which had turned out pretty well for me.  The look on his face was one of pity. I can still feel it.

but fast forward over the years since, and he now asks ME about my comics, with even a touch of envy. Feel pretty pretty good.

of course, I’m a Boomer and bought my good stuff many years ago. At laughable prices compared to today.  But I’ve done the math on all the most valuable books, and there are a lot of books I bought easily 20-30years ago for hundreds and maybe a thousand each that, just like the 8.5 Action 1, are worth only say 40-100% more than I paid for them (before expenses and fees) that add up to a return comparable to bonds and treasuries.  Good thing I also bought the blue chips in grade.  In the end though even these, if they don’t continue to increase in value will, as the years pile up, end up as more modest “investments” as the denominator (years) hollows out the gains %wise.

btw, the broker has done very well.  But then again, the markets gets a lot of the credit. He got burned and had no answers back in 2008 like everyone else.

[spreads]

I work in fund compliance for a major investment firm;  comics are not considered an investment and at the institutional level never will be.  And please, stop referring to them as commodities - they are not!  A commodity is a consumable item, that is replaceable with other units of that class (Hulk #1 and Spidey #1 are not interchangeable).