Theory of Speculation...

greg · Post by **greg** » Tue Apr 13, 2004 5:29 pm

I'm not really trying to stir the hornet's nest here...
but I figured I could at least create a post to allow the
"free flow of ideas" on the subject.
(Instead of seeing this same topic show up everywhere on the board.)

Consider...

When someone feels inclined to invest money into the stock market,
it is not uncommon for them to purchase, say, 100 shares of IBM stock.
This is considered both normal and appropriate in the investing community,
and all agree that investor with either make or lose money on the investment.

However, when someone feels inclined to invest money into the comic market,
the purchase of even 10 copies of a single issue, especially an out-of-print book,
immediately invites disdain, outrage, and even hatred(?) from the community.

Since shares of stock and comic books are both properties with
variable values as they are bought and sold on their respective markets,
what are the differences between these two investors?

Ghetto D · Post by **Ghetto D** » Tue Apr 13, 2004 5:30 pm

Nostalgia. That's all.

greg · Post by **greg** » Tue Apr 13, 2004 5:32 pm

Ghetto D wrote:Nostalgia. That's all.

Ok, what are the differences that would cause the reactions seen
in their respective communities? Are those reactions justified?

whetteon · Post by **whetteon** » Tue Apr 13, 2004 5:36 pm

greg wrote:
Ghetto D wrote:Nostalgia. That's all.
Ok, what are the differences that would cause the reactions seen
in their respective communities? Are those reactions justified?

You can always issue more stock.

Comics are a one time resource. Once another person buys that resource there becomes less resources for others to purchase if they are interested. This effect causes the "reactions seen
in their respective communities". Those reactions are justfied as my second post under this topic explains: http://www.valiantcomics.com/valiant/fo ... 28&start=0

Ghetto D · Post by **Ghetto D** » Tue Apr 13, 2004 5:41 pm

Not necessarily. True you can issue more stock, but stock is still a percentage of ownership (no matter how infentesmilly small). You cannot sell more than 100% of the company, but you can dilute it down. There's more at play here that I'm willing to go into (ask Ken I'm sure he'll talk your ear off), but at the end of the day there is only one Microsoft or Coke to divy up. Also keep in mind that these companies are growing and adding value. They also pay out dividend - when's the last time your comics paid you dividends without having to sell it?

The point is that they both represent a finite quantity. Hence why there is value.

Ghetto D · Post by **Ghetto D** » Tue Apr 13, 2004 5:43 pm

By the way, Ken issuing more stock is NOT the same as copying a comic book. The original comic book will always have value - facsimilies will not (except reader's value). Additional stock issuance retains value. The company is still worth X, it's just divided by a larger number.

greg · Post by **greg** » Tue Apr 13, 2004 5:44 pm

To put it even more bluntly...

Why does this community, in particular, denigrate Aug002, in particular,
when he is simply investing in items he deems worthy of his money?
Why do we (as a community) feel that someone should have one copy,
or maybe two copies, and then leave the rest alone?

No one says you shouldn't have more than two shares of IBM...
so what's the difference if you're buying what you know and like best?

cjv · Post by **cjv** » Tue Apr 13, 2004 6:13 pm

Personally, if people want to have more than one copy, that's fine with me. I think, however, comic books are more of a limited commodity than "traditional" investing options like stocks or bonds. In addition, the people who are generally interested in comic books probably don't have the same kind of disposable income that those who invest in stocks have (maybe not true, but I think it is likely).

Put those together, and you drive up the price of comic books. Add to the fact the to many people, comic books are more than just an investment - nostalgia, interest in a story line, simple collection options - these all make comic books in many ways more "collectible". If the prices are driven up by people trying to actually invest money (by buying more than one share) the people who simply want to read or collect an issue/series/company are driven out of the equation by prices that are too high.

Chris

x-omatic · Post by **x-omatic** » Tue Apr 13, 2004 6:18 pm

greg wrote:To put it even more bluntly...

Why does this community, in particular, denigrate Aug002, in particular,
when he is simply investing in items he deems worthy of his money?
Why do we (as a community) feel that someone should have one copy,
or maybe two copies, and then leave the rest alone?

No one says you shouldn't have more than two shares of IBM...
so what's the difference if you're buying what you know and like best?

I think it all comes down to 2 simple things.

1) We all want to buy at the cheapest price.

2) We all want to sell at the highest price.

Aug002 affects #1 big time as it seems when he wants abook money is no concern. having sold books to him, he has also affected #2 as well.

So it depends on which side of the fence you are on.

greg · Post by **greg** » Tue Apr 13, 2004 6:24 pm

Chris,

Great post... interestingly enough, Valiant seems to solve the problem
of needing to read the books that cost the most because almost all of
the highest priced books are either variants (with identical stories cheaper),
or they were already reprinted in trade paperbacks, second prints, etc.

Because they are a limited commodity, much more so than IBM shares, for example,
and because they have a nostalgic feel and personal connection,
that's almost "all the more reason" to put money into those comics.

It seems like the only people "left out" of the equation are either
those who do not have the financial resources to own everything they want
(what can theoretically be done for these people anyway?),
or those who believe they do have the financial resources necessary,
if only they could buy what they want without any other competition
(which isn't exactly logical, since that's the foundation of a free market).

wrunow · Post by **wrunow** » Tue Apr 13, 2004 6:25 pm

This is simple supply and demand economics, and in this case the supply is fixed because there are only so many copies of pre-unity and special issue Valiants available, and they can't make anymore. Because the prices are somewhat attainable for the average "Joe comic collector" out there, an emotional response happens when he thinks in the future the issues he wants to buy for his collection may be unobtainably due to rising prices.

Because of the fixed supply these books are now a commodity that will have price fluctuations based only on consumer demand.

mrwoogieman · Post by **mrwoogieman** » Tue Apr 13, 2004 6:26 pm

greg wrote:To put it even more bluntly...

Why does this community, in particular, denigrate Aug002, in particular,
when he is simply investing in items he deems worthy of his money?
Why do we (as a community) feel that someone should have one copy,
or maybe two copies, and then leave the rest alone?

No one says you shouldn't have more than two shares of IBM...
so what's the difference if you're buying what you know and like best?

I wish to be on record as supporting Aug002. He is a decent person from personal experience.

lobo · Post by **lobo** » Tue Apr 13, 2004 6:34 pm

greg wrote:To put it even more bluntly...

Why does this community, in particular, denigrate Aug002, in particular,
when he is simply investing in items he deems worthy of his money?
Why do we (as a community) feel that someone should have one copy,
or maybe two copies, and then leave the rest alone?

No one says you shouldn't have more than two shares of IBM...
so what's the difference if you're buying what you know and like best?

For everyone that wants to use Aug002 as a whipping boy for 'out of control' prices on Valiants needs to lighten up and gain some prospective. I myself have chastised Aug publicly here on this board but it has always been tongue in cheek. Those who have sold to him in the past have maintained that he is a great guy to deal with and is most likely a great person in general.
Just because you can't buy certain Valiant keys as they are going for too much money for your liking, don't blame Aug or other buyers. I see some collectors here who have enjoyed purchasing Valiants for next to nothing over the past few years but are now complaining that more fans looking for the same product are driving up prices. Get over it! Its not always the 'speculators' out to ruin your hobby! Valiants are not exclusive for your personal enjoyment.... and speculative joy.

The high prices for some Valiants these days represent the new reality of the market. And that market, at present, is in a definite upward swing.

My check list is pretty much done but I did have to bite the bullet in recent monthes to buy CEAR NM/M. It cost me just about $100. I'm resigning myself to the fact that I may not own a XO 1/2 Gold for a long time.
On the flipside I own many multiples of Pre-unity and golds that I purchased for chump change, so I see it as being even keel in the end.

I own Valiants for the love of the them first and foremost. I own multiple copies because I think they are worthwhile to speculate in and hopefully will really pay off down in time. I suspect Aug002 is doing the exact same thing, he just has deeper pockets than most.

Ghetto D · Post by **Ghetto D** » Tue Apr 13, 2004 6:52 pm

Is anyone going to come out against Aug or were all of those threads in good fun?

whetteon · Post by **whetteon** » Tue Apr 13, 2004 7:01 pm

Ghetto D wrote:Is anyone going to come out against Aug or were all of those threads in good fun?

I think it's always been in good fun. We probably wouldn't even mind if aug002 was a board member. It's just that it's easy to blame the valiant resurgence and hence the raising prices on him since he's not here to defend himself.

But just in case, let me get my fighting face on:

comicguy · Post by **comicguy** » Tue Apr 13, 2004 7:32 pm

Somebody earlier said it is simple supply and demand. That is true but also couple that with nostalgia(10 year gap effect). Lets remember how old were most people when pre unity issues were hot(I was in my early 20's) and now I have a more disposable income I can go back and afford to buy what I was denied by economics 10 years ago.

Also remember these comics have been kicking around unsold for the last 6-7 years and were really cheap. A smart investor does research and if you want a quality product and low print runs(compared to others at the time)Pre Unity Valiants are where you go. So it was only a matter of time before we started to see an increase in prices paid for these comics.

The usual 20 year cycle on comics had a hicup when it comes to these paticular comics. Collectors/Investors usually pick up comics that are 20 years old as an "investment". The smart person starts by buying them at 1.00 or less per issue and sells them when demand increases for a profit.
I see this theory of comic investing until we reach 1987-1988 issues(This is where the oversaturation begins) and it will pick up with 1998-1999 issues.

As far as aug is concerned I am not sure what his game plan is, maybe he has some inside info that the rest of us do not have or he thinks that these will be real valuable in the short/long term or still some other unforseen plan. I have bid against aug a few times for some complete series like Timewalker and have won but then the issues came in real crappy like, so who was the real winner.

Just remember comics like everything else in cyclical in nature and by this time next year it is possible these issues could be trading for a fraction of what they are going for now(I hope not and that this "revival" is long term and we eventually see some new Valiant comics in the near future

). But the key to remember when investing is buy low. Is 200.00 for an X-O 1/2 gold low, I do not think so but obviously others do so I will most likely never own one of these.(I have never paid more than 12.00 for a comic in the past but that will probably be changing as I get close to needing keys to complete runs like Hulk, X-Men, Avengers, ect. but not for a varient edition)

Jeez, I can go off on a tangent at times. I hope I did not bore people to death. These are simply observations that I have seen from my perspective of being a dealer in the early 90's and a collector today.

BloodOfHeroes · Post by **BloodOfHeroes** » Tue Apr 13, 2004 8:42 pm

Not that it really adds anything new, but the uber-wealthy who are known by most/all are treated with the same kind of scorn and contempt that so-called comic speculators are. Bill Gates is attacked every time he makes a new mega-acquisition, in a "how much can one man OWN?" kind of way.

we're just talking different circles is all. The people who critique mass purchasers of, say, IBM stock, wouldn't care about someone cornering the market on VVSS books, as most of us wouldn't care about someone suddenly gaining 51% ownership in IBM.

But then, I'm a capitalist, in the truest sense of the word...

And we *are* talking about capitalism, right? Right?

BoH

kryptonitecomics · Post by **kryptonitecomics** » Tue Apr 13, 2004 9:03 pm

Is this thread about me and my 22 copies of Solar #6????? Very flattering folks really I'm blushing

oh it's about the Aug002 guy.....I must be overvaluing myself again..........

That was my best impression of Kenji

comicguy · Post by **comicguy** » Tue Apr 13, 2004 9:05 pm

Kryptonite that was just too funny lol

Zero · Post by **Zero** » Tue Apr 13, 2004 9:25 pm

I didn't really see this mentioned, but I think it needs to be said that there are people out there bidding against Aug. The high bid on any auction is NOT what the high bidder is willing to pay, but one bid increment higher than what the second high bidder is willing to pay. If it were not for him prices would still most likely be high. He's just adding to the "madness." If not him it'd be someone else. I remember not so long ago guys on the previous board bashing DeSire's deep pockets. I think there just comes a time when people need to realize Harbinger #1 is no longer a $5.00 book. Just my couple pennies... ~Erskine

graybola · Post by **graybola** » Tue Apr 13, 2004 9:35 pm

thespeculatorboy wrote:To be honest with you, when I see aug bid, I bid it up to $180 knowing he will still out bid me just to spite him.

Yeah, but would you pay for the auction if you were able to outbid augie?

COMICKINGS · Post by **COMICKINGS** » Tue Apr 13, 2004 9:39 pm

thespeculatorboy wrote:
graybola wrote:
thespeculatorboy wrote:To be honest with you, when I see aug bid, I bid it up to $180 knowing he will still out bid me just to spite him.
Yeah, but would you pay for the auction if you were able to outbid augie?

It only backfired on me once, and it cost me $60.

be careful,he doesn't win everything he bids on.You could get spanked again.

ZephyrWasHOT!! · Post by **ZephyrWasHOT!!** » Wed Apr 14, 2004 12:12 am

greg wrote:To put it even more bluntly...

Why does this community, in particular, denigrate Aug002, in particular,
when he is simply investing in items he deems worthy of his money?
Why do we (as a community) feel that someone should have one copy,
or maybe two copies, and then leave the rest alone?

No one says you shouldn't have more than two shares of IBM...
so what's the difference if you're buying what you know and like best?

Shares of IBM are infinite. If enough people buy shares of IBM stock, the corporation will simply split the stock, thus making twice, three times, 50%, 33%, etc more shares available. There is, theoretically, an INFINITE supply of stock shares for any publically traded company. Stocks can split endlessly, there can be 10,000, 100,000, 10 trillion shares of stock in any company....it is limited by nothing but the corporation itself. There is not, obviously, an infinite supply of ANY comic, though it might seem so in the case of X-Men #1. Big difference.

The value of a share of stock is in direct proportion to the value (at least on paper) of a corporation AND NOTHING ELSE. The share itself bears NO intrinsic value, if the company goes out of business....the share becomes worthless.

Copies of X-O 1/2 Gold are not infinite. They are valued INTRINSICALLY, solely based on what a copy of X-O 1/2 Gold has to offer to whomever desires it, for whatever reason, and NOTHING ELSE. They exist in a finite supply, and cannot be authentically reproduced in any way (outside of going back in time and increasing the print run.) There will never be MORE original X-O 1/2 Golds than exist RIGHT NOW. It's value is tied to ITSELF ALONE, and is not based on ANYTHING other than it's tangibility. It's value may CERTAINLY be influenced by outside factors, just like stocks are, but ultimately, it's value is intrinsic. It sells for what it does because it's an X-O 1/2 Gold, and nothing else. A share of stock sells because it represents a company, not itself.

One is a commodity, a physical piece of property, a tangible that cannot be divided or diluted in any way in and of itself without taking away it's basic integrity. A stock, while often printed on paper, is an <i>in</i>tangible, and that piece of printed paper becomes meaningless (or is devalued, changed, whatever) if the stock itself splits or merges, the company goes out of business, etc etc etc. If you own 5,000 shares of Coke and Coke goes out of business....you own nothing. If the stocks weren't printed on paper, you literally own nothing. If you own 5,000 copies of Harbinger #1, and Valiant goes out of business...you still own 5,000 copies of Harbinger #1. Nothing has happened to the INTRINSIC value of Harbinger #1.

It's like comparing apples to kumquatts. And no, reprinting the book is not the same. We're talking about comics as commodities, and their value AS commodities rests solely in their individual status based on a set criteria established in an aftermarket (say, a first printing of Spiderman #1 as a back issue). A second printing of Spiderman #1 isn't the same thing as a first printing, and never will be (for good OR ill.) Splitting an 'A' share, or 'B' share, or whatever share, of stock is. It's simply reproduced a copy of itself, one that bears the EXACT SAME VALUE (whatever that may be) as any other share of it's class. You split one share of coke (turning into, say, two shares) and you have two shares that are identical in every way. You reprint Spiderman #1...and you have one original, and one reprint. Totally different things.

The other reason there's a problem with Aug002 is because he's not just doing it to invest....at least, not the 'right' way. He's not 'buying low and selling high'...he's 'buying higher than any other price has ever been for this specific book' and maybe selling even higher in the future.

The problem with this is that he's trying to 'corner the market'. This isn't possible in a theoretical economic model, because, theoretically, all goods and services will be bought and sold strictly according to the law of supply and <i>natural</i> demand. For example: if there are 1000 people who drink milk, milk will be sold at a certain price, according to the demand for that item, and the corresponding cost of production. Costs of production goes up, price goes up, demand goes down, and all vice versa. You add another person who wants milk, and demand goes up, driving the price up, which theoretically should drive the unit cost of production down. All very simple.

Then, of course, you toss human everything into the mix. Human beings are emotional creatures who don't often (if ever) think rationally. Aug002 does not NEED a single copy of anything to exist. He does not NEED more than one copy to 'enjoy the story'. However, apparently he NEEDS to have multiple copies of the things he buys, and is willing to set market RECORDS to obtain them. The finite supply means that many fewer copies for 'anyone else', and artificially influences a market that likely doesn't exist naturally. If 1 (or 10, or 100, or 1000) of those 1001 people buying milk suddenly got it in his or her head that all dairy cows were going to keel over dead overnight, and he or she decided to 'stock up' to have 'enough' or even try to 'make some money', and bought up more than they USUALLY used (or even COULD use; milk being a perishable item, nobody can keep it forever and maintain it's integrity.....same with....watch me now...comics. Though, of course, on a much slower scale), suddenly the supply would not meet the demand, and, as generally happens, people would react, and depending on the reaction, the price of milk would skyrocket, and then only the very rich would be able to buy the 'luxury' of milk. Does that make sense? Has the production of milk actually stopped? Does anyone even KNOW? How much did people buy into the hype for hype's sake?

This is all perfectly legitimate or course; Aug002 has the right to do whatever he wants with his money. However....what may be legitimate may not be in the best interests of all involved. Just because you CAN do something...doesn't mean you SHOULD. And, because of the human factor, an artificial market creates chaos with people buying and selling for way over (or under) what the market would NATURALLY bear, and in the fallout that inevitably ensues when the market 'corrects' itself (and it ALWAYS does), a lot of people get really, really screwed, and a few people make a lot of money, and no one's really satisfied. In a NATURAL market, people (grudingly or not) ACCEPT the current market conditions because they know that it would take something radical to disturb the market either up or down, so that they can generally be confident that what they paid $200 for this week doesn't sell for $10 the next. Chaotic markets create conflict in the human condition in direct proportion to their severity. Natural markets ALMOST NEVER EVER create conflict in human society. Witness, there's never been a single war amongst the United States for purely economic reasons...something that CANNOT be said for countless other nation states in the history of the world, many of whom have fallen simply because they couldn't make the economy work.

Want an understanding of the insanity of artifical markets and economic chaos? Read about the Hunt brothers, who tried to corner the silver market in 1979....with silver soaring to $50+ an ounce by January of 1980. What does it sell for now? $7+ (which is surprising, it was tough to get it over $5 for much of the late 90's) And THEN factor in inflation. It's SOBERING.

Or....read about the psychotic inflation in Germany post WWI (and a MAJOR contributor to WWII), where you couldn't buy ANYTHING except on barter, because your 1,000,000 DM in the bank literally became worthless overnight. Artifical markets are bad for EVERYONE.

greg · Post by **greg** » Wed Apr 14, 2004 12:33 am

A very well thought-out post, thanks Zeph.

The real question for us, the Valiant few, is whether WE are actually
going to be affected in the long-term by Aug002's purchases.

To date, I cannot name a single book for which he has purchased publicly
more than even one dozen copies. In fact, I would have to research to
find a single issue he has bought five times.

Can Valiant really be affected one-way-or-the-other by five sales of a book?

What percentage of a market has to be involved in order to cause a real problem?

So far, Aug002's activities have affected less than 0.2% of any issue.
Is 99.8% destined to "suffer whatever future may come" on the basis of 0.2%?

ZephyrWasHOT!! · Post by **ZephyrWasHOT!!** » Wed Apr 14, 2004 12:36 am

comicguy wrote:<snip> ...I see this theory of comic investing until we reach 1987-1988 issues(This is where the oversaturation begins) and it will pick up with 1998-1999 issues....<snip>

Oh, no no no....the print runs on comics didn't get insane until 1992, with the inasnity having it's starting point with X-Men #1 in '91 (and, tangentially, Spiderman #1 in '90), and culminating with Adventures of Superman #500 (well over 2 million copies) in 1993. These two years it seemed the presses never stopped running, and, most astonishingly, there were people BUYING all these books (regardless of how many any individual bought) because it LASTED for over two YEARS.

That said, '87 and '88 books make very fine investments, especially McFarlane Hulk and Spidey (#300 especially), Wolvie #1, Punisher & PWJ #1, etc. These books had sane, average print runs of between 200K-400K each. Not bad, and decent books are to be had, but not too common. Even well into 1990, you have VERY key books VERY low printed in relation to books that would follow (the most famous being New Mutants #87 with it's 110,000 print run), as well as X-Men #266 and #268. Heck, even Death in the Family only had print runs in the low 200,000s.

No, you won't do wrong investing in just about ANY 80's book, with the possible exception of mid-run GI Joe's (#50-#100), extreme fringe books (Ax!), or X-Men from about #150-#250, minus keys. You want a solid investment? Try finding 80's war.

By the by....I was looking at a copy of Adventure #353, Feb 1967, with it's statement of circulation...Net Press Run 759,000 copies....paid circulation, 481,000 (that's SOLD copies!) average for 1966. Fun, huh?