I grabbed people’s attention when I attended an investment seminar undercover and asked a simple question. The question was “should the age of the individual be a factor in the diversification of an investment portfolio?” I was rushed out so fast I did not even get my free dinner. Many comic book investors also fail to address their age in relation to their comic book portfolio. That could create problems with their planning. Here are two collectors I have personally encountered that also failed to consider their age in relation to comic book investment.
Case #1 Older Speculative Junkie
The Book is Going to Be Hot!
Investing in a well-diversified portfolio has some speculative investments. People choose to invest in these types of investments because they can produce a great return on investment. Many investors will invest in business start-ups because of the potential to be the next Amazon. Every speculative junkie mentions Amazon, but hardly anyone mentions Pets.com. They ignore the risk and only look at the possible reward. Comic book speculative junkies are of the same ilk. They see all rewards and ignore the potential dangers.
I know of an elderly comic book investor who purchases almost every variant cover produced in an attempt to hit it big and get that emotional high. This individual sees the high prices going for some variants and his F.O.M.O. drives him to make purchases. As a result, they only count their successes and fail to factor in their losses.
Acceptance of Risk
Speculative investments in comics should be a part of your portfolio. The problem that I always see is that the age of the individual is not factored into comic book investment strategies. As a teen, you may not be able to purchase many blue chip comics that maintain their value. Speculating on more books may be right for you. The problem with the older speculative junkie is that they should have a lower tolerance to risk. Do you know how many collectors are approaching their senior years and still invest in books for long-term speculation? Age should impact your risk tolerance for your investments. Certified financial planners adjust portfolios based upon risk tolerance and age with conventional investments. Should you not do the same with your comic book portfolio?
Case #2 The All in Hulk 181 Investor
But Everyone Knows Book X is Safe
Recently on a board, a person questioned why they should diversify their collection. They looked at the rate of return for books such as Amazing Spider-Man #14, X-Men #4, Incredible Hulk #181, and other books and said why would you not want to buy these books? These books have a history of producing a great rate of return on investment over the long haul so how dare anyone suggest diversifying their investment portfolio with a collection of lesser growth books. They already had diversification because part of their comic book portfolio was speculative, blue chip, and growth. Again diversification can mean many things and this collector failed to realize that diversification can also mean the number of your books.
A great article on diversification of your comic book portfolio is Jestin Davis’ Treat Your Comic Collection Like An Investment Portfolio. I had a fan contact me on the day it was published. They were going to follow the percentages listed, including putting all his growth portion in a Hulk #181! The article stated numerous times to DIVERSIFY your comic portfolio, but in the end, the person wanted to do just the opposite. They were going all-in on one of his recommended growth books.
Diversification can mean many things
A general rule for investment is that younger investors should never ever invest their entire portfolio in just a few investments (fact-specific exceptions not included). Again, the reason is that there is a risk of loss involved with that plan. Putting your eggs in one basket may not be the safest way to avoid risk. Diversify also means the nature and number of books in your collection. Investing in one type of book also may not be a wise strategy. First appearances books can be one segment of your growth books. Iconic storylines, another segment for your growth books. You could further diversify by having part of your growth segment in established horror, superhero, and war books.
I have seen younger investors go all in one established book because that is what older investors are doing. The question you have to ask yourself is “what if that book loses the interest of investors?” Growth is great, but diversifying your growth comics minimizes your risk. If you place all your eggs in one growth-type book, you are not investing in growth. Instead, you are speculating on the potential of that one book outperforming the increase in value of a well-diversified comic book portfolio. Talk to those young investors who put their faith in the Old GM stocks because of their parents. What was once safe may not be in the future.
Time affects everyone. Well, everyone but Tom Brady. Younger investors generally have a longer time to absorb losses from risk. They may be more willing to accept losses for the possibility of a greater return on investment. In contrast, the older we get the more adverse we get to the risk of loss. Older investors may be wary of risk because it took a long time to get where they are now. Lost money on risky investments may never be earned again.
When you read these blogs, the reader should factor in age with the advice provided. Our bloggers provide common-sense information, but please use your own fact-based scenario and proceed accordingly. As you get older, review your comic collection and ask yourself if your risk of loss is at an acceptable level for you. Consider it your yearly comic book physical. As always, it is better to review your comic book investments one day too early rather than one day too late.
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