Every time a high-grade key sets a new sales record, collectors claim we are in a collecting bubble about to burst. We’re not. Here’s why…
This is not the 90s
If I had a dollar for every post I’ve seen that declares the current, rising market is the second coming of the mid 90s comic book crash, I could probably pay cash for that Albedo #2 I’ve been saving up to buy. It’s what you might call an apples-to-oranges comparison or a false equivalency, and it’s time to call bullsh*t on this all-too-common claim.
For one, there are at least five indicators of a collecting bubble and we aren’t experiencing any of them. But since reading economic theory can be more tedious than discerning the different printings in a collection of Classics Illustrated, I’ve called upon Deadpool, Harley Quinn, and Miles Morales to help explain how this is a booming economy and not a collecting bubble. One can lead to the other, but there is a calculable shift that needs to happen. Luckily, Nobel Prize-winning economist Hyman P. Minsky identified those (five) stages and the order in which they must happen for a collecting bubble to result:
1. Displacement 2. Boom 3. Euphoria 4. Withdrawal 5. Panic
The Word Bubble
In order to prove that we aren’t experiencing a collecting bubble, it will be necessary to define one. I should warn you that if the next sentence were the only sentence in this article, it would absolutely cause the doomsayers to double down on their insistence that we are at the crown of a bubble –so bear with me. In the most basic sense, a bubble is caused when a change in investor behavior causes the price of a tangible good to rise far beyond its real value. This draws resources to areas of rapid growth, followed by rapid deflation.
In that capacity (and coupled with a cliché like “that which goes up must come down”) there are sensible people who could become convinced that any market increase is the sign of a pending collecting bubble. But that relies upon an assumption that each new peak is the zenith. Such open-ended fear lacks relativity since nothing grows in a vacuum. One needs to know the full distance between two points on a curve to know its length. Speculation here can result in an illusory view that assumes a shorter distance.
In other words, if you sell too soon you lose money.
Displacement is catalyzed by a new paradigm, and it requires two things: low interest rates and the illusion of scarcity. Interest rates need to fall, and there must exist a condition by which a belief in scarcity is provably false. Moreover, the instigator of re-evaluation must be new. Without these simultaneous conditions, a bubble can’t develop.
Right now, interest rates are rising (and will continue to rise into next year), and we have an actual record of production for almost every single comic book via Comichron’s posted circulation numbers and the GoCollect census data which reveals the day-to-day quantity of graded books by issue and condition. These data points provide the best/worst-case scenario for most comics in real-time. Combine that with a snapshot of what’s being offered for sale on sites like eBay and you have the tools to make educated guesses about how specific comics are being valued within the hobby and what potential there may be for growth based on abundance and scarcity.
The relative fluctuation of some comics is not an indication of market-wide conditions, so when the value of Silver Surfer #3 tanks after Mephisto fails to appear in the MCU, that is not an indication of an industry bubble. It’s proof of bad spec. But contrarily, whether Mephisto appears or not in the MCU may have little bearing on the relative value of his first appearance since it is still a Silver Age key issue that is exceptionally hard to find in high grade, and it should maintain a value in line with all comics of the era and outperform them based on its own tangible merit.
Boom / Paradigm
A Boom is when demand outstrips supply, allowing asset owners to raise prices. Booms are often mid-to-long-term periods of growth that may eventually turn into a bubble if the boom extends too far beyond the growth trend as buyers become foolishly ebullient. While we are indisputably in a boom, it has not followed a sudden displacement, so if we read the signals we can ride this up to the apex and exit before the late speculators take it over the cliff. And there is ample opportunity to take advantage of fear-motivated short-sellers between now and then.
That’s not to say there isn’t a paradigm at work here –it’s just not a new paradigm.
The five years that preceded 1996 are punctuated by a recession that culminated in massive inflation. Instead of curtailing production to navigate a marketplace in the midst of a competing boom (videogames), comic book publishers increased their circulation. They promoted false scarcity and amplified novelties until the business could not sustain itself. Over-production literally bankrupted more than half of the comic shops that had entered the market on the heels of hype about blue-chip auction prices and the Death of Superman.
A Numbers Game
The circulation of the comics produced in just the first six months of Image Comics’ launch was equal to all comics produced by all publishers in the last decade. We can point to the engineered scarcity of variants in today’s hobby. Still, there is no sidestepping the fact that they are legitimately rare. Comparatively, comic books are much more collectible today than they were in the early 90s when average print runs were in the millions.
It’s perhaps important to remember that while new comics dropped in value to almost nothing in 1996, most Bronze and Silver Age books kept their value and Golden Age books actually spiked. But the biggest difference between 1996 and 2021 is the MCU. Comics of all eras have a constantly renewing value-add via the largest entertainment conglomerate in the history of the world and its competition. Just as Broadway and even Vaudeville had once been the primary source material for films, comics are the adaptation of choice now –and the investments made on their behalf are both unprecedented and expanding. Comics have been undervalued for too long and we are seeing a market correction. This isn’t the end or even the middle of the boom, this is the beginning.
The Greater Fool
Economic euphoria is built upon the principle of “the greater fool,” or the belief that no matter how high prices get, there will be someone else to come along and pay more. This philosophy only becomes dangerous when the demand dissipates. But with billion-dollar IPs at stake and a growing interest in the source material for the most successful movies, videogames, and augmented reality experiences there are generations of greater fools waiting in queue.
Not all comics are equal. Some key issues offer a greater potential return than others. Some spec is really misguided hype, and some comics get overlooked relative to others. But that’s not an industry-wide condition. There are a plethora of heroes and villains whose appeal makes them fairly easy to predict that they are going to be around for a very long time and there are a finite amount of their key issues.
Withdrawal and Panic are as linked, as are insolvency and a run on the banks. These are the last aspects to defining a bubble and can remain hidden until they are actually happening (generally earning official recognition in hindsight). But nothing so broad can come as a surprise to anyone paying close attention. If you avoid herd mentality, short-term thinking, and cognitive dissonance, you are already defending yourself against the type of deflation that can never inflate again. In some capacity, the kind of massive sell-off that would be necessary to crash the entire comic book collecting hobby is not possible. This is because the contagious addiction that is collecting is underfed. There are, quite simply, fewer truly great collectibles than there are willing collectors.
When I see wildfires ravaging affluent neighborhoods in California, I of course empathize with the senseless loss. I also experience the terrible realization that among the things lost in all that destruction are collectibles. They may not be the same things that inspire my passions, but those people had things they cared about. They collected things. Rare things are not becoming more abundant; they are becoming more scarce. As long as there is any kind of economy there will be an economy of collectibles. As more and more people become disenfranchised with stocks and bonds, they will invest in nostalgia. Baseball cards are regional and deckmaster games are generational, but comic books are truly timeless.
What do you think? Is this a sustainable boom? Let us know in the comments! As always, find what you enjoy collecting, do your research, and have fun!