Five Reasons Why We are Not in a Collecting Bubble

by Matt Kennedy

070821B-300x157 Five Reasons Why We are Not in a Collecting BubbleEvery 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

albedo_2-190x300 Five Reasons Why We are Not in a Collecting BubbleIf 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

Deadpool-1990sUSeconomy-300x300 Five Reasons Why We are Not in a Collecting BubbleIn 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

SS3-199x300 Five Reasons Why We are Not in a Collecting BubbleDisplacement 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.

Harley_UsGDP1960-2019-300x300 Five Reasons Why We are Not in a Collecting BubbleThe 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

Miles-Morales2021-recovery-300x300 Five Reasons Why We are Not in a Collecting BubbleEconomic 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.

  IronMan128-192x300 Five Reasons Why We are Not in a Collecting BubbleWithdrawal 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.

Conclusion

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!

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12 comments

algonwolf July 12, 2021 - 8:41 am

Have you actually read, Stabilizing an Unstable Economy (1986) or are you just going off of a blurb you read on Wikipedia or Investopedia? Minsky is quite clear the 5 steps are a guideline, not a doctrine. The comic industry, right now, has quite a few things in common with the 90s crash and it is only a matter of time before the bubble bursts:

1) Scarcity is artificial. Despite your comparison to the million print run of the 90s, what you fail to realize is that the net number of “possessors” of comics has dwindled. There are far few buyers than the 90s, which is why you perceive a scarcity. The supply has dropped because the demand has dropped. In order for companies prop up sales they have reverted to the 90s variant / special cover, artificially propping up sales with “ratio” comics or variants.

2) In hand with Scarcity is the lack of actual consumers vs Speculators. While I concede that there are those that gain utility from a comic by appreciating the cover artwork only, in the 90s, people actually read them. The new comic market is made of three things, a) Readers, b) non-Readers and c) Speculators. I have no data to back it up but, non-Readers and Speculators, I would think make up a healthy number of those new-comic-buyers. That is bad for the long-term health of the industry. People just aren’t reading anymore, and the younger generation read far less.

3) Health of the Market. DC has shown what can happen if you do not have a robust cinema-side to boost your bottom line. DC is flirting with bankruptcy. DC is trying to survive. DC only has it’s comic sales to rely on because their movies keep tanking. DC is what marvel would be without the MCU to give them cash injections. What happens when the movie-going public decides they have had enough of super-heroes? When you rely on a different industry to prop up your industry (movies vs comics) then you are at the whims of that industry.

Like the Tulip crash of the 1600s, people wanted the Tulip, but no one was actually planting the Tulip. The hype drove the market, not an appreciation of the product itself. If an industry sees an influx of new money, new investors, new consumers but that influx is not based on valuing that product and is based primarily on speculation then what happens when that money leaves to the next big thing? All that money is withdrawn and those that initially valued that product are left.

The motivations of the consumers are similar to those of the 90s. The motivations of the sellers are similar to those of the 90s. The big difference is the industry contracted in the 90s and most of that contraction did NOT rebound. That contraction remained and the industry learned to survive in the new world. Now those market conditions are repeating themselves is there a reason to look at a different result…exactly what is the definition of insanity again?

I hope I am wrong.

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Matt Kennedy July 12, 2021 - 3:12 pm

Algonwolf, I thank you for your comment. It clearly took you a while to write it and I appreciate you spending that time to do so. To answer your question, I’ve read four of Minsky’s books (“Can It Happen Again?” “Stabilizing an Unstable Economy”; “Finance, Investment and Economic Fluctuations”; “Induced Investment and Business Cycles”; as well as L. Randell Wray’s “Why Minsky Matters”), but I wouldn’t knock investopedia, which is a great springboard for digging deeper. To be honest, I’ve absolutely spent more time in the last few years reading about game theory, applied investment history, and marketing psychology than I have reading new comics. And to that end, I think it is important to recognize that New Comics and Old Comics are two different commodities.

While fewer people are reading New comics, More people are buying old, graded comics than ever before. When the MCU adapts newer stories, those comics which are more recent and have lower circulation will become more valuable relative to that of older comics as movie fans seek those comics. Because of their scarcity, they may prove to be better relative investment material when those key issues provide the basis for new movies. Whether DC declares bankruptcy or not will have little impact on the price of Action Comics #1 (1938) or even Action Comics #9 (2012) –except perhaps to make them MORE valuable.

What happens when the movie going public gets sick of superheroes? There’s a lot of time left to figure that out because it isn’t happening soon. There are at least three years of forthcoming Disney-produced Marvel Comics-based projects currently in production. But the question itself is an assumption that is presented as a foregone conclusion.

Contrarily: What if the public doesn’t get sick of superheroes? The Disney Acquisitions of Marvel Studios and Star Wars are a massive investment and Disney will funnel whatever expense needed to prolong the life of those IPs. Superheroes went out of vogue in published comics in the 1950s creating an opportunity for Horror, Romance, and Science Fiction comics to take their place. It’s easy to predict comics will again pivot, as will the projects that get adapted. If so, the prices of rare horror comics will skyrocket as other media leads the industry. Both Marvel and DC published a LOT of horror and sci-fi comics in addition to their superheroes.

That doesn’t change the fact that even a bad Superman or Batman movie still drives up the price on their rare key issues. And we can’t consider a shift toward digital (and away from physical publishing) as an end to the industry, either, since the NFT market supplies a viable alternative with less overhead and a better retirement plan for the artists and writers. But that’s a whole other kettle of fish and I digress…

Tulips are an inherently bad comparison to comics because they are perishable goods. You can’t wait out a bad market with perishables. But comics don’t have a “shelf life” and can be stored allowing you to wait for the market to rebound. We’ve seen it time and time again. Things can become overvalued from hype, diminish in price, and then climb back up. Beany Babies would be a more apt comparison but only if the largest entertainment conglomerate in the history of the world had a vested interest in their success.

And while that does place a hefty degree of importance on another industry, there is no indication (based on the sizable investments) that the two will become inexplicably untethered. In other words it will be completely apparent if that is part of the plan because you’ll see less projects announced, less movies getting released, and that will provide plenty of lead time to opt-out if you are only in this for the money.

I’m also going to disagree that collector’s habits are the same (or to be fair, “similar”) now as they were in the 90s. That’s just not what I am seeing in my little corner of the world. People who bought comics before the launch of Image and Valiant probably aged-out of collecting new comics because of how badly written much of that era’s comics were (with obvious Vertigo exceptions). Many of them opted back later for nostalgic reasons, but the people who entered the hobby in the early 90’s to invest in the Death of Superman are probably not the same speculators buying Miles Morales keys now. And today’s buyers are certainly not buying long boxes full of Batman #92 like yesteryear’s speculators did X-O Manowar #0 and Youngblood #2 back in 1992 and 1993. As I stated above, the sheer number of monthly comics a small shop had to buy to stay competitive in 1995 put them out of business. The hype was from within the industry not from without.

It is also worth noting that almost all of those gimmick books are legitimately more valuable now than they were then. IF there had been an MCU in 1995, there may not even have been a crash –in spite of how many other terrible ideas were at play. We’ll never know. But to say that the market conditions are the same is just not true –and contrasting circulation numbers absolutely factor into their relative value.

Many of the doomsayers are convinced that all of the new high-end collectors are fair weather investors, and we just don’t know if that’s true. We know that there are people paying record prices for comics, but we don’t know that these buyers haven’t been life-long comic fans. While there is ample evidence that consumers of videogames and movie tickets have been spending money on old and new comics (and that this represents an expanded demographic beyond what the hobby has seen), we don’t know exactly which end of the market they have expanded.

We know that staying-at-home inspired many non-collectors to start collecting things, but we don’t know the long-term effect of “the collecting bug.” It could be fleeting, but it could be enduring. But as long as comics are turning into massive-budget movies there will be new collectors, which makes individual infatuation mostly moot. We didn’t have a reliable superhero film franchise in the 90s. Or (I should say), we didn’t have one until we did, and THAT signaled the end of the crash and the start of a new rise.

It may be a foregone conclusion that prices will continue to rise until they don’t and then, yes, there will be a crash. The relevance here is that it’s not immediately pending. We will not see a back-issues crash for at least another three years, and to be honest it may require another kind of financial crisis to happen. And that wouldn’t be a Comics Bubble because it would be an ancillary side effect of another kind of crash.

Bottom Line: We are not at the top of a bubble, and from where we are standing now, we may not even be able to see the top yet.

Side bar: Why do people keep saying that DC Movies are tanking? They may not be particularly well-regarded, but they haven’t been losing money: $1.1Billion for Aquaman. $883Mil for BvS. $822Mil for Wonder Woman. $747Mil for Suicide Squad (2017). $668Mil for Man of Steel. $658Mil for Justice League (and $266mil in HBO Max revenue for the Snyder Cut). Even WW84 brought in $166Mil and Birds of Prey earned $202Mil as a pandemic raged. When you add in AVOD, SVOD and physical media, you can add another $200Mil minimum to each of these. They aren’t as consistent as has been the MCU, but they are pretty far from flops.

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Dylan July 12, 2021 - 9:31 am

Silver Surfer 3 first app Mephisto.

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Matt Kennedy July 12, 2021 - 3:29 pm

Fixed! Thanks!

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David Seigler July 12, 2021 - 11:12 am

Like you, i would certainly like to think comics are truly timeless and perhaps they are.
However, I am reminded if that old joke where a stranger comes to town and asks a farm boy if he had lived there all his life, to which, after thinking about it, the farm boy replies “Well….not yet.”

I run a comic shop, and, somewhat like yourself, I have a vested interest in the continued health of the comic market. And you are certainly correct on at least one point- this is not the 90s. For one thing, the consumer is better informed with better tools than ever before. This has caused prices to change incredibly fast, with customers going through my back issue bins with literally up-to-the-minute pricing information. Obviously this can be a great tool for the Collector/Investor, but it also accelerates spikes in much the same way rumors of insolvency can accelerate or even be the cause of that very thing happening.

This may very well be our new reality, as you suggest, but it makes for a very volatile market. As a small town comic dealer it becomes my responsability not only to stay on top of trends but to anticipate them which in some cases actually makes me an active part of them. I may see a book that I feel has unrealized potential and price it a bit higher, which in turn alerts buyers to a potential trend they may not have thought of.

More often, however, the opposite happens. Some obscure character gets a small appearance in an MCU program and suddenly demand rockets up for a book that nobody cared about before and I find myself thinking “if you didn’t care before, why do you care now?”.

The easy answer is that Disney cares and that small MCU appearance makes a huge difference in a character’s exposure. But I think the core reason is actually closer to your own point and that is – People WANT to collect and are actively looking for new things to jump on. All of which is great as far as it goes, but I am much more confident in a book like Amazing Spider-Man 300 that has a steady climb because comic collectors love Venom than I am a book that takes a huge overnight leap because it is featured by one of the speculator apps as the Hot Tip of the Hour.

That is why I get a little uneasy when I see someone at my back issue bins scrolling through their phone, because this is buying based more on Fear of Missing Out than a genuine love or desire. And THAT ultimately leads to disillusioned collectors left with boxes full of Mike Greenwell rookie cards that nobody can remember why they wanted.

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Matt Kennedy July 12, 2021 - 1:25 pm

Great comments, here, David.
Apps like KeyCollector are part of the hype machine mentality that impacts titles on spec alone. That’s definitely as you called it, FOMO, but other apps like GoCollect help to give market-wide context to help expose those quick spikes as either premature escalation or the start of a long rise. I think the tools we have now help dedicated investors on a scale we never saw before, and the publication numbers (as they are now) help prevent unqualified inflation.

While I hesitate to compare comics to baseball cards (because of the inflated production on specific cards in the mid to late 80s), I’ll say this about those Greenwell rookie cards: what a different fate if Conseco had been caught with the steroids and Gator (the American League runner-up) had won MVP that year…

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Nick Chatzigeorgiou July 13, 2021 - 3:22 am

Totally agree with what you are saying Matt. I also want to add another factor that you didnt mention in your post. Comic book collecting now is Global..
I started collecting in 1993, before the crash..I live in Athens-Greece and i am 44 years old.
Back then i was looking to buy something for light reading..i came across a incredible hulk 406 in a newsstand..I was hooked..I wanted to buy more..There were only about four comic book stores in Athens at the time..and the newstands which after the crash stopped selling comics..Now i have a pretty big collection..4 years ago, comic cons started here..We now have Athens comic con which is not much compared to other countries cons but every time i go there there are hundreds of people attending..the booths have a lot more stores than what he had back then..i guess the MCU played its part..All in all, i totally agree that the game is different now, there isnt any crash coming. For sure we can see corrections..but crash?i dont think so..

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Neon Black July 14, 2021 - 9:22 pm

Comics have never been more legitimate as investment vehicles. will the values rise and fall? of course. will bubbles build and pop? yes. will comics stop being collectible as investments? hell no. that said, it would probably be unwise to put your retirement into a 9.8 copy of ASM #300. same thing with bitcoin !

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Redskydigger July 15, 2021 - 1:26 am

What is interesting is that children ages 6 and up are very interested in the MCU and they are starting to read comics. They want to learn about the characters and where did the come from.

For Gold and Silver age comics it’s starting to be looked upon as investments, simulator to art by the general public.

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GQGuyforComics July 26, 2021 - 10:57 pm

i have no argument about people collecting , yes i do feel people would like to collect. and no matter what especially holy grail bunch , golden age to bronze age will have its value rising , but the question is how much do people value this things with the present situation, your telling me that we will see the abrupt increase in value to be sustainable ? people jump in to buying comic books with a number of reasons , love of character, hobby collector for keeps , to sell , etc. if comic is truly a great investment and not for the quick buck turn around thats happening now then why do we see the market correcting in some way now. i dont know but the trends tells me is that buyers now are getting more knowledgeable what comic to buy, a lot of modern books are losing steam but the important books, 1st appearance of certain characters , holy grail, hype books from speculation ( laughing to those who fell from the mephisto crap ), upcoming movies are still pushing . im a collector ( i believe i am though i dont have vast collections compare to most of you ) and it sad for me to say im already at my breaking point in buying the books i want cause i cant afford it, i dont know since im sure not everyones buying power is like mine , if you look at IG community how many transactions do you really see happening when even raw books are being price at certain anticipated grades , whats the point ?? when your putting yourself in danger of handling problems and cgc blunders. like my daredevil 1.5 which i bought for 1900 , fmv from this website doesnt indicate its even close but im happy since i like daredevil. but i cant shell out 5000 for gs xmen 1 5.0 or 4.0 , its a hobby i wont sell any of my bought items and maybe i might stop for now and hope one day ill be able to come back when i can afford it. but i really hope people will get their money with this hobby but we all know comic hobby isnt about it. for quick bucks go to crypto ETH went down to 1700++ and goes up to 2100++ just for few days and still up and down. still i wish everyone happy comic collecting

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Matt Kennedy July 27, 2021 - 2:18 pm

As you noted, the more time spent in the hobby offers more opportunity to learn. Uneducated buyers can inordinately influence pricing on occasion, and that becomes a driving force for market corrections. Those corrections are good. They are a sign of a healthy market. I would caution you against waiting for prices to drop on vintage comics, as it doesn’t seem likely. Prices will continue to rise until they fall with the next massive economic disaster, but that will be relative to inflation across all markets –not just comics. When they do level out, your ability to buy-in will likely be in-scale with global monetary conditions. So basically, you’ll still be paying more later. It’s the new comic market that is most volatile because every new, shiny object is rapidly replaced by the next new, shiny object. If the new comic you want isn’t also coveted by the majority of other collectors you will have an opportunity to get a bargain there. I would caution you not to wait too long, as every 19-year cycle causes a value uptick for objects of a prior era for which the new generation of consumers are nostalgic. GSXM #1, on the other hand, is never getting more affordable than it is now.

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GQGUYFORCOMICS July 30, 2021 - 1:38 am

well , lets see once govt subsidy in different countries have gone dry and look at how trends go, im not from the US so everything i spend is blood money. even if im able to shell out that money my cost differ from yours, international logistics + tax + cost of book. still i wish everyone happy collecting , worst could happen is i just quit which means you all got 1 less competition in the market. cheers!

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