These are interesting times for investment assets as, by now, anyone paying attention has probably noticed that there’s a definite drop and slowdown happening in the stock market.
Will comics be hurt by this latest stock market downturn? Should you sell all your blue chip key comics right now? Is a crash of the comic book market eminent and finally upon us?
These are just some of the questions I want to explore in this blog post.
First, I want to briefly state two caveats and offer a full disclosure for the sake of transparency. To start: I am not, and have never been, an economist. I didn’t study economics at school and I’d be hard put to explain the more subtle details surrounding either macro or micro-economics or the behavior of interest rates and financial regulations on the larger economy.
Second, I am not Madame Xanadu. I possess no special power to predict the future. I don’t know if there’s a recession coming or if the market will pick up again in a few months.
Instead, what I want to offer here, building on some of my earlier blog posts about collecting and speculating, are observations about how well comic book investments have been performing and then try to say something (based on personal experience) about how the wider economy and the comic book speculation market seem to affect one another.
Here are a few things I’ve noticed as a collector.
Comics, like stocks and bonds – but much more like other collectibles and alternative investment assets – rise and fall in value.
To begin it can be said how, according to the data, on average there’s a recession in the US every decade (see here).
This has been true going back to 1850. Some economists (see here) think a full recession occurs within the US economy every 7 years.
The last two major recessions, for example, were the result of asset bubbles (the dot-com stock market bubble that happened in the early 2000s, and then the housing bubble that started in 2006 and ‘popped’ big-time in 2008). That’s more or less an 8 year period. The current appreciation of key comic books has actually been going on for around 8 years now.
The current explosion of comics into pop culture (due mainly to the success of comic book based movies) is also roughly ten years old now and there’s most definitely a correlation there.
For this reason, looking at the above numbers seems to signal an ominous portent: “I should sell right now”, you may be thinking, “I better get ahead of the coming doom”.
Well not so fast my friends, we shouldn’t confuse the movement and performance of the stock market – difficult enough to time or predict – with the movement of a subset of investment assets – in this case, comics.
Will a stock market crash directly affect the value of comics?
Yes, of course, to an extent.
Comics are driven by demand and they are very much luxury items in our economy, as they are purchased more often, and at higher prices, when people have extra cash on hand.
However, during the last recession in 2008, the depreciation of comics versus stocks and other investments – like housing- was much less pronounced.
So, perhaps the first lesson to take away is, although there’s a definite connection between the performance of the financial market and the sales of comics, the correlation between comics and financial assets is not a one-to-one direct relationship.
People will spend on comics when stocks are down, perhaps because they can find bargains on comics they’ve been eyeing, and certainly also for other reasons.
Second, even within the stock market, when there’s a downturn, not all stocks go down at the same time or to the same extent.
Some individual stocks may even manage to rise in value during a downturn. I think the same is true for comics. If there is a crash coming, perhaps a certain group of comics (modern cover variants) will see a much more severe downturn than, e.g. Silver Age Marvel keys. These are all ‘big ifs’, since at the moment most comics are rising in value.
But, if a stock market slowdown continues, I do think some people (those who need liquidity or have purchased on credit) will sell their big item comics. When that happens, and if the market is flooded with high ticket items, it will be interesting to see how low prices will go or if the demand will be strong enough to buy up the available keys at only a modest drop in price.
Whatever happens it’s important to remember that market ups and downs are cyclical. If the market is trending down, all other factors being equal, it’s only a matter of time before it will change course and trend upwards. So far as we know, the same seems to be true for comics.