Here at GoCollect, we have a diverse group of writers whose articles are based upon each writer’s personal beliefs and experiences. In reading Daniel Hatch’s Comic “Investing Pitfalls to Avoid” I had to write because my experiences have been somewhat different.
Prosecutor versus Defense Team?
In my job, I am constantly involved in an adversarial position with my peers. Sometimes the facts we utilize may be the same but the way we construct those pieces of evidence leads to different viewpoints. I respect Daniel Hatch and his writing, but based upon my experience I must differ on some of his conclusions.
Investments versus Speculation (Pitfall #1)
If you own a collection of comic books of any value you should know that courts already consider comic books to be an investment for legal and tax purposes. I believe serious investors should view comic books in the same way. Courts are not even concerned about liquidity as a factor to determine if something is an investment. It would be hard to argue that the Amazing Spider-Man #300 you purchased at the beginning of the marriage when it first came out has not appreciated in value like an investment. Speculators buy a book based upon what they think is going to be hot or a rumor they heard and hope to make money on their purchase. People buy stocks for the same reasons and stocks are known as investments to everyone.
The difference is that everyone knows of stockbrokers who can appraise and sell a stock, but very few know there are people who handle comic book appraisals and liquidations. Comic book auction houses exist that sell small collections. These auctions houses take the 50,000 books and break them down into much more manageable chunks to be liquidated that will appeal to buyers. They fill a niche in the market to help investors liquidate their comic book collections, but you have to work to find them. The fact that you may not know of one does not mean they do not exist. Even if they sell your books at a loss you should talk to a good accountant because successful investors do have investments that they use to their advantage. These sales may constitute a loss on your alternative investment that can be used to offset those books that appreciated in value because we all know someone who looks at where your money came from in April each year.
The Price is Not Right Reasoning (Pitfall #2)
I agree with Daniel Hatch that investing in Hulk #181 for a quick flip may not be a wise move. That book has had a meteoric rise and may not see an increase in value in the short term, but that does not mean it is not an investment that can increase in value in the future. Years ago before law school, I was told the same thing about Amazing Fantasy #15. The prices had risen so much that industry “experts” said there was no investment opportunity in this book because of the high fair market value, but again they failed to realize that there are both short term and long term investments and sometimes a book that has had a high value can still be a good investment. Imagine telling someone that a 9.8 Amazing Fantasy #15 they purchased for a couple hundred thousand dollars then was a “no-win” investment.
When you think of investments you must look at your age and also the type of investment. Yes, Hulk #181 has a high FMV now, but if you are a 30-year-old investor who can buy a copy and possibly hold on to it for 25 years the price may go up. Investing in Berkshire Hathaway’s Class A stock may seem silly at $120k roughly 10 years ago, yet now that single share was selling for $330k on November 9. Again just because something is priced high does not mean it still is not a good investment.
Buy the Rumor and Selling the News does not work with Comic Books (Pitfall #3)
When I was working on Batman v Superman, rumors that Zack Snyder and the production crew told the people on the set to confuse the paparazzi were being reported as “news” before I had arrived home from shooting that evening. Pictures of me with the stunt team director in the morning and then near Ben Affleck were on news sites before I had lunch. Our cellphones were taken from us but when I got mine back people were already texting me asking me where I was at that morning. I lied per my contract, but with the internet rumors being reported so fast and repeated so many times they became news. If you buy the rumors and sell the news you have maybe five minutes because in the time it took me to type this sentence a new comic book rumor has just become internet news.
If the time between rumor and news is quick in the days of the internet what should the comic book investor do to protect themselves? Buying what you like is great, but only if your books are a hobby that you do not care if you lose money. If you are an investor, research the rumors AND the news. Study sales data. Determine if the book has risen in value but might still have factors that can cause it to appreciate after the movie release. That is because again a book may have not great short-term potential to grow, but long-term growth opportunities may still exist to warrant buying the book. Look to Giant-Size X-Men #1 and the sales data the day the movie was released and determine if buying the “late news” back then would be worth it if that same book was sold today.
In conclusion my comic book reader jury…..
My professional experiences have made me understand that collectibles are defined as investments by statute. Try to tell a divorcing spouse that yes your husband’s comic book collection may only be worth $25,000 but it is not an investment like the wife’s stock portfolio and you will be laughed out of court. Attorneys will also look differently at a pile of 90s books that have an FMV of $10k and a Golden Age book that has the same FMV, but gone are the days when these books are looked upon as mere hobbies and worthless. Auction houses now exist that will take a 50,000 comic book collection and divide and catalog it for sale to meet a need never before met in the comic book market.
As I said in my first blog, the case that brought me back to comic books involved a little old lady who told people she did not have any “investments” and was poor. All she had was a comic book and comic art collection that ultimately sold for the mid-six figures. The reason was she too did not see these items as an investment but more as mere whims of speculation by her deceased son. Daniel Hatch was right in that not one person has all the answers. He developed his opinion from his personal experiences and I have developed my opinions because of my experiences. That does not make his opinion right and mine wrong, or vice versa. What it does mean is that two people viewing the same thing can see it differently.