Liquidity in the Comic Book Market
Comic Character Collectibles
By J.C. Vaughn
Vintage comic books offer many different factors that can appeal to collectors and investors. One of the key factors is liquidity.
“Liquidity is the ability to sell an item in a fast and easy process without causing a significant negative movement in price,” said Vincent Zurzolo, Chief Operating Officer of Metropolis Collectibles and ComicConnect.com.
Under normal conditions, he said increased liquidity should promote trade and increase prices because easier transactions allows more people to make those transactions in a confident manner. That increased consumer confidence is at the heart of it: if you are convinced that any investment in any field is safer, if all things are equal then you are more likely to make that investment.
“In a consistent fashion every month I am getting calls from brand new buyers who have never collected or invested in comic books looking to get into the market. They are motivated by finding a place to invest in Batman, Superman and Spider-Man. Long time collectors and investors are motivated financially but they are also motivated by their passion for the comic books, their love of the characters and trying to recapture the joy they felt in their youth when they read comics,” he said.
But why is liquidity important in the first place? It is probably – and understandably – more of an issue for an investor, but given the substantial prices paid by collectors for vintage, rare, high grade comics these days there is no denying that it’s part of the equation for them as well. The higher the prices investors and collectors have to pay for a given comic book, the more they want to know what their short-term downside is in case they have to sell sooner than they planned.
“A bidder doesn’t want to feel foolish by going too far beyond what anyone has paid before. Or to put it another way, if you overpay you want to be doing so consciously because you just want the item that much,” said Barry Sandoval, Director of Operations, Comics for Heritage Auctions.
Sandoval said that each high result from an auction provides other bidders a certain comfort level, particularly if the price is the result of an unreserved auction (meaning there was no bottom price for which the issue could have sold) because it takes a minimum of two people to get to a certain price.
“With high-dollar private treaty sales that were rumored or announced over the years, you never quite knew for sure if a partial trade or other considerations were involved.
The presence of investors in the market alongside collectors, though, does not by itself increase liquidity in the marketplace, said Josh Nathanson, President of ComicLink.com.
“Bringing investors into the market helps increase prices realized for certain segments of comic books at certain periods of time, but I don’t think it increases liquidity. It just affects the demand side of the equation. If the supply side does not increase as quickly as the demand side, or the supply on the market diminishes, prices go up,” Nathanson said.
“Accurate grading and pricing by sellers and third party grading services help to promote liquidity,” he said.
Most experts agree that reliable, independent, third-party grading has played an enormous role in shaping the comic book market’s past decade, including, including the robust growth in five-, six-, and now seven-figure sales.
“The advent of Comics Guaranty, LLC (CGC) has been an enormous factor. I believe the days are gone where a non-CGC-certified book of value gets bought or sold. Most dealers and sellers realize you will receive a lot more money for a certified comic book compared to a non-certified one (primarily for comics worth hundreds of dollars and higher) and most collectors and buyers will not pay a premium for a book of value unless it is certified,” said Doug Schmell, President and CEO of Pedigree Comics.
“It is the confidence and trust factor of the CGC product that drives this market, knowing that at least three expert graders have reviewed any given comic for its condition, knowing whether it has been restored or not, and having an impartial and accurate grade assigned to it,” he said.
No single factor, not even independent third-party grading, can make a market, though. There are many significant changes that we can enumerate, but the presence of the internet has changed the comics market – and so many others – in ways that we cannot entirely comprehend at this point.
In addition to the relative ease of finding the material compared to even just 10 years ago, there has also been a change in the social acceptance. The “Bam! Pow! Bop!” lead sentences in news articles about record prices given way – not quickly enough for our tastes, but still – to more articulate descriptions of our marketplace.
The financial success of comic characters or properties in other media has also helped. Blazing box office successes for The Dark Knight trilogy, the Avengers films, the Spider-Man movies, and The X-Men series, and along with television series such as The Walking Dead have helped raise the profile of comics as well.
In the end, however, there are no assurances that comic values will always go up. Anyone who peddles such a notion probably would have said the same thing about housing values prior to 2007. So, what is an appropriate way for a collector or investor to moderate his or her expectations?
“Collect and invest with a plan in mind. Come up with a strategy that fits your budget and talk to people like me once you have put your plan and goals together,” said Zurzolo.
Experienced, reputable dealers or seasoned collectors can help you to refine your plan and let you know if your goals are realistic ones. If you as the purchaser are willing to spend a substantial amount of money with them, they should be able provide you with references that will increase your confidence.
This column was excerpted from The Overstreet Guide To Collecting Comics (Gemstone Publishing, $19.95), which was published November 21, 2012. J.C. Vaughn is the Associate Publisher and Executive Editor of Gemstone Publishing.