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It is well known that proper diversification of an investment portfolio is a good thing, reducing overall risk and increasing total returns.

Proper diversification, for many years, was considered by most investors to mean that one should be invested in a mix of publicly-traded stocks and bonds, perhaps with a sprinkling of real estate.  Increasingly, people understand that events and circumstances can cause the multiple public markets to fall at the same time.  So, by example, people assumed (and experience showed) that when blue chip stocks were down, small caps might be up.  The recent Great Recession was so deep and wide, however, that multiple asset classes took sustained hits in unison.

For this reason, people are (and should be) looking for ways to diversify more than ever before.  Tangible, hard assets are a key place to do this.  These may include income producing assets such as timberland, farmland, and commodities of all kind.  For more general information on investing in tangible assets, click here.

Hard asset investments can also be made in a variety of antiques and collectibles.  This is the first in an AIMkts® series providing an introduction into various subclasses of antiques and collectibles.  This installment:  comic books.

As Rick Pitcairn, chief investment officer of Pitcairn, a family office with $3 billion in assets told InvestmentNews.com, “a collection of tangible assets will be an important inflation-fighting tool as inflation becomes more of an issue.”

So, is there value to investing in something that is of personal interest or value to you? From antique cars and fine wines to art and even hair (yes, you read that right), you can invest in just about anything your heart desires, but putting your money toward items of true, lasting value that aren’t subject to the whims of inflation takes as much calculation and skill as any other type of investment. AIMkts explores investing in rare comic books.

Why comics?

“Newfound enthusiasm for the [comic book] medium has led some to view comics as an investment in the same way others seek rare baseball cards or stamps. There’s good reason for this: History shows that hard-to-find comics can command huge sums,” according to DailyFinance.com writer Tim Beyers.

Heritage Auctions, the world’s largest collectibles auction house, points out, “In general, the comics that have the most collectible value are those published between 1938 and 1979. Typically within that time frame, superhero comics hold the most value, with first appearance or origin issues being the most sought after.  The vast majority of comics from the 1980s and later have little, if any, value today.”

“There are several factors that go into a comic being collectible”, says Vincent Zurzolo, COO of ComicConnect.com. “First is the popularity of the character. Second, would be the scarcity and third would be grade of the comic book. The higher the grade, the more scarce it is and then more in demand it is.” See more of Zurzolo’s CNBC interview here.

Beyers gives four tips for beginners considering making an investment of any size into the comic book genre:

  • Invest in proven titles – If the comic is one that has already gained attention for its value, chances are, it’ll remain that way for you.
  • Rarity beats heat – The harder it is to find, the more likely it is you’ll be able to sell it for a stellar price.
  • Avoid autographs – As the medium grows, determining the authenticity of autographs is too difficult to increase value.
  • Buy first appearances – Comics featuring first appearances of characters who later show up in TV or movies usually remain in demand.

To these tips, I have this to add: first, while scarcity is unquestionably important, so is demand.  So-called “platinum age” comics (defined generally as comic books published by certain publishers between 1883 and 1938) are exceedingly rare but because collectors of these comics are also rare, their prices are eclipsed by many comic books that are far less rare.  Second, while grade is not included on Beyers’ list, its importance has become paramount in recent years.

The “Blue Book” for Comic Books and Grading

The Overstreet Comic Book Price Guide by Robert M. Overstreet is considered “the comic collector’s Bible” – known as the definitive, industry-wide reference for looking up more information on most comic books.  And, because the grade of a comic book is such an important element of its value, independent grading companies like Certified Guaranty LLC are gaining in popularity.

A comic’s “grade” is simply the standard by which the condition of the piece is measured and, from there it is given value based on its grade. Learn about how grading works here.  Over the past 20 years or so, the grade of a book has becoming increasingly important, with very differences in grade sometimes meaning huge price differences.

Return on Investment

Investing in comic books can produce incredible returns, particularly if you were smart or luck enough to get into the hobby back in 1970, the year the first Overstreet was published Here is a comparison of values for a few key comic books between 1970 and 2010, and 2013, according to Overstreet (prices are for near mint copies):

Comic Book 1970 Value 2010 Value 2013 Value
Walt Disney’s Comics & Stories #1 $115 $40,000 $45,000
Amazing Fantasy #15 (first appearance of Spider-Man) $16 $100,000 $175,000
X-Men #1 $6 $26,000 $40,000
Captain America #1 (first appearance of Captain America) $150 $215,000 $300,000
Pep Comics #22 (first appearance of Archie) $10 $50,000 $144,000
Tales of Suspense #39 (first appearance of Iron Man) $6 $20,000 $36,000
Detective Comics #27 (first appearance of Batman) $275 $1,050,000 $1,500,000
The Incredible Hulk #1 $14 $65,000 $105,000
Action Comics #1 $300 $1,200,000 $1,900,000

In general, however, the best way to find out what anything is worth is to look at actual transactions.  With comic books, experience shows actual sales prices can deviate from what Overstreet suggests they should be.  For example:

  • Tales of Suspense #39 was sold by Metropolis/ComicConnect.com in 2010 for $118,000.
  • Detective Comics No. 27 (first appearance of Batman) sold for $1,075,500 in the February, 2010 Heritage Auction.
  • Heritage sold The Incredible Hulk #1 sold for $125,475 in November, 2009.
  • Copies of Action Comics No. 1 were sold in 2010 for $1 million and $1.5 million, respectively.  The difference between the two?  The million dollar copy was CGC-certified an 8.0 while the $1.5 million copy was CGC-certified 8.5.

Again, the grade of a comic book is hugely important.  To give you an idea, look at these comparisons for select issues of varying grades of select issues according to the 2013-2014 Overstreet: 

 

Comic 2.0 (GD) 4.0 (VG) 6.0 (FN) 8.0 (VF) 9.0 (VF/NM) 9.2 (NM-)
X-Men #1 $900 $1,800 $2,700 $9,000 $23,000 $40,000
Pep #22 $10,000 $20,000 $30,000 $70,000 $105,000 $140,000
Action #1 $120,000 $240,000 $360,000 $870,000 $1,400,000 $1,900,000

This is not to suggest that Overstreet values set a price floor.  According to a 2010 Overstreet article written by Mark C. Zaid of Esquire Comics, for instance, “Western comics from the 1950s are on a total downward slide.  Even high-grade gorgeous photo covers, such as those published by Fawcett, can be found from 50%-70% of Guide at times.”An individual comic book’s history/pedigree can also dramatically impact value.  There have been, over the years, some significant finds of collections and the specific comic books that can be authenticated as having been part of those collections often sell for multiples of the Overstreet value.  Examples of such collections include the Edgar Church/Mile High Collection and the Bethlehem Collection.

A peculiarity of the rare comic book market, like all antiques and collectibles, is that comic books have no real inherent value.  People must consume commodities, like oil, to heat their homes and fuel their cars, and grains, to eat and to feed their livestock.  Investments in securities represent a fractional ownership in income producing assets.  Comic books (and, for that matter, rare art, books, stamps, etc.) cannot be consumed.

The total size of the marketplace is relatively small as compared to the markets for many other assets.  For this reason, pricing can be fickle.  There are many instances of a single comic book auctioneer selling multiple copies of the same comic book in the same grade in the same year, for differing amounts.  For example, ComicConnection.com reported that in 2009 it Batman #1 in a CGC 7.5 grade for$16,395 yet sold the same book in a CGC 2.5 grade for $18,200.

Is Comic Book Collecting for You?

 So, who are the buyers of rare comic books? According to Zurzolo, “customers range from the average Joe on the street to politicians to CEOs of Fortune 500 companies, billionaires, celebrities – you name it.”

From spending a few dollars to millions of dollars, collecting comics doesn’t have to break the bank and careful buying, preservation and time may be the only components to assembling a collection that could well pay off in the end. However, the return on such a long-term investment may take decades to realize.

Then again, just like any other investment activity, you can get lucky.  In the recent past, a private comic book collection, discovered in the basement closet of a modest, middle-class home, was sold for $3.5 million. Lon Allen, managing director of comics for Heritage Auctions, said, “This is just one of those collections that all the guys in the business think don’t exist anymore.” Read more about this stunning collection here.

At the end of the day, “passion is required,” says CNBC’s Steve Sedgwick. “Because if it fails to make a profit, you still need to love owning it.”

 

 

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