Theory of Speculation...

[magnusr]

I'm not really trying to stir the hornet's nest here...

I say we ban this guy.

the purchase of even 10 copies of a single issue, especially an out-of-print book, immediately invites disdain, outrage, and even hatred(?) from the community.

Well, I've always tried to understand that as well. Then for a real contradiction, the boards recently tought me that it is accepted to "cut in line" even for the most unique of unique items. Compared to that, how can it invite those feeling to simply play by the rules and win? It is a good question and I've never seen any answer.

The obvious difference is that comics are collector items, with the corresponding emotional attachment. A possible difference could be in the basic mentality. Investors try to beat each other. Collectors try to help each other.

But still no explanation. Aug helps others. I feel his pride is in his purchases, not in having beaten others. So, emotions, yes of course, but those emotions, that I can not explain.

Maybe it is in the volatibility. A better comparison would be with some smaller stocks. If someone feels an unfair value has been put on a stock, then you will see emotions. It does not translate to this discussion, however.

What percentage of a market has to be involved in order to cause a real problem?

In currency speculation we have seen how one speculator (and those following his lead) can cause major problems. And it is common-place for stocks that are seldom traded to have their prices manipulated (not legal, but still common-place). Don't know the percentages, but I guess it is not only the size of the possible market one has to compare with, but also the size of the current trades.

Sorry, no answers, but I'd like to understand the reasoning as well and maybe my lose thoughts can lead somewhere.

/Magnus

[Ghetto D]

by issuing new stock you dilute the float, and you have to give an opportunity to the major stock holders to buy some of the new issue to keep their percentage constant. Finance 102

Yes I am aware of how companies issue stock. I did not in any way say that owners could not purchase old stock. I also believe that I made it clear that the percentage remains at 100% and could not go over. It is not a given however that previous stock holders will get an opportunity to purchase newly issued stock. In an private company, typically founder's stock is not treated this way and subsequent funding rounds are only treated this way about 65% of the time.

Ken, you are correct however in how stock is values. Zep I hate to tell you that, but unless your last name is Lay or Ebbers you simply cannot manufacture value in that manner.

The closest to that is Junk Bonds, which occupy their own unique place in Monetary History.

[Ghetto D]

One of these days I'll figure out how to quote properly.

[Ghetto D]

How is that even close to relevant? I am trying to make the point that stocks are not issued out of thin air. There were some comments that lead me to believe that some see stock issuance as a bunch of greedy guys trying to cash in by printing rolls and rolls of stock. Why do we need a discussion of proper stock valuation models?

[Ghetto D]

In response to Greg's question:

I think that when someone see the past few auctions of a particular book go for X amount, then they assume the book is worth at least that. I have always seen eBay (while being a true indicator of value) is essentially a wholesale market. I expect books to cost less on eBay then in person. I don't know why, but I think it's safe to assume others share that opinion.

Heck I was quoting eBay prices to my LCS. If they look at closed auctions including Aug's I would assume they would price their books higher. As an Overstreet advisor, they may put it in their market report, the price go into the bible and viola you have an artificially inflated price.

In sum, I believe that a few well timed auctions CAN affect the market price.

[Ghetto D]

Fair enough TSB.

[ZephyrWasHOT!!]

On the contrary, there is intrinsic value in share of common stock. You do have claims on the assets of the company even though you are last in line next to creditors. Most established stocks pay a dividend which is not guaranteed. And from an accounting perspective common stock can be valued at book value (book value for you laymans is shareholder equity which is assets minus liabilities to creditors) divided by number of shares outstanding. You lose sight of the fact of what a stock split is. In essence its nothing but a psychological ploy to make ordinary joes who trade stock think it is cheaper than it really is. A stock split is nothing more than changing your $1 into two 50 cent coins. A share is a proportionate ownership in a corporation, and its earning power.

One could also make the case that there is no intrinsic value in comic books, seeing they serve no utility or function.

You're not understanding what the word 'intrinsic' means as it relates to value. It means an item has value <i> in and of itself </i>, based solely on the characteristics OF that item, and relating to NOTHING ELSE AT ALL. A diamond has intrinsic value based on it's characteristics as a DIAMOND, not based on what the company that cuts those diamonds is worth at the moment. A share of stock, on the other hand, REPRESENTS something OTHER than itself; in this case, the value of the company. Again, if a company were to go out of business, its stock would be worth NOTHING, no matter how much you may wish otherwise, as it has NO INTRINSIC VALUE. It only REPRESENTS the value of the corporation it is a part of. See?

The absence or presence of 'utility' or 'function', as defined by you, has no bearing on intrinsic value. Intrinsic, again, is the value of a thing in and of itself, based on it's own characteristics, not what it may represent, nor whether it has any utility or function (which everything ultimately does, whether that function is simply 'enjoyment', it still a function has. I own a copy of the Drum Corps International Championships in 1991. What function does it have? It makes me happy [mainly cause I'm in it.] Nothing else. It doesn't make me money, it doesn't take care of things for me, it doesn't cook my breakfast. It just makes me happy. That's one of the most important functions in all of human history, if you ask me.)

And you're proving my point....a stock split (using your example of one $1 for two 50¢) is exactly the point: your two 50¢ are identical in every way, worth exactly the same as every other 50¢ 'piece' (I don't say 'coins', as they are TANGIBLE, and have that odd dual characteristic that ALL tangible money has, those of INTRINSIC value as a 'collectible' as well as REPRESENTATIVE value as a means of exchange in commerce.) Your 'share' ends up being two (or three, or 1/2 or 1/3, or five) shares that are still identical to each other (regardless of their current, past, or future representative value..they all still have the SAME value, whatever it may be.) You simply cannot reproduce tangible items in the same way. So, I'm not sure where I 'lost sight of what a stock split is'; on the contrary, I explained exactly what it is.

A share of stock, again, has REPRESENTATIVE value, not INTRINSIC value. A share of stock, outside of a live, existing corporation, has no value. On it's own, it means nothing. It REPRESENTS a SHARE, or part, of a company. A share of stock has ZERO...that's NADA...intrinsic value.

If you don't believe me....I've got stacks of stock certs from the 1800-1900's that became worthless as company after company after company went out of business and impoverished my once wealthy, descended-from-British-nobility family. Are you willing to pay me what they were worth on paper in August of 1929? Even NOT adjusted for inflation? If so, I'll give you my Paypal account, you can send it right now.

Ok, they're *probably* worth something as collector's items, but that's a whole OTHER Oprah, and has nothing to do with THIS conversation.

[Ghetto D]

Really the only reason I say that is that prices are blunted due to uncertainty, shipping rates, and the fact that another one just like it is right around the corner. I agree that eBay prices are about as close as you will ever get to actual value, but the fact that there are other elements at play besides "the highest bidder wins" leads me to my position.

[Ghetto D]

Zeph, you can't think of it as "you can divide a stock, but you can't divide a comic". It's kinda apples and oranges.

And a comic's value is determined by how much the next guy will pay for it. In this regard a comics value (aside from readability) is shakier than stock prices. They are at least based on something somewhat tangible. Can you determine how much the Coke brand is worth, not really. But you can determine how much their hard assets are worth.

At the end of the day, nostalgia and "I got what you don't" drive comic prices up. That's really it. Everything else is fluff.

[ZephyrWasHOT!!]

Zep I hate to tell you that, but unless your last name is Lay or Ebbers you simply cannot manufacture value in that manner.

Uhhh...huh? Who said anything about manufacturing value? The argument is tangible items with intrinsic value vs. intangible items with representative value. Soooo....?

[Ghetto D]

Perhaps I got lost in the words. It seemed like your were making the arguement that stock can just be printed at a whim and a comic's print run was finite.

If I got it wrong I appologize.

[x-omatic]

A very well thought-out post, thanks Zeph.

The real question for us, the Valiant few, is whether WE are actually
going to be affected in the long-term by Aug002's purchases.

To date, I cannot name a single book for which he has purchased publicly
more than even one dozen copies. In fact, I would have to research to
find a single issue he has bought five times.

Can Valiant really be affected one-way-or-the-other by five sales of a book?

What percentage of a market has to be involved in order to cause a real problem?

So far, Aug002's activities have affected less than 0.2% of any issue.
Is 99.8% destined to "suffer whatever future may come" on the basis of 0.2%?

Well I know of at least 4 sets of the Diamond Unity TPBs that he bought on Ebay. And also 2 sets sold to him by board members. On an item this rare the prices he pays and his efforts to buy almost each set on Ebay can cause problems as most of us have only ever seen these offered on Ebay.

[ZephyrWasHOT!!]

Youre discription on Supply and demand theory spurious in many ways. First of all the law of demand is the quantily of a good people are willing and able to buy at a given price. You mention a determinant of demand when you talk about the number of buyers increasing and yes this leads to a higher price due to the demand curve shifting, but you talk about per unit costs in production and youre totally wrong. When price goes up, suppliers have more incentive to produce more product, now when this happens there is a surplus of product and the price goes back down to its equilibrium price. As for unit costs, it doesnt necessarily get passed on to the consumer ultimately. It depends what type of market you are in, in a perfectly competitive market, the seller is a price taker, and does not have any pricing power. A factor in passing on cost also depends if the market is price inelastic or price elastic in relation to demand. In a perfectly elastic of demand economy you cannot pass on any of the increase in per unit cost. You need a refresher course in economy my friend.

Uhhhh...ok. You just said exactly what I said, using different words. When demand goes up, prices go up, production is driven up, per unit cost of production is driven down because more can be produced using the same static resources (means of production) because the producers now have more money to produce with, which ultimately results in demand being met, and lowered prices. This is basic economics. What aren't you understanding here? Who said anything about...well, I can't even decipher this line: " As for unit costs, it doesnt necessarily get passed on to the consumer ultimately"...

WHAT doesn't get passed on to the consumer ultimately...? Unit costs? The consumer has nothing to do with unit costs. The resultant decrease in price per unit from increased production? I never said it did. That's entirely up to the supplier. HOWEVER....in a pure market, the lower price WILL get passed on, simply because of competition.

The rest of what you typed really doesn't make any sense. Sorry. 'In a perfectly elastic of demand economy' doesn't make any sense at all. It's just a jumble of words. I understand your GIST, per se....but....

Maybe I just need a refresher course in 'economy'....<smirk>..I sure do spend my money fast....

Greg...did you know Ken-Daihatsu was still on the boards....?

[magnusr]

Greg...did you know Ken-Daihatsu was still on the boards....?

Hey! Daihatsus are great cars. I've driven Daihatsus on three continents. And they are Japanese, not Korean.

/Magnus

[Ghetto D]

I think everyone pretty much knows that Ken is back, but no one likes a taddle-tell.

[ZephyrWasHOT!!]

Zeph, you can't think of it as "you can divide a stock, but you can't divide a comic". It's kinda apples and oranges.

I don't know, but it sure sounds like some of you have been smoking something tonight.

Ghetto...the point is this, and this relates to Greg's FIRST post: You can buy 100 shares of IBM stock, and no one's going to have a problem with it...yet you CANNOT buy 100 copies of a hard to find comic book. paying record prices for them, and NOT have people with problems with it....that was Greg's question. MY answer is, in a nutshell...stocks are, theoretically, infinite. Nothing to do with value, nothing to do with cost of production, nothing to do with proper stock valuation models, none of that. Simply that shares of stock are INTANGIBLE, have REPRESENTATIVE value, and are, theoretically, in INFINITE SUPPLY. Comics, however, are TANGIBLE, have INTRINSIC value, and are a FINITE supply.

If everyone were to buy all outstanding shares of IBM for sale, and then MORE people wanted to buy IBM, the stock would RISE in price, and eventually, because IBM wants it's company to be have MORE investors to value the company for them, it would SPLIT the stock, taking the 100% of the company as it is, and dividing it into smaller pieces to spread around a greater numbers of investors (or, simply give it's current investors a 'bigger number of shares'.)

There are VERY RARE exceptions to this, specifically Warren Buffett's holding corp, where the stock has NEVER been split, but that's for very specific reasons by Mr. Buffett himself.

Harbinger #1 is FINITE. It CANNOT be split up so that more people can own a 'piece of the pie'. There are only the number of copies printed, minus the number destroyed during manufacture, minus the number lost, minus the number destroyed due to attrition, minus the number of copies damaged due to attrition (including removal of coupons), which is then equal to the amount of people who can own an original copy of Harbinger #1. Ever.

That's it. Pretty straightforward.

And a comic's value is determined by how much the next guy will pay for it. In this regard a comics value (aside from readability) is shakier than stock prices. They are at least based on something somewhat tangible. Can you determine how much the Coke brand is worth, not really. But you can determine how much their hard assets are worth.

At the end of the day, nostalgia and "I got what you don't" drive comic prices up. That's really it. Everything else is fluff.

I don't disagree with any of this. You're 100% correct. So, I'm not sure what point you're arguing against. The 'value' of anything is what the NEXT person is willing to pay for it, not the LAST. This includes intantgibles with representative value, such as stocks, and tangibles with intrinsic value, such as comics. The price of stock rarely has anything to do with the price of comics, or any other collectibles.

[ZephyrWasHOT!!]

Hey! Daihatsus are great cars. I've driven Daihatsus on three continents. And they are Japanese, not Korean.

/Magnus

So was Ken-Origami.

As far as tattle tailing....that was pretty much a tongue-in-cheek smirk that you missed, Ghet.

[ZephyrWasHOT!!]

Perhaps I got lost in the words. It seemed like your were making the arguement that stock can just be printed at a whim and a comic's print run was finite.

If I got it wrong I appologize.

Stock can be SPLIT indefinitely, but it's most assuredly not 'at a whim', and yes, a comic's print run is finite. Stock isn't usually split unless the value of the stock shares, corporation, assets, liabilities, p/e ratio, etc, support such a move.

However, I know of no printed item on earth that has been continually printed without pause forever.

[justin]

I've got about 150 "shares" of Turok #1 if anybody is interested in cornering that market!

-a

[wrunow]

Maybe it's just me, but I don't see any correlation between stocks and comics in any way. Stocks are certificates which basically represent a certain percentage of ownership of a corporation. Only corporate entities have stock, because they are not owned by specific individuals, unless one person owns 100% of the shares.

Ownership of a comic book is just that, ownership of the book you hold in your hand.

I think we are trying to make a comparison between the stock market and the comic book market, the markets we can compare, because both units can increase/decrease in value based on the activity in the market.
Where the separation occurs is that in the stock market, traders and investors will speculate (or gamble is a good term) on stock for their future value, hence we have day traders, etc. It is all based on making money and future value-even in the case of selling short. Very few people collect stock just to have it. Why bother?

In the comic book market there are so many more emotions and factors to consider, especially in a fairly small portion of the whole marketplace like the Valiant sector. Some collector/investor can make a major impact on the market like with what would not be a huge amount of money. A huge amount of wealth has been created in this country inthe last 10-15 years and is being spent. We're not talking about Golden Age comics or Silver Age Marvels here where it's would cost in the 100's of thousands (actually millions probably) for your investment to register and create any type of scarcity in marketplace.

Back to Greg's original question: We're all fans of the books and the best analogy I see here is with baseball which is pertinent at this time. Why do Red Sox fans hate the Yankee's? Red Sox fans are jealous they can buy whatever they need to win and have deep pockets. We all wish we could buy whatever comics we would like too. The Yankees overspend to stockpile the best players, some collectors overspend to stockpile the best comics. We poor schmucks have to sit on the sidelines and watch cause we can't afford to play or compete and we get *SQUEE* off about it.

I don't know if that makes any sense or not, but if it doesn't I'm sure TSB or someone will chime right in and let me know, Mark

[Zero]

In response to Greg's question:

I think that when someone see the past few auctions of a particular book go for X amount, then they assume the book is worth at least that. I have always seen eBay (while being a true indicator of value) is essentially a wholesale market. I expect books to cost less on eBay then in person. I don't know why, but I think it's safe to assume others share that opinion.

Heck I was quoting eBay prices to my LCS. If they look at closed auctions including Aug's I would assume they would price their books higher. As an Overstreet advisor, they may put it in their market report, the price go into the bible and viola you have an artificially inflated price.

In sum, I believe that a few well timed auctions CAN affect the market price.

I respectfully disagree about ebay being a wholesale market, its more of a competitive market, local comic shops have an oligopoly in areas depending on how many they are, and oligopolies can manipulate price. ON ebay the market is almost a competitive market where they are price takers. Ebay has eliminated a lot of the transaction cost associated with seeking, negotiating, and consummating a deal for a certain book, thats why its much cheaper to buy a book, excluding rare graded books.

E-bay *IS* a wholesale market & was always meant to be (as they've advertised). The vast majority of comics go for well under guide on E-bay. Where the hiccup comes in is when you get lower print run books or limiteds/premiums that have no value according to the major pricing guides. They are rare to begin with & many sellers see they don't price high enough to mess with scanning a pic, paying insertion fees, & writing up descriptions for. According to the price guide the books are not worth the effort. So, you don't see early/premium Valiants that often because the vast majority of sellers see those books as being worthless. Overstreet says they aren't worth much & Wizard doesn't even bother to list them. So, now you have a small pocket of Valiant fans continually bidding each other up every time a rare book comes up.
If anything (no knock to you or your site Greg) I feel this site's board, cover scans, checklist, & price guide have caused more price increase than Aug ever could think to. Where would any of us go for Valiant info if this site simply didn't exist? There aren't many places to go & they don't have some of the neat options this site has. ~Erskine

[cjv]

Just doing a little more thinking about this, and I am going to expand upon my previous comments.

Basically, there are three different types of collectors who might want to collect comic books - I will call them investors, completionists, and readers.

Investors want to buy comics books because of the possiblity of making money, either short term or long term. They will want to buy high grade, NM copies, low print runs, etc.

Readers want to collect comic books to read them (or possibly because they read them at one point and they have a nostalgia value). For the most part, they probably don't care about condition, and are just as happy to buy TPB and reprints, so they can re-read them.

Completionists want to buy comic books because they want a "complete" collection - either of a title, company, artist, writer, character, whatever.
They can be a combination of the of the previous two types, sometimes hoping to make some money as well, or also wanting to read the issues (or for nostalgia value). They probably want to have pretty good copies, because part of the idea of having a collection is having something that can be "shown off".

The problem with speculators is that they are attempting to be the first type of collector, withouth doing the research (ie, they buy a hot comic book that has a print run in the millions).

Now, for an investor collection, they generally are going to have more disposable income than the reader or completionist. ANd hte problem with buying comics as opposed to normal investing is the limited nature of comic books. Reprints and TPB aren't going to have the same value as an original copy, and there are distinctly limited quantities of first print issues. With stocks, however, there is almost ALWAYS going to be someone selling one stock or another, so there isn't the limited nature. As people were talking about, comics (especially from a defunct company) have a very limited supply.

This will work to drive the prices up, since investors are willing to pay more. For the readers, this probably doesn't matter as much, because they can buy reprints, worn out copies, or TPB's just to read them. However, for the completionish type collector, who maybe wants to make some money, but that isn't their primary goal, they are the ones that sort of get left out in the cold. They want to have good copies for their collection, but they don't have the disposable income. Nor will they generally buy a comic with the premise "well, I can sell it for more later", which might cause people to pay more than they originally were willing to.

I suspect most of us are the completionist type collectors. As such, investors like Aug002 really drive the prices up for us (especially of the premium/variant/HTF issues). I don't fault the investors at all (although I wonder about the wisdom of investing in a comic that is no longer being produced, and has a small, core group of followers) since they are just trying to make money. It is just frustrating for us completionists when all of a sudden a comic is worth $150 or something, and out of our price range.

Chris

[greg]

where would a person like me fit in? Im collect for the pop cover art? Im not seeking out a certain plan like a completionist would, and I dont read the books? And i dont plan to resell the books, unless the right price is offered. Your analysis is incomplete. But to be honest ive only read the first part of your post. Dont make posts to ponderous, its automatically daunting to look at and you probably dont get the attention from other post readers because of that. Make it succinct and concise, and split it up into several post if you have to. NOw back to reading the rest of your post.

Don't split your posts up into several posts,
especially when they look like replies to yourself... it's annoying.

A well-thought-out post is welcome in any length.
Multiple reflex-posts based on random thoughts
as they occur are subject to deletion.

This isn't a chat room where words disappear after 30 seconds,
these posts are stored in a database and the good ones take up
less space than the fluff.

Back to CJV's post... I believe he captured 99% of the Valiant situation
in the three types of collectors he mentioned...
there's no use trying to describe 100% of collectors because
the final 1% is usually made up of people being different simply to be different.
As soon as you describe their behavior, it will be changed just to change.

[greg]

here is the problem with long posts. YOu dont give a chance for your readers to rebutt every fact without forgetting the point to rebut before the previous. does that make sense? i worded it haphazardly.

Readers don't rebut every fact. Instigators do.

[greg]

Intimation noted.

But to take an analogy to an extreme, are you more likely to read a 10000 page novel or a 300 page book.

I'm more likely to read the rest of CJV's post when I have been intrigued
by the first couple of paragraphs.