Tuesday, September 8, 2009

Speculating is highly...speculative!

Face front troops! I hope you all had a great Labor Day. Now back to school and onward towards Christmas!

From time to time I am going to write something that I aim towards newer collectors. These pieces will concern things that the seasoned collector probably already knows, but for you veterans I hope you find something here of value as well.

Today I want to talk about the dangers of speculating on the value of comics and the danger of third party grading companies such as CGC.

Comic Book collecting as an organized activity, with specialty shops, preservation supplies, third party grading and independent price guides is actually not all that old. It was not until the late 1960’s that the first Comic Specialty shops appeared and it was not until the Marvel’s “Dazzler” sold 400,000 copies as a direct to specialty store title that the hobby began to take on the form we are familiar with today. Before the comic specialty shop you had to go to the local news stand to get your comic’s fix. Deliveries to the news stands were erratic and it was easy to miss issues or never even see certain titles.

Of course the advent of the comic shop did not come without some pain. Back in the late 80’s and early 90’s, because of the early success of the direct market shops, publishers began to flood stores with huge amounts of product that was solely produced to entice collectors to speculate.
Foil Covers, Photo Covers, Die Cut Covers, Double Covers, Comics with NO Covers (ok I made that last one up) all created a glut of product that would initially go up in value and then just as fast drop to almost no value. This occasionally still happens today. The recent Batman And Robin #10 that had obscenities not properly blacked out climbed to over $100 and has dropped to less than $10 in very short order. Imagine that happening in the comics hobby with several books each and every week and you get an idea about how things were during the speculator’s boom.

It very nearly killed the golden goose.

Happily the speculators dropped out and the true comic book lovers stayed with the hobby and we are back in a robust direct comics market once again. Is there still speculating? You bet. However it is now more of a fringe thing than the REASON people are in the hobby.

People who have been collectors for a long time already know this, but to newer collectors I will caution you against speculating in comic book collecting for profit. For one thing, newer comics are available in abundance, collectors preserve their copies and the price point of new books severely limits most collectors from investing in back issues. If you feel the pull to invest in comic books for profit, I would not touch anything after the Bronze Age and would in fact would focus on Silver and Golden Age books. The reason for that is comics from those earlier periods are actually tougher to come by in anything near a decent grade and THAT is what makes them collectible. The scarcity outstrips the demand and drives up the price. You just don’t have that, long term, with newer books. They may spike short term, but they almost always come back down to earth. In general, I would advise to collect for pleasure and not profit.

In the last several years there has been a new wrinkle in the valuation of comic books. That is the advent of the third party grading company (CGC being the biggest by far). This practice of “slabbing” has been both impactful and highly controversial.

First the collector submits his book to the company for grading. One or more graders at the company decide on a numeric grade for the comic and then pass it along for the preservation process. The comics are placed in an inner well - a sealed sleeve of Barex, a highly gas-impermeable plastic polymer. Then, the comics are sonically sealed in a hard plastic, tamper-evident holder. This process is often referred in slang as "slabbing". A label is affixed at the top indicating the title, date, grade, page quality, and any notes, such as notable creators. Books which would be damaged by encapsulation are returned without this process. Examples of this include books with cover overhang (i.e., the cover protrudes beyond the interior book), some European variants, and Museum Editions of modern comics.

After the grading and slabbing process CGC affixes a label that denotes certain characteristics about the book :

Universal (blue) a standard comic book

Restored (purple) a book that has evidence of restoration, either amateur (A) or professional (P), combined with the descriptors slight (S), moderate (M), or extensive (E)

Qualified (green) a book with a significant defect that needs specific description or one with an unauthenticated signature

For example, an otherwise "near mint" condition book with a 4-inch back cover tear would be given a Qualified grade of "9.0, back cover 4-inch tear."

Signature Series (yellow) an unrestored book signed by one of its creators, as witnessed by an employee of CGC

Signature Series Restored (yellow/purple) an authenticated signed book showing evidence of restoration

Modern (red) No longer in use, originally used to distinguish Modern Comics

All of this is all well and good as a preservation practice. However, comics that have been processed by third party grading services have driven prices up many times over similar quality books that have not been slabbed. In other words I can have two copies Fantastic Four #1 in near mint condition, one has been processed into a slab and graded, the other is in a mylar sleeve with a backing board. The one that has not been processed may fetch $5,000 while the VERY SAME BOOK IN THE VERY SAME CONDITION WILL GET OVER $20,000 simply because it has been processed through a third party grading service.

I have several problems with this.

First – Third Party Grading Services do not share their grading criteria. Unlike the Overstreet guide, we do not know how they come to their numeric grade. Thus their work cannot be verified. There are many instances of books getting a low grade and upon resubmission getting a much higher grade. There is a simple reason for this (perk up your ears for this newbies). Grading is ALWAYS subjective. I often look at some of my own older books that I have graded and wonder how I ever gave it that grade. It is not a science. That is why Overstreet puts forth a criteria that allows for interpretation, especially for grades ranging from Good to Fine/Very Fine. (The criteria tightens up at the VF level as it should.)

Second – Once the book has been slabbed there is no way, short of cracking the slab, to examine the book to even know if it is the same book that is described on the label. While I assume that all third party grading companies act in good faith, there is no way for the person who submitted the book or the person who later purchased it to ever really KNOW what they are getting. All you can actually see are the front and back covers.

Third – If we assume that the FF in the slab and the one outside the slab are the same grade, how could they have such a wide variance in value? If we were talking a 10% premium for the preservation techniques I would be ready to accept the difference but 200%,300% and even 500% differences just look like a sucker bet to me.

Fourth – This is just my personal feeling but once you slab a book, you can’t READ it anymore. You lose the simple pleasure of leafing through your beloved collectible. And that is my main reason for collecting.

Fifth – While the preservation of older comics that are truly rare and in danger of being lost makes perfect sense to me, the idea of slabbing a brand new and plentiful book for resale at a premium price smacks of price gauging. Take a look on Ebay and you will see slabbed copies of new books at anything lower than 9.8 very often sell for less than it cost to slab them in the first place. AND I defy anyone to show me the difference between even a 9.2 and a 9.8 comic. There comes a point where the differences are so slight as to be of no difference at all.

Sixth – If you really want to preserve your books in this manner, you can purchase your own slabs and do it yourself far more cheaply.

I am not denouncing third party grading services by any means. For older books it is an invaluable way to preserve items that might otherwise be lost. However for newer books that value is dubious at best. And until someone can come up with a truly unbiased method of grading I, for one would be much more comfortable being able to inspect a book and decide for MYSELF what I am willing to pay for it.

Which leads me to the point of this piece. Ultimately a comic book, or any other collectible is really only worth what YOU are willing to pay for it. Keep that in mind when you hit those comic shows. The BUYER (you dear reader) is in the driver’s seat.

How about it troops? I want to hear from you on this.

Comic book speculating good? bad? silly?

CGC - Does it serve a purpose? Is to a good thing or just another stunt to part you from your bucks?

Next – Back to stuff actually IN comics!

That’s 30!


No comments: