Comic Investments

Jonathan Last has an interesting article in the Weekly Standard dated June 13 comparing the comic book crash of 1993 — what?! You didn’t know? — to the housing bubble. Yes, yes,  it’s the evil neo-neo-con and self-appointed Svengali William Kristol’s rag… but I think the story makes some interesting comparisons…criticisms below.

While speculation drove up the price of collectible comics, publishers strove to make every comic they released collectible. While you may not live inside a comic (or maybe you do, figuratively) its value, minus speculation, becomes personal. But let’s not forget the role of demand-and-supply or the roguish business practices of greedy middle-men.

Last, a comics collector as a kid, gives a good history of the run-up to the crash, plotting how comic rose from pulp to treasure in a half-century or so. By 1992, “At the investment level, high-value comics were appreciating at a fantastic rate. At the retail level, comic-book stores were popping up all across the country to meet a burgeoning demand. As a result, even comics of recent vintage saw giant price gains. A comic that sold initially for 60 cents could often fetch a 1,000 percent return on the investment just a few months later.”

What brought comics down, he says,  was part speculation and – here’s where housing comparisons become murky –  distribution. The two largest comic distributors, not to be confused with the two largest comic publishers (DC and Marvel), strictly controlled who would sell comics off the shelf. As Last points out, they required financial reserves, large orders and high sales; until 1979. Then the two largest distributors, Diamond and Capital City, in an attempt to do away with their smaller competition, lowered the bar. (It’s worth noting that one of the best authorities on all things comics, Mile High Comics President Chuck Rozanski, believes that the comics speculation bubble of the 1990s is a myth.)

The cut-throat policy of these two distributors, Last says, “had the practical effect of turning many collectors into dealers. Comic book shops proliferated, growing from 800 in 1979 to 10,000 by 1993. Diamond and Capital City were so successful that they drove every other distributor in America out of business.”

Because wholesale comics purchases are made months in advance, and retailers are forced to swallow any stock they don’t sell, the suppliers were unaware that sales had fallen precipitously, even as they continued to add new retailers. The crash of these new, poorly capitalized and inexperienced comic stores came quickly. “The weakest of them folded first, and their demise began a cascade.  Publishers saw a rapid and dramatic decline in orders, so they moved to reduce costs by cutting back the number of titles they shipped. Which led to less product for the remaining retailers to sell. Which pushed the stores on the margins of survival out of business. The death spiral was on.”

Last says that nine out of ten comic stores closed during the crash and that publisher sales dropped by 70%. But the biggest burden fell on the collectors/speculators, many of them like Last himself, still kids. “As a 12-year-old I had a collection worth around $5,000, Last confesses. “By the time I was ready to sell my comic books to buy a car—such are the long-term financial plans of teenagers—they were worthless.”

Last’s comments on comics and the housing market regaining their value are worth reading. Certainly some high-end comics will never depreciate just as housing at the extreme upper end has lost less than your run-of-the-mill tract home. High-value art might make for a better comparison. And the story of what saved comics – movie rights and merchandise sales – has no obvious parallel in housing (apartment sales?). But both have value even though it’s worth remembering that comics, because of their size and easily porous paper, make for poor shelter. Comics weren’t always an unlikely investment for collectors. But their returns, like their tales, often prove imaginary.–Cabbage Rabbit

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