The Economics of Back Issue Comics Retailing

In last week's column, I pulled back the magic curtain to reveal some of the economic underpinnings of Mile High Comics. This week I'd like to take you through a brief journey into the economics of back issue comics retailing. While that might initially sound like a dry subject, I think it is critically important for every collector of comics to understand what they are getting into when they purchase old comics.

To begin, I would hope that anyone actively purchasing comics in the back issue market does not suffer from the delusion that they are engaged in "investing." I define investing as setting aside funds in a reasonably stable environment where your money gains small, but reliable, short term appreciation, and is easily recoverable if the need arises. Buying old comics is the exact opposite of investing. Under usual circumstances, the minute you purchase an old comic book (or a new one for that matter...) it instantly depreciates by 50%-90%, depending on the type of issue you've purchased. The reason this immediate decrease in value occurs are the unstated costs to the dealer of having provided that comic to you at the moment that you purchased it. If you doubt my estimates, go to any comics convention, shop quite carefully for the very best deal you can find on any given old comic, and then try to sell it back to another dealer at the same show. If you were offered even 50% of what you paid, I would be surprised. There are a few professional comics "scouts" who manage to eke out a living by finding undervalued books at comics shows, and then selling them for a premium, but for most consumers reselling for anything approaching what they paid is an impossibility.

Before you allow this information to disenchant you from ever again buying an old comic book, bear in mind that comics provide a unique benefit to collectors that other more stable investments cannot. As an example, I am a passionate collector of Native American pottery. So passionate, in fact, that I own the largest private collection in America. I do not suffer from the delusion, however, that my 5,000+ pieces of pottery are strictly an investment. The real benefit to me is in the pleasure that owning them brings to me. Before you scoff at the notion of mixing business and pleasure, bear in mind that I simultaneously operate Mile High Comics, run a successful certified organic vegetable farm, keep up with a wife and four very active daughters, and am committed to write numerous columns each week. As a natural consequence of my intensely busy lifestyle, I live with a great deal of pressure and stress. Simply put, when I take the time to work with my pottery collection (photographing, cataloging, researching, etc.), it completely changes my biorhythms, and allows me to decompress. Putting a value on that kind of reward for building my collection is hard to define, but I most certainly gain that very substantial benefit from my collection each and every day. I think the same thing is true for most comics collectors I have met. Very few people purchase old comics strictly as investments. For the most part, people who collect comics like not only reading them, but also learning about their history, chatting about them, and sometimes just simply gain pleasure from the joy of owning them. Unless you're Uncle Scrooge, that is a personal psychic reward that does not generally come from owning government bonds, or blue chip stocks.

The good news in this entire equation is Bob Overstreet. Do you remember that I mentioned a couple of columns ago that Bob is the one who guides the comics market to a steady rate of growth each year? I don't know the exact figure, but as near as I can tell, Bob seems to target an overall 8%-10% growth rate for the retail value of most older comics in any given year. It is Bob's passion for steady market appreciation which has made more money for comics "investors" than any other factor. He cannot, of course, ever go on public record as saying he's going to keep the values in the back issue market growing every year come hell or high water, but that's exactly what he's done over the past 33 years. As a direct consequence, Bob has redeemed the seemingly very poor investments of tens of thousands of comics fanatics. Put another way, anyone who purchased large numbers of old comics prior to 1985, is now sitting pretty, directly due to Bob Overstreet's carefully orchestrated steady growth. Simply put, the initially poor economics of purchasing back issues has been more than offset during the past three decades by the miracle of 8%-10% compounded growth.

The key element in this entire process is time. Because Bob is so determined to be slow and steady, you cannot assume that the comics you buy today will be resaleable at a profit for at least five years, probably not for ten. It will take at least that long for the steep margins that dealers need to charge in order to cover their operating costs to be mitigated (see my last column for more on this subject). In the meantime, however, you gain the specific short term reward of the enjoyment of reading and possessing wonderful works of art and literature. As long as you don't need to get your money back immediately, and have the copious storage space that a serious comics collection requires, then I think that purchasing old comics for the long term has the potential to be very rewarding. If you have any doubt that I personally believe fervently in that philosophy, consider for a moment that I have the majority of my personal net worth invested in about ten million old comics. I must admit, however, that I keep a candle burning for Bob Overstreet's good health. While I certainly differ with him on some specific issues (such as evolving grading standards and the prices of very recent comics), I would still be the first to defend Bob Overstreet from any fundamental criticism. Frankly, without his steady hand at the helm of the back issue comics market, I doubt very much if we would have survived the turmoils of the past 33 years.

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221