I conducted an experiment this past weekend. To gain a sense of comparison of current collectibles prices in our present economic crisis, I attended a local Indian Arts and Crafts auction. As many of you already are aware, I have an extensive collection of pottery hand-created by the Pueblo Indians of New Mexico and Arizona. I began collecting this pottery about ten years ago at auctions conducted here in Boulder by Bob and Dal Payne, a father and son team of auctioneers from the Four Corners region. The Paynes have been swinging through the Boulder area every four months for about the past twenty years, and always carry with them an extensive inventory of Native American pottery, rugs, jewelry, and other items of a similar nature. Their inventory varies from auction to auction, yet it always follows a very familiar theme (much as Heritage comics auctions are individually quite different, yet always contain comics, original art, etc.). The Paynes always have quite a few new items consigned by contemporary artists, a few rare older items from estates that they represent, and a lot of relatively common Native American collectibles that they themselves purchase at wholesale prices. While this drive by the Paynes to make all of their auctions quite similar in content can make them sometimes a little boring, I am amazed to see how successfully they have utilized this formula approach in their auctions to generate over $100,000.00 in gross sales like clockwork, every four months.
All of the above having been said, I was eager to see if the Payne's formula would work this time. As this column is being written, the world is holding its collective breath, waiting to see what happens in the credit and stock markets on Monday, October 13th. Quite honestly, I haven't a clue. I do know that this current economic "correction" is as savage a destruction of capital as I have ever experienced in my lifetime. With the stock market down 40% from its high point of a year ago, I would normally have to believe that this "bear" market had just about run its course, and that a stock market rally was imminent. That simplistic analysis ignores the fact, however, that there is an element of hysteria that has infected people's perceptions. Especially as regards the long term viability of a great many of our once seemingly omnipotent economic institutions. Once questions are raised about the viability of the entire worldwide banking and investing system, then all bets are off as to what might transpire. Personally, I am thrilled that I don't have a dime at directly at risk, as I own no stocks, and have completely ignored the popular "wisdom" of building a stock and/or bond portfolio for retirement. Regardless of how "safe" buying Blue Chip stocks was touted as a retirement fund strategy, my reading (many years ago) of the book THE GREAT DEPRESSION by John Maynard Keynes had such an affect on me that I have assiduously shied away from letting anyone else "invest" my money ever since. After all, between 1929 and 1932 the Dow Jones Industrials declined by a stunning 89%. No matter how you slice it, I don't view investing in stocks as always being a "safe" investment.
Returning to my analysis of the Paynes' auction, it might interest you to know that the current economic disasters seemingly had absolutely no affect on this weekend's bidding. In planning for the auction, I had sort of hoped that I could "bottom fish" a couple of nice pots for half of their usual prices. With a sizable crowd of eager bidders in attendance, however, the very nice Carmelita Dunlap pot that I particularly lusted after sold for $3,150.00, when I thought it should have topped out (on a good day...) at no more than $2,500.00 A slightly smaller Carmelita sold for $2,310.00, when I really thought it was worth no more than $1,500.00. The same held true with a great big Tec Nos Pos Navajo Rug, which I thought would bring about $7,500.00, and instead sold for $9,450.00. Even lesser items in the auction were bringing top dollar, to the extent that on that entire first day of bidding I ended up with one small painting for $60, and nothing else. Bidding on the second day (and final day) of the auction (which is usually a bargain hunter's paradise) was also far stronger than I expected.
The conclusion that I draw from this one Payne auction is that collectors, at least in the Native American arts and crafts genre, are seemingly immune to the negative effects of the stock market crash. I find that result quite interesting, as the collectors of Indian art also tend to be older, generally ranging 50+. It is that demographic group that has supposedly been hit the hardest by the stock market decline, as they will need to draw upon their retirement nest eggs the soonest. Based on the bidding that I saw by the elderly attendees of the Payne auction, however, I would draw the conclusion that these people haven't a care in the world. Quite honestly, it was just the damnedest thing to see...
Looking at collectibles purchasing from a different perspective, I also have been analyzing our year-to-year sales comparisons at Mile High Comics. July, which was a great month for the rest of the world, sucked for us. Our online sales were down about 9% from last year, which was quite a reversal since we were up about 12% during the April-June quarter. During July, however, we saw five major comics films released (Iron Man, Hulk, Dark Knight, Hellboy, and Hancock), all of which, but especially Dark Knight, drew disposable income away from our website. Since July, however, our sales growth has returned, and our sales for September were up a robust 19.9% over September of 2007. Even the first days of October have been strong, with an 11% increase of the same period of last year, despite the economic world falling apart. Whatever the reason, when offered good deals on back issue comics, comics fans are actually responding better this year, than last!
In combining what I have read in newspapers from around the world about the dire state of the financial crisis, and the seeming inconsistency of today's robust purchasing of collectibles, I have come up with an odd rationalization. Simply put, I think that eBay prepared the entire collectibles world for armageddon, long before the current crisis began. To be specific, when eBay first began auctions in 1997, the worldwide market for collectibles was insanely inefficient. You could easily have comics selling for $20 in one region, while they were being dumped for $2 each just 500 miles away. At the same time, comics price guides offered subjective opinions about the relative "values" for scarcer collectible comics, but there was absolutely no objective measure as to whether those prices were validated by actual consumer demand. This all changed during the period of 1999-2005, as eBay exploded in traffic. With $400,000,000.00+ in comics material now reportedly being auctioned on eBay each year, objective price research on the relative value of any comic book is available to anyone within a few keystrokes. That's the good news. The (sort of...) bad news is that the vast majority of back issue comics have experienced price declines due to eBay. Especially comics where actual consumer demand is low, or where the number of copies available (especially in lower grades) is far higher than actual demand.
While the retail prices of many collectible comics declining over the past years might sound negative, it has actually been a real boon for our industry. As the prices for even many pre-1985 comics have declined to under $3 each, we have seen a substantial resurgence in consumer demand for old comics. eBay has also created an active marketplace in which there is a great deal of market efficiency, with prices for most comics now being relatively the same throughout the country. In effect, the vast majority of regional premium pricing that once existed within the collectibles comics world was wiped out during the first few years of eBay. On the flip side, however, comics that are genuinely rare, such as 9.4-9.8 Marvel comics from the 1960's, are now experiencing price increases unprecedented in the entire history of our collecting genre. When I hear of high grade 1960's Marvels selling for more than$100,000.00 each, I am simply astounded. But the simple truth is that our marketplace is now defined by actual supply/demand factors, and the prices that result (even the ones over $100,000.00) are vastly more accurate than what has ever existed in the comics world. That being the case, is it any wonder that consumers are still feeling both comfortable and confident when they purchase older comics? Not only are collectibles prices now in line with actual demand, but since many back issue prices have dropped so steeply over the past ten years, comics have once again become relatively inexpensive entertainment. That's a big plus in a world in which people are oftentimes seeking a momentary respite from the insanity of watching a century of economic progress suddenly disintegrate before their eyes...
So where will this all lead? Well, having started my company during the extremely difficult recessionary period of 1974-1979, I can tell you that inexpensive comics do quite well during ordinary economic hard times. Nothing about what is presently occurring, however, is ordinary. If the pump priming currently being undertaken by the world's leading economies fails to stabilize the overall economic system, then even our seemingly recession-proof industry could experience some hard times. If the history of the Great Depression is any guide, however, those who purchased art and collectibles during that period of economic distress fared far better than anyone else as regards long term rates of return. And, no matter what, if you purchase any kind of tangible that you enjoy owning, at least you have the day-to-day pleasure of its company. Upon reflection, that's infinitely more than the stockholders of Bear Stearns and Lehman Brothers can say these days.
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Mile High Comics, Inc.
Attn: Chuck Rozanski
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