Comic investing tips #6: How to spot the next breakout hit

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There are many ways to invest in comic books. The usual way is to spot new books that under the radar. Another approach that is less uncommon, is to look at well recognised keys that have not fully break out. Examples include the likes BA #12 when it was a $400-500 book or WWBN #32 when a 8.0 is still under $300.

 

Why invest in potential breakout books

The thing about books that are not under radar is that they are not cheap. If I asked you to buy a NYX #3 when it was a $400 book, will you do it? (By the way, that is what I did and I am glad I did so). Most will not do so because the front cost is high. However, the benefit is the higher absolute returns if the books become a breakout hit.

Just take BA #12 as an example. If you bought it for $400-$500 in 2013/14, you will be able to earn around $1k in profit if you sell it now, after deducting Ebay and Paypal fees. Think of how many $20 profit books you need to sell to reach the same amount. It is around 50 books. That is a lot of work for a side hobby and something I will never do. I rather invest in one book and enjoy the returns without the work.

Incidentally, the risk is also lower because it is rare for a well recognized key to go back to cover price. It might dip here and there but the demand drop will not as high, relative to modern cover price flips.

 

How to spot breakout books

Books that are poised to become the next big hit like the BA #12 kind of pricing are usually not unknown books. In fact, they must be simmering for a period of time  at a certain price level. If we consider only the modern and the copper books, a 9.8 that can break out will usually be hovering around the $400 – $500 price tag.

 

Why is the price level important

A price tag carries a lot of information about a book. Unfortunately, a lot of comics investors don’t think of price in this way.

In economics, price is able to capture all relevant factors that influence a book’s market value. In contrast, our individual gut feel can usually only see a few of such factors. For example, I might care about absolute supply, keyness of the book, popularity of the character etc while you might only see things like 9.8 rarity, whether it is modern or older books etc. Regardless of how we individually access a book’s potential, we will not be able to capture all relevant information

In contrast, a public price takes into consideration what is listed above and more. It summarize total demand and total supply factors in a way that everyone can see and learn from.

When a modern book like a Harbinger 1 is selling for $700-$800 in 9.8, the market is telling us that there are certain factors that make this book desirable. It can be the short supply. It can be their growing popularity. The reason doesn’t matter as long as we know it is selling at that price.

When a big news break out, like actual casting confirmation or box office sales, the same factors that are making Harbinger 1 9.8 a $700-$800 book will cause it to spike to the next big level. Again, we don’t have to know what these exact factors are. We just know they will come into play and exert the same influence that makes this book a $700 book in the first place.

In contrast, if a book is only selling at $200 at a 9.8 grade like Eternal Warrior #4, we know there are factors keeping this book down. It can be supply or low demand or other things. We don’t have to know the exact factors but we can conclude from its price that something is keeping this book down. Hence, when a big news break, the same factors will be come into play and suppress this book’s value.

Note that I am NOT saying a book like Eternal Warrior #4 will not rise in value. I am saying that the level of price appreciation will not be on par with a true breakout book like a BA #12 due to the factors that are keeping this book in the current $200 range.

 

List of potential break out books

Based on the above, it is easy to pick out books that currently simmering and are poised for a breakout. We will get to these in the future.

2 thoughts on “Comic investing tips #6: How to spot the next breakout hit

  1. Been lurking here for a few months, finally decided to sign up and join. Interesting stuff Aaron, looking forward to seeing your “List of Potential Breakout Books” Thanks!

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