Is The Old Comic Book Market A Ponzi Scheme?

See Those Comics in Your Basement? Probably Worthless. It seems like the forces of supply and demand have greatly reduced the price of most, but not all, old comic books. Excerpts:

"Barry T. Smith, 44, spent most of his life collecting comic books. And he always considered them an investment. “These books would someday be college tuition, or a house down payment,” Smith remembers thinking. “I would lay them all out in my parents’ living room, sorting them, cataloging them, writing down entries on graph paper while cross-referencing them against the Overstreet Price Guide.”

After college he landed a tech job in Silicon Valley but held on to all 1,200 of his comics, including several hundred early issues of Marvel’s X-Men, which his research suggested had grown in value every year. The comics sat in a storage unit, boarded and bagged, for close to two decades. When Smith found himself unemployed and in need of money to support his wife and two daughters, he decided the time was right to cash in on his investment.

The entire collection sold for about $500. “I’m not too proud to admit, I cried a bit,” Smith says.

Frank Santoro, a columnist for the Comics Journal and an avid collector himself, has noticed the same trend. “More and more of these types of collections are showing up for sale,” he says. “And they’re becoming more and more devalued. The prices are dropping.” He recently had to break the bad news to a friend’s uncle, who was convinced his comic collection—about 3,000 books—was worth at least $23,000. “I told him it was probably more like $500,” Santoro says. “And a comic book store would probably only offer him $200.”

Stories like these are a stark contrast to what’s typically reported. To go by media accounts, 2013 has been a huge year for the vintage comic market. A Minnesota man found a copy of Action Comics No. 1—the first appearance of Superman, published in 1938—in a wall of his house and sold it for $175,000 in June. Three decades ago a different copy of the same comic sold for about $5,000, a record at the time.

Outlandish claims and tales of amazing windfalls elicit only groans from Rob Salkowitz, a business analyst and author of Comic-Con and the Business of Pop Culture. He also happens to be, in his own words, “a guy in his 40s with a basement full of old comics.” He warns that too many people have been deluded into thinking they are sitting on a comic book gold mine.

“There are two markets for comic books,” Salkowitz says. “There’s the market for gold-plated issues with megawatt cultural significance, which sell for hundreds of thousands and sometimes millions of dollars. But that’s a very, very, very limited market. If a Saudi sheik decides he needs Action Comics No. 1, there are only a few people out there who have a copy.” And then there’s the other market, where most comics change hands for pennies and nobody is getting rich or even breaking even. “The entire back-issues market is essentially a Ponzi scheme,” Salkowitz says. “It’s been managed and run that way for 35 years.”

On the other end of the spectrum, almost any comic book store owner can supply eye-opening tales of depreciation. Walter Durajlija, an adviser for Overstreet and owner of Big B Comics in Hamilton, Ont., sold a copy of Uncanny X-Men No. 94 in 2010 for a record $26,500. Last year, that same comic sold in his store for only $12,000. “[My] last two sales [of X-Men No. 94] were $9,501 in February of 2013 and $8,089 three short days later,” he says. And that’s just the tip of the iceberg. “Incredible Hulk No. 181 was getting $20,000; they now trade for $8,000.”

There are many theories for why comic collectibles have stopped being valuable. Some blame readily available reprints. “What drove the collectibility of the old comics was that they were once genuinely rare,” says Salkowitz. Others point to the grading system, which now requires that comics be encased in plastic polymer. “It really is a shady process that’s completely changed the marketplace,” says Santoro. And there’s reason to suspect that the Internet era has yet again worked its magic on prices: “In the ’60s, the only way to read these stories was to own the original issues,” says Salkowitz. “Now you can go on Pirate Bay and download a torrent of anything you want for free.”"