Investment Ideas #2 : Disposition Effect in Comic Book Investing

Disposition Effect in Comic book Investing  


This behavior concerns the tendency of people to hold onto comic issues rather selling and acknowledging how little it is actually worth. 

Comic book investors have a tendency to hold onto investments that have fallen in price, regardless of how unlikely it is that they will ever recover in value, rather than selling and acknowledging the loss. The inverse is true, and can be just as damaging: we’re more eager to sell our comics when they are going up, regardless of how much further up they might go.

Every price point is not a single point at all but that price point needs to be seen as a distribution of possible future outcomes. A comic's price is not static as changes will occur. 

Collectors hold onto their losers and cut their winners short. 


Investors should do the reverse. 



Part of your portfolio building process should be to go through your collection on a regular basis, figure out which issues are the winners and which are not. Sell or trade the losers. The sold issues then will be a source of seed capital for buying the next round of winners. That is called having an exit plan which must be a part of your portfolio building.

That is assuming you have kept an investment diary and know you can make money in comic book investing. 

If you can not make money then just buy and hold and let your relatives/family sell your collection after you are gone. They will have no bias to deal with as its all a win to them!

An investment plan will track your initial purchase as well as how you’re going to respond if the 

1) price goes down (Sell it when it drops a certain percentage? Buy more issues when it dips lower?

2) and if the price goes up (Sell it when it gains a certain amount? Wait to see how high it goes, selling when it starts to dip from its peak?).

Building a Portfolio, having defined plans including exit strategies and preforming timely assessment of your investment plans will allow you to move away from the Disposition Effect.


My up-coming book on investing in comics will have an informative section on portfolio, exit and investment plans, and identifying and dealing with cognitive biases. 


Good luck with your investments!


Comments

  1. As a kid to age 35 I was into baseball cards. My first set a 1979 Topps Set. I was born in 1970 -- I had all of them up to 500,000 cards filled a uhaul trailer 6x10 my first move. Recently I sold them all, and since have invested every asset, pension, retirement check into comics, variant issues, keys, first apps, Marvel DC, have gotten numerous sketches, signed books, grading with CGC CBCS PGX -- I can tell you that comics are more interesting, artwork from Silver and Bronze age including 70's Marvel Horror, Vampirella, et al -- I am hooked. I guess I speculate here and there, but my main concern is that I collect the entire series of whatever I can -- recently finished Hero For Hire, Luke Cage, Power Man, Iron Fist 1-125, now into Master of Kung Fu 15-125 -- love searching out Pizzazz ads, Mark Jewelers Inserts - actively building my 15,000 base comics and 100+ graded keys by going to LCS x4, yard sales, estate sales, flea markets - and even eBay -- I am totally hooked lined and sinkered!! Nathan.

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    Replies
    1. Neat story. My first comics were from 1974. I actually won them playing poker using comics as betting chips. Won ASM 129 GL 76 etc but lost the entire silver surfer run. It was fun! Sounds like you are all in. Go for it! I am more into investing in Golden Silver and Bronze age comics but collect pulp magazines etc. Got a nice run of Capt Future, Doc Savage and the Shadow pulps from the 1930/40s etc. So I ignore my advice on pulps but will follow with my comics. I hope my data aids you in your journey! I am working on a book that will have a lot of interesting data not seen on my blog. I will announce it when it is ready. FYI I play fantasy football and use my profit to fund family vacation and buy more pulps and investment comics! I took home 2000$ last year! So I will be moving to win me more seed investment money. Thanks for commenting!

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