Reasons to Sell a Comic and Comparing the Collector vs. Investor?

Reasons to Sell a Comic

Consider this a Positon Paper. I have set out extremes of 100% collectors vs 100% investors. I expect it's a normal distribution of people from the extremes inwards. This figure shows my journey. 

A)  Avoid the gamble and focus on a plan

“The reason why many have trouble selling is rooted in an innate human tendency to be greedy. As greed and emotion overcame rational judgment, sound investment principles were replaced by casino-like tendencies.” *

* http://www.investopedia.com/articles/stocks/10/when-to-sell-stocks.asp By Sham Gad

  

Prospect Theory ** explains some of this tendency.

** “What is the 'Prospect Theory? Prospect theory assumes that losses and gains are valued differently, and thus individuals make decisions based on perceived gains instead of perceived losses. Also known as "loss-aversion" theory, the general concept is that if two choices are put before an individual, both equal, with one presented in terms of potential gains and the other in terms of possible losses, the former option will be chosen.” 

 **Prospect Theory Definition | Investopedia http://www.investopedia.com/terms/p/prospecttheory.asp#ixzz4PoQLuE3Q

For example, an investor purchases a comic at $250 and tells themselves that if the comic hits $400, they will sell. What happens next is all too common. The comic hits $400 and the investor decides to hold out for a couple of more profit. This could be during the release of a movie associated with the comic.

Surely, the comic will hit $600 and greed continues overcome rationality. They hold out for more. Suddenly the price takes a turn downward and cools off. The movie was a flop and now it’s back to $200 to 250. 

The investor then tells themselves that once the stock hits $300 again, they will sell it all. Unfortunately, this never happens and the price continues to drift. Succumbing to emotions and frustrations, the investor sells at $230, below the initial buy price.

B) When to sell is of paramount importance

Never Attempt to Time Markets

“Before getting into reasons to sell comics, investors should realize that timely selling does not require precise market timing. Very few, if any investors, will ever buy at the absolute bottom and sell at the absolute top. That will never happen! “*

Instead, comic investors should be focused on buying at one price and selling at a higher price.

C) Reasons to Sell a Comic

 Mistakes in Analysis

If upon buying a comic for investment, you later conclude that it was bought because of a poor analysis - as a suitable investment. You should sell even if it means a loss will be incurred. See Prospect Theory**

Data and analysis should trump emotional mood swings.

Rapid Price Appreciation

A comic book’s price spikes and it rises dramatically in a short period of time. That does not mean you are the smartest kid in the comic book store! A predetermined investment plan should include a "sell" price. This comic book’s investment expires at that price.

The current price is not logical and the future seems unclear. Greed whispers to forge and hoard! (System 1 thinking). Use System 2 thinking to get beyond the fast and frugal thinking.  ++ see -  https://en.wikipedia.org/wiki/Thinking,_Fast_and_Slow

 

Bonus-My Treat!

Collector vs. Investor?

(from my unpublished comic investment manual - chapter 1)

Investing in Comic Books can be a time intensive endeavor. You need to establish your goals for your investing. Usually asking predictable questions of yourself is a beginning. Your answers will give you the insight into your expectations and profit goals. Simple questions can concern amounts of seed money and time available. Until you have sufficient time and money do not invest. I suggest 200$ per month and 10 hours a week. Pick your levels.

Collector vs. Investor?

The main question is do you wish to focus on investing in comics or just be or remain a collector? A collector is having fun and looks at his journey as a hobby and thus can ignore traits and processes an investor cannot.  A collector buys issues only for personal satisfaction and just hopes that these comics will be valuable if they ever wish to sell them.

An investor must develop plans, procedures, acquire new skills, acquire new ways of using investment data, and understanding the barriers to their success. This is the purpose of this manual. A mistake investors can make is the over- or under-diversifying your comic book investment portfolio. For anyone with a portfolio, each comic book issue should be there for a reason. You’ve may have spent a lot of energy, time and money acquire the right comic book issues. However, your efforts may have created the exact opposite of what you wanted to accomplish.

 Table 1 Collector vs. Investor Characteristics

Remember, you’re not a collector. You’re an investor. You want comics that will meet your goals and also expose you to as little risk as possible. The end result should be a comic book portfolio that fits your temperament, risk tolerance, and goals. Assess who you are by using the Collector vs. Investor Characteristics in Table 1.