By Benjamin Nobel, April 2, 2020
Hi everyone, first and foremost, I hope you are all staying healthy and safe. I’ve had to put comics on the back burner and focus fully on work and family, so you haven’t seen a post from me for awhile (and you will likely not see another for awhile after this). We’ve all heard the comparisons to the 1918 Spanish Flu as the last time a pandemic of this magnitude took place, so this is truly a “100-year-storm” type of event we are collectively experiencing.
It occurs to me that anyone who was actually alive back in 1918 is now ~102 years old now, so any memories they might have of that past event would have been as a toddler or young child at best… Nobody alive today has a first-hand recollection in the memory banks of their brains, of what this type of 100-year-storm global pandemic event is like to live through as an adult. A lot has been written of the 1918 pandemic for sure, but this is the very first time, for every adult alive on the planet today, to actually experience this type of once-in-a-century global pandemic themselves. Wow.
Country by country and state by state, we’re seeing schools and non-essential businesses closed by government mandate until further notice, and in most states here in the USA we presently have shelter-in-place/stay-at-home types of orders for the public; the streets of our large cities are now eerily empty. We’ve simply never experienced anything like this in our lifetimes. With no prior reference point in our brains from our own memories of our past to compare this to, there is naturally unprecedented fear, uncertainty, and doubt about the future. Collectively, nobody knows what to expect will happen next (and for now the news just keeps getting worse).
In the comics industry, first we saw announcements of canceled attendance at comic cons, then announcements that the cons themselves were postponed or canceled. As we speak, the Jacob Javits Center in New York City (where NYCC has been held historically) has been transformed by the Army Corp of Engineers into a hospital in an amazing and awe-inspiring feat, and one that speaks to the priorities right now: all the measures to slow the spread of the virus are critical because of our limited hospital capacity against the percentage of active cases that will require hospitalization. The Javits center transformation is remarkable but we can make only so many additional hospital beds, and thus we must take the ‘self-inflicted hit’ of shutting down economically in order to slow the spread, because if the spread happens too fast we’ll suffer the feared mega health hit measured in deaths too many to bear. So, on with the economic hit we must go…
Back when cancellation of large events/gatherings was still the news-of-the-day it might have been hard to envision that comic shops themselves would be forced to close, but now, I’m sure that you too are receiving announcements and having friends forwarding you announcements from their local comic shops, about their forced closure. And then last week, Diamond Comics Distributors announced they will cease distributing new comics, until further notice. So not only are the physical storefronts of our favorite comic shops closed, but now, until further notice these shops will have no new shipments coming to them, at all, of new comics to sell. Wow.
Even with no new comics coming in, a closed comic shop still has to pay the rent… Hopefully the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” will be able to provide some help in that regard. But the precise extent of the help doesn’t yet seem clear. And if you’re a comic shop with no new books coming in, then it would sure seem to me that you’ll be looking at selling your old books (back issues) as aggressively as needed in order to generate the cash required to survive this event through to the other side.
And it isn’t just businesses like our local comic shops that need cash right now. It is of course the many individuals too, who are losing their jobs. It is upsetting to think of all the industries where so many people are being let go or furloughed: airlines, hotels, restaurants, movie theaters, malls, the list goes on and on. A recent projection from the St. Louis Fed puts the potential job losses at 47 million and the unemployment rate surging past 32% at the peak of this mess… All these people are going to be wondering how they are going to pay their living expenses, feed their families, make their rent / mortgage payments. Will they receive one of those government checks and will it be enough?
Certainly, there is a sudden giant need out there all over the place, for cash… For those individuals in cash-raising mode who own collectible comics, they might be thinking about parting with some of them right about now. But we should keep in mind, that the need for generating cash by selling assets is everywhere, not just in the area of comics. In the stock market, prices of stocks across the board began to plunge when huge numbers of investors and traders, pretty much all at once, started to sell stocks to raise cash: According to CNN, the Dow Jones Industrial Average recorded its worst quarterly start to a year in history, down 23.2% for the first quarter. The price of a barrel of oil meanwhile set its worst quarter on record according to Bloomberg, with a stunning 66% loss in price, a shock that has been absolutely hammering the energy industry.
With uncertainty and doubt about who is going to be able to afford to pay their April rent (and mortgage payments, and payments on loans), the value of real estate companies (landlords), the value of riskier corporate bonds, and also the value of mortgage-backed securities has been plunging in tandem. What is particularly alarming about the plunge in mortgage-backed securities is how what’s currently happening “rhymes historically” with what happened during the financial crisis of 2008-2009, which is that many of the companies set up to be the owners of those securities actually own them with mostly borrowed money — i.e. they essentially made a “down-payment” on the securities and then they borrow the rest with short-term borrowings.
Borrowing to buy something is not abnormal of course (people borrow to buy cars, houses, you name it, all the time), but in the case of the mortgage-backed securities owners, those borrowings were short-term in nature and came with the stipulation that if the market value of the securities fell, then more cash would need to be delivered to the lender — basically what’s known as a “margin call.” [Imagine if you bought a comic on eBay, but instead of paying the full purchase price in cash, you had a business partner who allowed you to make just a small down-payment on the comic and lent you the balance of the purchase price… but lent it with the stipulation that you would both check the market value on a regular basis and if the value of the book were to fall as observed by other sales, then you’d have to put up more and more money as the value fell further and further, otherwise you’d lose the book to the lender or be forced to sell it to make the lender whole.]
And what happens if the owner of the securities doesn’t have any more cash left to meet that final margin call? Things like this happen: someone forwarded me an example of a sale filed just days ago, by a company that had owned a portfolio of $6.1 billion face value of residential mortgage-backed securities and after a series of margin calls ultimately decided to sell them quickly — generating proceeds of just $3.3 billion. Wow. And now that sale becomes a reference-point for market participants assessing current market value for other similar assets owned with borrowed money… you can see how it can easily become a self-reinforcing downward spiral. And similar stresses caused by falling market value and forced selling are a systemic risk to the commercial mortgage market too according to Tom Barrack, unless something is done to step in and stop the downward spiral.
And here’s just one more recent “sudden need for cash” example: Carnival — the cruise line — is publicly traded and was at around the $50/share level before the pandemic struck. Its share price had fallen to about $13 by Monday of this week. Then on Tuesday morning the company announced it wanted to raise $1.25 billion in cash via the sale of newly issued shares of their stock. Typically, in such a situation the company would need to offer the new shares at a discount to where they had been trading, with the hefty discount then luring in the new buyers for those newly offered shares. The outcome of the money-raising endeavor was just filed with the SEC: even after discounting the shares all the way down to $8/ea — a nearly 40% discount to where the stock had traded days earlier and a small fraction of where they traded before the pandemic — they only ended up with buyers for $500 million worth of new shares ($750 million short of what they originally were hoping to raise).
I give these examples for some backdrop of everything that’s going on out there around us, to provide context of the discounts being seen left and right: all over the place right now in the world there are sellers of all types of assets and many of them need to be sellers, even at prices that a month ago would have seemed unthinkably too-low to contemplate selling.
Tying this all back to our hobby: When it comes to collecting comics during the pandemic, I think that here too in our hobby we’ll be seeing lots of really interesting stuff hit the market that might not otherwise have been put up for sale in normal times. Some people (and comic shops) will simply need to sell some books that they would otherwise have wanted to keep, in order to raise much-needed cash.
I’m seeing this plenty already and I bet you are as well; I have been quite surprised by just how many alerts I am getting in my inbox for wantlist comics that are now available on the marketplace — weird quirky stuff like manufacturing errors that I haven’t seen available in years and now suddenly people are putting them up for sale. And for CPV collectors, earlier this month (as I’m sure many of you reading this also noticed), for the very first time in several years someone was willing to put up for auction a 9.8 CPV copy of Amazing Spider-Man #238 (it sold for $4,650). Whether related to cash-raising or not, that’s the first 9.8 of this key book we’ve seen for sale since our first guide was published in 2017.
Bottom line, these are clearly unprecedented times for any of us living on this Earth today, and for many the #1 focus is literally just staying alive and seeing our loved ones survive. After health, financially speaking the first priority for your cash is to ensure that you are in a position to provide for yourself and your families and make it through to the other side of this awful period. Right now your cash is extremely precious; I envy those who have a massive pile of cash right now.
If you don’t have any “extra” cash but you are able to make it through to the other side of this, I’d still consider that a big win. (Even without extra cash, this might also be a good time to barter — another way to stay active in the hobby.)
If you are lucky enough to fall into the category of people who have some “extra” cash, I have to think that in the future, when you’re looking back on this period once it has become a memory (and it will become a memory), it might be nice for you to recall happily about how you were able to use some of that “extra” cash for investment into your favorite collectible comics (or investment into any other asset class for that matter where you see strong value). Landing something great for your collection during the pandemic, whether it is a book that you’d been looking for unsuccessfully for years and years that finally became available, or getting a tremendous deal on something at a fraction of what you feel it will be worth two years out, is a nice thing you can do for your future self, during this pandemic. [And, chances are you may be providing cash for someone who desperately needs it immediately, in the process].
I recognize that right now, the total number of COVID-19 cases in the USA (and the worldwide count) is still rising rapidly and people are still extremely scared. The numbers are alarming, and growing, no doubt about it. And the longer the ‘shutdown’ goes on, the more the economic situation becomes a self-reinforcing downward spiral and the harder it will be for the economy to bounce back from the damage. But on the other hand we know this period will not go on forever: there is going to be a day that this is all just a memory.
When the economy “opens back up” again, the survivors in every business area currently impacted, comics included, will move forward and thrive once more, and lost jobs will return. The energy industry too may snap back if the Saudis reach an agreement with Russia or other positive news emerges that sends energy prices back upward.
Today in the current US “epicenter” of the outbreak, Governor Cuomo of New York gave estimates that the “apex” of hospitalizations could come as early as one week from now or as long as three weeks from now, depending on which expert opinions you draw from. I keep reminding myself that after the apex is finally reached, we will start to go down the other side of the hill. While we don’t know exactly how long that will take, at some point in the future we will start to see that proverbial light at the end of the tunnel. We’ll be able to once again envision the world re-opening and envision the economy starting to come back. We’ll envision asset prices, including comics, returning to their pre-pandemic “normal levels” … and the big fear that’s out there, the fear of things getting worse, will transform into a fear of missing out on the recovery where those who are lucky to be sitting on their pile of cash will fear they waited too long and missed the rebound without having done anything with their cash pile. And then, finally, at some point we’ll reach the time when we look back on this pandemic as a memory.
I wish you all well during these tough times, dear readers of the Rare Comics Blog! I hope we can all remember that above all else the “Key” in this particular situation is being able to make it through to the other side of this pandemic. And any great comic collecting wins in the interim are just a bonus.
All the best,
– Ben
Rare Comics 
FWIW: I’ve stopped buying until people are back to work. There may well be bargains out there but I don’t see the economy recovering that quickly. A lot of productivity disappears when seventy percent of the population aren’t working or spending money for six weeks or more. That productivity is gone forever, as well as cash flow momentum needed to keep businesses operational.
Another concern is whether collector interest after the crisis will resemble interest before the crisis. I wasn’t worried about it until Diamond first stopped shipping new comics, then stopped paying vendors. At that point, I can imagine a switch to either digital comics or away from comics altogether. Something similar happened in the NFL, thanks to Colin Kaepernick. Regardless how anyone feels about his kneeling protest, he started an exodus of fans who stopped supporting the sport of American football altogether. Today, years after he decided to defy his team, the NFL, and fans annoyed by the protest, the NFL still hasn’t recovered to pre-protest levels of viewership. The reason seems to be that former fans found alternative sports to support and have left football for good.
The comic book industry has already suffered a long decline in sales. From what I can see, there are three primary reasons for this. The first is direct distribution. By taking comics out of a general market, they lost casual readers and focused on collectors. Collectors weren’t numerous enough to replace casual readers, so publishers created gimmicks to inspire collectors to buy multiples. That worked for awhile, until the collector market was tapped out (in the mid nineties or so). The second reason is competition from other media, particularly video games. Third, politically-charged content has skewed the audience to an even smaller slice of the collector market than was the case in the nineties.
In my own collection, the comics I read with interest are all fairly old. My favorites are the Carl Barks duck stories from the forties through the sixties. After that, DCs from the sixties, Marvels from the seventies and eighties, and that’s it. I’ve bought around 1,300 newsstand comics from 2000-2017 in the last year but read only three or four of them (by Byrne and Romita jr). I have glanced through the modern comics but see way too many talking heads, angst, and lack of enthusiasm in the characters. Also, the story-telling is lazy. In decades past, the story had to move on a per page, per-panel basis. Now, it’s a hard slog to see much progress in an entire issue. Compare that to any of the old Lee/Kirby Fantastic Fours, like the Skrull arc from #90-94. Every page significantly advances the story. No wasted pages on superheroes sitting around in a restaurant or cafe grousing about their love life.
The good news is that the MCU and DCU have significantly raised awareness of comic book characters and repopularized them. The comic book publishers have not been able to translate success in the theater to success for the comics they are based on, and that’s with over ten years to do it. My feeling is that the continuing desire to make comics “relevant” as opposed to “entertaining” (and I don’t believe it can be both) is what is killing them. It’s like when you have a favorite TV show. You see an episode you don’t like but continue watching because of the dozens before it that you liked. See four in a row that you don’t like and you never come back. I think comic book publishers are near or at that four episode mark now with the content they are producing, and this stoppage of product may be the last straw. We’ll see.
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