The value of alternative assets, such as collectibles, art, and other non-traditional investments, is influenced by a range of factors. These factors include scarcity, liquidity, market sentiment, trends, and catalysts, among others. In this FAQ, we'll explore these factors and how they can affect the value of alternative assets.
Scarcity is a key trait common among most, if not all, collectible alternative assets of significant value. An asset is considered scarce when it is deficient in quantity or number compared to the demand for the asset. Scarcity can drive up the value of an asset, as collectors and investors are willing to pay a premium for items that are rare and hard to obtain1
Liquidity refers to the ease with which an asset can be bought or sold in the market without significantly affecting its price. Alternative assets with low liquidity may be more challenging to sell quickly and at a fair price, which can affect their overall value. In contrast, assets with high liquidity are generally more accessible to a broader pool of buyers and will not have its value constrained by liquidity.
Market sentiment and trends can have a significant impact on the value of alternative assets. The popularity of certain trends, investor sentiment, and supply and demand dynamics all play a role in determining the value of collectible assets. For example, if a particular type of collectible gains widespread popularity, its value may increase as more collectors seek to acquire it. Conversely, negative sentiment or a shift in trends can lead to decreased demand and lower values.
A catalyst is an event or development that causes a significant change in the value of an asset. Catalysts can be positive or negative, meaning they can cause an asset's value to go up or down. Examples of catalysts for collectible assets include the release of new information about the asset, changes in market conditions, significant auction results, or notable events related to the asset's history or cultural significance. Catalysts are typically expected to drive short-term, rapid changes in value.
Yes, there are risks associated with the factors that influence alternative asset value. Market sentiment and trends can be unpredictable, leading to potential fluctuations in value. Additionally, low liquidity can pose challenges for investors looking to exit their positions. It's also important to consider the possibility of changes in the regulatory landscape, economic conditions, or other external factors that could impact the value of alternative assets.
We hope this FAQ has provided valuable insights into the factors that affect alternative asset value. For more information about alternative assets and strategies for successful investing, explore our other resources and guides on Altan Insights.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
An efficient market is one in which asset prices fully reflect all available information, resulting in a fair and accurate representation of an asset's value. In contrast, inefficient markets are those in which information asymmetry, limited liquidity, and other factors may lead to mispricing of assets. In this FAQ, we'll explore the concept of market efficiency and discuss whether collectible markets are considered inefficient.
An efficient market is a financial market where prices accurately reflect all known information about the assets being traded. In an efficient market, it is challenging for investors to achieve excess returns consistently because any new information is quickly incorporated into asset prices, eliminating arbitrage opportunities.
Several factors contribute to market efficiency, including a large number of well-informed participants, access to relevant information, low transaction costs, and high liquidity. When these factors are present, new information is rapidly disseminated and reflected in asset prices, leading to greater market efficiency.
Collectible markets often have lower liquidity than more efficient markets like stocks. Liquidity can play a significant role in a collector's success or failure in realizing optimal value for their collectibles. Many collectible markets are beset by low liquidity, and that's especially the case in times of stress. Additionally, collectible markets may have higher information asymmetry, where some participants have access to more information than others.
Collectible markets are often considered less efficient than traditional financial markets like stocks and bonds. Factors such as limited liquidity, information asymmetry, and the subjective nature of valuing collectibles can contribute to inefficiency. However, this does not mean that opportunities for profit do not exist; rather, it suggests that pricing discrepancies may persist for longer periods allowing for keen eyed collectors to reap profits.
Yes, market inefficiencies can create opportunities for collectors and investors to capitalize on mispricing in collectible markets. For example, if a collector has specialized knowledge about a specific category of collectibles, they may be able to identify undervalued items and profit from their eventual appreciation. However, it's important to exercise caution and conduct thorough research, as inefficiencies can also lead to risks and uncertainties.
We hope this FAQ has provided valuable insights into the concept of market efficiency and how it applies to collectible markets. For more information about collectibles and alternative asset investing, explore our other resources and guides on Altan Insights.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
Photomatching is a process used to verify the authenticity of sports memorabilia, particularly game-worn jerseys and equipment, by comparing them to photographs taken during games or events. The goal of photomatching is to determine whether a particular item was actually used by an athlete during a specific game or event.
Photomatching involves analyzing high-resolution photographs from games or events to identify unique characteristics or markings on a piece of memorabilia. These unique features can include stains, stitching patterns, wear marks, and other identifiable details. By matching these features to those seen in the photographs, it's possible to confirm that the item was worn or used by the athlete in question during that specific event.
Photomatching is an essential tool for verifying the authenticity of sports memorabilia. It helps collectors and investors determine whether an item is genuine and was actually used by an athlete during a game or event. This verification adds value to the item and provides peace of mind for those looking to purchase or invest in sports memorabilia.
While photomatching is commonly used for game-worn jerseys, it can also be applied to other types of sports memorabilia, such as helmets, gloves, bats, and balls. However, photomatching is not always possible for every item. It requires clear, high-resolution photographs from the specific game or event, and the item must have unique characteristics or markings that can be matched to those in the photographs.
Photomatching is typically performed by specialized authentication companies that have expertise in analyzing sports memorabilia and access to extensive photographic archives. Among the leading companies in the field of photomatching are MeiGray Group and Resolution Photomatching. These companies use advanced techniques to match items to photographs and provide certificates of authenticity for successfully photomatched items. Through their meticulous examination process, both names have become trusted in the sports memorabilia space, helping collectors and investors verify the authenticity of their prized items.
Photomatching is not foolproof and has some limitations. It relies on the availability of high-quality photographs from the specific game or event, which may not always be available. Additionally, if an item lacks unique characteristics or markings, it may be difficult or impossible to match it to photographs. Finally, photomatching can only verify that an item was used during a specific event; it cannot determine how many times the item was used or whether it was used by the same athlete in other games.
We hope this FAQ has provided valuable information about the process of photomatching. For more information about sports memorabilia and alternative asset investing, explore our other resources and guides on Altan Insights.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
Population reports are data sets that track collectibles graded by individual grading firms. Each offers insight into their rarity and distribution among collectors. By analyzing these reports, collectors can identify the scarcity of each asset; allowing them to come to conclusions about their value. Population reports are a wealth of information when analyzing the assets you already have and ones you would like to own in the future.
Grading agencies like PSA, Beckett, WATA, CGC, and SGC use population reports as a sort of "collectible census" to keep track of graded items' rarity and conditions. They meticulously record each item they grade, noting its condition, category, and any other defining characteristics. Each time an asset is sent to one of these firms to be graded, it is recorded in the population report for other collectors to analyze. By maintaining these detailed population reports, they help buyers and sellers navigate the sometimes untrustworthy nature of collectibles markets.
Collectors can access population reports through the websites of grading agencies like PSA, Beckett, WATA, CGC, and SGC, where they're often available for free or sometimes offered through a subscription service. Those linked below are free for anyone to take a look!
These reports guide collectors to their desired collectible's rarity and value. To interpret a population report, collectors can look at individual items, say “1999 #58 Pikachu Red Cheeks Shadowless PSA 8”, in order to understand the rarity of an individual card. You can also research assets more broadly–by category, athlete name, Card Set, etc… Once you have an idea of the supply of an asset, you can then surmise the item's relative value by comparing the population figures; although this must be done with an eye towards demand as well, as it is an equally important factor in the value of an asset. With this knowledge, collectors can confidently negotiate deals, avoid overpaying for items, and spot hidden gems in the wild.
The value of a collectible based on its population report can be influenced by several factors, including its condition, rarity, and demand within the market. Although just because an asset is rare does not guarantee a high imputed value. The population report merely serves to give a snapshot of supply at a moment in time. It's essential to remember that a collectible's value is not solely determined by the population report; collectors must also consider factors like historical significance, cultural relevance, and the whims of the market. If collectors are able to accurately predict these factors, population reports will allow them the information they need to profitably grow their collection.
Video game pop reports differ from other categories in that they are broken down in such a way that represents video games as opposed to a broader list of filters. WATA breaks everything down first by console–you can search for games under anything from the Atari 2600 to Xbox 360. Then you can drill down into the “state” of graded games within each console: Sealed (factory sealed), CIB (complete in box), and Cart (loose cartridge). With Sealed being the most rare, followed by CIB and then Cart.
After being broken down by state, you can drill down into each title. Although, one title will have several different “variants”; each of which is a different printing of the game. For example, each of the below is a unique variant of “NES Super Mario Bros.”. These variants are then broken down again by overall grade (from 1-10) and seal grade (from C+ to A++).
Each variant of a single title can go for wildly varying prices. In the above, “*Made in Japan, Hangtab - NES-GP - NES Code '' is among the most valuable variants. Due to its rarity, only 7 of the 205 total population, but also since it is from a relatively early printing period before the NES completely took over the North American console market.
Comic book population reports are organized in a way dissimilar to other assets. Firstly, by “series title” and “issue #”—these two delineate the graded book from different ones in the series and from alternate series’ altogether.
Once you search by those two parameters, you are met with a list of titles attached to different ‘publisher’, ‘year’, and ‘issue date’.
Each publisher is wont to stop and start a series as fan interest waxes and wanes, so for a popular series you will see many different issues, albeit with the same issue #. Clicking into an individual title will give you a detailed look at the population of the asset; broken down not only by grade, but by label as well. The label of the book is a signal as to how we should interpret the grade. CGC assigns the following labels to their graded comic books:
Universal (Blue)
Signature Series (Yellow)
Qualified (Green)
Restored (Purple)
Pedigree (Gold)
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
We compiled the all-time auction price records for video games as of February 23rd, 2023. Be sure to check back as we update the list as new records are set!
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As one of the only two non-Nintendo games on the list we have to give Sega some credit for keeping Sonic on the mind of gamers all these years later in spite of losing the console wars around 30 years ago now. It is even more fun when you know that Sonic was created in an effort to compete with Nintendo’s own mascot, Mario. Sonic’s attitudinous, devil-may-care demeanor was meant to appeal to teenaged North American fans.
The company pushed very hard for Sonic to become the face of their brand. “Sonic the Hedgehog” became the bundled game with the Sega Genesis replacing ‘Altered Beast’ (another classic, we might add); in fact Sega even offered those that bought a Genesis with ‘Altered Beast’ a trade-in replacement for Sonic.
This example is one of 42 graded copies from WATA. Of those, 17 were graded higher. This is a beautiful, well-maintained object, but since it was sold at the height of the video-game market frenzy in 2021 it received a significant premium. To see this record broken we would likely have to see one of the two highest graded copies (WATA 9.8 A++) be sold.
Alright second Genesis game, but also the last. A good one to be sure though, like all the titles on this list the Madden name persists into video gaming today. So much so to the point that most young fans today have no clue that John Madden was a wildly successful NFL coach and broadcaster on top of his achievements in the world of gaming.
Madden lent not only his name, but his expertise to the game. It began development in 1984 and was not released until four years later in 1988, albeit on the Apple II not the Sega Genesis. The game spent so much time in development due to Madden’s devotion to accuracy. When arguing with EA developers over how the game needed to be 11-on-11, he was quoted as saying “I'm not putting my name on it if it's not real.”. He was thinking of the game as an educational tool for people to better understand the game of football. Madden’s uncompromising attitude led to his game being the football game.
It is always interesting looking back to see how mega-brands came to be. The Madden name is now indelibly linked with football. Fifa, NHL ( AKA “Chel” *gag*), NBA 2K, MLB The Show. Boring, the whole lot of them. John Madden may have passed away in 2021, but he gets to live on in the PS4's and Xbox One's of football fans everywhere.
WATA has graded 14 copies of the 1990 Genesis version of “John Madden Football” of those 14 there are 8 better. This is another object that isn’t exactly the crème de la crème of graded copies, but when you consider 400,000 copies of this game were sold 1 of 14 ain’t too shabby. Especially when you consider that this copy came from the office of John Madden himself.
Few games hold the iconic status of the original "The Legend of Zelda," which debuted on the Nintendo in 1986. Renowned Nintendo game designer Shigeru Miyamoto was the creative force behind the game.
The release of the game featuring Link, Ganon, and Zelda not only achieved commercial and critical success with over 6.5 million copies sold but also initiated one of the most enduring and beloved gaming franchises. The Legend of Zelda is consistently hailed as one of the most pivotal and influential video games ever, with its impact still evident today.
This particular sealed copy showcases a circular Nintendo "Seal of Quality," a "Small Warranty," a "5-Digit ZIP," and an "NES TM" label, marking it as a first edition. Per WATA's census report, among the three copies graded with an "NES TM" label, only one has received a higher grade, enhancing the rarity and appeal of this first edition copy.
Although not his first appearance on the small screen, ‘Super Mario Bros.’ on the NES was Mario’s first go-round at being the title character. Released in 1985, just four years after his initial debut in arcade cabinets everywhere in ‘Donkey Kong’.
The industry was in dire straits after the video game crash in 1983. Sega and Nintendo were struggling for games that would renew interest in their consoles; this game did that and more. Cited as the first “killer-app” for the NES, Nintend is said to have sold over 50 million units in the ten years that followed the release. The best selling video game of all time for quite a while, until it was unseated by another Nintendo classic, “Wii Sports”.
“Super Mario Bros.” had 11 unique printings, each differentiated by things like stickers, tabs and text on the box. This example is among the most scarce variants as it was packaged in the span of just a couple of months in 1987; a year where Nintendo sold approximately 1.8 million consoles in North America. In the following four years the Japanese company would sell around 27.54 million units in the region.
This hangtab version only has 12 graded copies in the WATA population report. Among those there are only two graded higher. In total WATA has graded 205 copies of “Super Mario Bros.” which further illustrates the limited supply of this piece.
Earlier in 2021 another copy of “Super Mario Bros.” was sold, but for a more impressive sum. This April sale outstripped the last one by about $260,000; the difference can mostly be explained by this box being from an even more scarce set.
This example is the fourth version of the game that was produced. Known colloquially as “1-code, hangtab”, there are only four graded copies of this print-run, making it a very sought-after collectible. This copy also happened to be the highest graded of those four. Only 8 of the 205 total graded WATA copies received higher than this 9.6, but not a single one of them was printed earlier than our example here.
I am sure you are getting tired of seeing gaming’s favorite plumber on this list. So we will break up the monotony with a fun fact!
Mario was named after Mario Segale, a prominent Seattle real estate developer who was renting out a warehouse to Nintendo of America. Segale angrily came in to speak to president of Nintendo America, Minoru Arakawa, after they had been late on rent. His name was chosen thereafter by employees who witnessed the heated exchange. So next time you are having a hard time thinking of a name for the main character of a creative project, just go for your landlord’s name! It worked for Nintendo!
But seriously, this example is graded lower than the above #7 on our list, but received a worse grade. What gives? Although this copy is stellar in terms of rarity and quality; you will only be able to find 4 copies graded better from earlier productions. There are 58 copies graded above in total, but many of them belong to later print-runs that are far less valuable.
Ah, finally! A new entrant to the list. And one that likely holds a special place in the heart of gamers everywhere. In one fell swoop with ‘The Legend of Zelda’, Nintendo launched a tentpole franchise and created one of the most celebrated games of all time.
Beloved by fans and critics alike, the game went on to sell 6.5 million copies. Further solidifying Nintendo’s brand as the gold standard in video games.
As far as the rarity of this individual example goes it looks like this: there are only 3 sealed copies of this print-run that are known. 120 of the total 186 graded copies out there received above an 8, but nearly all of those copies are from far less desirable production-runs that came in the late-80s/early-90s.
This example is from the same production run as #8 in the list above. This one received quite a bump up in price, around a $225,000 bump to be exact. Likely due to the simple fact of this example receiving a 9.6 to the 9.4 of the other.
This early production-run of the game has seen zero copies graded higher. There are only 8 graded higher in the entire population of 205, none of which are from earlier or scarcer releases.
In the early 1990s during the development of “Star Fox”, legendary Nintendo game developer, Shigeru Miyamoto, imagined how the most recent developments in home console computer chips could lend itself to a 3-D mario game. This idea never came to fruition while working on the SNES, but upon the release of the Nintendo 64 with its more powerful processor and larger controller he was finally able to execute on his vision.
With a team of just fifteen to twenty people Nintendo developed SM64 in just under two years. The game was released alongside the new console to wild success. Nintendo knew they had a hit on their hands–assuming SM64 would be their ‘killer app’ for the console. The marketing budget for the game was set at $20 million and the game went on to do $140 million in gross sales in its first three months in North America. By 2003, 11.9 million units of the game had been sold; Nintendo sold about 32 million units of the N64, so around 37.5% of all consoles had a copy. Not bad!
This example is from the first printing of the game, there are 90 similar copies WATA has graded from this production run. This one however is among the three highest graded copies. It should be said that these three copies are not only the highest graded examples from this production, but from any production. Compared to this example there are zero copies graded higher from any of the 142 sealed copies in the WATA population report.
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This copy of “The Legend of Zelda” is a variant that has seen just 4 WATA graded examples in existence. The sale of the same game above at #5 in the list is part of a different variant, but one that is similarly rare. Though when accounting for the difference in sale price of the two assets we can only assume that this one received $165,000 more due to its grade being one full number higher.
There are no other examples of the original ‘Zelda’ that have come up for public sale like this one. Even with a far lower grade this would still be a sought after piece for any collector in the space. The WATA 9 is simply the cherry on top that propelled this copy to #2 in our list.
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Ahh finally made it! Number 1!
We saw a like-graded copy of this example above at #3 in the list which was sold in September just two months after this $1.5 million sale at Heritage in July of 2021. The two copies are nigh-identical, yet the difference in price represents the most significant disparity in the list among two games.
The frenzied market at the time of these sales likely speaks to the difference, but it is also a good learning on the value of uber-high-quality-grail-objects. When it comes to the best of the best within a certain collectible category it is often very hard to predict the final price when these pieces comes to public sale; bidding action can be frenetic, many times between just two or three deep-pocketed bidders that can send the hammer price soaring over estimate.
Only time will tell whether or not spending 7-figures on a sealed Mario game will have been a profitable endeavor. The current owner may well have severely overpaid, but whether it is a a Mickey Mantle rookie card selling for $12.6 million or a Warhol canvas going for $195, trophy assets are priced the same way everything else in a market economy is–by way of supply and demand. Except in this case there are only three "supply" to go around, and well, lets just say that is a demand curve that is very hard to draw.
Fractional platform, Rally, exited their 'Super Mario Bros.' asset for a price of $2 million. Higher than any asset on this list. At the peak of the market insanity around video games in 2021, Rally was in the right place at the right time. They had the foremost asset in video games: a "WATA 9.8 A+ Hangtab Variant Super Mario Bros.". Zero copies graded higher. The examples that also received a WATA 9.8 A+ seal? From variants that are much more abundant.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
We compiled the all-time auction price records for comic books as of February 12th, 2024. Be sure to check back as we update the list as new records are set!
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The first comic book to feature maybe the most singular character in the history of western media. Published by DC Comics in 1938, the cover as well as the first thirteen pages of the book depict "Superman"; established in those pages is the foundation of the character that kicked off the superhero era. We learn that he is sent away from his dying planet as a baby, he can leap tall buildings in a single bound, he is a reporter at a newspaper (although it is named "Daily Star" instead of "Daily Planet"), and that he is interested in a woman named Lois Lane.
Originally discovered in 1986 at a Pittsburgh auction of hardcover books, this copy of of 'Action Comics #1' was tucked into the pages of one of said books—likely the reason why it stayed in such good condition for nearly 50 years. Upon bringing this book to a comic convention two weeks later, all hell broke loose as dealers and collectors did what they could to obtain the book from the lucky auction winner.
Déjà vu, am I right?? Get ready to see a lot of 'Action Comics #1' in this list. As mentioned above, it is the genesis of the superhero genre, and copies of all manner of quality are highly valuable. This copy in particular is 1 of only 2 CGC 9.0 grades with none graded higher; the other copy happens to have 'WHITE Pages" as opposed to the "CREAM TO OFF-WHITE Pages" on this one. Read on if you are curious how that other one performed at auction...
Everyone's favorite caped crusader made his first appearance in 'Detective Comics #27' a year prior to the release of his title series 'Batman #1' in 1939. His popularity in the original DC run propelled creators Bill Finger and Bob Kane to write him his own series which then went on to be even more successful. This copy introduced us to two of the most well known Batman characters: The Joker and Catwoman. Both of them have even served as the titular character in massive blockbuster films—to varying success anyway. We would like to know if the buyer is one of the 17 people who saw Catwoman (2004) in theaters (Sorry, Halle Berry!!).
With zero copies graded higher by CGC, this copy is among the most pristine Golden Age books in existence. But you don't need some fancy-shmancy grading agency to tell you, just take a look at the cover. Yellow backgrounds are known to fade quite quickly, but this one has bucked the trend in stunning fashion. In one of the most iconic covers of all time, the bright red and yellow background is contrasted beautifully against the dark costume of Gotham's Dark Knight. Just as good as when it was picked off the newsstand in the summer of 1940.
The first multi-million-dollar sale of 2024 hammered at Heritage as this CGC 7.0 graded copy of Superman #1 sold for $2.3 million. The specimen is bested by only two copies in the CGC pop report and the result gave Superman #1 two sales above $2 million. While the high-end of the comic book market struggled to reach record-breaking prices in 2023, this sale secured at least one top-10 placement for a comic book in 2024.
Surprised it took this long to get to a Marvel comic book! Although this book did not introduce us to the most well known characters from the universe, it is the first appearance of The Human Torch and Sub-Mariner. The significance likely stems not from the characters, but from the first use of the name "Marvel Comics"; the value makes sense when you consider that 80 years and $26 billion in box-office receipts later, that name has become maybe the most powerful media property on planet earth.
This copy's value is also derived from it being what is called a "Pay copy", meaning that it was used by publisher Lloyd Jacquet to record payments to the artists that contributed to the book. Most notably, a hand-written detail specifying reimbursement to legendary comic book artist Frank Paul. Only one copy is graded higher and was sold in 2019 for $1.26 million; three years of time and "pay copy" status propelled this CGC 9.2 copy to sell for nearly twice that sum.
If you're keeping count at home, that's three Superman books out of the last four; what can we say, he is a popular guy! Although not the first appearance of Superman, this edition gives us some vital information about Clark Kent's lore. We learn the name of his home, Krypton, and his adoptive parents, the Kents. They teach Clark that he must hide his powers, but when the proper time comes, he must use them to assist humanity.
With only 3 copies graded similarly or higher, this Superman #1 is a magnificent example of Golden Age art. Superman leaps above the city in his bright attire, adorned with the first edition of his iconic "S". A far more family-friendly cover compared to "Action Comics #1," the hero's friendly smile is a much more accurate embodiment of his mission.
Superman may seem like a passé character nowadays; where is the dark angle? Where is the brooding bad-boy demeanor? The problematic/troubled superhero trope may be in vogue for now, but Superman's story has proven to be a timeless one; just some dude from Kansas trying to do the right thing.
Captain America may have gotten a career revival since Disney and Marvel studios won the superhero box office wars. Before all of that, he was the face of some very effective allied propaganda. "Captain America #1" is purported to have sold one million copies a year before the United States entered the war. Captain America creators Jack Kirby and Joe Simon received numerous threats for the subject matter of this book at the time, but the $3 million price tag would indicate that punching Hitler has thankfully become a welcome image in a saner society. Talk about an introduction, though! Not many characters get to be introduced against such a pivotal moment in history.
Unsurprisingly, yet another cover of these top ten books is in gorgeous condition. The quality of the drawings on the cover are sharp and energetic. Massive block letters reading "CAPTAIN AMERICA" against an American flag backdrop fill the top third of the page. Not to mention the back cover of this copy received similarly high praise from graders. There is only one copy graded higher than this superlative example. Who is to say what that one, a CGC 9.8, would find on the auction block.
This copy of 'Action Comics #1" actually holds some historical significance outside of what's been already mentioned about this book above. The 13-year old boy who bought it off a newsstand promptly stamped the rocket onto it. Only 8 are graded higher, but quality copies of Action Comics #1 do not come up to auction very often, so it fetched quite the price.
From time to time, distinct copies of otherwise impressive books receive a premium to the market due to the story involved. Like the "Pay copy" example above, the story of the 13-year old with a stamp in his hand is an endearing one. And what are bidders paying for besides a good story?
The other CGC 9.0 graded 'Action Comics #1' at the 9th spot in this list is the only other copy known to CGC of this quality. Even with the fuzziness of this 2014 image you can tell the book is in stupendous condition. The white behind "ACTION COMICS" seems less worn than lower graded copies. It's surprise enough that 43 unrestored copies survived these 80 years without falling apart. Seeing one that could be fresh off of a 30's newsstand is unbelievable.
Okay, last time I promise. This copy sits at an 8.5 just below the two 9.0 copies mentioned above and in the 9th spot. It is telling that the current auction record for this book is not held by the highest graded copy. These things just do not come up for sale very often; if you are a collector looking for one graded above a 6 then you would be lucky if it comes up every few years.
No superhero has captured the imagination of a city like Spider-Man has for New York. In his first outing in a Marvel Comic, we learn foundations of the character that have been told and retold through any number of films, television shows, and comic books. Peter's initial use of his powers is as a means to make money by wrestling and entertaining people, but when his uncaring behavior allows a burglar to go free and shoot his Uncle, he changes his ways. He comes to understand that "with great power comes great responsibility" and he must use his powers for good.
The cover does well to illustrate the crux of the ongoing appeal of Spiderman—the push and pull between him and Peter. When Stan Lee created the character he did so with an intent to give him "problems". And those problems are only exacerbated by the onset of his powers. Relationship issues with Mary Jane cause him to be distracted or unfocused while fighting crime, financial problems keep him from being able to fix his web shooter. Bullies go from some kid at school to Doc Ock and The Green Goblin. He is truly the every-man hero. Struggling through life one problem at a time.
This copy is tied for the highest quality "Amazing Fantasy #15" books of all time; including this one, there are four CGC 9.6 copies out of 2,407 unrestored copies. It is a beautiful illustration of the character's iconic outfit which has not changed very much in the past 60 years. It seems fitting that if the great Stan Lee's work was only going to be featured in one spot of this list, it would be this spot. Number one, baby!
Okay, it turns out that #3 was not the last we would be seeing of 'Action Comics #1'. A Heritage sale in April of 2024 saw the Man of Steel take back his rightful throne as king of the comic book auction world. This copy is one of only four pedigree copies of the comic. One such copy has appeared previously in this list at #5, the Rocket Copy. This copy's pedigree, 'Kansas City', is from CGC's earliest pedigreed collection; dating back to the 1960s when 250 well maintained comics from the 1930s and 1940s were discovered.
Not only is does copy have an excellent provenance, it is also among the highest quality copies in existence. CGC has just two unrestored 'Action Comics #1' graded higher. Even without consulting a population report, one can see that the book's cover is in impeccable condition. It has not dulled one bit, the colors are bright and decadent, Superman's blue suit against the explosive yellow background looks the way it did when it sat on a news stand 85 years ago.
Six of the ten spots on the top ten list are now occupied by a Superman book. He is faster than a speeding bullet, more powerful than a locomotive, able to leap tall buildings in a single bound—and as it turns out—will repeatedly convince collectors to dig seven-figure sums out of their pockets.
'Action Comics #1' taking back the auction record is fitting. Even more fitting in fact, is that the copy itself came from Kansas, just like Clark. You just can't get more poetic than that, though, I would be curious how a 'Krypton' Pedigree would perform at auction.
In a private sale brokered by Tony Arnold and Roy Delic, two very well respected comic book dealers, the book sold for the highest price of any comic book ever. It is likely the highest price paid for a comic book, full-stop. Superman is the top dog.
The "Rocket copy" that holds the above #4 spot was sold twice in the span of a year in two separate private sales. The first in September of 2022 brokered by Goldin and again in January of 2023 brokered by Comic Connect. It seems collectors continue to be very taken with the story of the 13 year old kid with a rocket stamp.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
Sneakerheads are a committed group. For them, most Saturday mornings are devoted to hopelessly opening Nike’s SNKRS app, frantically searching retailers from Foot Locker to boutiques, and completing CAPTCHAs (where are the traffic lights?!), all in hopes of securing the latest drop. Often, the only things secured are “Ls”, and from that frustrating rite-of-passage sprouts the growing sneaker resale phenomenon. Due to the significant imbalance between supply and demand, secondary market sneaker prices are frequently multiples of a given pair’s retail price. What was theoretically a $160 sneaker at 10:00am, when the possibility of acquiring them still lingered, is a $480 sneaker by 10:05.
While the sneaker market softened in late 2022 (check out our blog post that explains why!), much to sneaker purists’ chagrin, the dynamic described above has attracted fervent profiteering, bolstered by sophisticated bots and carefully cultivated connections, which enable the most successful resellers to acquire hot pairs in heavy volume. The headline-grabbing practice of acquiring for retail and selling immediately at elevated prices on the secondary market is flipping, not altogether the same as embracing sneakers as a collectible asset class.
In flipping, appreciation for what makes a sneaker culturally valuable is not required to provide an edge. In fact, in today’s sneaker market, many would argue hype has rendered that appreciation almost entirely irrelevant. If social media hype surrounds a sneaker, flippers will flip it – not because of anything particularly special about the sneaker itself, but because they know Nike will release a quantity dramatically lower than the demand built by the social media hype cycle. It’s more a matter of access, less a matter of acumen. Such a practice is common in any market where supply is insufficient to meet demand, and the retail price is therefore artificially stifled somewhere below where supply and demand intersect in reality. It’s analogous to the way in which many card flippers aren’t necessarily staking out retailers due to a long-term, bullish thesis on a given underlying card, but instead for the possibility of instant profit on offer.
Bricks are discounted, readily-available sneakers that you can generally find on shelves or on websites with relative ease. The practice of flipping bricks is somewhat of an "asset" play, though it's more akin to arbitrage resulting from market inefficiency. Due to the fragmentation of the sneaker markets, a brick-flipper can spot excess supply at a discount in one channel, unmet demand at a higher price in another channel, and bridge that chasm. It's an interesting strategy, and it can work very well, but it's potentially unsustainable and best executed at high volumes.
Alternatively to flipping and flipping bricks, just as with other collectible assets, it is possible to devise a capital appreciation thesis for a given pair of sneakers based on various criteria. We'll take you through the criteria that make a sneaker valuable below. Such criteria aren’t exclusive to these factors, but they stand out among the most influential. When we talk about "investing" in sneakers, we're generally talking about the effort to achieve capital appreciation beyond just simply buying at retail and immediately selling at prevailing resale prices. A collector or investor would be purchasing sneakers with the expectation that, over a matter of months or years, they can go up in value due to favorable changes in the prevailing supply and demand dynamics. Each of the factors below - and the market's awareness of them - can have an impact on supply and/or demand, which ultimately affects the value of the sneakers, making some pairs winners and others losers. The latter is often more common than the former, so it's critical to research and understand these factors well. Even then, as sneakers are speculative assets, there are no guarantees of appreciation.
Was it the debut of a successful model? A landmark collaboration? The signature sneaker of an athlete worn in a decisive moment?
Without rich associated stories, sneakers very infrequently command high values. It would be a misconception to believe that a sneaker becomes valuable solely on the basis of “looking cool”; that absolutely matters, yes, but it’s not always enough on its own. Before we go any further, let’s debunk the idea that cool-looking sneakers are analogous to valuable sneakers. We see it all the time – two pairs of sneakers appear virtually identical, but due to one small tweak, there’s a $1000+ differential in market value.
Take the Air Jordan 1 “Colette” for example. That's a special pair of Jordans made in limited quantities to commemorate the closing of the French boutique back in 2017. These sold in 2021 for over $23k with Sotheby’s, though prices are closer to the mid-teens today. Meanwhile, the “Storm Blue” Jordan 1, essentially identical to the Colette, but missing the “1992” and “2017” printed on each pair and the “Bonjour” and “Au Revoir” on the outsole, sells for approximately $500-700, depending on size. Minor differences in appearance, huge differences in value owing to story & scarcity.
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For another example, look at the Jordan 3 in “Fire Red” and “Varsity Royal” colorways. These are roughly $250 sneakers on the secondary market. Now take their very similar looking counterparts made in collaboration with DJ Khaled in very limited quantities. These are $5,000 sneakers, give or take a grand. Both were released in promotion of one of the artist’s new albums, and whether you’re a fan or not, it’s clear that the combination of his promotional capacity (24mm Instagram followers) and extreme scarcity (more on that next) can make all the difference in market values.
The main takeaway from these examples: aesthetic alone is not enough.
And what about backstory? Consider two Jordan 1 Retro releases from 2016, one in a black and red colorway, the other white and metallic navy blue. Both were colorways dressing the original Jordan 1 way in 1985, but the black and red colorway sells for 3-4x the metallic navy.
Why?
Well, that black and red colorway is better known as the “Banned” colorway, and it epitomizes the mythology of the Jordan 1. Nike expertly marketed the Jordan 1 in that colorway as the sneaker banned by the NBA; Jordan had, in actuality, worn a black and red Nike Air Ship in garnering a reprimand from the league, as black was not a primary uniform color for the Bulls. Still, the marketing worked wonders, and the “Banned” Air Jordan 1 remains among the most sought after today.
Collaborations can also enhance the richness of a sneaker’s storytelling. Whether it’s a brand collaboration with a retailer, an artist, a designer, a celebrity, or another brand, the sneakers are usually developed to fit a certain theme or concept. Speaking of concepts, let’s use the sneaker retailer Concepts as an example. They’re considered a master collaborator, having worked with several brands on countless well-regarded sneakers for over a decade. Concepts, which hails from Boston, is perhaps best known for their Lobster Nike Dunk SBs. The first of those pairs, the Red Lobster, was released in 2008, and was designed to evoke imagery of the New England lobster bake. That first pair has inspired several other “Lobster” colorways, becoming an icon in the process. The Red Lobster frequently sells for over $2,000, while the Yellow Lobster, which debuted a year later in lower quantities, now costs more than many cars. The collaborator, the theme, the sneaker model, and the reputational success that followed all contribute to a rich story here.
Were the sneakers released in limited or large quantities? Are they making their way to feet, thereby reducing the supply of deadstock pairs? Or is there still a huge volume on StockX and GOAT?
All else equal (aesthetic included), scarcity is often the difference between the next four-figure flip on StockX and the bricks sitting in the sale section. This is a familiar factor for connoisseurs of any collectible. People want what not everyone can get. And while it’s just one piece of the puzzle, limited quantity releases can do a strong favor for secondary market prices, so long as the other pieces of the puzzle are sufficient to generate demand well in excess of that reduced supply.
But the scarcity story doesn’t end at release. In the immediate aftermath, it bears watching if a given drop was devoured by resellers without strong underlying collector demand. This means fewer pairs ending up on feet. If that’s the case, the deadstock supply available on the market will remain elevated, and prices will drop to meet that weaker than expected demand. Conversely, satiated end-user demand in the immediate aftermath of release will reduce deadstock supply quickly, potentially yielding larger future price increases.
A recent example would be the Air Max 90 “Infrared” release from late 2020. Despite being a high-volume release with muted flip potential, pairs found their way to StockX and GOAT in droves. As it was not a particularly difficult pair to find, the price fell from the mid-to-high $100s towards $130 a few months after release, a $10 discount to retail. With some of the deadstock supply being thinned out of the market, the sneaker now sells for more than $200. The 2015 release of the same sneaker eventually worked its way in to the $300s before news of this 2020 drop broke (we'll explain this risk shortly).
Does the sneaker resonate past the realm of the sneakerhead niche for myriad reasons?
Jordan sneakers aren’t popular solely because Michael Jordan was really good at basketball or because they’re cool-looking. They’re popular because he was really good at basketball, he’s a global icon that transcended sports, he made Nike into a global phenomenon wearing their shoes, the sneakers are a bedrock piece of street fashion, and their must-have, sometimes unattainable nature fueled further must-have, unattainableness. Those are merely a few reasons, but a run-on sentence can’t run on forever.
Before Kanye West went fully off the rails, the Yeezy Prototype became the most expensive sneaker ever sold at $1.8 million. Again, speaking about the status before the meltdown, it was a sneaker that sat uniquely and historically at the intersection of music, culture, fashion, business, and sport, both because of Kanye himself when at his best and because of everything that followed for Yeezy sneakers with Nike and Adidas.
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Or consider the Dior Jordans that released in 2020. Sure, sneakerheads alone would have made this release a smash-hit, but it was the notable intersection of sneaker and streetwear culture with high-fashion, two worlds growing ever closer in recent years, that attracted interest beyond sneaker-centric blogs and IG pages.
Is Nike going to re-release this sneaker frequently, or is it permanently one for the archives? Will are-release tank value due to the new supply, or draw attention to the OG?
Considerations here can be a bit tricky, particularly in an era when “retros”, re-releases of old models, comprise such a large portion of key drops. So, collectors are left to ask, as they purchase an “OG” release of a model, whether future retros will be a detriment to their asset’s value, or conversely, if those future retros serve to amplify the importance of the OG. The latter is best evidenced by the massive values of good-condition, 1985 Air Jordan 1s. Those originals command tens of thousands of dollars even though the Jordan 1 is one of the most longstanding, consistently released sneakers on the market. In this case, the OG’s value is boosted by the reverence for its standing as a foundational piece of sneaker culture, in addition to the rarity of examples in good condition given the passage of time.
On the flip side, a Jordan 11, which is among the very most beloved Jordan models, in its OG form from the 1995 release doesn’t fetch much more than double what a retro released in 2019 or 2020 commands on the secondary market.
Renowned collaborations aren’t immune to re-releases either. The original Animal Pack Air Max 1 release from Atmos and Nike in 2006 garnered prices over $2,000 on a fairly consistent basis….until 2018, when the sneaker was retroed (retro’d?). While sales of the original are infrequent fifteen years on, they’re certainly no longer consistently in excess of $2,000. Meanwhile, the 2018 release goes for $300-500. Not to pick on Atmos, but the 2007 release of the Atmos Elephant Air Max 1 effectively halved in value from $1,500 when the sneaker re-released in 2017. That’s not to say that the OG maintained in good condition can’t one day sell for multiples of the more common re-release, but that’s not a certainty today.
Certain sneakers have become part of borderline folklore, and therefore its hard to see how a re-release would be anything but detrimental. For example, Nike Yeezy releases have attained a premium of sorts due to the low likelihood of Kanye ever coming back into the fold with the Swoosh. The Staple Pigeon Dunk is one of the most memorable sneaker releases of all time, due to the ensuing riots and the portrayal of said riots on the cover of the New York Post (talk about a rich story). While variations and approximations have released, the luster of that historic sneaker moment would be tainted by another release. And so, the sneaker is worth close to $50k.
While not an unmitigated death-knell to sneaker values, the likelihood, implication, and timeline of a potential re-release must be considered in relation to the intended holding period.
Are trends, whether fashion, cultural, or otherwise, going to drive new demand to previously disregarded models?
The case study here is a simple one. If you believed that Nike Dunk SBs were going to come back into vogue before 2020, or better yet 2019, you stood to make a lot of money. As part of a years long strategy to make the Dunk highly coveted, Nike brought the frenzy to a crescendo in 2020, delivering millions of Ls on the SNKRS app to a mainstream public suddenly rabid for the sneaker. Whether it was the Ben & Jerry’s Chunky Dunky, the Grateful Dead pairs, or Travis Scotts among many others, nary a week went by in the sneaker world without a Dunk dropping to great acclaim.
What’s important for this discussion, though, is that the rising tide of the Dunk frenzy also lifted the boats of Dunks released in years past. The Newcastle Brown Ale Dunk, released in 2008 for $90 and a $300 sneaker as recently as 2018, tripled to over $900. The Heineken Dunk, released for $65 in 2003, traded for around $900 in 2018. In 2021? It was a $4,000 sneaker. The Purple Lobster Dunk SB by Concepts is an even more recent example. Released in late 2018 for $130, the Purple Lobsters spent the first half of 2019 below $400, breaching $600 by the end of that year. Today, sales are often above $1,500. If you managed to get this pair at retail (it wasn’t the hardest drop of all time), kept them on ice, and sold today, you would have achieved a return of over 1000% in under three years. Even if you missed at retail and felt the Dunk wave building at the end of 2019, you’d still be looking at 2.5x.
The 2020 Dunk wave is an extreme example, but still, the sneaker market abounds with tales of well-theorized bets on future demand growth for certain pairs.
This is a tricky one that also underscores a significant risk in sneaker investment. As a sneaker approaches the later stages of its lifecycle, there are pushes and pulls on value. On the one hand, the longer its been since a sneaker released, the fewer deadstock pairs will exist as more and more pairs find their way to feet over the years. This could have a favorable effect on values as supply dwindles. However, on the flip side, demand could also dwindle as the sneaker drifts further from the mind of consumers and younger generations demonstrate little interest.
Furthermore, and perhaps more importantly, many sneakers begin to decay or deteriorate in condition after a certain number of years have passed. Of course, once that happens, the value is detrimentally impacted considerably. Some sneakers can cruise past a decade or even close to two decades with no issue, but others might fare worse, particularly if stored poorly. This presents great risk. Those looking to move sneakers on at a profit should take care to act at the appropriate moment in the lifecycle, when there is still demand from buyers eager to put the sneaker on foot, and when there's little danger that the sneaker will effectively disintegrate on foot. That's a delicate balancing act, and it's a relatively unique one for the asset class.
It's also worth noting that if sneakers are carefully preserved and appear pristine and intact, some collectors will have little issue purchasing them, as their intent is not to wear them but instead to display them. However, that typically only applies to very high-end, very collectible, very significant sneakers.
The sneaker market has grown so significantly in part because it's so much easier than it used to be to buy and sell sneakers. Thanks to the rise of resale marketplaces like StockX and GOAT, the experience of buying a sneaker on secondary markets is effectively the same as buying one at retail. Selling them on those platforms is similarly straightforward, though costly for low-volume sellers (typically a 10% fee, in addition to payment processing at 3% and shipping). eBay, the forerunner in online sneaker commerce, has recently dedicated greater resources and attention to its platform, and it remains a popular arena even if not the leader it was once perceived to be. Any of those marketplaces are generally beginner-friendly, reliable places to start, and each offers some level of authentication for those purchasing sneakers.
Consignment services like Stadium Goods and Flight Club (owned by GOAT) can also be leveraged by sellers looking for higher-touch service, and they boast strong and rare inventory for buyers as well.
At the ultra high-end, premier auction houses like Sotheby's, Christie's, and Heritage Auctions have begun to offer rare sneakers both at auction and in buy-it-now formats. This has the potential to introduce sneakers to new, affluent audiences, and it positions the sneakers included in sales as premier offerings. Of course, one can expect that listing with these houses may not be the most cost efficient way to sell, given the marketing and fees associated. A buyer may pay $5,000 for a pair, but at least $1,000 of that (25%) is likely going to the auction house in buyer's premium.
If live negotiation is your thing, many cities around the country host large sneaker events and conventions at which collectors come together to buy and sell sneakers. This can often be a convenient way to transact, removing middlemen, shipping, and other processes from the equation, but it can also be both time-consuming and frustrating should the haggling prove difficult.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
When used in reference to market dynamics, liquidity is the efficiency or ease with which an asset can be liquidated (put differently: sold for cash) at market prices or without significantly impacting market prices. Markets that are liquid are characterized by very active participation from a large number of parties. The stock market, for example, is generally said to be quite liquid, as participants can very often liquidate their holdings at or very near to the prevailing market price. This is not necessarily true of all stocks, but for the purposes of illustration, consider the well known, mega cap names like Apple, Alphabet, or Microsoft.
An illiquid market, then, is one without active participation and a large number of participants. In this type of market, where liquidity is low, you might expect that when you want to liquidate your asset, you may have to do so at a significant discount to prevailing fair market value in order to entice a willing buyer. In effect, you’re making a tradeoff between the value you’ll realize and the speed with which you’ll realize it.
Liquidity can play a significant role in a collector’s success or failure in realizing optimal value for their collectibles. Many collectible markets are beset by low liquidity, and that’s especially the case in times of stress, but relative to more efficient markets like stocks, liquidity is persistently quite low.
Consider what you have to do to sell a collectible asset. There isn’t an active exchange that operates with specific hours that sees millions of traders ready to do business. Instead, you have to list the asset, either with an auction house or on a marketplace, and you either wait for the auction to end, or you wait for a buyer to surface. Sometimes this can be quick and painless, others not so much. Under regular circumstances, you might hope that your asset transacts at the same level as a recent transaction for an identical or near-identical asset. This would be the hope in times of higher liquidity.
In times of lower liquidity, sellers have to settle for whatever their asset will fetch at auction or whatever offer they receive if they’re motivated to sell, and generally, that will be at a lower price relative to recent results. When various collectible markets were melting down in the summer of 2022, there were still sellers motivated to liquidate their assets against a backdrop of low liquidity. The buying pool was growing smaller and less motivated each day. More than ever, yesterday’s price was not today’s price.
While fractional collectible markets are intended to function more like the stock market in structure, the young age of the concept and the marketplaces means there isn’t nearly the same sizable audience, and that audience isn’t nearly as active in trading. So, much like in regular collectible markets, when things go south, the impact can be amplified by low liquidity.
For example, shareholders in an asset may see that an identical asset just sold for $60,000 at auction. Seeking an exit from the asset, they may place an ask for a share price that values the fractional asset at $60,000. Due to low liquidity though - a lack of bidding activity - there may be no interest whatsoever on the buy side of that transaction. So, the seller is then forced to lower the price if they want out, and there are no guarantees as to what level (if any) may motivate buyers. In a more liquid market, there might be a larger pool of buyers more quickly motivated by a disconnect in value between the fractional asset and its real world counterpart.
In the absence of solid liquidity, fractional shareholders may be forced to hold onto an asset they’d prefer to liquidate, rather than realize a significant loss that values the asset well below the market.
Illiquidity can introduce many challenges for any asset class. In some asset classes, illiquidity is a forced constraint, as vehicles like hedge funds and private equity funds have differing liquidity parameters allowing customers to redeem quarterly (in the case of hedge funds) or after as much as 10-15 years (in the case of PE).
There is no imposed constraint in collectibles, but perhaps collectors would be wise to impose constraints upon themselves in certain cases. The illiquidity in collectible markets means that timing sales is perhaps even more important than it is elsewhere. Liquidating assets in times of stress can create dramatically different outcomes than doing so in more stable moments, often for the worse.
It can also make evaluating sales and sales data challenging. Outlier sales may result from moments of very low liquidity, and that can make it difficult to understand the value of one’s asset and how it performs over time.
Liquidity in collectible markets is consistently improving and has improved leaps and bounds in recent years. These markets are the most liquid they've ever been. Significant investment has flowed into collectible markets, leading to competition and important innovation. More than ever before, it’s possible to purchase and sell collectible assets with reduced friction, and stakeholders continue to reduce that friction. For example, markets now boast a greater frequency of auctions, more marketplaces, vaulting services, lending solutions, fractional investing, and more. Essentially, innovation is focused on lowering the various barriers to transacting.
Ultimately though, while those measures are indeed helpful, at some point, improved liquidity will rely mostly upon increased participation. The degree to which that occurs is anybody’s guess.
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Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
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Common among most, if not all, collectible alternative assets of significant value is one key trait: scarcity.
When something is scarce, that means it’s deficient in quantity or number compared with the demand for the asset. Simply put, demand exceeds supply, and when we’re talking about valuable collectibles, the gap between the two is quite large.
Scarcity lies at the root of the most basic economic principles guiding collectible market values. When there’s minimal supply of an asset relative to strong demand, the potential for high prices is strong. The assets that are everywhere (think the general release sneakers, the base sports cards, the commercially-produced art prints) have supply that satiates demand fairly well...or even overdoes it. Those values are generally tame relative to more scarce assets in each category.
That’s why present-day collectible manufacturers aim to create scarcity - or at least the perception of scarcity - when developing and marketing products….but we’ll get to that in a bit.
It’s chiefly the demand component that differentiates scarcity from its oft-used and oft-confused sibling, rarity. An item that is rare is seldom occurring or found. There’s nothing in the definition that describes quantity in relation to demand.
An item can be very rare without being scarce. If there are very few of an item in existence, but demand for the item doesn’t overwhelm supply, that item is not scarce, just rare. Conversely, an item can be scarce without being rare. For example, if Nike releases a sneaker in quantities of 200,000 in the US, but demand far exceeds that supply, you’d call that sneaker scarce. It’s not rare - there are 200,000 pairs in the country, and likely hundreds of thousands more that are very close in appearance.
The two words can very often be used interchangeably without issue, and very few will call you out for mixing them up (we won't!) - just know that there is a difference, albeit slight.
Some items are said to have natural or naturally-occuring scarcity. That’s the type of scarcity that develops when, often due to the passage of time, supply of an asset naturally becomes extremely limited relative to the demand for it. It doesn’t have to be due to time passage either - some resources are naturally scarce to begin with. Think precious metals or gold. Natural scarcity can also develop due to overconsumption.
Now, the definition of natural scarcity might be a bit more flexible for collectibles than it is elsewhere. When talking about collectibles, it’s usually the passage of time that leads to an item’s scarcity. Take vintage baseball cards for example. When many vintage baseball sets debuted, while there was an element of artificial scarcity (more to come on that), the coveted cards weren’t nearly as scarce as they are now. But, over time, those cards were lost, thrown away, damaged, or otherwise compromised. Most pieces of cardboard would fail to survive over the course of decades or even a century. Their scarcity today is more naturally-occurring then.
Or take fossils for example. There was a time when woolly mammoths wandered the earth en masse. Their tusks were not scarce then - there was no demand. Fast forward thousands of years after their extinction, and they still weren’t as scarce as they are today. Precious metals and oil miners cast the fossils they found aside, unaware of their value. Today, the number of surviving tusks in museum quality condition is scarce, not because somebody decided they should be, but because natural factors made it so over the course of epochs.
We’ve established that scarcity can lead to increased values for collectible assets. Modern manufacturers of collectible items recognize this reality, and they capitalize on it. It took time to build that recognition though. For example, the sports card industry went through the “junk wax” era of overproduction; when customers realized how many of the cards were out there and how little value they held, many stopped buying entirely, crippling the industry for many years.
Today, brands across various collectible categories pursue a strategy of “artificial scarcity.” What does that mean exactly? The manufacturers release a limited quantity of highly-desired product, so that demand far exceeds supply. They’re effectively creating scarcity. In some industries, like sneakers for example, the frenzy to secure the product conveys the image that the brand is hot, trendy, and coveted, offering momentum and demand to even the non-limited product. In cards, manufacturers create “chase cards,” the low-numbered parallels that consumers will desperately seek by buying pack-upon-pack, box-upon-box, and case-upon-case of product.
These products are scarce solely because someone decided that it should be so. Often, the strategy works, so long as demand is maintained. To some outside of collecting spheres, the results can be astounding. A card executive decided that a black parallel of a sports card should be a 1-of-1, so that card is worth $100,000, while another piece of cardboard featuring the exact same image but without the shiny black look is worth $10. A pair of “Chicago” Jordan 1 Highs sells for $500, while a Jordan 1 Mid with a near identical colorway sells for $135 or less.
It takes some suspension of disbelief on the consumers’ part to enable artificial scarcity to take hold in prevailing market prices. If consumers broadly decided “there’s nothing special about this card, there are actually tens of thousands just like it” or “I actually prefer a mid-top sneaker over a high-top,” these assets would be more rare than scarce. Alas, that’s not how these markets function, and it’s hard to see that changing dramatically in the near term.
At least when talking about collectibles, natural scarcity arises when organic circumstances or the passage of time create a significant supply deficit relative to demand for an asset. Artificial scarcity, on the other hand, is typically created from intentional human intervention and decision making.
Importantly, an artificially scarce asset is often at some level of threat of its scarcity being reduced by other decision making. More of the asset could be produced, and even if there’s a preference for the original, this impacts scarcity and value, while also raising the barriers to understanding what makes the “original” scarce. If they’re not at threat of greater quantity being introduced, they might be at threat of consumers reducing demand by considering alternative, less scarce options and holding them in similar esteem.
Generally speaking, naturally scarce assets do not face the same threats. The supply is less flexible (in reality, it should be totally inflexible), and potential substitutes are far less comparable or completely inauthentic altogether.
Not necessarily. There is perhaps a slightly lower level of risk associated with naturally scarce assets; the supply side of the equation is under less threat. Ultimately though, both types of scarcity are - to some degree - subject to the whims of the demand of the collecting public. Many artificially scarce items are currently among the most popular, particularly with younger generations. Most important is that a savvy collector understands which scarcity applies to their asset of choice and is fully aware of the risks associated with that asset.
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