Rotational Leadership...what it is and how a cool head can profit from it

As you know, price resistance plays a major role in shaping the prices of collectibles.  Closely related to the concept of price resistance is the concept of rotational leadership.  Rotational leadership is what occurs when you have two equally desirable collectibles within a price resistance grouping.  With rotational leadership, two, sometimes three collectibles will take turns in the price leader role within a collectible genre.  A great example of this are two comic books, Issue #27 of Detective Comics and Issue #1 of Action Comics.  Detective Comics #27 the comic book where Batman first appeared.  Action Comics #1 is the comic book where Superman first appeared.  Both of these characters are popular among the collecting faithful, though Batman may be a bit more popular. (Come on, Batman is pretty cool, right?)  Action Comics #1, however, is a ground-breaking comic book, because Superman was the first super hero.  Before Action #1, there were no super heros, including Batman.  So which book is more important?  Which should be more valuable?  The market can’t decide!   Over time, each of these comic books has held the title for the most expensive comic book.  Often, the championship belt for most expensive comic book is worn by whichever comic was the most recent to cross the auction block in high grade.  Once in a while, however, there is a third contender for this throne, issue #1 of Marvel Mystery Comics.  This comic book is the first Marvel Comic book, and also the first appearance of the Human Torch, a very popular comic character.  This comic is in the same general category of rarity and desirability as Action #1 and Detective #27.  So once in a while, Marvel Mystery Comics #1  will hold the title as the most expensive comic book.   All three comics are rotational leaders.

      How can knowledge of rotational leadership help the investor and the speculator?   First, we have to understand that rotational leaders do exist.  Not every collectible genre has a single most expensive item.

     But secondly, it is important to know that a change of rotational leadership creates excitement among those collectors who desire that leader.  For example, when Detective #27 moves into the leadership position, this creates excitement among Batman collectors who reassert their efforts to own the more key Batman issues.  Then a trickle-down effect occurs.  The collectors believe that if the value of Detective #27 jumped into first place with a 10% increase, then surely the value of the almost as rare, almost as valuable issues should increase by almost 10% as well.  This creates a trickle-down or ripple effect that starts at the top and works its way down the collector pyramid and the collectible pecking order. 

     How can we take advantage of this phenomenon?  First of all, if we monitor the high-level comic auctions, if we knew that a high grade copy of Detective #27 was going to be coming up for auction and the current rotational leader was Marvel Mystery Comics #1, it might behoove us to pick up some first-rate specimens of Detective and Batman comics in anticipation of a changing of the guard.  But of course, we should only consider this if other factors are taken into consideration, (i.e., we must not overpay, the comic book must be a truly great book, etc.).  Secondly, even if we were not aware of an auction coming up, it might make sense to buy issues of the non-reigning rotational leader in anticipation that some day the guard will change.  When everyone else is buying Batman, you buy Superman.  When everyone is buying old Gold coins, you buy old high grade copper coins. 

    Rotational leaders do come in and out of favor.  Sometimes, they can go surprisingly out of favor and become screaming bargains.   As long as you can verify that a collectible item is truly a rotational leader, (i.e., it has held the price leadership role more than once), then buying a high quality collectible related to an out of favor leader can be lead to excellent profits.  However, when it is time to sell, do remember to keep a level-head and actually sell, and not get caught up in the feeding frenzy.