I've got a time machine and $800

Here's the situation.  The year is 2010, I have $800 and a time machine.  The year 2010 is when I bought my comicbook price guide, so bear with me.  Unfortunately, since I'm on a budget, I bought my time machine as a "scratch and dent" model so it will only go back 8 years.  Now I'm a really big comicbook fan, so I set my time machine to transport me to a really big comicbook convention in the year 2002.  I figure Spiderman comicbooks are a good safe bet, so my plan is to spend my $800 on some Spiderman comicbooks at the convention and then zip back to the year 2010 with my investment. Hopefully, I'll choose the right comicbooks.

But now the big question:  What do I buy?  Should I spend my $800 on one really important comicbook in low grade?  Or maybe a somewhat important comicbook (or two) in mid-grade?  Or perhaps I should buy a really mint version of a not so important comicbook.  What do I do?

Here are my choices:

1.  I can buy a "good" copy of Amazing Spiderman for exactly $800.  This agrees with the 2002 price guide loaned to me by a friendly dealer.  This book, in "good" isn't really that good at all.  A good comicbook looks pretty rough, but it is still intact.  Hmmm....It would be nice to have a Spidey #1! 

2.  Or, I can afford two comicbooks in Fine, like a Spiderman #5 in Fine for $414, which is an early Dr. Doom appearance (a really cool bad guy) and a Spidey #6 in Fine, which is the first appearance of the Lizard (another cool bad guy), for $375.  I'd still have enough change to buy an overpriced lunch for my $800.  These books look better than average, but they still show some wear.

3.  Lastly, I could spend my $800 on a Near Mint copy of Spiderman #17.  This is the not-so-important second appearance of the Green Goblin (yep, another cool bad guy).  By guide, it is a $875, but the dealer gave me  a 10% discount.  I figure maybe I can pass on that savings to the next guy and sell it for 10% off when I get back to the future (pay the good Karma forward).

I think I'll take option #2.  I figure I may as well take the middle of the road option by buying the two comics in Fine condition since I don't know the outcome.  Note that I'm careful to pay the dealer with currency dated before 2002 so as not to arouse suspicion. :)

Now I jump in my time machine and go back to the future to see how I did with my new purchase.

Option #1 is now worth $1500

Option #2 is now worth $636 plus $513 for the #5 and #6 respectively, totalling $1149.  Say $1170 after factoring the lunch money that I could have invested in something other than a hotdog.

Option #3 is now worth more than $2000.  I don't know exactly how much because the 2010 price guide only goes to a low end Near Mint grade.  Even with the 10% discount I need to give it for the sake of fairness (or Karma), I'm sure it's worth more than $2000 in the slightly lower (but still very high) grade.

So what can we conclude?

The return on our investment is a kinked line, like a "V" or a "U" where the Y-axis is return on investment and the X-axis is grade and I chose badly by selecting the middle of the curve.  It seems that it is better to spend a set amount of money either on a very key item in low grade, or a somewhat key item in a very high grade.  This is probably because collectors want items that are very key, even if they are in low grade, or the items that are in very high grade, even if they aren't as important.  Oh, and for the record the better collectibles in this scenario averaged around a 10% return.

So, does this work with other collectibles?

Quickly, here's a scenario:

In the 1990 Redbook price guide, $65 will either buy you: 

1.  A very rare "key", but very worn 1914-D cent in Good (low grade).

2.  Six Fine (mid-grade) 1910-S (semi-key) cents at $10 each with $5 left over for lunch. (or 6.5 coins if you want to think of it that way).

3.  A Choice Uncirculated (MS-63) 1919-S cent...(an uncommon but definitely not key coin).

How do those do in the 2012 Redbook Price guide?

1.  The 1914-D cent guides for $215.

2.  The six 1910-S cents (combined) guide for $143 after figuring in a similar return for the lunch money.

3.  The 1913-S cent sells for $275.

The average return on the best two selections in this example is about 6.2%.

Note that the selection of the coins was somewhat difficult due to the fact that the price of a low grade key coin and a mint state coin was so high relative to the price of a mid-grade more common coin.  It took many mid-grade coins to be equivalent to the amount you'd spend on one nice coin and the 1914-D isn't even the absolute key of the series! The comics, on the other hand, were all fairly key.  In effect, the division line between key vs. non-key coins is more obvious than it is with comics; possibly due to the fact that comics are keys due to their content/popularity, rather than their production numbers. (i.e., with coins, it's obvious if you have a key or not, but with comics, the transition is more subtle).

Regardless, low grade and key or high grade and non-key trumps mid-grade semi-key material most of the time for the same dollar value.

Collector Steve