Jay Benach’s Law of Three Hundred Thousand

I recently met an intriguing philosopher named Jay Benach who, when not starting Internet companies, roams the streets of New York City. 

In the course of a conversation over a few ginger ales, Jay enlightened me about the Law of Three Hundred Thousand.

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When Jay was a kid, he was a comic book collector.  While he could not always predict which comic books would massively rise in value, he could usually predict when a comic was going to be worthless.  He figured out that there were about 300,000 people that read American comic books.  Whenever a comic printed more than 300,000 copies of an issue, Jay knew that the value of that issue would be close to zero since there are only so many comic book readers and every additional comic is just going to speculators (or to the readers buying two and three copies).

So sometimes a new comic book series would start and the publisher would print a boat-load of copies of the first issue, the issues would be bought up quickly, prices would initially rise … but they would inevitably crater.  A classic bubble and pop phenomenon. 

Every market has its own law of three hundred thousand – where the exact number of “readers” changes but the idea remains the same.   Oversupply feeds speculation and leads to massive downturns later on.

In some ways, the housing market followed the law of three hundred thousand.   Too many of the same type of houses were built in an area that not enough people wanted to live in (or afford).  

But the law of three hundred thousand is most apparent in the collectibles market.   When people start buying something (whether it is Beanie Babies, wine, art, etc.) purely because they think it will go up in price and not because they enjoy consuming it, then expect a big bubble and big burst.   Essentially, for a collectible to have sustained value, people need to “buy and hold” it rather than have a trading mentality toward it.

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