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Investing In Lego Bricks For Fun But Mostly Profit
First time accepted submitter theideabulb writes "Just as stock investors have portfolios of all different sorts of stocks, Lego investors hold massive collections of Lego sets and can make annual profits that beat stocks. This article is a looking into the world of the little plastic brick that makes money for LEGO fans and a website that helps track peoples' collections to help them track their profits."
... but these people haven't made a "profit" until they have SOLD their holdings.
Who to? Other investors? What if they all sell at once?
Are you listening?
Plastics
There's a great future in plastics. Think about it. Will you think about it?
I'm sure it worked well when there were only a few people doing it, buying the collector's edition sets and selling them when they're no longer available, but once this kind of information about an imbalance in the market hits the news (as it just has) then you'll see a whole bunch of people pile into the market. They're all speculators. The price goes up. It's a bubble. The first people out "win" and the rest lose money. It's such a scam for them to talk about it in terms of annualized returns. That makes it sound like you can do this over and over every year. This is just market prices changing, and they tend to correct quickly. If you're thinking of getting into this market, I caution you it's a very bad idea.
"I have never let my schooling interfere with my education." - Mark Twain
I think if Beanie Babies have taught me anything, it is that toy collecting is extremely volatile, and if people think they can buy something for collecting or investing, chances are, it will never increase significantly in value.
As for this article, being that it came long after many "investors" have bought their stocks, it smells oddly like just a run-of-the-mill pump-and-dump scam. Except that instead of posting it on obscure investment "advice" sites, they used the Lego brand nerd attraction to post this BS somewhere mainstream.
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Lego regularly release themed sets, they're not around for a huge amount of time. These people buy them all up as soon as they're out preventing children from discovering them until they're all gone. Kids don't sit monitoring websites for product releases, they see something a friend may have and get into it, they then get excited and try to find out more about them, see the product on Lego's site, and then get upset it's no longer available except for triple the price on ebay or amazon affiliate stores. Net result, parents says "sorry kid".
This article has several spelling and grammar errors. It could use some editing. Call me an elitist, but I distrust the veracity of sources that can't get the language right.
"These things are gold," Jeff says.
A huge mistake in that comparison.
Gold is produced by a zillion miners all over the world at a more or less long term stable labor cost
Gold can be repurposed / recycled / remanufactured pretty much infinitely
Gold at least fundamentally has a long term "drain" to the market in industrial processes and electronic connectors, etc, and a medium term "drain" as in give a girl a piece of gold jewelry and it "probably" won't be melted down for a lifetime or at least a little while anyway. So the market has both a source and a drain (no gate, so its not a FET (sorry)) and its got both short liquid traders and long term non-liquid owners. Those combined make a stable long term market.
Lego is the opposite of all of those characteristics of gold. For example, nothing stopping Lego Inc from buying short futures on the price of the classic millennium falcon, and shipping a million $50 made-in-china clones imploding the price, making serious bank off the futures and selling new identical sets to all the suckers.
He is correct that lego from an inflation standpoint is an adequate stand in for any other generic commodity. It is, fundamentally, a refined petroleum product. Made out of oil, shipped by oil... So on a long term basis should track oil, more or less. The imaginary govt propaganda inflation numbers don't count energy prices in order to keep the figures low... no great surprise that an oil surrogate product is rising in price faster than the propaganda inflation number. For a very small time investor its a pretty good commodity oil surrogate, can anyone think of a better one? Better as in a more "pure" surrogate or higher weight/volume cost density?
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
It's LEGOs ffs. How cool is that?
because you're selling used items, the profits are untraceable! no taxes! take that 1%ers!!!!!!
This is the same as other collectibles like Beenie Babies or Magic: The Gathering cards. Yes you can make money at it but it is a tiny market and carries a lot of risk, particularly inventory risk, liquidity risk, and demand risk. It's one thing to buy Legos at wholesale and sell at retail. It is quite a lot more difficult to make money trading on volatility and relative scarcity. Furthermore this only works if there is a relatively small number of people doing it who have knowledge of the market that is not widely known. If it becomes a Beenie Baby craze, people will jump in and turn it into a bubble that will inevitably pop.
Toy trains are a much better long term investment. People have been trading them since Lionel started producing them, and today's manufacturers understand that limited editions can sell new for huge margins as long as they keep them truly limited, with documentation to back up how many are made, etc. That's the key. The only way the secondary sales market will survive is if the manufacturers get their piece of the action too. I don't see where Lego is really doing that, except for the crazy-expensive kits that are just for show in the stores.
It's a lot like the art market, where signed numbered prints are the only ones that have any value. There's nothing stopping artists from cranking out millions of prints, but they understand that the secondary market wants scarcity.
"Well, good luck finding a judge that doesn't run a bestiality site."
Barbies apparently do appreciate in time, but it's because they intentionally manufacture limited runs/editions. Not so Legos: if something is selling well, they make more of them. You can still buy brad new Death Star kits.
My sister used to buy Barbies for my niece, and I came to visit once, and there were these boxes of barbies over her bed. She had never been allowed to take them out and play with them. hat day, I immediately went down to the store, bought several + outfits, and ripped them all open, stuffed them in a cardboard box so nothing remained of the original wrapping, and brought them over to my niece so she could finally play with the damn things. To this day, I am her favorite uncle.
It's OK to invest in toys for known to be limited runs (i.e. generally not Legos, whose meaning for "Limited Edition" is "sold only at the Lego store and one or two other chains, not everywhere"), but don't torture your kids with the things, that's all I've got to say.
You invest in something that can create wealth.
You speculate in something whose market value might change.
LEGO sealed off in a tub doesn't produce wealth. Speculating in the LEGO market isn't investing.
LEGO does have value, because it is fun and educational, but only in the quantities that you are actually using.
-Dave
Yes its true a lot of toys can be sold for a profit later on. Like say some transformers you paid 50 bucks for in the 80s are now worth 200 bucks, thats a good profit. But is it really worth buy every toy, waiting 30 years or more in the hopes you can turn your 50 dollars into 200 dollars? That is a incredibly poor investment if it takes you 30 years to earn 150 dollars.
Then you have things like beanie babies that were on fire and sold for mad money and suddenly one day they arent worth shit and no one cares about them anymore. If you invested in them, especially at above msrp you screwed yourself.
Bottom line is if you use toys as investments youre stupid. You should buy toys because you enjoy them, not because you hope they might one day send your kids to college (unless you have a 1 in a billion toy or just a insanely large collection it wont send your kids to college). Its a bad investment. Investing in rare earth metals, old graded comic books, a good chunk of money in a bank with a good interest rate and so are are far more dependable and will net you more money for your time.
Reminds me of when Image Comics release all those #1 issues. A $1.95 issue was instantly $10 (or more) for no supply-and-demand reason. And then I walked into Wal-Mart and saw bags of mint condition #1 issues for less than cover price, all over the place. So much for scarcity. Image Comics had sold a lot of their print run to Wal-Mart, who thought a four-issue mini-series would come out in four months, not two years. Suddenly, after the #1 issues had all been grabbed up by speculators, Wal-Mart finally bagged up all four issues of those first mini-series from Image Comics and flooded their stores with cheap #1 issues. The comics industry has never recovered from the speculator implosion that came after that. Word to the wise!
They're saying the "sets" of Lego become valuable.... So, the damned cardboard box? I mean, let's say I have many sets of Legos: I see a new rare "set" I don't have, so I just use the other sets to create the same thing that's in the rare Lego set. Now, if that collection of parts didn't just increase in value to become as valuable as the rare set, then what these folks are investing in isn't Lego it's Lego Packaging.
Even the newer sets with different shaped pieces for space ship cockpits or different colors or with little magnets they had several different sets all made of the same pieces. A number of not-valuable partial sets could be made into a "rare" set. It seems to me these fools are ignoring what even makes Lego interesting, and are instead valuing the damn boxes like any other toy collectors are wont to do, e.g., with figurines.
Suddenly, "Investing in Toys with Pristine Packaging" sounds a lot less desirable. Now, if they actually got together hacker-space style and charged entry to a giant evolving Lego city you could build in, THAT might be an interesting way to make money with a huge Lego collection...
It's the unique pieces per set, that you're undervaluing even though you kinda mentioned them, combined with availability, that makes the set go up in price. LEGO has done a very good job (from their point of view) of making pieces unique. You can even buy a single pack of a unique LEGO figure for about $3 retail, but which one you get is a mystery (unless you read the bumps on the bottom of the packet which is a PITA) and some are worth more than others. So it's not the box at all, it's about the unique pieces that only exist in a certain set. I have a 5 year old and my wife has become a LEGO addict after buying him his first lego sets. Right now we have the $150 Pet Shop on order and it should be here next week. And that, btw is retail price and IIRC comes out to about 6 cents per brick so it's a nice set. In a year it will easily be $200+ set, which it sells for right now at a few places, and it sold out in many places and was one set lego not allowed in brick and mortar stores.
I bought a Toy Story Lego train set for $50. Two of them actually, when Walmart had them steeply discounted. My daughter has one she can play with. One is still in the box. They're now selling for $83 on Amazon at minimum. I tried selling it once, got to UPS who wanted $30 to ship it, and promptly cancelled the sale. Amazon charged the customer only a few dollars for shipping.
Sure the price has gone up (or rather, stayed steady since the original price was around $80) but shipping costs make it so that the only one making any money on it is the shipping company.
Not much of an investment when the "gain" will go to shipping it to the buyer.
Work Safe Porn
I'm actually from the UK.
Lego have re-issued sets before, including large/expensive ones, as a "Legends" line. There's also been adhoc re-issues of sets other than the Legends line. All it takes is Lego to do the same again with the few sets that are being ridiculously hoarded and traded at obscene prices for some people (Those who bought early) being left with no gains and some (those who bought in older sets late) being left hugely out of pocket. The more they push it as an investment idea, the more Lego may realise there's demand for the sets to be reissued.
I bought guns and every time the president opens his mouth they spike in value. Best president ever as he's going to let me pay my medical bills without some tax collector sticking a gun in your face.
Something I paid $800 for is going for $2,500 now. One I paid $65 for as 'broken' is now worth $3,000.
You need to have him threaten to ban Legos.
Oh, yea when one of the food blatherers like Eemrill tell your grrrrl that she can cook food in cast iron that'll make his dick hard and her tits perky then cast iron skillets go from scrap metal to $700
My plan was to find the mothers whose kids have moved out and selling the toys, then I'd pick out the valuable stuff. The problem was that there were enough other people doing the same thing the profit margins were low enough to not be worthwhile. Now I just buy the ones I want to play with.
I could see this working as a short term investment, rather than a long term holding. For example, there was an "ultimate collector series" millenium falcon they made (which was huge, much bigger than the set my son plays with) that sold for about $500. If I'd thought about it, I'd have realized it would sell out and that only a couple of years later, it would be worth $1800-2000, for about a 200% to 300% profit. It's not major income, but a small, short term thing that could have generated some hobby funds or something.
The collectors market will certainly disappear, but Lego won't (unless they're foolish and bank on the collectors market.)
Parents will always buy their kids Lego, because it's a fun and creative toy with universal appeal. Your average parent doesn't give a damn about the collectability of Lego, just that it will keep their kid occupied with something constructive.
Does it make you happy you're so strange?
I would bet the entire "article" was created for LEGO. They're on an advertising blitz because they have competition now.
Sure they have franchises. But the Barbie sets are not made by LEGO. Since the patents expired and the lawsuits have been lost, there's lots of competition. Perhaps this will lead to the availability of large boxes of bricks rather that just trademarked sets...
My cotton t-shirt beat the stock market. Most of the non-perishable food items in my pantry beat the stock market. Gold and silver clearly beat the stock market (I am looking at long stretches of time, I never sell). I mean beating the stock market today is not a problem, because the only reason that the stock market is going in the direction that it is going is inflation. People are pushed into the stock market, into the bond market, into housing, all of this is done by the governments today manipulating the currency supply.
Beating these things is easy simply with items that don't make it into the official (reversed engineered to fit the propaganda) inflation calculation formulas.
You can't handle the truth.
BUT, unlike things like Beanie Babies or Barbies, Lego kits can usually be parted out for a reasonable return. There is a value to them beyond just speculation by collectors.
(I am looking at long stretches of time, I never sell)
Selling is the only way to actually make money on the stock market, everything else done on the market is speculation. If you never sell, you have invested but never made any money. I'm sorry that your dogma has caused you to fail to grasp even this most basic economic concept.