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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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"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
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.
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.
I tend to agree with you. I had similar problems when my kids got into the Marvel Super Hero Squad figures, which were aimed at younger children. I was excited because it seemed like a great way to introduce my kids into something awesome, but some figures were impossible to find, unless you went online and paid 2-5 times the retail price from collectors.
We've had similar problems with other toys. For my money, these guys are asshats.
-- Sent from a computer.
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...