When the Saturn V rocket Lego set came out a few years ago, I decided to try this "Lego collector" market. I bought and built (and now proudly display) one set, then bought and stored another in the back of a closet, inside the shipping box. Perfect condition, I figured, for when they stop selling it and it skyrockets in value.
They didn't stop selling it. I think they never will. I'm going to be storing this enormous box of Lego forever.
I did the same. I think you're overly pessimistic so early on. It was released less than 2 years ago, and while I read somewhere (but may be wrong) that the regular production run of LEGO IDEAS sets is 1 year they'll likely stop manufacturing sooner than later, like their other sets.
I bought a few with the idea of keeping them until 2069.
Yes, I just built this from a set received for my birthday. It's a great set! Highly recommended.
However, I already had one, as I like to try and 'hold' a copy of any sets that I think are special.
I tend to collect what I like, mainly Lego Technic, but I think my most valuable set right now is the big Star Wars AT-AT walker, but I have one of the older Ferrari F1 cars, the big Technic crane 42009, etc.
Being originally from Chicago, I remember when the Sears Tower was in the process of the name change to Willis Tower. There was a Lego kit to make the Sears Tower (marked as such) and it was re-released with the Willis Tower naming. I believe we paid $19.99. We bought it purely for nostalgia purposes and keep it on the shelf unopened.
This article caused me to look into the kit. According to BrickLink[0], the average selling price is $148.83 One sold this month for $193
The only issue is there are high fidelity clone sets available from China for all the great old sets. This reduces the market for old perserved sets. Look at AliExpress and Lego, there are 10s of thousands of sales across hundreds of vendors
No there aren't any "high fidelity clone sets". Lepin, the Chinese Lego clone, isn't anywhere near Lego quality.
Hell, even the American building brick competitors aren't as good. You can tell Lego from any of the competitors by feel. By the way they don't hold together as well, etc.
Is it the one with 1969 (!) pieces? According to the article, "sets with a relatively few pieces, up to 113, returned 22 percent per year, almost 16 percentage points more than the group with about 860 bricks in each".
Give it a moment. The 2015 Doctor Who LEGO Ideas set for instance was retired after a bit less than 2 years and is rising in value already. I'm pretty sure, the Saturn V will be retired this year, after the Apollo 11 anniversary.
Just wait on it. My mom bought me a lego ferrari f40 a couple years ago for 100$, it's now going for 200 sealed on ebay. All of the old lego ferrari and Lamborghini sets are going for insane prices now as well.
Just finished building that set with my son. It was a really fun one to build. Printed lettering on the pieces versus the usual stickers was a nice touch.
You would have better luck with the Christmas lego sets. Those really are only printed for 2 seasons (at least so far, Lego could always change it of course).
"Sounds great! So if I am running a $10 billion institutional portfolio how much of it should be in Legos?
">In one extreme case, a kit for Star Wars Darth Revan that retailed in 2014 for $3.99 went for $28.46 on eBay a year later -- a 613 percent premium.
"Uhhhhhhhhhhhhhhh. So the extreme case is making a profit of … $24.47 over a year? I mean, I guess you could buy … a million … of those Darth Revan sets … and … put them somewhere … but … no, I am going to say no, this is not a strategy with institutional capacity. (And you can’t use it as an additional signal in your multifactor general model of what stocks to buy, because they are Legos, not stocks.) I suppose if you are a perverse sort of finance professor though you should be using a factor model to trade Legos in your personal account; let me know—and, more importantly, brag to your students constantly about—how it goes."
At the height of baseball card collecting in the 90's, my best friend's dad went out and bought a closet full of baseball card sets (not classic sets, but sets from the time period). He told my parents he was doing it to save for his son's college education.
Yeah. People don't get this, but what you want to collect is what kids are having fun with today that they'll want to have fun with again when they're older.
Nostalgia and natural rarity. If it weren't for emulators, I'd wager that old Nintendo systems would be the rage right now.
My dad did the same with Magic: The Gathering. It actually would've worked okay (though still probably not as good as investing in an S&P 500 index fund), except that he died, my mom knew nothing about M:tG (or negotiating, for that matter), and she took the first lowball offer from a card dealer she ran across. He made a nice 80% profit off of them, at least.
On the plus side, I had a lot of fun showing off & playing with my dad's "investment" as a teenager.
So, now that there's been an article in Bloomberg, I'm guessing we can expect future events to play out like the comic book collecting market has since it became a thing in the 1990s: A bunch of people try to build up their stockpiles at the same time, potentially driving up prices in the process. Then, in a couple decades, they also try to liquidate their collections at the same time, driving prices down to near 0 in the process.
As a LEGO enthusiast it would suck if LEGO turns to the next tulip (nobody mention the c-word..!), except LEGO can just react to hoarders and ruin the "futures" market.
> In one extreme case, a kit for Star Wars Darth Revan that retailed in 2014 for $3.99 went for $28.46 on eBay a year later -- a 613 percent premium.
Say I'm really prescient, and know exactly which kit to collect.... can I expect to invest 400K and get that 600% return? I doubt it. Sure it's possible for 4$, or 100$, but is it possible at any kind of significant scale?
I worked at toys r us in the mid 90's and snagged a bunch of "rare" action figures. I've been sitting on them for 25 years now. They aren't worth anything more than what retail price back then. My lesson was to stay away from collectibles. It's too much like gambling, may as well take your money to Vegas.
I worked at a competing toy store in the mid 90s also. It always brought me great joy that Beanie Babies ended up being a bad investment. We had to call the cops the day we got our shipment of Princess Diana bears. I'd say about 90% of our BB sales were to adult buyers speculating on huge returns.
Care to share what action figures you held onto? My guess is Star Wars reissue figures from the 20th anniversary theater releases. Maybe some early McFarlane toys? :)
Fun fact: The small toy store chain I worked for is the toy store that Arnold goes to in Jingle All The Way. I make sure to watch it every year for a little trip back in time.
I like buying my kids weird old collectible toys from ebay, usually for about 50% of their original MSRP. I recently snagged a set of early 90s Star Wars action figures for damn near nothing in their original boxes. My kids had a blast opening them.
Yes. This is the problem with this as an investment strategy for anything but hobbyists.
In addition; it would require quite a lot of labor to auction and send all these sets around, as well as paying for storage space. Something which is not accounted for in the 10-20% return figure.
I would have thought depth of market would be the problem.
Presumably no one bought the set, which is why it wasn't selling for very long. If you buy 1000s of sets you run the risk of Lego increasing production to compensate. Second you can't just sell all your sets at once. There might be demand for one set at $28. What about 2? 10? 100? So even with a 'winner' you may be only able to sell them in dribs and drabs, and even then only at an average of $14.
Of course not, it's an insane argument. To end up with a decent retirement fund, say $1.5m, you'd need to buy 50k units and store them for years. Whether you could even get hold of such a large quantity would be questionable, but when it came to shifting them you'd encounter a huge liquidity problem as you single-handedly flooded the market and watched the asking price plummet.
I think the only feasible way would be to use them as retirement income rather than a lump sum, by trickling them onto the market at the rate you needed for your weekly income.
Niche collectible markets can be really fragile. Just a few people interested in a particular topic can skew the price expectations, and then someone trying to liquidate a large collection while prices are high can single-handedly burst a bubble.
> I think the only feasible way would be to use them as retirement income rather than a lump sum, by trickling them onto the market at the rate you needed for your weekly income.
I know of a guy who has inherited an ENORMOUS collection of old hand tools. He's been dripping them into the market via online auction website for well over two years now. Every week he just lists a few chisels, some hand planes, a saw or the like netting, by my estimate, around the average salary.
While this is a good strategy - he gets the fair market value of each and every tool, instead of selling in bulk at a huge discount - this is also almost a job: taking pictures, setting up the auctions, accounting, packaging, and sending the packages, possibly resolving disputes.
> and know exactly which kit to collect.... can I expect to invest 400K and get that 600% return? I doubt it.
You are correct to doubt it: there are a limited number of collectors so as soon as you start selling the supply/demand curve bends away from your favour. To keep the curve in a good place you would need to buy many individual kits (or perhaps one or two of each at most) and there won't be enough good candidates to build a 400K portfolio.
Very few kits will see that sort of return over just one year. I'm guessing not many more will see that order of return over several years, and once you get into multiple years you have inflation to account for when comparing purchase and eventual re-sale prices.
Also, you have the cost of storing the kits and ensuring they are safe from (and/or insured against) damage/theft/etc.
You don't need to only buy Legos. If you diversify across more toys, electronics, etc you can certainly get to over 400k in inventory. I know people selling more than that every month.
Investment markets come in to ruin yet another thing - people who just mix up Lego and play it themselves, now under pressure to keep their sets, sets.
> people who just mix up Lego and play it themselves
Those people (/me waves) aren't going to be ruined by this. The people who mix up their sets aren't particularly interested in the sets, anyway - why would we be, if we're just going to mix them into a giant bucket anyway?
But yes, people who buy sets to build them and display them are probably going to be dinged by this, as people rush out to buy "investment" sets. (My friend is one of these people. He loves to buy sets and build them, and then stick 'em on a shelf. I don't get it.)
I do the same, build them and set them on shelf. Then take them down every few days when my 4 year old wants to play with them. Then spend 20 mins putting them together when he is done with them; he is quite considerate for 4 year old: bircks, or entire sections, will get detached, but he won't outright destroy them; he also love to build complex models together. Currently working on the Tower Bridge.
Maybe it'll go the way comics went; a massive increase in people purchasing items solely for investments, the manufacturers pandering to (or alternatively, taking advantage of) them, and ultimately a massive crash leading to plenty of choice and low prices for actual lego aficionados in the future.
I don't see how you can think of this as a negative thing. We should be celebrating people buying $100 toys for their kids because they know they'll retain (or increase) in market value than $5-10 trash.
It:
a) Reduces waste, since we get re-use rather than disposable plastic that's thrown away soon after its first use.
b) Gives owners an economic incentive to preserve quality toys for generations, thus preserving iconic products.
If you get your kids a "collectible," you're not buying them a toy, you're buying them a decorative box. If you open it and play with it, it stops being collectible and the resale price plummets.
Not quite. You can always part stuff out on http://bricklink.com/ and might get a penny per element or might get several dollars per element depending. Us AFOLs that make MOCs are frequently buying random elements we need for this or that. For example:
To make this Mars habitat MOC I spent about 60$ just to get some of the elements (like the curved tops of the habs, the PV panels and the ISRU tanks) because I simply didn't have the elements or anything comparable. That base plate was 11-12$ by itself and it's the only thing remotely Mars-regolith looking that Lego has produced https://www.ryanmercer.com/ryansthoughts/2016/7/29/my-lego-m...
When 31032-1 Red Creatures came out I really wanted a black dragon, not a red dragon, so that was another 15-20$ I had to spend, again didn't have some of the necessary elements, to be able to make one https://www.ryanmercer.com/ryansthoughts/2016/7/6/lego-31032...
I will agree though that speculating on any given, current production, Lego set is idiotic at best. You never know what will be popular and what won't, you'll never know when something will be retired or won't.
I also add to my Modulex collection every quarter or so. Modulex elements are considerably smaller than traditional Lego and incompatible. They were a 1:20 scale for building architectural models that never really caught on but are just neat https://lego.fandom.com/wiki/Modulex
> I will agree though that speculating on any given, current production, Lego set is idiotic at best.
The comment you're replying to doesn't suggest any of that.
yukonbound's comment made me think that comparing the items whose value really popped to those whose value didn't might provide a guide to which items would become more valuable in the future.
> You never know what will be popular and what won't, you'll never know when something will be retired or won't.
The really obvious counterexample is Star Wars-branded stuff associated with a current feature film. I don't think it would be that hard to identify stuff with a limited production run. The "will be popular" part is trickier, yes.
Yes, assuming people will be playing with Legos in 10-20 years ( which is a safe assumption) and that knock off will stay low quality (which might be not), there is a floor on the value of a set.
That was my sentiment exactly. I couldn't tell 100% from the article, but it looked like the professor only looked for items that had been on sale in the secondary market, and then looked back at the original retail price to gauge the return. Worthless (or near worthless) items wouldn't be put up on EBay at all. This invalidates the entire study.
Bulk used Lego sells pretty consistently around $10/lb. Certainly less than retail, but never un-sellable. Of course, selling piece-by-piece on Bricklink will net more, for more work.
Especially when compared to pure "collectibles" that are past their peak, they're much more regular in value and always sell.
99.99% of wine and jewelry sold is also worthless (beyond immediate enjoyment, which LEGO also provides). For any successful product the collector market will be small.
> Mar 22 2016
> Why Stealing Legos May Be the Perfect Crime
>
> A recent undercover sting operation busted a Lego thief in Portland, but thanks to the toy bricks' high price and the ease of reselling them online, stealing them has become a lucrative trade.
Similarly, a former SAP executive was busted for printing his own fake UPCs, applying them to Lego sets, buying them, and reselling them on eBay in 2012.
I have a client that has a reverse logistics business buying second hand X, testing, cleaning, repackaging and then selling X as refurbished. They have been doing this a few years and created a multi-million dollar business unit with reasonable margins.
They did a trial about 3 years ago of buying separating, sorting, cleaning, repackaging and selling LEGO bricks/parts. After about 3 months they ended the trial deciding that the economics of the process just didn't work for them at any kind of scale.
What I just described is quite different than buying new LEGO sets, leaving them unopened and storing them for a few years and then selling them with the hope that some of them have appreciated so greatly that the overall collection is worth substantially more.
Readit News
They didn't stop selling it. I think they never will. I'm going to be storing this enormous box of Lego forever.
Still an amazing Lego set.
Still, I'll be interested to see if you're right and it vanishes from the shelves in 6 months!
If demand warrants the manufacturer will just start pumping out more identical sets, like Lego is doing with their Harry Potter sets.
The only true collectible has to have some sort of natural limiting factor, like made in a specific year, or serial number sequence.
I bought a few with the idea of keeping them until 2069.
However, I already had one, as I like to try and 'hold' a copy of any sets that I think are special.
I tend to collect what I like, mainly Lego Technic, but I think my most valuable set right now is the big Star Wars AT-AT walker, but I have one of the older Ferrari F1 cars, the big Technic crane 42009, etc.
This article caused me to look into the kit. According to BrickLink[0], the average selling price is $148.83 One sold this month for $193
[0]: https://www.bricklink.com/v2/catalog/catalogitem.page?S=2100...
Hell, even the American building brick competitors aren't as good. You can tell Lego from any of the competitors by feel. By the way they don't hold together as well, etc.
"Sounds great! So if I am running a $10 billion institutional portfolio how much of it should be in Legos?
">In one extreme case, a kit for Star Wars Darth Revan that retailed in 2014 for $3.99 went for $28.46 on eBay a year later -- a 613 percent premium.
"Uhhhhhhhhhhhhhhh. So the extreme case is making a profit of … $24.47 over a year? I mean, I guess you could buy … a million … of those Darth Revan sets … and … put them somewhere … but … no, I am going to say no, this is not a strategy with institutional capacity. (And you can’t use it as an additional signal in your multifactor general model of what stocks to buy, because they are Legos, not stocks.) I suppose if you are a perverse sort of finance professor though you should be using a factor model to trade Legos in your personal account; let me know—and, more importantly, brag to your students constantly about—how it goes."
Nostalgia and natural rarity. If it weren't for emulators, I'd wager that old Nintendo systems would be the rage right now.
On the plus side, I had a lot of fun showing off & playing with my dad's "investment" as a teenager.
Obviously, you don't trade cash Lego. You trade Lego asset swaps.
https://news.artnet.com/art-world/us-postal-service-statue-l...
But it will be great for people who like to build Legos! Only think about all the sets that were missed and now are too expensive.
> In one extreme case, a kit for Star Wars Darth Revan that retailed in 2014 for $3.99 went for $28.46 on eBay a year later -- a 613 percent premium.
Say I'm really prescient, and know exactly which kit to collect.... can I expect to invest 400K and get that 600% return? I doubt it. Sure it's possible for 4$, or 100$, but is it possible at any kind of significant scale?
Care to share what action figures you held onto? My guess is Star Wars reissue figures from the 20th anniversary theater releases. Maybe some early McFarlane toys? :)
Fun fact: The small toy store chain I worked for is the toy store that Arnold goes to in Jingle All The Way. I make sure to watch it every year for a little trip back in time.
In addition; it would require quite a lot of labor to auction and send all these sets around, as well as paying for storage space. Something which is not accounted for in the 10-20% return figure.
Presumably no one bought the set, which is why it wasn't selling for very long. If you buy 1000s of sets you run the risk of Lego increasing production to compensate. Second you can't just sell all your sets at once. There might be demand for one set at $28. What about 2? 10? 100? So even with a 'winner' you may be only able to sell them in dribs and drabs, and even then only at an average of $14.
I think the only feasible way would be to use them as retirement income rather than a lump sum, by trickling them onto the market at the rate you needed for your weekly income.
> I think the only feasible way would be to use them as retirement income rather than a lump sum, by trickling them onto the market at the rate you needed for your weekly income.
I know of a guy who has inherited an ENORMOUS collection of old hand tools. He's been dripping them into the market via online auction website for well over two years now. Every week he just lists a few chisels, some hand planes, a saw or the like netting, by my estimate, around the average salary.
While this is a good strategy - he gets the fair market value of each and every tool, instead of selling in bulk at a huge discount - this is also almost a job: taking pictures, setting up the auctions, accounting, packaging, and sending the packages, possibly resolving disputes.
You are correct to doubt it: there are a limited number of collectors so as soon as you start selling the supply/demand curve bends away from your favour. To keep the curve in a good place you would need to buy many individual kits (or perhaps one or two of each at most) and there won't be enough good candidates to build a 400K portfolio.
Very few kits will see that sort of return over just one year. I'm guessing not many more will see that order of return over several years, and once you get into multiple years you have inflation to account for when comparing purchase and eventual re-sale prices.
Also, you have the cost of storing the kits and ensuring they are safe from (and/or insured against) damage/theft/etc.
Easier if you branch out to other stuff that's not Legos.
Those people (/me waves) aren't going to be ruined by this. The people who mix up their sets aren't particularly interested in the sets, anyway - why would we be, if we're just going to mix them into a giant bucket anyway?
But yes, people who buy sets to build them and display them are probably going to be dinged by this, as people rush out to buy "investment" sets. (My friend is one of these people. He loves to buy sets and build them, and then stick 'em on a shelf. I don't get it.)
It:
a) Reduces waste, since we get re-use rather than disposable plastic that's thrown away soon after its first use.
b) Gives owners an economic incentive to preserve quality toys for generations, thus preserving iconic products.
Deleted Comment
Focusing on items that have been resold would bias the analysis to show larger profits for LEGO investment.
This looks like a great example of survivorship bias.
Not quite. You can always part stuff out on http://bricklink.com/ and might get a penny per element or might get several dollars per element depending. Us AFOLs that make MOCs are frequently buying random elements we need for this or that. For example:
To make this Mars habitat MOC I spent about 60$ just to get some of the elements (like the curved tops of the habs, the PV panels and the ISRU tanks) because I simply didn't have the elements or anything comparable. That base plate was 11-12$ by itself and it's the only thing remotely Mars-regolith looking that Lego has produced https://www.ryanmercer.com/ryansthoughts/2016/7/29/my-lego-m...
When 31032-1 Red Creatures came out I really wanted a black dragon, not a red dragon, so that was another 15-20$ I had to spend, again didn't have some of the necessary elements, to be able to make one https://www.ryanmercer.com/ryansthoughts/2016/7/6/lego-31032...
I will agree though that speculating on any given, current production, Lego set is idiotic at best. You never know what will be popular and what won't, you'll never know when something will be retired or won't.
I also add to my Modulex collection every quarter or so. Modulex elements are considerably smaller than traditional Lego and incompatible. They were a 1:20 scale for building architectural models that never really caught on but are just neat https://lego.fandom.com/wiki/Modulex
The comment you're replying to doesn't suggest any of that.
yukonbound's comment made me think that comparing the items whose value really popped to those whose value didn't might provide a guide to which items would become more valuable in the future.
> You never know what will be popular and what won't, you'll never know when something will be retired or won't.
The really obvious counterexample is Star Wars-branded stuff associated with a current feature film. I don't think it would be that hard to identify stuff with a limited production run. The "will be popular" part is trickier, yes.
Especially when compared to pure "collectibles" that are past their peak, they're much more regular in value and always sell.
https://joncraton.com/lego-by-pound
> Mar 22 2016 > Why Stealing Legos May Be the Perfect Crime > > A recent undercover sting operation busted a Lego thief in Portland, but thanks to the toy bricks' high price and the ease of reselling them online, stealing them has become a lucrative trade.
Source: https://www.vice.com/en_us/article/yvx77j/why-stealing-legos...
https://venturebeat.com/2013/08/03/former-sap-exec-faces-30-...
https://www.wired.com/2013/08/langenbach/
They did a trial about 3 years ago of buying separating, sorting, cleaning, repackaging and selling LEGO bricks/parts. After about 3 months they ended the trial deciding that the economics of the process just didn't work for them at any kind of scale.
What I just described is quite different than buying new LEGO sets, leaving them unopened and storing them for a few years and then selling them with the hope that some of them have appreciated so greatly that the overall collection is worth substantially more.