Lego collecting delivers huge and uncorrelated market returns

https://www.bloomberg.com/news/articles/2019-01-17/lego-collecting-delivers-huge-and-uncorrelated-market-returns

by pseudolus • 8 years ago

229 207 8 years ago

empath752• 8 years ago

There was a time that beanie babies, baseball cards and comic books would have yielded similar returns or better. The collectible market can get insanely hot and then die in an instant.

std_throwawayay• 8 years ago

Yes, but this time it's different.

That's what everybody inside the bubble thinks. That's what they must think. It's what makes the bubble work. The bubble must always contain some forgotten ingredient that makes it special. Something that people do not remember about the past bubbles. Then nobody inside the bubble can prove that it will burst and if it's not provable maybe it won't burst.

tehbeard• 8 years ago

I wonder how much the compatibility between sets (being able to snap blocks made in the 80's to ones from a set today) affects that, along with them having more of a "repeat use" than something like a baseball card or comic.

Zekio• 8 years ago

I have Lego bricks that are from the 80's and they snap together with brand new ones just fine even after being used by my parents through their childhoods and through my own

giancarlostoro• 8 years ago

I think that's the distinction that matters. You can collect it, and it stops being sold, now somebody somewhere wants your set in brand new condition so they can play with it, cause well they love Lego's and you've got some rare set they wish they had.

Nasrudith• 8 years ago

I wonder what difference intended collectability has on the value if any.

All three tried to exploit those to inflate the bubble. Given the strategy seems more toys first than limited platinum collector's edition - which doesn't really have much demand over the baseline. I would expect an overleveraged by speculators market to collapse eventually but far slower - akin to the decline in antiques as many new buyers shun them as white elephants.

TheOtherHobbes• 8 years ago

Also BTC.

usrusr2• 8 years ago

The thing with collectible markets is that usually price collapse trails far behind transaction volume collapse, so that the few examples of complete price crashes are just the tip of the iceberg. Apparently even the most professionalized traders would rather hold on to imaginary riches than liquidate their stocks for pennies.

tapland• 8 years ago

I wonder how well that holds over time. Maybe there is a huge price increase after LEGO stops manufacturing the set, with value not increasing much over time after the point at which buyers are left to the secondary market.

Also, listing fees. Swedish eBay owned Tradera charge fees and 10% of sales value.

But, I would love to save in Lego. Keep them around and look at the boxes.

jopsen• 8 years ago

We really should start a Lego index fund buying up 10% of all new sets, storing them for 10 years then selling them on eBay.

Maybe we should do tulips too while we're at it, I heard they give a huge return too :)

yreg• 8 years ago

Last black Friday I bought multiple boxes of Lego City series as an investment. We will see how this goes.

bena4• 8 years ago

City is a bad move.

Licensed sets, Ideas, and modular Creator sets are better bets. You're really looking of uncommon pieces in rare colors or unique minifigures.

The radar dish from the original UCS Millennium Falcon will fetch a couple hundred dollars because it's a custom print.

There's an X-Men set "Wolverine Chopper Attack" or something that retailed for $20 but goes for about $60 on the secondary market because it's the only set with a Deadpool minifigure.

virgilp2• 8 years ago

Ok, interesting as a curiosity, but:

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?

hjnilsson• 8 years ago

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.

benj1115• 8 years ago

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.

empath752• 8 years ago

Obv something that can be solved with futures.

mipmap04• 8 years ago

So my dream of an LBS ETF will remain a dream.

3chelon• 8 years ago

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.

pawelk• 8 years ago

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.

dspillett2• 8 years ago

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.

ikeboy8• 8 years ago

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.

le-mark• 8 years ago

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.

shiftpgdn• 8 years ago

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.

dsnuh• 8 years ago

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.

sigi45• 8 years ago

If you don't forget the storage cost and shipping effort. Sure.

castlecrasher22• 8 years ago

yeah Revan was an exclusive "buy $75 worth of LEGO, get a free Revan." I don't believe it was available at retail by itself

ikeboy8• 8 years ago

You can certainly scale it to make a comfortable full time living and I know multiple people that do that.

Easier if you branch out to other stuff that's not Legos.

m-i-l• 8 years ago

See also "Lego a 'better investment than shares and gold'" on HN 3 years ago[0] and the various Lego investment websites[1]. Not something I engage in myself, but have been aware of. Like the people who "invest" in trainers/sneakers[2].

[0] https://news.ycombinator.com/item?id=10791057

[1] e.g. https://www.brickpicker.com/ & http://brixinvest.net/

[2] https://news.ycombinator.com/item?id=18535897

mabbo2• 8 years ago

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.

Still an amazing Lego set.

fouronnes3• 8 years ago

I have an unopened one as well. Currently I'm weighting the utility I would get from building it versus a 11% monetary gain...

watmough• 8 years ago

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.

samastur• 8 years ago

They will, don't worry :P It just takes longer for some sets than others. It's not like Disney, where you'd get a year and then into a vault for 7.

avar5• 8 years ago

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.

pattle3• 8 years ago

I'm not sure if you're joking or not but 50 years is a long time to store them, how are you planning on keeping them in good condition?

nkrisc3• 8 years ago

Hm, do you sell them before or after they re-issue the set to commemorate the 100th anniversary of the mission?

PurpleRamen• 8 years ago

They released it 18 Months ago, usually they sell those Ideas-Sets for 2 Years. Which means starting this summer the prices should starting to rise.

ckdarby• 8 years ago

Thank you for clarifying the timeframe. I read original OP's question and thought he had been sitting on the lego for like +10 years.

mabbo2• 8 years ago

According to my wife, it's been taking up closet space for at least a decade.

Still, I'll be interested to see if you're right and it vanishes from the shelves in 6 months!

ticmasta• 8 years ago

You can't "collect" something that has an artificial limit on production, like lego, beanie babies, disney movies, etc.

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.

post_break• 8 years ago

I should have done this with the Shuttle set. I just couldn't afford to buy two at the time.

loolatrix2• 8 years ago

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.

bhouston• 8 years ago

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

jedberg3• 8 years ago

Someone gave me one of those. They aren’t as high fedlity as you think. They don’t stick as well because they don’t have the same precision.

gowld5• 8 years ago

No one who would consider paying 5x retail for a LEGO set would be happy with a junky knock-off.

bena4• 8 years ago

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.

kart23• 8 years ago

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.

gowld5• 8 years ago

Is it that hard to enjoy the toy (or give it to someone who will) and spend some time in the next few years to do something productive to earn $100?

zachrose• 8 years ago

Last time I checked eBay and did the math, a first gen iPhone new in box has appreciated something like 14% year over year for over a decade.

irrational2• 8 years ago

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).

CodeTheInternet• 8 years ago

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

[0] https://www.bricklink.com/v2/catalog/catalogitem.page?S=2100...

vlaak• 8 years ago

I didn't know this existed until I read your post. Now I have it on the way. I can't wait to build it! Thanks mabbo!

T-A• 8 years ago

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".

uptown2• 8 years ago

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.

lordnacho3• 8 years ago

Why would you expect correlation? Financial assets are correlated because people tend to think of them together.

Lego is not in most people's investible universe, so there's no wealth effect or substitution effect to drive correlation.

benj1115• 8 years ago

I would expect correlation to the amount of cash sloshing about / the state of the economy.

Unemployed people aren't likely to be buying collectors sets of Lego.

Its unclear how much of this return is due to a recent boom. I hadn't heard of Lego collecting until 5? years ago. So now you have adults in the market with a lot more money to spend, wanting to relive their child hood (not intended as an insult), is this just a bubble?

lordnacho3• 8 years ago

But mental accounting probably does not lump the stocks/bonds portfolio together with the hobbies.

Also most people actually don't have any stocks or bonds, it's held by pension funds who certainly aren't Lego investors.

C1sc0cat2• 8 years ago

Its only those with large portfolios - that consider non standard assets: classic cars , watches, coins, wine, whisky, toys etc

GorgeRonde• 8 years ago

Certainly related, cause or effect ?

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...

tubbs• 8 years ago

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.

https://venturebeat.com/2013/08/03/former-sap-exec-faces-30-...

https://www.wired.com/2013/08/langenbach/

Waterluvian2• 8 years ago

Now that I have kids I've been looking up all my favourite childhood toys. Some of them are worth a crazy amount now. But that's maybe 5% of them. So what do I do? Hoard everything?

capty99• 8 years ago

no, just pick the ones that will be in that 5%

Waterluvian2• 8 years ago

Yeah, exactly, right?

If I do the unquantifiable math on the cost of storage tomy happiness living here, it's not worth it. But I value various things like clutter as incredibly expensive.

benj1115• 8 years ago

Very popular toys, preferably with something unusual/wrong with them.

Or very unpopular toys, that no one bought.

Easy.

ekianjo• 8 years ago

paying for storage of large amounts of lego sets will offset any gain you can extract out of them... obvious flaw of the study.

yukonbound• 8 years ago

The analysis ignores 99.99% of LEGO that has been sold and is now worthless.

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.

wslh• 8 years ago

Or a lack of false positive/hypothesis test analysis.

ryanmercer3• 8 years ago

and is now worthless.

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

justin66• 8 years ago

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.

gpderetta3• 8 years ago

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.

twic2• 8 years ago

Ah, exotic America: where people think seriously about exploring Mars, while still using top-loading washing machines. Truly, a land of contrasts.

pavlov• 8 years ago

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.

white-flame• 8 years ago

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.

jncraton• 8 years ago

You can usually get closer to $5 per pound on eBay if you search carefully. I built an algorithm to do this searching and filtering for me:

https://joncraton.com/lego-by-pound

hn_throwaway_99• 8 years ago

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.

mswen• 8 years ago

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.

patrickk2• 8 years ago

Apple products?

Scoundreller3• 8 years ago

On a sample of 2 tear downs, I’d say harvesting Apple products for parts is where the real money is.

_Codemonkeyism3• 8 years ago

Made some money with LEGO technic sets something between 100% - 200%. But what was much much better was keeping some Magic Cards currently valued ~5k which I bought for pennies when at university.

C1sc0cat2• 8 years ago

I must dig out my MTG cards from 20 years ago and see if I have any rares or valuable cards I assume there is some online resource

_Codemonkeyism3• 8 years ago

I'm using https://www.cardmarket.com

dwd2• 8 years ago

Anything from the Alpha release is going to be worth a lot.

Even a set of basic lands will set you back $500.

When I used to play back in '95/96 (4th Ed/Ice Age era) any Alpha/Beta cards were relatively expensive - now they're crazy.

santoriv2• 8 years ago

If you want to sell them quickly and easily you can use: https://store.tcgplayer.com/help/playerbuylist . It's not as much money as you would get selling them individually on ebay but a lot more money than you would get from your local card store.

stuaxo• 8 years ago

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.

avar5• 8 years ago

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.

PhasmaFelis• 8 years ago

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.

EliRivers• 8 years ago

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.

pavel_lishin• 8 years ago

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.)

gpderetta3• 8 years ago

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.

randomsearch• 8 years ago

Stamps.

pattle3• 8 years ago

I've been a fan of LEGO since I was a kid and have got back into in the last 5 years or so.

I wish I'd have bought more sets when I was younger as some of them sell for crazy amounts of money now. Particularly the early Harry Potter, Star Wars and Pirates of the Caribbean sets. The minifigures alone can sell for close to £100.

I dabble in buying and selling LEGO and it is true that you can make money but it's a lot harder than it used to be. LEGO makes and sells a lot more sets now so it's not as lucrative.

At the end of last year I bought a load of sets that were shortly going to be discounted in the hopes of making money in the future. Some of the sets I'm expecting to do well are the Silent Mary Pirates of the Caribbean set as this was the only set released when the latest film came out. Also I'm predicting the Old Fishing Store set should do well as it's a much loved set and it was only on sale for a year. Generally the higher priced licensed sets have netted you a nice return in the past.

The problem with buy sets if you have to have somewhere to store them and be prepared to keep them for a long time, even slight damage to a box can harm its resell value. Plus my wife doesn't like having lots of boxes lying round the house. I'm mainly concentrate on collecting minifigures now as their easier to store and take up a lot less room.

sigmaprimus• 8 years ago

I might be just cheap but the last time I was at a toy store shopping for a Christmas gift for my friend's son, I was shocked at the retail price of Lego. I wonder how the numbers would look if we were to consider the year after year increased prices of new product, sort of an accounting for inflation. I do find it very interesting how the Simpsons kits have lost value though, is it because the bricks are somehow different than the rest?

Fricken• 8 years ago

Lego is kind of like Apple in the sense that they exercise draconian brand control, they have a best in class product no one can compete with, and thus they can command ludicrous profit margins.

In spite of being expensive, though, Lego is still a good deal, because it lasts forever. My childhood Lego, the oldest sets nearly 40 years old, was passed on to my younger sister, then my cousin, then my nephew, and I've got it back again.

No other toy from my childhood is still around, let alone in use. It's a pretty safe bet that Lego will still be popular in 40 years, and my childhood Lego will still be compatible.

bena4• 8 years ago

Price per piece, Lego is still roughly the same price. Sets are now more complicated and have higher piece counts.

Small $5 sets with about 50 pieces that used to command shelf space are not polybags.

The bricks are the same. I think they don't hold the same value because the minifigures are non-standard. And they had a Minifigures blind bag set as well that used the same molds/prints. So most of the reason to buy the sets could be had by buying a display box of Minifigures.

dspillett2• 8 years ago

"Lego collecting delivers huge and uncorrelated market returns" - up to 2015, when articles like this started coming out and more people started buying ans storing sets as investments.

If you invest now you will have more competitors with the same idea so supply/demand factors are likely to be less favourable when you try to re-sell the items later.

bunderbunder• 8 years ago

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.

Scoundreller3• 8 years ago

Or postage stamps. Though I quite like buying them from collectors for 40-60% of face value.

joering2• 8 years ago

Unless you have this stamp [1] .. since its been discontinued and story went viral, unused unstamped sheet of 16 got sold for $1000 on ebay.

https://news.artnet.com/art-world/us-postal-service-statue-l...

krupan• 8 years ago

I still have a box of baseball cards from the '80's and '90's. It'll make me rich someday...

netsharc• 8 years ago

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.

vl• 8 years ago

they also try to liquidate their collections at the same time, driving prices down to near 0 in the process.

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.

topkai222• 8 years ago

There is a several dozen location retail chain called bricks and minifigs (https://bricksandminifigs.com/) that supports this trade.

It drives me crazy to spend $15 for a Jedi Master Plo Koon minifig but when my kid has been saying for weeks that is what he wants, i shell it out, and I see tons of other parents doing the same at our store.

Jaruzel2• 8 years ago

What REALLY annoys me, is that people selling minifigs on the second hand market, are splitting them from new sets. Leaving the set without any figures. If you search eBay you'll see 100s of nearly-new sets listed but with 'NO MINIFIGS' in the description. If you wanted to buy a popular out-of-stock set for your kid, expect to massively pay over the odds just to replace the missing minifigs all because of the greedy minifig collectors market.

What LEGO should do here, is sell single minifig 'blister-packs' for all their themed figures (Disney/Marvel, Star Wars etc.). This would have the benefit of ensuring that new sets don't get split for profit, and also create a new income stream for LEGO. They could even make some minifigs limited run 'blister-pack' only, driving up the demand/value.

I'm a casual minifig collector, but I refuse to buy figs that have been clearly split from bigger sets. It makes it hard for me, as I also won't pay more than £10 for a set, so I'm restricted to the blind-bags and the small range of tiny single-figure sets. It's frustrating, but at least my conscience is clear.

topkai222• 8 years ago

Around here lego seems to be doing that, except they are the “trading card” or “loot box” style packs where you can’t see what you are getting ahead of time. This seems to be a direct strategy to further cash in on minifig collecting.

And on second reading, that’s what you might have meant by “blister pack”, but I’ll still comment as I wasn’t sure.

gowld5• 8 years ago

Why are you driving yourself crazy instead of being a responsible parent?

acomjean• 8 years ago

My brother has a few boxes of unopened baseball cards from the 1980s.

They're not worth anything.

We also have star wars cards from the 70s. To worn to be worth anything, but they brought a lot fun to young me.

If you collect things I feel you should do it because you enjoy it. Collections for collections sake always puzzled me.

Also Beanie Babies. And a bunch of other "collectables". That market crashed. Its very hard to predict.

rapfaria• 8 years ago

Agreed, but a lot of collecting involves talking the monetary value of the collection. Some people will never sell it, but they will tell you - with some sort of pride, even - the thousands of dollars it is worth.

castlecrasher22• 8 years ago

LEGO is smarter than all of those companies, though, because there's always a couple unique pieces in larger sets, and those are the insanely expensive ones. The part-out value on Bricklink is useful for this.

gpderetta3• 8 years ago

You should see the return of investment in reserve list Magic the Gathering cards... I wish I had bought some 15-20 years ago.

jerkstate• 8 years ago

they could have said the same thing about baseball cards 30 years ago

52-6F-62• 8 years ago

Haha. I'm still sitting on a binder and a box of hockey cards from over around 30+ years ago— thankfully I never had to spend a dime on them.

Some are still calling for a decent price, but I'm not sure there's the market for them quite as much.

On the plus side, we might see a minor resurgence in their popularity: https://theplantnewspaper.com/2018/03/the-evolution-of-colle...

gammateam• 8 years ago

well, not anymore

mistercow• 8 years ago

I dislike how this article goes out of its way to prejudice the reader against a perfectly reasonable criticism but making it sound like critics are simply unwilling to entertain unconventional ideas.

diminoten• 8 years ago

I'm pretty sure that's tongue in cheek, it's a fun article but no one is saying dump your 401k into lego.

ghostbrainalpha• 8 years ago

LEGO collecting doesn't always work out.

I snatched up all the classic Bill Cosby Lego's I could find in 2013, thinking I could get ahead of a trend when they announced a new Lego version of The Cosby Show that was supposed to come out in 2014.

That show never came out, and Cosby's popularity isn't exactly what is was. I'm still keeping my fingers crossed for some sort of morbid Lego fan interest but so far it hasn't materialized.

My tech friends bough Crypto in 2013. I bought Cosby. Lesson learned.

wmf• 8 years ago

A classic essay on collectibles is relevant to several comments here: https://theonlinephotographer.typepad.com/the_online_photogr...

jedberg3• 8 years ago

And yet there are places online where you can buy cheap legos by the pound (or kilo).

So I guess the real value is in keeping the sets together? I suppose you could make some money buying legos by the pound and then sorting them into sets and reselling them. In fact I’m pretty sure I’ve seen people who do that.

blacksmith_tb• 8 years ago

I think the problem with this approach is the lack of the box and instruction booklets, which are also part of the set.

jedberg3• 8 years ago

You can download them all from the lego website now, and if you want to be full service, you can print them in color.

gowld5• 8 years ago

Also you are missing all the specific pieces the set needs.

cmsj• 8 years ago

I love Lego, my kids love Lego, they have all my old Lego and it really bums me out how quickly Lego sets go out of production. One of my sons really wants a set from the first Jurassic World movie, but it's been discontinued and is only available for several hundred pounds on eBay (or 100-200 if you settle for parting it out on Bricklink) and so he's not going to ever get it.

I get that they can't keep making the sets forever, it wouldn't scale, but it's still annoying and drives this feeling of needing to buy any Lego set you might ever want, because you'll never get it later without wasting loads of money on scalpers/hoarders.

kgwgk2• 8 years ago

Matt Levine today: https://www.bloomberg.com/opinion/articles/2019-01-17/the-co...

"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."

patorjk2• 8 years ago

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.

nkrisc3• 8 years ago

That's kind of tragic. Out of curiosity, do you know what happened to the cards?

oskkejdjdkjd• 8 years ago

Intellectual Darwinism.

3pt141592• 8 years ago

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.

nostrademons• 8 years ago

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.

twic2• 8 years ago

Matt's been out of the game for a while now, so this is an understandable oversight.

Obviously, you don't trade cash Lego. You trade Lego asset swaps.

howard941• 8 years ago

Lack of interest in my Erector Set's going to average out those huge returns.

ikeboy8• 8 years ago

Doesn't need to be Lego. Buy most popular items when discontinued, hold for a year, some people will be willing to pay more for it.

This is part of my e-commerce business. (I do some regular items as well but discontinued items are often lucrative).

See e.g. https://www.amazon.com/Motorola-H720-Bluetooth-Headset-Packa...

Two years ago this was going for $23.50 wholesale (I was offered by a large supplier) and $35 retail. Tens of thousands of units sold. Price went up over time and whoever still has units is making a killing now.

It's definitely possible to deploy millions into the business, but it's far more of an active part of a portfolio. You can't trade an index of discontinued products that appreciate.

ikeboy8• 8 years ago

If anyone wants to chat about the business there's an email in my profile that still forwards to me

JohnJamesRambo3• 8 years ago

I'm confused. What moron would pay $270 for that cheesy bluetooth headset?

ikeboy8• 8 years ago

Someone who used the same one for years - this was one of the most popular bluetooth headset for years.

Sales went down as price goes up, but I estimate it was selling 100+ units/month when the price was $150 and got worse as price got higher

hotpockets3• 8 years ago

How do you differentiate discontinued product versus ones that are upgraded to a different model?

ikeboy8• 8 years ago

There's no difference. People will pay more for older model even if there's an upgrade.

I generally look for stuff where I make a small profit at current price and where total quantity isn't so much that I'm worried about getting stuck.

tbabb• 8 years ago

Sounds ripe for a speculation bubble.

forkLding• 8 years ago

I believe Pokemon cards, other trading cards and sneakers are all valuable collectible markets as well

pdkl95• 8 years ago

Lego bricks are an example of a product that has the market advantages of popular with both children and adults (as parents, nostalgia) that is also a durable good[1]. Purchasing new bricks today is a lot easier to justify with the knowledge that can be used with the bricks purchased 20 years ago thanks to their durability and backwards compatibility. While planned obsolescence can be profitable, durability reduces sales friction.

[1] https://en.wikipedia.org/wiki/Durable_good

dwd2• 8 years ago

When I was a kid I swapped a friend one Lego spaceship for his entire collection of original star wars figures that he didn't want.

If they were still carded their current value would be astronomical.

Lego collecting delivers huge and uncorrelated market returns

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