Lego collecting delivers huge and uncorrelated market returns
bloomberg.com
bloomberg.com
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!
Our wives must use a shared Gmail calendar.
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.
Harry Potter LEGO sets have a long life because Harry Potter has sustained popularity -- but even so, LEGO would rather issue N different sets, so LEGO fans buy multiples, than try to see N times as many copies of one set, since most consumers won't buy duplicates.
Really doubt it. JK Rowling is the Enid Blyton of our time. How many kids read Enid Blyton now?
[1] https://en.wikipedia.org/wiki/Enid_Blyton#Commercial_success
"The Twins at St. Clare's", in Germany known as "Hanni und Nanni" is so popular, the movies in 2010, 2012 and 2013 were some of the most popular German movies at the time, and the reboot in 2017 also was extremely popular.
And even in Britain, another author continued the "Twins at St. Clare’s" book series into the 2000s.
So, if Rowling does equally well, and her works are also continued by other authors after her death, we’ll have decades of new Potter movies and books ahead of us. The Fantastic Beasts trilogy is already a taste of what’s to come.
Collectors often aren't that rational and will value otherwise [functionally] identical sets much higher simply because they were released previously.
I bought a few with the idea of keeping them until 2069.
> inside their delivery boxes [...] two layers of pond liner [...] several bags of drying granulate [...] wooden boxes [...] in the dry attic
hackernews definition of "just" :)
When I was a kid, I had that "medieval" Lego set with knights and castles. My nephews still play with this set.
It's a bit sad that it's long been discontinued. I liked the simplicity of it all: just knights, horses, castles, etc. It wasn't tied to a franchise. I think it was "Lion" knights vs "Horse" knights or something like that (I found it on a database once many years ago).
Also sad: many of my Lego pieces have bite marks. I wish I could travel back in time and tell my younger self one thing or two about taking care of cool toys...
Now they have excellent orange lever pieces that work even better, and are included in nearly every Large set. (I wish I had them as a kid.) . I also discovered that the pointed end of a cheap spudger also works, but not as well.
http://phillipecantin.blogspot.com/2013/02/legos-magic-numbe...
I'm not planning my retirement around this or anything, it was just a relatively inexpensive thing to do, and seemed to be a fun thing to sell on the 100 year anniversary of the moon landings, or alternatively to give it to a child or a grandchild.
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.
Stashing a mint NES back in 93 with the hopes of making fat stacks today would have been a folly because of how people are valuing the whole thing(they value the game/experience, not the console/object).
https://rover.ebay.com/rover/0/0/0?mpre=https%3A%2F%2Fwww.eb...
Yes, the ROM can be had for free and the experience of playing the game is identical. No, a collector doesn’t care.
Maybe I'm just being pedantic?
The casual nostalgics are happy with emulators, hence the systems not being expensive. Still enough SNESes out there to placate the the small number of people that want the original.
LEGO would certainly fit the bill
On the plus side, I had a lot of fun showing off & playing with my dad's "investment" as a teenager.
As an aside, his dad was for the most part a pretty smart guy, he had a PhD in Physics. He just got caught up in the hype and made a bizarre financial decision after reading articles on the projected value of baseball cards in the future.
Obviously, you don't trade cash Lego. You trade Lego asset swaps.
https://news.artnet.com/art-world/us-postal-service-statue-l...
Does this mean if the USPS wanted to create stamps for the major cities of the US say LA, Chicago, NY and were to use pictures of Santa Monica Pier, Sears/Willis Tower, and Empire State building that they can't purchase pictures from Getty Images and would need permission from the owners of those properties? Also what stops me from suing Google or Zillow for taking a street view shot of my home and claiming copyright infringement on monetizing google maps / Zillow listings with a picture of my home?
>Does this mean if the USPS wanted to create stamps for the major cities of the US say LA, Chicago, NY and were to use pictures of Santa Monica Pier, Sears/Willis Tower, and Empire State building that they can't purchase pictures from Getty Images and would need permission from the owners of those properties?
A property release is not normally needed for buildings. In the US copyright for buildings viewable from the public is treated differently from copyright for statues or sculptures or other art. Also some of those are in the public domain because of their age, or because the architect did not register the copyright to the building. There are some cases where the trademark could also be an issue too, like for the Transamerica pyramid. It is generally not a problem for a photographer to get a property release before selling stock images for commercial use.
>Also what stops me from suing Google or Zillow for taking a street view shot of my home and claiming copyright infringement on monetizing google maps / Zillow listings with a picture of my home?
Google is not using the image commercially, and does not need a release from the architect or property owner to use the image. Whether or not they make money is not what determines commercial use or editorial use, and editorial use does not require a property release. In a newspaper that costs money it is OK to take a photo of Trump for a headline about him, and ok to use this next to an ad the newspaper is getting paid to publish, but not OK to use his photo as an endorsement for a product without a model release. Zillow generally gets your permission to use your images to sell your home when you upload them to a site that syndicates with zillow. For other uses where they are not selling your home, like showing the past sale price they would not need a property release. The architect would be the one with standing to sue under copyright law, to prevent others from making derivative works. If they did not register the copyright this is not practical because there are no actual damages, and they cannot collect statutory damages. The owner of the home could sue under right of publicity laws in some states if the image was used commercially. Historically but this has never applied to regular homes, and it would be rare to have meaningful damages. See Robinson v HSBC Bank USA
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’d think there may be an opportunity for a buying group or banner type consolidator though.
Or just straight up acquisitions, like independent pharmacies getting bought for 2-4x earnings, then sold as a package to public investors at 10x+ earnings.
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.
After having kids I've seen the sheer amount of crap in excessive volumes that gets gifted to kids. Everyone would be better off if kids got 10x fewer toys of 10x more quality.
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.
Uh
>The analysis ignores 99.99% of LEGO that has been sold and is now worthless.
That blanket covers 99.99% of anything Lego, combine that with what this article is about... speculating on Lego sets... my comment is fine.
"worthless" though is not the case. Individual elements absolutely have value on the secondary markets. Bricklink has more than a million mmebers, 10,499 stores and 125,105 unique elements with millions and millions of pieces for sale.
Parting a 'worthless' set out can often yield you more, if not several times more. Sure it might take you years to sell every single element of a set, but by no means is 99.99% of Lego 'worthless'.
>really obvious counterexample is Star Wars-branded stuff associated with a current feature film.
Plenty of Star Wars sets have gone on varying levels of sale/clearance (some quite drastically) via both shop.lego/Lego stores and non-Lego retail outlets in the past several years. 42 of the 97 Star Wars sets are currently on sale on shop.lego for example and almost certainly won't rocket up in value, ever. The Clone Wars sets were probably the worst failure here.
Lego also has plenty of series that just never gain traction. Most recently I'd point at Nexo Knights. Kids just weren't interested, despite the cartoon, and most of us adult fans only bought it because we wanted space and/or castle/knights to come back and this was the closest offering. We basically got 2 rounds of releases the they scrapped it.
Legends of Chima is mostly a flop.
The Minecraft series had some of the steepest discounts I've seen directly from shop.lego/lego stores.
Architecture sets are more often miss than hit and you find unopened sets fairly regularly in thrift/budget store chains.
Bionicle flopped hard and only has a small die-hard fan base not unlike the Dreamcast.
Angry Birds had pretty steep discounts direct from Lego early on.
TMNT several years ago was a pretty big bust and hasn't retained value.
Etc.
This is a very poor example; Bionicle sets have skyrocketed in value.
Plenty of things may go on clearance now but become worth a lot of money years later.
Comic con/promotional exclusives, yes. Everything else, no. The biggest increase I'm seeing is a 14$ set going for staring around 42$ sealed (and only 7 new have sold in the past 6 months on Bricklink and 0 since November with only 16 new available), a 300% return that is not impressive - especially considering this is one of the 3-year old reboot sets which means the bulk of that value is likely from speculators and not actual collectors and will probably go down considerably over the next few years. You can see this clearly on Bricklink:
https://www.bricklink.com/v2/search.page?q=bionicle&brand=10...
Yeah, on Bricklink. Have you tried looking at more mainstream places like Ebay? There are dozens of sealed sets selling there.
>a 300% return that is not impressive
Really? You dont think 300% ROI is not impressive? Most of the regular sets from the 1-4th generation also sell at that kind of inflated price so its really not that unusual.
Especially when compared to pure "collectibles" that are past their peak, they're much more regular in value and always sell.
> 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-...
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.
https://motherboard.vice.com/en_us/article/3daq4n/music-geek...
I've done this myself (listening to 5.5 gen iPod, I'd forgotten how good mp3 sounds vs Spotify), but for personal use not flipping for profit. Some refurbished iPods sell for quite a lot though.
[0] https://news.ycombinator.com/item?id=10791057
[1] e.g. https://www.brickpicker.com/ & http://brixinvest.net/
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.
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.
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.
Lego is not in most people's investible universe, so there's no wealth effect or substitution effect to drive correlation.
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?
Also most people actually don't have any stocks or bonds, it's held by pension funds who certainly aren't Lego investors.
But it would depend on why you bought it? If you bought it as a toy, then yes. If you bought I as an investment, wouldn't you then lump it in with your other investments?
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.
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.
Maybe we should do tulips too while we're at it, I heard they give a huge return too :)
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.
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.
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
Take this blue tooth headset as an example. If I spent $300 buying various headsets 5 years ago before finally settling on it, I might expect to spend a similar amount of money (or time) to find a new headset today, and may well be willing to pay $300 just to get the same headset. It's not necessarily a great example, since I expect the quality of headsets to be much improved today, but I was super tempted to scour ebay for an old microsoft itellimouse when my last one finally became unusable. I'd used this model for 2 decades, and no other mouse I've used feels the same. I'm likely to give this new mouse I found another few months, but I may end up deciding that it's worth it for me to pay whatever premium it's currently going for.
The important thing is that the demand curve slopes down but doesn't go to 0 that quickly. With Amazon you have the entire US (and other countries) as potential buyers and for popular items there will often be some buyers.
Also, you don't need much appreciation to make money. If MSRP is $50 and you get $80, and paid $35 wholesale you still make a good return after fees.
I just picked this one out because it went up a ton, plenty of others go up less but are still good.
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.
I look at a lot of things, and like I said I don't just do discontinued items.
Right now I'm holding onto some Samsung Blu-ray players from 2015. Samsung stopped making them, so the 2017 models are the latest, but the 2015 are cheaper and still selling quite well. I expect the price to go up a bit as the other guys selling it sell out, and then I'll make maybe 30-40% on my money for holding it for 4 months or so, minus costs/returns.
Very doable if you have capital and are willing to be active and take some risks.
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.
I own thousands (probably 10's of thousands) of magic cards but I'd say 95% of my collections value is tied up in probably fewer than 50 cards.
If you have unopened product (sealed boxes or packs) those are potentially worth quite a bit. A lot of old unopened booster packs are worth $15+ now.
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.
Or very unpopular toys, that no one bought.
Easy.
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.
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.
And on second reading, that’s what you might have meant by “blister pack”, but I’ll still comment as I wasn’t sure.
LEGO do have the 'blind bags/loot box' type minifigs, which run in 'Seasons', the last season was Harry Potter themed, so I skipped that. I'm currently waiting for the next Season to come out.
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.
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.
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.
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.
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.
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.
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...
If they were still carded their current value would be astronomical.