Spotlight: LEGO 7900 Heavy Loader

Look at her, isn’t she a marvel!

I stumbled upon this set looking back over a few of the older sets in the City theme.  It caught my eye as something I would have loved to have played with when I was a kid, so much play opportunity for a young lad.  Then after looking at sets info page here on Brickpicker the CAGR and secondary market pricing history captured my attention.

The first thing is that the set boasts a very impressive CAGR of 22.6%, that puts it ahead of all but one of the entire Star Wars UCS sets!

Then if you look at the pricing graphs you see this: Flat or even dipping value for the last year at least on the pricing graph, on a set still maintaining 26.5% CAGR – interesting!  I guess the volumes are a little low with only 9 sold over the year but that should still be enough to gauge any price movements if present.

To examine this further we can look down to the Performance Over Time table:

That to me presents a very interesting view of this sets performance.  In the last two years the price for the set has actually dropped slightly by 11%.  This means it was priced at $143.44 in Nov-2011.  That would mean the set had a CAGR at that point of 41.83%!  Furthermore if we take the assumption that the set had a retail shelf life of 2 years as is the generally accepted average we can start the CAGR calculation baseline at 2008 rather than 2006.  This would mean in the 3 years from 2008 to 2011 the set had a CAGR of a phenomenal 79.05% and a full ROI of 474%, and that’s before even considering a cheaper purchase price via discounts that no doubt would have been on offer at the time!

We can look at the changes in prices more visually in the graph below:

Keep in mind that the time scale is not linear as you approach recent periods.

“So what” you may asked, “how is this relevant to investing decisions I make today?”  Well aside from being just an incredible piece of data and information to admire in its own right, there is perhaps a phenomenon at work here that this may be a prime example of.

After writing several set reviews and a few blogs in the past year I’ve noticed many sets seem to plateau in secondary market price at around 4-5 times their original retail price.  This set hit 5.7 and has dropped back to 5.1.  To me this makes intuitive sense.  The collector or consumer buying the set on the secondary market has a hard time justifying paying 5 times the retail of an older set they missed out on.  Once you start to get into that price territory the set competes against other demands for the buyers money such as newer retail Lego sets, other EOL sets that haven’t appreciated as much, used sets,  the ability to ‘Bricklink’ the parts, and many other things people want/need to spend their cash on.

It takes a special set with very high demand comparative to supply in order to push past that barrier.  The average to good sets all seem to hit a peak and flatline or fall away.  Sure some experience a second wind growth spurt but most do not.

This sort of info may help provide a piece of the information puzzle when deciding how long to hold onto investments I your portfolio.  Unless you are convinced of a coming second surge of growth you may be best advised to divest any sets that show signs of flattening growth once the reach around 4 times their retail price.