Reddit Comment against LEGO investing

[cobi]

WOW.. These are loaded posts. The only thing I can add is that I honestly believe I enjoy building, buying and selling my Legos more than I would enjoy owning a yacht or Ferrari. Talk about carrying costs and overhead. By the way my 401K stinks and this is alot more fun!

[BrickBroker]

As one of those creators of the site I would welcome a well written blog article on any negative aspects of LEGO investing and trading. Call it what you will, it is a means to make money. Maybe your intentions are honorable, maybe you are full of it and are trying to scare people out of the business for personal benefit, only time will tell. So far you've come across as slightly condescending. As for a 5% return, I don't think most people would bother either, but who is talking about 5% returns? Monthly maybe. LOL. The opportunity is here for you to share your point of view with thousands of people. I look forward to reading it.

Challenge accepted.

Again, what anyone does for a living and what they do with that living is their business. My written words have no tone or inflection, but they are very direct. Not everyone is prepared to hear a differing opinion. 5% monthly return? Let's look at some simple math about that;

You start with $10,000 in capital. Invest it all in various LEGO sets. So, now you have exhausted your capital. You're at zero capital, but you have $10K in LEGO. You spend 20 hours driving around all your local stores, and buying online. Call it $100 in fuel/wear on your vehicle. So far so good. Now you have to wait for the "EOL" until your investment can really start to appreciate, right? So you wait that 12-18-24 months from the time you bought in. I'll give you the bennie and say it all goes EOL 12 months past release.

So it all matured in 12 months, yay! Now the only thing left to do is sell it, right? You check out eBay and low and behold, your speculation's value has grown by 50% (all based on what other sellers are selling the similar items)!!! You started with 10,000 and now it is worth $15,000. Good on you.

So you get in there, take your pictures and write your listings, how long is that going to take? 8 hours? Maybe you use a listing software that templates all of your stuff so you can save time. That's just good efficiency, but you lose a little bit of that authentic feel by doing that, so your sets do not quite sell as well as what you previously researched. You liquidate it all for $14,500, and you sell everything over a one month time frame. You expend about 40 hours of labor packaging, shipping, responding to customer inquiries, and offering customer support. Packaging supplies for $10K in LEGO may cost anywhere from $250-500. Secure boxes are not inexpensive, and you can not risk a damage shipment at this point of the game. I'll be generous and call it $250.

Now the real fun begins.

So you have that $14,500 gross from your sales.

You did not pay for anyone's shipping costs, so we need to add that to your gross income, as that is the total money you will receive via your Paypal payments. Shipping costs will run anywhere from 7.5% to 10%, but we'll just use 7.5%

$14,500 x 7.5% = $1087.5

Your total gross income is up to 15,587.50. Paypal gets their money first. Call it 3%

15,587.50 x 3% = $467.63

Now eBay wants their cut, of the enhanced total of $15,587.50. The fees can range anywhere from 10-15% unless you are a powerseller (which you are not, you're an investor, not a store owner, right?) I'll shoot the middle and call it 12.5%.

15,587.50 x 12.5% = $1948.44

Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680.

So now it's time to do the subtracting.

You originally brought in $15,587.50 to your Paypal account, way up from the 10K you initially invested. The itemized costs are $3,446.07

15,587.50 - $3,446.07 = 12,141.43

Now deduct your original investment of $10K

12,141.43 - $10,000 = $2,141.43

Your payout is $2.141.43. Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money. You can only do it every 12 months, because you do not have $10,000 to invest every month, and you are not turning the previous months 10,000 in to $15,000 every month. So divide that return by 12. $178.45 That is your return on a monthly basis.

If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all.

Please keep in mind the above scenario makes some extremely generous assumptions. You're not likely to get a 50% return, and you are not likely to liquidate it all in a months time. It's probably going to take you more time to answer questions, pack and ship, than I have estimated.

I think I have hit the high points and I'm out of time. I'll check back in the morning with my flamesuit on.

BrickBroker

[Rich B]

What anyone does with their money is their business. If you want to clear off a whole shelf of toys or buy a whole toy store it makes no difference to me. I do not have kids, so it's impossible to tug those heart strings, and as far as AFOLs go, I am in that crowd for sure, I will clean off a shelf to get what I want, if that is what I want to do. Supply issues are LEGO's problem.

If anyone reads my words and is discouraged, well, that was not my intention at all. Go out there and buy that LEGO! I mean that, seriously, buy it all, I do not care. If you break down the real math, I think you will probably agree that you'd be better off getting a second job at McDonalds.

Still, no one has addressed the argument I have put forth regarding your carrying costs and opportunity costs/loss, no one has infinite capital, and if they do, they are not investing in something like this.

Instead, everyone wants to bash the different opinion and instead brag about how "successful" they are at LEGO speculating. I'm not going to argue with you guys. I'll wait patiently for the posts about how you liquidated, bought a yacht, mansion, and a Ferrari all from LEGO speculations. I have a feeling I will be waiting a long, long time.

BrickBroker

As Pickleboy, Anakinisvader, and Cobi said, most of us do this because it's fun and it's a hobby. As far as breaking down the math to show that working a second job at McDonalds would be better off........well I would love to see that math. Working a second job at McDonalds doesn't seem like it would be fun, and I'm pretty sure it's not a hobby for anyone. As far as being able to purchase a mansion or Ferrari from selling Lego, well you'd be surprised how much Lego some have. While I do not have hundreds of thousands of dollars in Lego stocked away there are some that do, so technically they could cash in for a Ferrari if they wanted. However they may prefer to just buy more Lego over owning a Ferrari or yacht, etc. And for the record, no one is buying a mansion, yacht, or Ferrari because of the income from their second job flipping burgers at McDonalds.

[Grolim]

Interesting post BrickBroker. You do raise some good points that I think many may not have considered - it's good to air and discuss these things for the benefits of all. In your example you come out with a return of $2.1k on $10k capital invested for 13 months, lets say 20%. In you previous posts you alluded to opportunity costs which you haven't yet quantified. What do you view as the risk free rate of return at present? I'm not US based so not sure what Govt Bonds are returning for you at present, for me it's 2.5%. If you want to move up the risk scale a little you could look at bank rates, or even more risk you could look at a well diversified mutual fund. All I think well below 20%. Your example uses 50% gross return which you state as generous, I think it's realistic. If you are a smart Lego 'investor' you buy stock at 20-30% below retail sometimes more. Selling at or above retail after EOL is at present what happens in the market. Many people even buy at a discount and flip the items quickly at retail. This equates to higher liquidity which you also have as an issue - it's not a simple buy set and hold for most people. There is a mixture of profitable methods of making money from Lego. Smart investors use them all and combined with not putting all their eggs into one set (not to mention many people here have other traditional non-Lego investments) this equates to diversity - a classic investment strategy. I think 50% could be a realistic per annum average gross return. Carrying costs, as it has already been mentioned, can be zero if the space is already there as excess. Sure if you need a storage unit or something you'd have to factor in those costs. You have factored in time using labour cost which is good and something many people overlook. Even if people find the Lego 'work' enjoyable they still need to factor it in as they could theoretically use that time to earn money (opportunity cost). Love to talk more but out of time at present. Cool discussion though - I like finance :)

[littlenicky]

As one of those creators of the site I would welcome a well written blog article on any negative aspects of LEGO investing and trading. Call it what you will, it is a means to make money. Maybe your intentions are honorable, maybe you are full of it and are trying to scare people out of the business for personal benefit, only time will tell. So far you've come across as slightly condescending. As for a 5% return, I don't think most people would bother either, but who is talking about 5% returns? Monthly maybe. LOL. The opportunity is here for you to share your point of view with thousands of people. I look forward to reading it.

Challenge accepted.

Again, what anyone does for a living and what they do with that living is their business. My written words have no tone or inflection, but they are very direct. Not everyone is prepared to hear a differing opinion. 5% monthly return? Let's look at some simple math about that;

You start with $10,000 in capital. Invest it all in various LEGO sets. So, now you have exhausted your capital. You're at zero capital, but you have $10K in LEGO. You spend 20 hours driving around all your local stores, and buying online. Call it $100 in fuel/wear on your vehicle. So far so good. Now you have to wait for the "EOL" until your investment can really start to appreciate, right? So you wait that 12-18-24 months from the time you bought in. I'll give you the bennie and say it all goes EOL 12 months past release.

So it all matured in 12 months, yay! Now the only thing left to do is sell it, right? You check out eBay and low and behold, your speculation's value has grown by 50% (all based on what other sellers are selling the similar items)!!! You started with 10,000 and now it is worth $15,000. Good on you.

So you get in there, take your pictures and write your listings, how long is that going to take? 8 hours? Maybe you use a listing software that templates all of your stuff so you can save time. That's just good efficiency, but you lose a little bit of that authentic feel by doing that, so your sets do not quite sell as well as what you previously researched. You liquidate it all for $14,500, and you sell everything over a one month time frame. You expend about 40 hours of labor packaging, shipping, responding to customer inquiries, and offering customer support. Packaging supplies for $10K in LEGO may cost anywhere from $250-500. Secure boxes are not inexpensive, and you can not risk a damage shipment at this point of the game. I'll be generous and call it $250.

Now the real fun begins.

So you have that $14,500 gross from your sales.

You did not pay for anyone's shipping costs, so we need to add that to your gross income, as that is the total money you will receive via your Paypal payments. Shipping costs will run anywhere from 7.5% to 10%, but we'll just use 7.5%

$14,500 x 7.5% = $1087.5

Your total gross income is up to 15,587.50. Paypal gets their money first. Call it 3%

15,587.50 x 3% = $467.63

Now eBay wants their cut, of the enhanced total of $15,587.50. The fees can range anywhere from 10-15% unless you are a powerseller (which you are not, you're an investor, not a store owner, right?) I'll shoot the middle and call it 12.5%.

15,587.50 x 12.5% = $1948.44

Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680.

So now it's time to do the subtracting.

You originally brought in $15,587.50 to your Paypal account, way up from the 10K you initially invested. The itemized costs are $3,446.07

15,587.50 - $3,446.07 = 12,141.43

Now deduct your original investment of $10K

12,141.43 - $10,000 = $2,141.43

Your payout is $2.141.43. Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money. You can only do it every 12 months, because you do not have $10,000 to invest every month, and you are not turning the previous months 10,000 in to $15,000 every month. So divide that return by 12. $178.45 That is your return on a monthly basis.

If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all.

Please keep in mind the above scenario makes some extremely generous assumptions. You're not likely to get a 50% return, and you are not likely to liquidate it all in a months time. It's probably going to take you more time to answer questions, pack and ship, than I have estimated.

I think I have hit the high points and I'm out of time. I'll check back in the morning with my flamesuit on.

BrickBroker

Thank you for sharing one side?

Ok, playing the other side, drop 10k with a investment specialist. I can tell you that there aren't too many so called "specialists" who made 20% profit on someone's portfolio especially after all their commission fees. If there is, I'd love you to point me in the right direction where these specialists consistently drive home 20%+ year in and year out. I see more losses here than wins. Then, factor in the stress you go through watching your portfolio especially if the sector he/she is investing drops like a rock. Then, what?

Some items we hold, some we don't. Lego 10217 was in stock a month ago at $150. You can sell for $230ish on eBay. After shipping/expenses, you make roughly $50. With 10k, I buy 66 of them. I cash out a month later @ $50 profit each which is $3300. I just made 33% in a month. Now, I buy more Legos with the profit and look for other discontinued Legos to flip. I keep flipping that and even after 10% profit, you keep churning and profits start to go up dramatically, much more than a portfolio would with less risk. I continuously buy throughout the year and flip.

Labor isn't very intensive. You simply have templates and you sell the same items. Everything is completely automated. You prebox your Lego and slap labels on when buyers pay. USPS provides free pickup. It can't get any easier than that.

The reason why people are a little unsettled is very simple. You come onto a forum with people who enjoy Lego and earn extra money at the same time. You immediately tell us it doesn't make money and that having a 2nd job at McDonald's is more advantageous. You obviously do not have any experience selling Lego. You are basing your assumptions outside the box. Many people do this as a hobby and selling simply earns extra money or helps pay for the sets. Some people take it more serious and earn more than you think. There are a few sellers out there who has sales of Lego's in the millions and speculate as well.

Assuming you are a stock person, how would you like it if some individual comes into your stock forum and tell everyone that stocks is a losing game and you are wasting your time and to get a real job. You'd get the same exact reaction you got here but some may get a little more testy. Everyone here is quite civil.

You have so many calculations and costs laid out for us. I would love to see you stock portfolio with an investment broker and see how well it performed the last few years. With the way you state how our Lego selling is not worth the time, I would expect to see your investments have 100-200% gains for the past few years.

[agp548]

I'd rather for all the lego I own to be worthless than to ever work at McDonald's.

[Veegs]

I think (at least for me) that all that hard work/effort for a couple thousand dollars profit per/10K invested is still worth it. If I keep my regular job, do this on the side because I genuinely like LEGO, collecting lego, selling some, researching etc., then it isn't really 'work'. Also, in your numbers, wouldn't you also get to keep the $680 that you 'paid' yourself for your effort? Maybe I read that wrong, but if I could play out your above scenario (with some minor modifications) I'd still do it No need for a flamesuit, either - I think being reasonably 'successful' at flipping LEGO IS a lot of hard work - work that the average person may not consider, and even if people don't like your numbers, they should at least give them pause for thought.

[Anakinisvader]

If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all.

BrickBroker

[Teeird]

As one of those creators of the site I would welcome a well written blog article on any negative aspects of LEGO investing and trading. Call it what you will, it is a means to make money. Maybe your intentions are honorable, maybe you are full of it and are trying to scare people out of the business for personal benefit, only time will tell. So far you've come across as slightly condescending. As for a 5% return, I don't think most people would bother either, but who is talking about 5% returns? Monthly maybe. LOL. The opportunity is here for you to share your point of view with thousands of people. I look forward to reading it.

Challenge accepted.

Again, what anyone does for a living and what they do with that living is their business. My written words have no tone or inflection, but they are very direct. Not everyone is prepared to hear a differing opinion. 5% monthly return? Let's look at some simple math about that;

You start with $10,000 in capital. Invest it all in various LEGO sets. So, now you have exhausted your capital. You're at zero capital, but you have $10K in LEGO. You spend 20 hours driving around all your local stores, and buying online. Call it $100 in fuel/wear on your vehicle. So far so good. Now you have to wait for the "EOL" until your investment can really start to appreciate, right? So you wait that 12-18-24 months from the time you bought in. I'll give you the bennie and say it all goes EOL 12 months past release.

So it all matured in 12 months, yay! Now the only thing left to do is sell it, right? You check out eBay and low and behold, your speculation's value has grown by 50% (all based on what other sellers are selling the similar items)!!! You started with 10,000 and now it is worth $15,000. Good on you.

So you get in there, take your pictures and write your listings, how long is that going to take? 8 hours? Maybe you use a listing software that templates all of your stuff so you can save time. That's just good efficiency, but you lose a little bit of that authentic feel by doing that, so your sets do not quite sell as well as what you previously researched. You liquidate it all for $14,500, and you sell everything over a one month time frame. You expend about 40 hours of labor packaging, shipping, responding to customer inquiries, and offering customer support. Packaging supplies for $10K in LEGO may cost anywhere from $250-500. Secure boxes are not inexpensive, and you can not risk a damage shipment at this point of the game. I'll be generous and call it $250.

Now the real fun begins.

So you have that $14,500 gross from your sales.

You did not pay for anyone's shipping costs, so we need to add that to your gross income, as that is the total money you will receive via your Paypal payments. Shipping costs will run anywhere from 7.5% to 10%, but we'll just use 7.5%

$14,500 x 7.5% = $1087.5

Your total gross income is up to 15,587.50. Paypal gets their money first. Call it 3%

15,587.50 x 3% = $467.63

Now eBay wants their cut, of the enhanced total of $15,587.50. The fees can range anywhere from 10-15% unless you are a powerseller (which you are not, you're an investor, not a store owner, right?) I'll shoot the middle and call it 12.5%.

15,587.50 x 12.5% = $1948.44

Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680.

So now it's time to do the subtracting.

You originally brought in $15,587.50 to your Paypal account, way up from the 10K you initially invested. The itemized costs are $3,446.07

15,587.50 - $3,446.07 = 12,141.43

Now deduct your original investment of $10K

12,141.43 - $10,000 = $2,141.43

Your payout is $2.141.43. Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money. You can only do it every 12 months, because you do not have $10,000 to invest every month, and you are not turning the previous months 10,000 in to $15,000 every month. So divide that return by 12. $178.45 That is your return on a monthly basis.

If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all.

Please keep in mind the above scenario makes some extremely generous assumptions. You're not likely to get a 50% return, and you are not likely to liquidate it all in a months time. It's probably going to take you more time to answer questions, pack and ship, than I have estimated.

I think I have hit the high points and I'm out of time. I'll check back in the morning with my flamesuit on.

BrickBroker

I enjoyed your post, you brought up some valuable points, so good on ya

Yeah, the average lego investor would probably do what you said. They will get that $2k or so. So like you said, with about 70 hours invested and 12 months delay, you're getting roughly $28/hour, which is fantastic. I think anyone would take that job rather than work at Mc Donalds.

[Ed Mack]

As one of those creators of the site I would welcome a well written blog article on any negative aspects of LEGO investing and trading. Call it what you will, it is a means to make money. Maybe your intentions are honorable, maybe you are full of it and are trying to scare people out of the business for personal benefit, only time will tell. So far you've come across as slightly condescending. As for a 5% return, I don't think most people would bother either, but who is talking about 5% returns? Monthly maybe. LOL. The opportunity is here for you to share your point of view with thousands of people. I look forward to reading it.

Challenge accepted.

Again, what anyone does for a living and what they do with that living is their business. My written words have no tone or inflection, but they are very direct. Not everyone is prepared to hear a differing opinion. 5% monthly return? Let's look at some simple math about that;

You start with $10,000 in capital. Invest it all in various LEGO sets. So, now you have exhausted your capital. You're at zero capital, but you have $10K in LEGO. You spend 20 hours driving around all your local stores, and buying online. Call it $100 in fuel/wear on your vehicle. So far so good. Now you have to wait for the "EOL" until your investment can really start to appreciate, right? So you wait that 12-18-24 months from the time you bought in. I'll give you the bennie and say it all goes EOL 12 months past release.

So it all matured in 12 months, yay! Now the only thing left to do is sell it, right? You check out eBay and low and behold, your speculation's value has grown by 50% (all based on what other sellers are selling the similar items)!!! You started with 10,000 and now it is worth $15,000. Good on you.

So you get in there, take your pictures and write your listings, how long is that going to take? 8 hours? Maybe you use a listing software that templates all of your stuff so you can save time. That's just good efficiency, but you lose a little bit of that authentic feel by doing that, so your sets do not quite sell as well as what you previously researched. You liquidate it all for $14,500, and you sell everything over a one month time frame. You expend about 40 hours of labor packaging, shipping, responding to customer inquiries, and offering customer support. Packaging supplies for $10K in LEGO may cost anywhere from $250-500. Secure boxes are not inexpensive, and you can not risk a damage shipment at this point of the game. I'll be generous and call it $250.

Now the real fun begins.

So you have that $14,500 gross from your sales.

You did not pay for anyone's shipping costs, so we need to add that to your gross income, as that is the total money you will receive via your Paypal payments. Shipping costs will run anywhere from 7.5% to 10%, but we'll just use 7.5%

$14,500 x 7.5% = $1087.5

Your total gross income is up to 15,587.50. Paypal gets their money first. Call it 3%

15,587.50 x 3% = $467.63

Now eBay wants their cut, of the enhanced total of $15,587.50. The fees can range anywhere from 10-15% unless you are a powerseller (which you are not, you're an investor, not a store owner, right?) I'll shoot the middle and call it 12.5%.

15,587.50 x 12.5% = $1948.44

Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680.

So now it's time to do the subtracting.

You originally brought in $15,587.50 to your Paypal account, way up from the 10K you initially invested. The itemized costs are $3,446.07

15,587.50 - $3,446.07 = 12,141.43

Now deduct your original investment of $10K

12,141.43 - $10,000 = $2,141.43

Your payout is $2.141.43. Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money. You can only do it every 12 months, because you do not have $10,000 to invest every month, and you are not turning the previous months 10,000 in to $15,000 every month. So divide that return by 12. $178.45 That is your return on a monthly basis.

If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all.

Please keep in mind the above scenario makes some extremely generous assumptions. You're not likely to get a 50% return, and you are not likely to liquidate it all in a months time. It's probably going to take you more time to answer questions, pack and ship, than I have estimated.

I think I have hit the high points and I'm out of time. I'll check back in the morning with my flamesuit on.

BrickBroker

I really think you are missing the point of this site and LEGO investing in general. I believe if you go back and read many of my posts and articles, you will realize that I constantly refer to LEGO investing as a "grind." There is no such thing as easy money, especially when investing in LEGO sets. They take up a huge amount of space to do it on any large scale and the selling, packaging and shipping is a big pain in the @$$, not to mention expensive and time consuming. But you know what, it is damn enjoyable.

I have invested in stocks and real estate over the years and have done well with both forms of investing. I have also lost money and had to pay huge amounts in capital gains taxes on the sale of such investments. Tax issues and selling on eBay is somewhat of a grey area, so I'll leave it up to people with more knowledge than me to discuss that. I think it comes down to love of LEGO sets, stability and control of your investment.

I'll give you an example. As a collector and investor, I not only buy sets to resell later, but to build now. If I invest in a LEGO set that I think is a good investment and it tanks, I still have the set to build. I still have something tangible. Most valuable LEGO sets never lose so much value as to become worthless, as some stocks do(Lucent comes to mind). There is value in the bricks themselves. There is much more stability in LEGO investing. Most sets appreciate in the 10% range annually. Even poor performers appreciate at some point and buying in at a low price years after EOL can be profitable on some "losers."

But it's the control thing that really gets me. I feel like I have more control over a given LEGO set than I do with stocks. Look at what's happening with Apple for instance. It has lost almost 40% of its value in the last several months, why? Who knows? It was the greatest thing since sliced bread, now they are attacking the company and a couple of hacks on TV are calling the company "behind the times." What has changed? Nothing. They are still producing the best products and will far into the future. But how is a small investor supposed to deal with a situation like this? You invest $10000 into Apple two months ago thinking that you are investing in a stable and profitable company and whammo...for no real reason, your investment is now worth $6000. I really can't tell you of a top notch LEGO set losing 40% of its value in a couple of months after EOL.

I have no interest in letting the real "speculators" destroy my investment portfolio. The stock market of today is disconnected from reality. I own a business and speak to hundreds of customers a day and know that people are hurting out there. My business is off 40% from 5 years ago, yet the stock markets are at record highs. I am not alone. Many small businesses are in the same boat or out of business all together. I am supposed to trust people with my money who have no basis in reality? I'll pass. I still dabble in mutual funds, but they are quite diversified and dollar cost averaging takes care of the rest.

Bottom line is that most people on this site and who invest in LEGO sets in general do so to make a couple of extra bucks or to further their hobby. While there are some serious LEGO resellers that invest tens of thousands of dollars in product, most have no intentions on getting rich enough to buy a Ferrari. While the opportunity to make millions in LEGO investing is not practical, the smaller and solid returns of LEGO sets should not be scoffed at.

As I stated earlier, if you want to write up an article that explains your point with a little more depth, data and detail, I will be happy to post it on our homepage. If you need any data, feel free to ask Jeff or I. Thanks.

[Doofy McGee]

I'm not going to argue with you guys. I'll wait patiently for the posts about how you liquidated, bought a yacht, mansion, and a Ferrari all from LEGO speculations. I have a feeling I will be waiting a long, long time.

I already have a yacht, mansion, and Ferrari. They're all made out of LEGOs. :)

[govtcheeze]

Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680.

...

Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money.

I havent followed the thread so forgive me if this was pointed out, but you are double dipping here. You paid yourself 10$/hour to do the work, so your profit is free and clear of the hours spent doing it. Or you need to toss the 680$ back into the profit pool and then re-calculate your profit / hour.

[Anakinisvader]

We've been duped. Brick Broker kept us busy and is out stocking up on LEGO's at this very moment. :)

[Ed Mack]

We've been duped. Brick Broker kept us busy and is out stocking up on LEGO's at this very moment.

LOL...Funny Stuff. I don't know what his angle is yet, but I'm sure we'll find out.

[legopocalypse]

Ha! I was thinking something similar. I think he's been selling Legos and doing very well these past several years. I'm sure he doesn't want that to stop so he's trying to dissuade the newer investors from getting in. Besides why call yourself BrickBroker if your against lego investing. That's like calling yourself StockBroker and going on a stock forum and bashing investing in stocks.

[vandiverscott]

I've figured it out...I'm quitting my current job, putting everything into LEGO, and applying at McDonalds tomorrow. That's what I call a win win situation.

[TheOrcKing]

Sheesh, this thread is still going on? Good grief....

[Doofy McGee]

I've figured it out...I'm quitting my current job, putting everything into LEGO, and applying at McDonalds tomorrow. That's what I call a win win situation.

They probably have great job security there. :)

[steveviscious89]

They probably have great job security there.

If you're in the US, you'll still have to buy health insurance somewhere else...I think they got a waiver or something. But hey, this is a LEGO SITE! I come here to avoid politics....ugh.

So let me get this straight, investors are bad because they cause people to have to pay full price for lego sets? FULL PRICE!? Give me a break people! We're not entitled to a special sale for everything. I consider myself lucky if I come across a clearance lego item...and even then I can't get one now because I'm all out of room. I think I got the Queen Anne and the portal of atlantis like that. Oh and I kicked myself for getting the fire station 7208 at an actual lego store and not more than a week later, it was on clearance. Should have known.....

[Darth Lego]

Ha! I was thinking something similar.

I think he's been selling Legos and doing very well these past several years.

I'm sure he doesn't want that to stop so he's trying to dissuade the newer

investors from getting in.

Besides why call yourself BrickBroker if your against lego investing. That's like calling yourself

StockBroker and going on a stock forum and bashing investing in stocks.

Exactly.

[Fcbarcelona101]

As many have said, he raised some interesting points. However, he misses the whole point of what I think the majority of us do here. I personally only started doing this for 2 very simple reasons: 1- Because I enjoy thinking about which set may do well in the future and acting on that (basically I enjoy just buying the different sets) and 2- To use the profits to cover my own personal collection. Do I plan to do this for a living? of course not, and I think almost everyone here is not doing this full time. Besides, investing in LEGO does not exclude doing other types of investing like stocks, etc. One can easily do both, and that is precisely what I do. It just happens I enjoy this a lot more.

[BrickBroker]

I really think you are missing the point of this site and LEGO investing in general. I believe if you go back and read many of my posts and articles, you will realize that I constantly refer to LEGO investing as a "grind." There is no such thing as easy money, especially when investing in LEGO sets. They take up a huge amount of space to do it on any large scale and the selling, packaging and shipping is a big pain in the @$$, not to mention expensive and time consuming. But you know what, it is damn enjoyable.

I have invested in stocks and real estate over the years and have done well with both forms of investing. I have also lost money and had to pay huge amounts in capital gains taxes on the sale of such investments. Tax issues and selling on eBay is somewhat of a grey area, so I'll leave it up to people with more knowledge than me to discuss that. I think it comes down to love of LEGO sets, stability and control of your investment.

I'll give you an example. As a collector and investor, I not only buy sets to resell later, but to build now. If I invest in a LEGO set that I think is a good investment and it tanks, I still have the set to build. I still have something tangible. Most valuable LEGO sets never lose so much value as to become worthless, as some stocks do(Lucent comes to mind). There is value in the bricks themselves. There is much more stability in LEGO investing. Most sets appreciate in the 10% range annually. Even poor performers appreciate at some point and buying in at a low price years after EOL can be profitable on some "losers."

But it's the control thing that really gets me. I feel like I have more control over a given LEGO set than I do with stocks. Look at what's happening with Apple for instance. It has lost almost 40% of its value in the last several months, why? Who knows? It was the greatest thing since sliced bread, now they are attacking the company and a couple of hacks on TV are calling the company "behind the times." What has changed? Nothing. They are still producing the best products and will far into the future. But how is a small investor supposed to deal with a situation like this? You invest $10000 into Apple two months ago thinking that you are investing in a stable and profitable company and whammo...for no real reason, your investment is now worth $6000. I really can't tell you of a top notch LEGO set losing 40% of its value in a couple of months after EOL.

I have no interest in letting the real "speculators" destroy my investment portfolio. The stock market of today is disconnected from reality. I own a business and speak to hundreds of customers a day and know that people are hurting out there. My business is off 40% from 5 years ago, yet the stock markets are at record highs. I am not alone. Many small businesses are in the same boat or out of business all together. I am supposed to trust people with my money who have no basis in reality? I'll pass. I still dabble in mutual funds, but they are quite diversified and dollar cost averaging takes care of the rest.

Bottom line is that most people on this site and who invest in LEGO sets in general do so to make a couple of extra bucks or to further their hobby. While there are some serious LEGO resellers that invest tens of thousands of dollars in product, most have no intentions on getting rich enough to buy a Ferrari. While the opportunity to make millions in LEGO investing is not practical, the smaller and solid returns of LEGO sets should not be scoffed at.

As I stated earlier, if you want to write up an article that explains your point with a little more depth, data and detail, I will be happy to post it on our homepage. If you need any data, feel free to ask Jeff or I. Thanks.

I would agree that I do not understand the micro investing of LEGO...I will easily agree that there is a lot of labor involved, and it has to be time consuming, regardless of how seamless others make it out to be. I just look at the effort for the return...and it's simply not enough. I accustomed to earning much bigger returns. Then again, I have also sustained some pretty big losses. Regardless, I am still way ahead.

I'm confused about the capital gains statement though...paying taxes is just part of the game. I have never not invested because I would have tax implications. As far as I understand it with eBay, or with any business, report the income, and pay the taxes. If you are not set up as some sort of legal entity I think you can claim up to a certain amount as hobby income, but I'm no tax guru, your accountants can better advise you.

The control aspect of most investments is an illusion in my opinion. You may have control over one thing, but not everything. If I understand this particular class of speculation correctly, the control you have are what your entry price is, and I guess there is some satisfaction to looking in your closet and seeing your investment, although that is not really a control. But other than the entry price, what else are you in control of?

With the case of Apple...well it's pretty simple if you ask me. Their visionary is dead. No more magic devices are being innovated. The decline was predicted, and a lot of people made a ton of money shorting the stock down from 600-500, and there are still people out there doing it daily. Even at $450 it is still a bargain, and do not forget the dividends. The company will return an entire share purchase in dividends in 5 years. That's money making money.

I am also a business owner, and I'm sorry to hear that yours is off so much. I can not say the same for mine. I'm in the stone, concrete, and glass business. Our demographics are really, really wealthy people, and we do it all from the smallest stonework to huge retaining walls. It's all about positioning. I do know that people are hurting out there, and that really sucks, but it is not the same for everyone. Some people are thriving and have been.

I have read the consensus, and you are right on with your demographics. Everyone seems to be "doing this for fun." So I say keep having fun. Who really cares what one random person on the internet thinks?

Cheers,

BrickBroker

[joelfinch]

The control aspect of most investments is an illusion in my opinion. You may have control over one thing, but not everything. If I understand this particular class of speculation correctly, the control you have are what your entry price is, and I guess there is some satisfaction to looking in your closet and seeing your investment, although that is not really a control. But other than the entry price, what else are you in control of?

On this specific point, my read of Ed's comment is that you can spend $10,000 on stocks and wind up with nothing, and that whether the stock collapses or not is out of your control.

If you spend $10,000 on LEGO, the secondary market may collapse, but you still have at least some value in the sets and parts themselves, which no-one can wipe out overnight. "Control" might not be the best word for it, more like a less-bad worst case.

[Ed Mack]

I would agree that I do not understand the micro investing of LEGO...I will easily agree that there is a lot of labor involved, and it has to be time consuming, regardless of how seamless others make it out to be. I just look at the effort for the return...and it's simply not enough. I accustomed to earning much bigger returns. Then again, I have also sustained some pretty big losses. Regardless, I am still way ahead.

I'm confused about the capital gains statement though...paying taxes is just part of the game. I have never not invested because I would have tax implications. As far as I understand it with eBay, or with any business, report the income, and pay the taxes. If you are not set up as some sort of legal entity I think you can claim up to a certain amount as hobby income, but I'm no tax guru, your accountants can better advise you.

The control aspect of most investments is an illusion in my opinion. You may have control over one thing, but not everything. If I understand this particular class of speculation correctly, the control you have are what your entry price is, and I guess there is some satisfaction to looking in your closet and seeing your investment, although that is not really a control. But other than the entry price, what else are you in control of?

With the case of Apple...well it's pretty simple if you ask me. Their visionary is dead. No more magic devices are being innovated. The decline was predicted, and a lot of people made a ton of money shorting the stock down from 600-500, and there are still people out there doing it daily. Even at $450 it is still a bargain, and do not forget the dividends. The company will return an entire share purchase in dividends in 5 years. That's money making money.

I am also a business owner, and I'm sorry to hear that yours is off so much. I can not say the same for mine. I'm in the stone, concrete, and glass business. Our demographics are really, really wealthy people, and we do it all from the smallest stonework to huge retaining walls. It's all about positioning. I do know that people are hurting out there, and that really sucks, but it is not the same for everyone. Some people are thriving and have been.

I have read the consensus, and you are right on with your demographics. Everyone seems to be "doing this for fun." So I say keep having fun. Who really cares what one random person on the internet thinks?

Cheers,

BrickBroker

I would like to first state that Jeff and I appreciate any and all constructive comments, whether they are positive or negative. We have encountered such a high degree of intelligence in our short time as the creators of BrickPicker, that we often take member's ideas and incorporate them into the site. We have accountants, financial planners, engineers, etc...as members on our site and they help us with some basic financial and statistical facts and figures. Jeff studied computer science in school and I was a biochem major, so we have very little experience in financial formulas and terms. We listen to people and learn. You mentioned "carrying/holding costs" and I learned something. I knew what it meant, basically, but know I know the term to describe it. So thank you.

The way I figure it(because you told me so), you sell "brick" and masonry items, hence the name "Brick Broker." We all assumed you resold LEGO bricks...LOL. Silly me. This would explain a lot of your comments and how many of us misread them. I can also assume you probably found our site through the USA TODAY article, because you probably scan such publications for ideas on investing and LEGO investing intrigued you, but eventually learned that there was a lot of effort and time involved to achieve the ROI that we talk about. You probably have no real interest in LEGO bricks, just the money aspect of it.

LEGO "investing" is not for everyone. As stated numerous times already, it takes time, space, effort and some luck to make money...with an emphasis on space. I don't think LEGO investing can yield the total dollar returns you seek unless a concerted effort was made in labor and facilities to flip hundreds to thousands of LEGO sets. It sounds like you are willing to write a big check and take a big chance, but don't want to get too dirty. You just want to let your money ride the old fashioned way, through stocks, gold, bonds...the traditional methods. That's cool with me. Millions of people do it and do well with it. I have and still do as well.

I disagree with you on the control issue. Stock markets are way more volatile and unpredictable than LEGO sets. I can pretty much tell you what sets are going to be top performers, but stocks are way more fickle. Apple stock hit it's record high about a year after Steve Jobs death. People were predicting that Apple could hit $800-$900 a share several months back, yet it started tanking for no real reason. It might be a good value at $450, but tell that to the guy who bought it at $700. A LEGO set is never "worthless." The bricks have value, sometimes more than a set if parted out. A valuable stock can become worthless and the people who work for the company and own the stock have very little control in stopping the slide(Lucent).

As for the tax issues, I realize that all Americans have to pay taxes on income. I pay my fair share. That being said, many online auction sellers, whether legal or not, do not pay taxes on their sales. At some point, I would like to have a member who is an accountant write an article for the site explaining what a LEGO reseller is responsible for tax wise.

I am glad to hear that someone is doing well in this economy. I own a car wash and quick oil change in NJ and business is off 40% over the past 4-5 years. I speak to all sorts of business owners and they all tell me similar stories. Costs are up, incomes are down. There is a disconnect in this country from the "rich" and the rest of us. I'm happy that you can benefit from their resources. Good thing I have LEGO investing to make up for my losses. ;-) Thanks for your quality posts and look forward to hearing from you again...

Ed Mack

[Ed Mack]

On this specific point, my read of Ed's comment is that you can spend $10,000 on stocks and wind up with nothing, and that whether the stock collapses or not is out of your control.

If you spend $10,000 on LEGO, the secondary market may collapse, but you still have at least some value in the sets and parts themselves, which no-one can wipe out overnight. "Control" might not be the best word for it, more like a less-bad worst case.

Thanks for clearing that up. I don't know what other term I should use other than control.