Why wait until EOL?

[megano]

Hello everyone,

 

My name is Megan, from Australia, and I've just started to wonder whether to small-scale amateur invest in some lego. I've been reading some of the articles and they are great, but one thing I haven't understood is why would you wait until a set is close to being retired to purchase?  If I see something on sale, or even RRP that I think would be good to purchase, wouldn't it make sense to purchase it and then keep it for a few years, if I'm not in a hurry to make a profit?  Also, why is the year after retirement the best for selling rather than, say, ten years after retirement?

 

Thanks very much!

Cheers,

Megan

[char]

sorry if this is short, but you can google it to read more and understand more. The reason is "Opportunity Cost". 

[iguana]

Because most people do not have an unlimited budget, there is nothing wrong with buying when ever you see a good deal, and if you have the additional money, who cares right? Any profit down the track is better than no profit at all. There is nothing wrong with this type of strategy if your willing to wait a while before seeing any profit.

But obviously the idea is to make as much as possible in the shortest possible timeframe, to maximize your investments. So with a little bit of research and not much effort most people do just this by looking into near EOL sets.

Why wait 4 years when you can wait 2?

Edit: having said this, being in Australia, we don't really have the same type of luxury as our US counterparts by waiting right up to EOL to buy sets. It will be likely that there will be no suppliers left by that time. A good idea is to wait to the final estimated production year of a certain set and buy as much as you can afford in that year. As sets are constantly being retired, there will always be near EOL sets to purchase.

Edited September 8, 2014 by iguana

[Sparkesy43]

Welcome to another Aussie,

 

The consensus seems to be that the majority of sets appreicate most shortly after they go EOL.  Purchasing as close to this as possible has a twofold benefit.

 

#1 - Retailers are more likely to be clearing out discontinued lines to make room for the new sets, so you can often get some decent discounts.

#2 - You don't have your money tied up for too long before sets are out of retail circulation.

[megano]

Yeah, fair enough, thanks :-)  Can I ask another question?  Some of the sets go for some serious $.  If someone is willing to spend that much on a new in box set, why didn't they do it when it was available, rather than waiting until it was gone?  What I mean is, presumably it's a lego collector/investor, so wouldn't that person already know what they wanted before EOL?  I know that's a dumb question, but it's got me curious. I can understand deciding to collect a series halfway through and backtracking to get what was released before you came on board - is that the only reason?

[Jojoyojimbi]

I live by the "if it's cheap enough buy it" strategy personally, when I wander through an isle at walgreens and see clearance sets for $5 that are normally 24.99, i buy them all, because even if they take years to EoL, I could always flip them for 20 and pocket the difference

 

point is if you amass a collection of cheap sets if you ever have to liquidate or need cash fast, it's easier to get than waiting for a set that you bought for $150 to be worth 300 to sell

 

but i also have a good holding of sets that are waiting for EoL that I buy because I'm sure they'll be worth it, point is, diversify, buy what you want, and remember if the bottom ever falls out of the "lego investing market" it's still fun to play with your stock

[legokent]

I wait till the EOL because I'm a procrastinator.      

 

..........I'm procrastinating work .....surfing the brickpicker forum....

[kenaijoe]

The way I see it is this:

Say you have $100 to invest. Say I find a great deal on a Palace Cinema, and it is marked down from $150 to $100. Score! This set will easily be worth $300 after it retires. This set came out last year, maybe it retires in 2015, and then you sell it in September 2016 for $300. (assume no selling or shipping fees). This is $200 profit and a 200% ROI! That is great, and a lot of lego resellers use this strategy.

 

Okay now say I take that $100 and buy a T1 Camper, again for a pretty good deal of $100 down from $120. Now say it retires next month, and I sell it in November for a measly $120. Only a 20% ROI, but in only 2 months. But say that I then take that $120 and reinvest it in another set or sets that again get me only 20% ROI but in only 2 months. And say I can reliably do this every 2 months. That means I can turn that money over 12 times in the same time it took to sell the Palace Cinema. At the end of the 2 years I have made $791 profit! 

This is a very simple example, and if you are smart, you can get much higher than 20% ROI in similarly short time spans. Most sellers actually use some combination of these 2 strategies based on what they prefer and their financial situation. In my mind, the 2nd scenario is more of a business, while the 1st is more of a hobby or investment. 

Edited September 8, 2014 by kenaijoe

[justafrog]

Yeah, fair enough, thanks :-)  Can I ask another question?  Some of the sets go for some serious $.  If someone is willing to spend that much on a new in box set, why didn't they do it when it was available, rather than waiting until it was gone?  What I mean is, presumably it's a lego collector/investor, so wouldn't that person already know what they wanted before EOL?  I know that's a dumb question, but it's got me curious. I can understand deciding to collect a series halfway through and backtracking to get what was released before you came on board - is that the only reason?

 

Didn't have the money when it was available, didn't have the interest when it was available, didn't have the space when it was available. There are plenty of reasons, not unique to LEGO collecting, why someone might be looking for an item that's out of production. Thus was eBay born (only it was Pez dispensers).

[inversion]

Yeah, fair enough, thanks :-)  Can I ask another question?  Some of the sets go for some serious $.  If someone is willing to spend that much on a new in box set, why didn't they do it when it was available, rather than waiting until it was gone?  What I mean is, presumably it's a lego collector/investor, so wouldn't that person already know what they wanted before EOL?  I know that's a dumb question, but it's got me curious. I can understand deciding to collect a series halfway through and backtracking to get what was released before you came on board - is that the only reason?

The simple answer is that people come out of their Dark Ages in a specific time, before which some sets were already retired. In simple word, they did not care when the sets were in production but want the great sets of the past.

[lodibricks]

Yeah, fair enough, thanks :-)  Can I ask another question?  Some of the sets go for some serious $.  If someone is willing to spend that much on a new in box set, why didn't they do it when it was available, rather than waiting until it was gone?  What I mean is, presumably it's a lego collector/investor, so wouldn't that person already know what they wanted before EOL?  I know that's a dumb question, but it's got me curious. I can understand deciding to collect a series halfway through and backtracking to get what was released before you came on board - is that the only reason?

I often think about that one as well, why spend so much afterward, especially knowing they're most likely people who are LEGO fans. Then I remembered I only got into this game a couple years ago after taking my kids to Legoland. I realized I missed out on the first few modulars and a person more determined would pay the premium. I'm too cheap though and can't justify it.

[Neosphinx]

Just remind yourself that not everything on sale is a good deal. It involves a lot of reading to determine what is a good deal and especially when you should buy it. If you will be stuck with an item 2 more years before it goes EOL but you can buy it at -20% off, while there is another item that we assume will go EOL in less then half a year, but it is only 10% off, the logical choice should be to buy the latter as it will tie up your funds and your storage space less than the other item that is -20%. Besides, there is always a good chance that the other item will be priced down again on a later time.

[Vegito1338]

Also buying stuff early by being a Lego VIP like the new Batman Tumbler and selling for 300$ to people with no patience is good.

[Alcarin]

Just remind yourself that not everything on sale is a good deal. It involves a lot of reading to determine what is a good deal and especially when you should buy it. If you will be stuck with an item 2 more years before it goes EOL but you can buy it at -20% off, while there is another item that we assume will go EOL in less then half a year, but it is only 10% off, the logical choice should be to buy the latter as it will tie up your funds and your storage space less than the other item that is -20%. Besides, there is always a good chance that the other item will be priced down again on a later time.

 

This exactly.......