This is Money - "Build a fortune from Lego stashed in the attic"

[Val-E]

32 minutes ago, redcell said:

RI wasn't a bubble...it was simple market dynamics of supply and demand.  When it came out, the demand was so great that it far outstripped supply.  Once supply caught up to the demand, the price fell because there were more sellers.

I don't recall there being a spike in price of Exo Suit, but if there was, it again was likely supply and demand.  Once demand caught up to supply, prices stabilized at MSRP. 

Sounds pretty much like a bubble to me. Prices rapidly inflated to unrealistic levels due to speculation, the market price was not sustainable and fell to more reasonable levels. It´s true that in these cases, Lego then produced more sets to satisfy demand and prices fell, but then that´s what we are also discussing here - the more sets they churn out, the less rarity value each one has.

One could argue the same thing happens when a company issues more stocks, the value of existing ones usually declines. When Lego remake a product, this is what usually happens to the previous edition.

It´s not really fair to compare the stock market to Lego as stock values are based more on emotional value about the future performance of the company, war, macro economics, who wins the World Series and what way the wind blows. The value of Lego is based primarily on the scarcity of the set or piece.

 

[conceptmachine]

It's happened with every collectable known to man, lego will be no different.  This is a gluttoned market.   Over produced and over hoarded.  Thank goodness the economy is decent right now because when it drops people will be really hurting to get rid of stuff, taking big losses.  Me, I'll be sitting on the sidelines watching it all unfold.  Someone mentioned new markets being brought into the mix.  I agree that will help to a point, but most of those new markets will be buying tubs of used legos for pennies on the $.  Those countries have few that can afford new expensive sets let alone sets that are marked up for profits.

Life is good anyway, we all can move on to the next money maker.  There is always a new one to be found.

Edited November 19, 2015 by conceptmachine

[biking_tiger]

5 minutes ago, valenciaeric said:

Sounds pretty much like a bubble to me. Prices rapidly inflated to unrealistic levels due to speculation, the market price was not sustainable and fell to more reasonable levels. It´s true that in these cases, Lego then produced more sets to satisfy demand and prices fell, but then that´s what we are also discussing here - the more sets they churn out, the less rarity value each one has.

One could argue the same thing happens when a company issues more stocks, the value of existing ones usually declines. When Lego remake a product, this is what usually happens to the previous edition.

It´s not really fair to compare the stock market to Lego as stock values are based more on emotional value about the future performance of the company, war, macro economics, who wins the World Series and what way the wind blows. The value of Lego is based primarily on the scarcity of the set or piece.

 

For the bubble explanation to fit in RI's case, "speculators" would need to be buying RI at high mark-ups assuming even higher profits down the road. That was part of the housing collapse in the US. It looks a lot more like good ol' supply and demand--like most initial releases for popular Lego sets which don't meet initial demand. Two months ago, flippers made profit on the Mystery Machine... now it's available everywhere at retail or below. All driven by supply and demand. Yes, flippers are causing supply-side issues, but the price is driven by demand. Flippers weren't buying Mystery Machines at inflated prices with hopes of greater returns--if they were, they suck at business.

I think it's too early to tell if sets like TH are "bubble worthy" after that initial bump.  Yes, we've seen investors buy up stock at increased prices, which in turn increases the price rapidly at first, but I don't know anything outside these anecdotal examples showing us the demand won't continue to trickle from real consumers and collectors for years to come.

10179 didn't immediately jump in value to $4-5 grand.

[Ed Mack]

1 hour ago, MarxMarvelous said:

Wall maybe next time the founders of this site do another round of interviews for these ill informed journalists they could inform them better. ;)

Journalists write what will sell magazines and ad space.  They want good news, not bad in this case.  As  for this particular article..the author didn't even ask us, the main source of this sort of information.  They did a poor job researching on the internet.  Every person we speak with, we also talk about the negatives, but nobody wants to hear that.  

[KShine]

There hasn't been, is not, and will never be a LEGO "bubble". In theory, the market could collapse - but it isn't a bubble.

[Darth_Raichu]

13 minutes ago, Ed Mack said:

Journalists write what will sell magazines and ad space.  They want good news, not bad in this case.  As  for this particular article..the author didn't even ask us, the main source of this sort of information.  They did a poor job researching on the internet.  Every person we speak with, we also talk about the negatives, but nobody wants to hear that.  

90% of journalists have an agenda or a conclusion they want to present first.  THEN they find or create the materials to support their main agenda.

[ZULU]

30 minutes ago, Ed Mack said:

Journalists write what will sell magazines and ad space.  They want good news, not bad in this case.  As  for this particular article..the author didn't even ask us, the main source of this sort of information.  They did a poor job researching on the internet.  Every person we speak with, we also talk about the negatives, but nobody wants to hear that.  

I'm not impressed. Looks like a journalist who just has written something he doesn't believe in.

All in all, it looks more like a farce to me. Written with some much irony (a Mr Gold?? Worth 1000E? Serious? Ridiculous...) that it shouldn't fool anybody. And at least not trigger a horde of new stupid buyers who are going to stash UA massively. (if only - that would be a good lesson as it took me 3 years to unload the last of that series).

So I believe this is no extra fuel. But the fire is burning too hard. People sell stuff way to cheap. 5E profit = nothing. That's worrying (including the deals you can get on wholesale buying - another topic obv ;-))

[Ed Mack]

2 hours ago, conceptmachine said:

It's happened with every collectable known to man, lego will be no different.  This is a gluttoned market.   Over produced and over hoarded.  Thank goodness the economy is decent right now because when it drops people will be really hurting to get rid of stuff, taking big losses.  Me, I'll be sitting on the sidelines watching it all unfold.  Someone mentioned new markets being brought into the mix.  I agree that will help to a point, but most of those new markets will be buying tubs of used legos for pennies on the $.  Those countries have few that can afford new expensive sets let alone sets that are marked up for profits.

Life is good anyway, we all can move on to the next money maker.  There is always a new one to be found.

What you fail to consider in your theory is that LEGO is not only a collectible, but the most popular toy of all time.  There will always be new fans and collectors.  All you have to do is look in the eyes of a six year old kid to know that he is hooked for a lifetime and that one day, his kid will have the same look.  Lather, rinse and repeat...millions of times.

[redghostx]

32 minutes ago, Ed Mack said:

What you fail to consider in your theory is that LEGO is not only a collectible, but the most popular toy of all time.  There will always be new fans and collectors.  All you have to do is look in the eyes of a six year old kid to know that he is hooked for a lifetime and that one day, his kid will have the same look.  Lather, rinse and repeat...millions of times.

 

One other thing to add is that there are a large untapped market presenting itself in the next few years as more people realize how "cool" Lego sets are now and that people regret selling or giving away their old Lego.  I personally meet about a person a month just coming out of their dark ages and getting back into Lego and these people all have disposable income that I am happy to help them part with.

[labfreak7]

For f***'s sake people, chill out.  You're acting like one single article presages the full scale collapse of the secondary resale market for Lego.  As history has shown us...it doesn't.  Although there haven't been many such articles over the years, this is not the first and won't be the last.  Although each new article may draw more people in looking for a quick buck, as many have pointed out, the money isn't as easy as many think and most of those folks wash out in a relatively short period of time when the hundreds or thousands that they've dropped on Lego don't multiply over night.  As long as Lego maintains its popularity and TLG continues to operate on the same business model as it does today (i.e., with sets that are only on the market for a limited period of time), there will continue to be a secondary market and there will continue to be money to be made reselling Lego on that market.  That money may not come in exactly the same ways, same volume on a per set basis, or same timeframe that it has in the past, but that money is still there and will remain there.  My margins are lower today than they were a few years back, but I am making far more money overall than I ever did before.  If I had freaked out when USA Today did an article on Lego investing a few years back, I would have missed out on all that profit. 

Problem is- articles like this one got me into the Lego investing game.....

[redcell]

3 hours ago, valenciaeric said:

Sounds pretty much like a bubble to me. Prices rapidly inflated to unrealistic levels due to speculation, the market price was not sustainable and fell to more reasonable levels. It´s true that in these cases, Lego then produced more sets to satisfy demand and prices fell, but then that´s what we are also discussing here - the more sets they churn out, the less rarity value each one has.

One could argue the same thing happens when a company issues more stocks, the value of existing ones usually declines. When Lego remake a product, this is what usually happens to the previous edition.

It´s not really fair to compare the stock market to Lego as stock values are based more on emotional value about the future performance of the company, war, macro economics, who wins the World Series and what way the wind blows. The value of Lego is based primarily on the scarcity of the set or piece.

 

What you're missing is that the prices on RI didn't inflate because of speculation...they inflated because a newspaper article clued consumers into the existence of the set, the set hit a particular chord with a large group of consumers, and there wasn't enough supply on the market to satisfy that demand on the primary market...so prices rose because resellers who held the set weren't limited by MSRP.  Once Lego produced more sets to meet the demand and the sets were more plentiful, competition among sellers brought prices back down.  

[thecrapweasel]

I just turned 40.  3 years ago, my wife bought me Jabba's Palace...sort of as a gag gift (Not to shabby, right?).  I put it together and enjoyed it so much.  It brought me back to when I was a kid.  Fast forward to today, I have spent probably close to $10k on Lego since then.  Just think about how many thousands of other people like me around the world doing the same?  Example, somebody buys their kid a Lego set as a birthday gift because they remember loving Lego as kid...they help little Jimmy put it together and BAM!!  They are hooked and on the way out the door to go buy another set.  Its not all doom and gloom here...

[KShine]

48 minutes ago, redghostx said:

One other thing to add is that there are a large untapped market presenting itself in the next few years as more people realize how "cool" Lego sets are now and that people regret selling or giving away their old Lego.  I personally meet about a person a month just coming out of their dark ages and getting back into Lego and these people all have disposable income that I am happy to help them part with.

We have been tapping into new markets for years, and things have continued to get tighter for all sellers (as new sellers have continued to outpace new buyers).

Why is that trend suddenly going to change???

[Val-E]

28 minutes ago, redcell said:

What you're missing is that the prices on RI didn't inflate because of speculation...they inflated because a newspaper article clued consumers into the existence of the set, the set hit a particular chord with a large group of consumers, and there wasn't enough supply on the market to satisfy that demand on the primary market...so prices rose because resellers who held the set weren't limited by MSRP.  Once Lego produced more sets to meet the demand and the sets were more plentiful, competition among sellers brought prices back down.  

I´m not convinced that it was ONLY end users buying up RI´s or EXO´s, Jurassics, 41999´s, Calendars or whatever the flavour of the moment has been. We saw it with the Town Hall too, enough resellers were willing to buy them from other resellers at above RRP because they thought RI = Mars Rover = Ching ching.

What we can say is from the above examples, the worst thing that happened was that the market price stabilised back down at around RRP and in most cases has recovered to above RRP again once the only source for obtaining them is the secondary market. Some non bubble sets just flatline from the getgo and never go anywhere and others have had remakes destroy ther value  so are much worse investments.

With irresponsible journalism, the picture painted is that any fool can make money trading lego´s and that is a very dangerous thing to promote because when they fail they will jettison their stock and bring prices back down as you mentioned above - then in a deflationary period, buyers stop buying as they expect the price to fall further.

 

[Val-E]

7 minutes ago, KShine said:

We have been tapping into new markets for years, and things have continued to get tighter for all sellers (as new sellers have continued to outpace new buyers).

Why is that trend suddenly going to change???

It would be nice to have a survey on what % of our sales are to foreign customers - I´d bet that in the US it would be less than 10% and in most European countries too.  Customs complications, currency fluctuation, scamming risk and transport costs all make it very difficult to tap into markets that are not neighbours.

Another thing is that more and more China sellers start tapping into our market with fakes and counterfeits  but maybe I am just being too pessimistic, as usual.

[binici]

My friends always seem aw struck when they come visit and see my collection and stock.

They know I resell and always ask, are you doing well? I showed them some profits and they seem to always want to jump in on the action, but flake out because they expect quick returns and don't have the time and funds...

Case in point, if you have the time and capital, you can try, but there are other factors that come into play if you want to become successful!

[biking_tiger]

I'm not sure it's a "Lego" problem. This seems to be the era of retail arbitrage, and Lego is just part of that patchwork. There are more resellers of everything right now.

[thecrapweasel]

6 minutes ago, biking_tiger said:

I'm not sure it's a "Lego" problem. This seems to be the era of retail arbitrage, and Lego is just part of that patchwork. There are more resellers of everything right now.

I resell new sneakers and clothing and invest the profits in Lego

[Val-E]

5 minutes ago, biking_tiger said:

I'm not sure it's a "Lego" problem. This seems to be the era of retail arbitrage, and Lego is just part of that patchwork. There are more resellers of everything right now.

Maybe if shops didn´t offer up such horrendous online shopping experience there wouldn´t be a need!

If little Timmy decides what he wants for Xmas at the last minute, the B+M stores are all out of stock and your online stores are OOS, can´t deliver to you on time or without running an elephant over the packaging - who ya gonna call?

 

[redcell]

58 minutes ago, valenciaeric said:

I´m not convinced that it was ONLY end users buying up RI´s or EXO´s, Jurassics, 41999´s, Calendars or whatever the flavour of the moment has been. We saw it with the Town Hall too, enough resellers were willing to buy them from other resellers at above RRP because they thought RI = Mars Rover = Ching ching.

What we can say is from the above examples, the worst thing that happened was that the market price stabilised back down at around RRP and in most cases has recovered to above RRP again once the only source for obtaining them is the secondary market. Some non bubble sets just flatline from the getgo and never go anywhere and others have had remakes destroy ther value  so are much worse investments.

With irresponsible journalism, the picture painted is that any fool can make money trading lego´s and that is a very dangerous thing to promote because when they fail they will jettison their stock and bring prices back down as you mentioned above - then in a deflationary period, buyers stop buying as they expect the price to fall further.

 

Ok, but you're expanding the list there.  41999 is a different story than RI.  I saw no evidence to indicate that the increase in price for RI was driven by anything other than consumer demand.  The number of sets for which a reseller would pay 5x MSRP as a buy-in are few and far between and I can't think of any that happened that quickly.  41999 is a different story and one driven largely by the unique circumstances of its release.  However, in that instance, the fact that speculators were buying them at prices above MSRP had very little effect on the secondary market price.  There was a quick spike to $500 and the price then settled down quickly (within a few weeks) to around $425 and then to around $375.  To the extent that resellers were buying in at any of those prices, those speculative sales had very little effect on the price.  If they had, the price would have continued to climb.

[jdmpartz]

2 hours ago, Ed Mack said:

What you fail to consider in your theory is that LEGO is not only a collectible, but the most popular toy of all time.  There will always be new fans and collectors.  All you have to do is look in the eyes of a six year old kid to know that he is hooked for a lifetime and that one day, his kid will have the same look.  Lather, rinse and repeat...millions of times.

Exactly.

My 3 year old says LEGO probably 20+ times a day. You cannot beat that type of following from that age. Plus DISNEY to boot, it cant get much better than that to grow the younger age base. These kids eventually turn AFOL, possibly a collector for some.

No need to twist my arm on buying LEGO for my kids. Played with or brand new, you will never lose out 100% on your money.

 

Not specific towards you Ed, that last sentence came out wrong.

Edited November 19, 2015 by jdmpartz

[redghostx]

1 hour ago, KShine said:

We have been tapping into new markets for years, and things have continued to get tighter for all sellers (as new sellers have continued to outpace new buyers).

Why is that trend suddenly going to change???

It's all about having the right merchandise, as with any venture. 

 

ETA - Nothing will ever be like the gold ole days, in almost every part of life.  As has been noted before, the evolving people will do just fine and will walk over those that are ill-prepared or fail to change.

Edited November 19, 2015 by redghostx

[Ed Mack]

48 minutes ago, redghostx said: One other thing to add is that there are a large untapped market presenting itself in the next few years as more people realize how "cool" Lego sets are now and that people regret selling or giving away their old Lego.  I personally meet about a person a month just coming out of their dark ages and getting back into Lego and these people all have disposable income that I am happy to help them part with.

We have been tapping into new markets for years, and things have continued to get tighter for all sellers (as new sellers have continued to outpace new buyers).

Why is that trend suddenly going to change???

I don't think it will change back to the way it used to be, but I don't foresee an implosion of the market either.

[KShine]

1 hour ago, valenciaeric said:

It would be nice to have a survey on what % of our sales are to foreign customers - I´d bet that in the US it would be less than 10% and in most European countries too.  Customs complications, currency fluctuation, scamming risk and transport costs all make it very difficult to tap into markets that are not neighbours.

Another thing is that more and more China sellers start tapping into our market with fakes and counterfeits  but maybe I am just being too pessimistic, as usual.

Lifetime 23-24% of my sales are international, but this year it has dropped down to 18% - I attribute this to the recent strength of the $ (which has made things more expensive)

[d4m60d]

Hello guys,

does anybody remember or think about it when and why this bubble started if it really exists?

I just thought to myself, when was the time that the first AFOL was born in this world? And even why and when he started appreciating Lego and its toyworld. Was it when he saw his son playing with his old toys that pushed him out of the dark ages?! And when did he realized there will be money to be made with old sets or buying beyond msrp?!

I think, if you really could go back to this moment, we would better understand how the lego phenomenon works.

So my conclusion at first sight is that the possible bubble started with the first AFOL who saw the potential in reselling. So he "infected" other people who first didn't saw how cool lego is and dropped them out of their dark ages... and so on... demand increases till it reaches its critical point...

Snd even this forum and other media pushes more people to this gold digging rush as it seems to be now!

Fact is we know that there are thousands of resellers and maybe not enough buyers. But do we actually have reached the critical mass? Do we have no choice and gi down? Maybe or maybe not. It is an interesting time and I will look back at this moment right now in a few years. Surely I will be amazed what will be happened!

Greetings,

Chris