Are LEGO Bricks a Better Investment Than Stocks?

[asharerin]

I am definitely scaling down my purchases of Lego in 2016. I will no longer be purchasing large quantities of sets to hold and resell a few years later. There is obviously alot more selling competition but I also think the brand is slipping. There are also going to be some big changes in 3P selling on Amazon over the next 3-5 years and I really don't have any faith in the ebay platform. All this adds up to not enough reward for shouldering all of that risk for me. In 3-4 years I will be completely out of the Lego game in any serious way. I think the easy money is now in selling services to resellers and Amazon stock did not let me down this year. I will be mainly concentrating my reselling efforts on items I can realize a good ROI bi-weekly rather than every 2 years. I no longer feel the brand is as safe as it has been in prior years and unfortunately I can start to see some larger cracks appearing in my local brick and mortar private chain of brick stores. For my business model the Lego brand just isn't going to work as far as reselling their toy line. I think there is a good market for complimentary brick related and reselling merchandise tho.

[kiltyoneal]

Alright, who is going to be the first to create a Lego hedge fund?!

[zskid00]

5 hours ago, valenciaeric said:

Did you invest in gold or oil?

You can't even compare these markets.  Nobody has to actually take inventory of gold or oil to speculate on prices and future values.  You have to buy, store, and sell LEGO sets to get in this game.  That is going to turn off a lot of people from the start.  Certainly there is more competition today but if you are experienced, put in the time, and are able to adapt you will outlast and outperform a lot of them.

[Mos_Eisley]

4 hours ago, asharerin said:

I am definitely scaling down my purchases of Lego in 2016. I will no longer be purchasing large quantities of sets to hold and resell a few years later. There is obviously alot more selling competition but I also think the brand is slipping. There are also going to be some big changes in 3P selling on Amazon over the next 3-5 years and I really don't have any faith in the ebay platform. All this adds up to not enough reward for shouldering all of that risk for me. In 3-4 years I will be completely out of the Lego game in any serious way. I think the easy money is now in selling services to resellers and Amazon stock did not let me down this year. I will be mainly concentrating my reselling efforts on items I can realize a good ROI bi-weekly rather than every 2 years. I no longer feel the brand is as safe as it has been in prior years and unfortunately I can start to see some larger cracks appearing in my local brick and mortar private chain of brick stores. For my business model the Lego brand just isn't going to work as far as reselling their toy line. I think there is a good market for complimentary brick related and reselling merchandise tho.

I agree with the overall quality of the LEGO brand slipping, at least at the retail level. The stores around me are far less enjoyable to visit than they were a few years ago.  They seem to have really lowered the standards for who they hire for regular associates and managers. 

[Val-E]

1 hour ago, zskid00 said:

You can't even compare these markets.  Nobody has to actually take inventory of gold or oil to speculate on prices and future values.  You have to buy, store, and sell LEGO sets to get in this game.  That is going to turn off a lot of people from the start.  Certainly there is more competition today but if you are experienced, put in the time, and are able to adapt you will outlast and outperform a lot of them.

Did you read my post about the investment trust? It´s only time before someone creates one to allow speculator to invest in Lego without getting their hands dirty....

[zskid00]

6 minutes ago, valenciaeric said:

Did you read my post about the investment trust? It´s only time before someone creates one to allow speculator to invest in Lego without getting their hands dirty....

That would certainly be interesting to see.

[Val-E]

Greed will entrap people, for sure - it always does. Promise good enough returns and they will invest in anything they don´t understand.

[ZULU]

7 hours ago, fossilrock said:

I bet we start to see crapola like that over the next year. 

It's getting weird.  Even my old honey holes that were easy pickings are now being swarmed by competition.  I went to a TRU the other day, and it was filled with two other "investors" that were picking and chatting and had no problem filling carts up with what I would deem "too early junk".  That was a bit of a spooky experience, because I DO my research quite a bit on stuff, and they seemed to have done none.  I wouldn't have done what this one 20 something was doing loading up on new star wars items, some superhero sets, speed racers, etc all at TRU inflated retail costs .  Then I went to my local BAM which had at one point 6 UN Architecture buildings two weeks ago.  I was considering buying a couple, but passed, then I went back this week, and they were all gone.  I'm starting to even think the architecture line, which has a small but fanatical fanbase, is now becoming swarmed by resellers.  2 years ago, most sets like Sungnyemun, Robie House, Burj, Guggenheim, etc were hardly hoarded like most of the sets are now and I attribute the rise in costs to many of those older architecture sets to the fact that not many people were buying them to hold. 

Don't get me wrong, this christmas selling season was great.  I just sold another Farnsworth house at 120 a day ago which gave me about a 96% return on investment from my buy-in, and the prices on Fallingwaters, Sydney Opera Houses, etc are definitely at a spot, where doubling your money, even after fees if you bought in at discounts are a given.  But, do I think this will continue like this next year on the six sets that just retired?  I'm not so sure...  I actually have some doubts on many of them. 

Add in all the extreme rookies that have flooded this site over the last couple weeks that don't even seem to have much knowledge about lego, and it's left me thinking that it's time to be a lot more selective this year, but scale down on my buying by 60% compared to last year, with the goal of buying things I would open, but then just hold them in the box for a year or two.  If things go south, then they become birthday and christmas presents and i'm not out on a huge loss.

When I wrote the blog article on BP about architecture, most people weren't biting because fallingwater hadn't retired as it should.

With the old architecture done and appreciating nicely, there's no holding the horde now. Sleepers wake up fast these days

[exciter1]

7 minutes ago, valenciaeric said:

Greed will entrap people, for sure - it always does. Promise good enough returns and they will invest in anything they don´t understand.

I have friend named Madoff who has just what you need.

[Darth_Raichu]

9 minutes ago, valenciaeric said:

Greed will entrap people, for sure - it always does. Promise good enough returns and they will invest in anything they don´t understand.

cf. last night $1.5 billion Powerball lottery.

[Val-E]

8 minutes ago, Darth_Raichu said:

cf. last night $1.5 billion Powerball lottery.

We´re all guilty, though. How many people only started doing this to pay for their own collection then saw they could make a profit on top of that and then got good at it and saw they could make a career out of it  and even start advising other people on how to invest?

[Seal Cutter]

7 hours ago, valenciaeric said:

Did you invest in gold or oil?

Both, naturally

[Val-E]

And how did it work out for you?

[fossilrock]

7 hours ago, valenciaeric said:

When people inforrm about getting in, it´s time to plan getting out. When people actively advise getting in, it´s time to actively get out.

The only thing that makes this different than stocks is that these plastic bricks are mostly for a hobby.  My family enjoys building lego sets, so if Lego makes great sets, we will continue to buy them.  Stocks are strictly for investing.  With lego, you at least get some enjoyment and fun out of buying a box and building it.  I will buy every modular from here on out as long as they have uniqueness and interesting builds to them, and probably buy most UCS Star Wars sets until the theme seems overcooked..  But there are limits to what i'd want to invest in right now and i'm definitely not going to spend thousands buying multiples on a single set like i've done over the last few years.  The only sets that I feel I made a somewhat bad move overbuying over the year was in JW, but I did get some money back in that theme already.  Unfortunately, I see many more JW's, Seasonal Advent Calendar, and Santas Workshop fiasco's this year.  That was merely the beginning of what is going to become the norm.  And looking at the sets they are releasing this year, I just have no interest in the Ghostbusters, angry birds, or Batman themes, and the newest star wars wave was pretty weak.  I'm sure there will be more awesome sets coming out, and they'll be known soon, but I just can't see myself a year from now stocking up on a lot of these sets.  I'm sure i'll miss the boat on a few, but that's ok with me.  I think for every hit there's going to be a lot of strike outs.  Like I said, i've seen this happen in other brands over the years. 

Edited January 14, 2016 by fossilrock

[Seal Cutter]

11 minutes ago, valenciaeric said:

And how did it work out for you?

Well enough

[fossilrock]

29 minutes ago, ZULU said:

When I wrote the blog article on BP about architecture, most people weren't biting because fallingwater hadn't retired as it should.

With the old architecture done and appreciating nicely, there's no holding the horde now. Sleepers wake up fast these days

Very true.  The internet gets the word out fast, and furiously, and it can spread like wildfire in hurricane force winds.  I bet a majority that are hoarding architecture now, have never built a single one, nor are really into the theme.  Once a lot of people jump into a hobby that are not really into it, that's when the ship sails straight into the hurricane.

7 minutes ago, Seal Cutter said:

Well enough

Well, you are about 3 years late to the game here.  So, "well enough" might not be good enough in this case.

[Val-E]

6 minutes ago, Seal Cutter said:

Well enough

Meaning you got out before the respective crashes or you got in after/during them?

[Seal Cutter]

33 minutes ago, fossilrock said:

Well, you are about 3 years late to the game here.  So, "well enough" might not be good enough in this case.

Ouch. I guess we'll see. What's the worst that can happen?

[Seal Cutter]

37 minutes ago, valenciaeric said:

Meaning you got out before the respective crashes or you got in after/during them?

Meaning i rode somewhere near the curve by mixing short and long positions. And i got lucky

[Seeyounexttuesday]

8 hours ago, valenciaeric said:

Did you invest in gold or oil?

My parents bought three chains in Bahrain in 95 or so. Those three chains cost 700 uk pounds approx, they weighed aprox 100 gram and they were bought to wear and enjoy. They were sold when gold was  over 30 uk pounds per gram and got about 3k back for them.

 

im a bit like them with my Lego, I buy to enjoy, open and build. Hopefully even after opening and using them I can still make some profit one day too

 

Edited January 14, 2016 by Pjking

[Val-E]

That´s what I was saying about Lego, you need to combine luck with skill and timing - just hoarding stuff with no end game is a recipe for disaster as is selling short. Knowing when to let go of stuff is a vital skill that I think most of us still need to finetune and is why we get nervous seeing all this publicity about Lego being the best investment in the world. Lifts can only carry so many people till the cable snaps.

[Seal Cutter]

Wise words

[ED-209]

10 hours ago, fossilrock said:

The only thing that makes this different than stocks is that these plastic bricks are mostly for a hobby.  My family enjoys building lego sets, so if Lego makes great sets, we will continue to buy them.  Stocks are strictly for investing.  With lego, you at least get some enjoyment and fun out of buying a box and building it.  I will buy every modular from here on out as long as they have uniqueness and interesting builds to them, and probably buy most UCS Star Wars sets until the theme seems overcooked..  But there are limits to what i'd want to invest in right now and i'm definitely not going to spend thousands buying multiples on a single set like i've done over the last few years.  The only sets that I feel I made a somewhat bad move overbuying over the year was in JW, but I did get some money back in that theme already.  Unfortunately, I see many more JW's, Seasonal Advent Calendar, and Santas Workshop fiasco's this year.  That was merely the beginning of what is going to become the norm.  And looking at the sets they are releasing this year, I just have no interest in the Ghostbusters, angry birds, or Batman themes, and the newest star wars wave was pretty weak.  I'm sure there will be more awesome sets coming out, and they'll be known soon, but I just can't see myself a year from now stocking up on a lot of these sets.  I'm sure i'll miss the boat on a few, but that's ok with me.  I think for every hit there's going to be a lot of strike outs.  Like I said, i've seen this happen in other brands over the years. 

I personally reckon that the new Star Wars wave are pretty good. X wing, Tie, Freezing Chamber, Final Duel and Hoth Attack look pretty good in my eyes. As investments? maybe not so much. They are gonna be hoarded as all hell and if TLG don't realise what's happening to their brand, are likely to be over-produced.

Depends on which country you are in, but the last wave of AT-AT, Snowspeeder and ISD were only available for a year in Aus. There are at present none left at national retail outlets and are starting to appreciate well. There are quite a few listings on ebay.com.au, so even though they were released for only a short time, they have been hoarded quite a bit. As long as TLG don't remake them soon, they should do even better once the glut is sold off.

I think all this madness will end in a race to the bottom until things pick up again. IMO timing is important for sets that might be remade, but unique sets may still pay off well as long as you're willing to wait a few years for decent returns (as opposed to selling for 2x MSRP six months after EOL).

[chezzzuk]

Did you invest in gold or oil?

You can't even compare these markets.  Nobody has to actually take inventory of gold or oil to speculate on prices and future values.  You have to buy, store, and sell LEGO sets to get in this game.  That is going to turn off a lot of people from the start.  Certainly there is more competition today but if you are experienced, put in the time, and are able to adapt you will outlast and outperform a lot of them.

It just struck me that investing lego could be like investing in fine wine. There are companies that buy, store and sell the actual wine bottles for people so that it is easy to invest in wine without the hassle. Also if your wine/lego investment goes pear shaped you just drink/build it!

[HandyHand]

20 minutes ago, chezzzuk said:

It just struck me that investing lego could be like investing in fine wine. There are companies that buy, store and sell the actual wine bottles for people so that it is easy to invest in wine without the hassle. Also if your wine/lego investment goes pear shaped you just drink/build it!

The difference is: once you uncork a bottle of wine and drink it, you have the fun once and then it's gone. But when you open a sealed Lego set and build it, you have the fun of building the set, enjoying to look at the finished set on display, and then after some time you can take it apart, bag it up, put it back in the box (which of course you neatly saved together with the manuals) and you can sell it off again as an 'only built once, light display use' set. And if the set appreciated well after EOL you'll even make a profit on it!