10179: The Worst Thing to Ever Happen to Lego Investing

[Fenix_2k1]

3 minutes ago, Sprocket77 said:

Not disagreeing with your overall post, but maybe, just maybe, Tower Bridge and the T1 VW Camper Van have stayed around because they're really cool Lego sets which sell well and they're ageless so new afols are always going to want them. 

You do know also, that when you talk about the horde, that really we're all part of that horde.

I consider the horde to be the people who are buying 10+ of each exclusive. 

Buying 2-3 of an exclusive over time won't change the market but people filling containers certainly will. 

Most of the Exclusives are cool and ageless that's why they were making good money before, that didn't prevent retirements in the past though.

[Val-E]

If someone buys 1 Tumbler because Emazers/The Daily Telegraph/Ed Mack/ their barber advised them to, they´re part of the horde. 60 people with 1 Tumbler saturate the market as much as 1 person with 60, especially if they have no game plan.

[Fenix_2k1]

21 minutes ago, Val-E said:

If someone buys 1 Tumbler because Emazers/The Daily Telegraph/Ed Mack/ their barber advised them to, they´re part of the horde. 60 people with 1 Tumbler saturate the market as much as 1 person with 60, especially if they have no game plan.

The people with no game plan who bought Tumblers are probably the ones already selling and most didn't get in until it was already retired at LEGO Shop at Home.

Yes 60 investors buying 1 is same as 1 buying 60 but if 1 in 10 of the new investors to the market is of the type that buys in bulk then that does change the market.  There had always been a steady flow of extra lego investors but I think the main issue is the articles have brought in more heavy investors now making the Exclusives not very exclusive at all. 

After all, the reason 10179 was so successful was the low production number, scarcity and lack of real interest at the time.

As an example, look at the star performers in the Star Wars range for recent retirements. Red 5 UCS is doing OK but not spectacular, just starting to make a little bit of profit if you bought at rrp, yet underrated sets like The Phantom and The Ghost have rocketed because they weren't heavily bought into.

Then there's the millennium falcon that did make insane profits quickly. The microfighters version,  that has tripled in value post retirement again because it was overlooked at the time as a novelty.

Edited March 23, 2016 by Fenix_2k1

[Val-E]

So we agree that a major part of the problem is excess offer then. My point is the guy with 60 sets hopefully won´t be dumb enough to try to list/sell them all at the same time (some are, though!) whereas 60 sets split between 60 sellers is harder to control and creates a clear image of excess offer for buyers as then there are 60 separate listings. If I see that, I´ll hold off buying till they crack first.If there is only one listing, I´ll probably crack first if I can´t be sure the seller has more stock. If they are smart, they´ll relist at a sightly higher price and it´s matchball yet again.

With 60 folk, the opposite happens as they get stressed they are not selling and start to mark their prices down and the smart buyers can lie in wait.

Edited March 23, 2016 by Val-E

[Fenix_2k1]

I guess it all depends on the motivations of the small v  large investor.

Personally as a small investor I'll happily hold on to inventory as it's not tying up too much capital and I'm looking for a good profit per set, although you are right that there are plenty of small investors in a race to the bottom with Exclusives just to get out. If I had lots of sets I may think making £40 per set leaves me with a tidy profit. Maybe keeping 5 or 10 for longer term.

I get the feeling that the market is so excited by the prospect of huge profits. Lego could release a £1000 ucs star wars set with a 5000 unit production run and it would sell out in days.

[HandyHand]

One part of the problem is the insanely low interest rates offered by the banks. When people could get 3-4% interest on their savings, many were happy to just leave it there. But now that banks offer less than 1% interest, more and more people are looking at other ways to get a bit more out of their money. And investing in Lego suddenly becomes interesting for a lot of people. If you only get 0.7% interest offered by the bank, making just 5% profit (after costs) on Lego investment sounds already great. 

And because these new investors are already happy to take 5-10% of net profit after a few months of waiting, the prices will stagnate for a long time after a set retires.

Until (hopefully) a new fad comes around causing many of these new Lego investors to jump ship and join the next opportunity that the media claims to offer mountains of gold. 

[Deadfraggle]

1 hour ago, Fenix_2k1 said:

I get the feeling that the market is so excited by the prospect of huge profits. Lego could release a £1000 ucs star wars set with a 5000 unit production run and it would sell out in days.

My honest opinion here is that a truly limited production run, i.e. Numbered with certificate like the UCS Falcon (1st edition) or the VIP Bat-pod, and the set was really well done, it would last last then a day.

Lets say LEGO released a truly epic UCS on May the 4th, but limited each of the LEGO stores to 5 copies and dispersed the remainder of the 5000 units evenly across each LEGO Shop at Home country's website. In this case, I think it would sell out almost instantly.

[lostontheverglow]

18 hours ago, Rimmit said:

So ultimately, 10179, has caused a spiral of events that will ultimately eventually bring about the end of Lego Investing.  Is that likely to happen in the next 10 years?  Not likely, but this site is adding 60 new members a day based on the number at the bottom of the main page. Albeit, not everyone is going to invest, and some might join just for the community, but there are some investors in that number.  The market is still very strong, and will always remain strong because Lego is not a fad, and Lego will always have demand.  Are you likely to lose in Lego Investing, like people lost big in baseball cards and beanie babies.  Not likely, unless you are just AWFUL at picking sets, and are completely impatient.  However, eventually a time will come, when selling just to cover your initial investment at RRP+Taxes will become standard for most sets.  

Interesting to note, however, that this number was something like 200 new members a day. Also during peak hours there were around 500 users online (I think), and now there are usually around 100 users online. While the overall pool of investors is growing without a doubt, you can be certain that a large number of users simply are curious or have already given up. Also I'm sure a potential bubble is causing a lot of older investors to phase out as well. The Dec-Jan craze over Lego investing is slowing down.

[gregpj]

Le sigh...

 

 

[Val-E]

What else would you like to discuss? There are no leaked images of new releases to get excited, nothing has retired unexpectedly or is showing any strange patterns (except for PS which is a given as it happens every year) and no sets are showing spectacular growth worth reporting on. If all else fails it´s bubble time!

[Sprocket77]

7 minutes ago, gregpj said:

Le sigh...

Just cause you're in France doesn't justify Le Sigh 

[exciter1]

1 hour ago, Haay said:

One part of the problem is the insanely low interest rates offered by the banks. When people could get 3-4% interest on their savings, many were happy to just leave it there. But now that banks offer less than 1% interest, more and more people are looking at other ways to get a bit more out of their money. And investing in Lego suddenly becomes interesting for a lot of people. If you only get 0.7% interest offered by the bank, making just 5% profit (after costs) on Lego investment sounds already great. 

And because these new investors are already happy to take 5-10% of net profit after a few months of waiting, the prices will stagnate for a long time after a set retires.

Until (hopefully) a new fad comes around causing many of these new Lego investors to jump ship and join the next opportunity that the media claims to offer mountains of gold. 

I remember 8-9% interest rates at banks, but loans were 12-15%.  My Dad remembers 19% interest rates, so it could always get crazy again.

[Sprocket77]

8 minutes ago, Val-E said:

What else would you like to discuss? There are no leaked images of new releases to get excited, nothing has retired unexpectedly or is showing any strange patterns (except for PS which is a given as it happens every year) and no sets are showing spectacular growth worth reporting on. If all else fails it´s bubble time!

What's a bubble?

[Val-E]

2 minutes ago, exciter1 said:

I remember 8-9% interest rates at banks, but loans were 12-15%.  My Dad remembers 19% interest rates, so it could always get crazy again.

Yeah, I remember opening a deposit with Citibank at 10%  - happy days.

[gregpj]

17 minutes ago, Val-E said:

What else would you like to discuss? There are no leaked images of new releases to get excited, nothing has retired unexpectedly or is showing any strange patterns (except for PS which is a given as it happens every year) and no sets are showing spectacular growth worth reporting on. If all else fails it´s bubble time!

Honestly, I prefer not having to read the same doom and gloom posts every damn day to be honest. So many members have absolutely ZERO to contribute yet need to constantly post the most negative asinine comments day in and day out. Now some members like rimmit like to post novels and rehash pictures from 8 years ago about some deal of the century, but at least it's an attempt to be helpful and provide more than "my box came squished" or "I can't believe how many new investors there are" or "this is unsustainable" or "I can't wait for T1 to retire".

The OP attempted to offer a different take on investing in LEGO and you guys are just steering it back to the same old same old.

14 minutes ago, Sprocket77 said:

Just cause you're in France doesn't justify Le Sigh 

How about if I'm also French Canadian and was always a big Looney Tunes fan?

[exciter1]

3 minutes ago, gregpj said:

How about if I'm also French Canadian and was always a big Looney Tunes fan?

[Crustybeaver]

11 hours ago, Migration said:

Just wait for the re release.

That's the impending doom right there!

[Rimmit]

53 minutes ago, gregpj said:

Honestly, I prefer not having to read the same doom and gloom posts every damn day to be honest. So many members have absolutely ZERO to contribute yet need to constantly post the most negative asinine comments day in and day out. Now some members like rimmit like to post novels and rehash pictures from 8 years ago about some deal of the century, but at least it's an attempt to be helpful and provide more than "my box came squished" or "I can't believe how many new investors there are" or "this is unsustainable" or "I can't wait for T1 to retire".

Thanks. 

In actuality, the pictures from 8 years ago were not "deals of the century."  Those were just the STANDARD deals back then.  In today's market it would be the deal of the MILLENIUM.

Sorry for the novels, but I try to convey my thoughts in a well thought out manner so as to avoid confusion.  Communication is the number one reason for mistakes and misunderstandings in almost any field of life, and good communication reduces errors and conflicts dramatically especially with the wife/SO.  Good communication keeps your feedback ratings high as well.

In all honesty,  I am just flat out MIND BLOWN, by what has happened in 8 years.  I joined onto here, with minimal forum reading, all super enthusiastic to get back into Lego Resale.  I ante'd back buying the Tumbler, as based on my 2004-2007 experience it would be a home run. I still believe it will be, but it will not be a home run by 2004-2007 standards.  However, after 2 months on here, I quickly realized, that this is NOT the same as it was in 2007, and I cannot expect the same returns and appreciation as I had previously experienced.  The market has changed significantly since 2007, and is changing RAPIDLY since 2012 and the startup of Brickpicker.

I was simply attempting to provide a historical perspective, especially, for all the newbies out there who might think another 10179 is a possibility, because it is not.  It is an enigma on the market, and will NEVER be recreated, and quite frankly the catalyst to the eventual fall of Lego Investing as being a HIGHLY lucrative market.  It will always make money if you are smart, but we will never be able to recreate the previous gold rush days.  If you came into this now expecting to hit the next 10179, you are in for world of disappointment. 

Edited March 23, 2016 by Rimmit

[redcell]

3 hours ago, Val-E said:

The 12% annual return is an average over maybe 3-5 years, the big gains usually used to come immediately after EOL and about a year or 2 later when scarcity took over. Nowadays the quick flippers look like they are killing the initial jump and the second one got killed off a while back so we are probably looking towards a more realistic 5-10% annual gain over 5 years with a more gradual rise. We´ll see down the line if after 5 years there is a new scarcity blip.

There are aways going to be sets that buck the trend in a good or bad way but we can look to the performance of FB, GE, Bwing, Medieval Market and a few others as indicators for exclusives.

If folks are really targeting the 4-5 year post-EOL timeframe as their ideal selling window, one thing to realize is that demand for most retired sets falls off a cliff once you hit the 3-year post-EOL mark.  By that time, most buyers have moved on to other products and are focused on buying other sets.  Prices may continue to climb, but it becomes increasingly difficult to move inventory.  If we end up in a scenario where there are a lot of resellers targeting that same window, that supply combined with low demand will keep prices from rising and make it difficult to unload inventory.

[Crustybeaver]

32 minutes ago, gregpj said:

Honestly, I prefer not having to read the same doom and gloom posts every damn day to be honest.

Greg I don't want to come across as being rude but you might wanna start looking elsewhere then because I see this becoming a more common affair. 

Edited March 23, 2016 by Crustybeaver

[KShine]

22 minutes ago, gregpj said:

Honestly, I prefer not having to read the same doom and gloom posts every damn day to be honest. So many members have absolutely ZERO to contribute yet need to constantly post the most negative asinine comments day in and day out.

If you think that the mob is negative now (when things are still relatively good), just imagine how they will be when things are actually bad.

[chezzzuk]

If someone buys 1 Tumbler because Emazers/The Daily Telegraph/Ed Mack/ their barber advised them to, they´re part of the horde. 60 people with 1 Tumbler saturate the market as much as 1 person with 60, especially if they have no game plan.

Not really as a percentage of the 60 investors might change their mind and decide to keep and build if there is no demand. What would 1 investor do with 60 tumblers - sell at a much lower price?

[gregpj]

28 minutes ago, Crustybeaver said:

Greg I don't want to come across as being rude but you might wanna start looking elsewhere then because I see this becoming a more common affair. 

I still love LEGO and enjoy most of what gets posted/goes on here on BP. I just don't get how some members can be so negative all the time... It tires me out just reading their posts never mind thinking it!

Truthfully, I don't believe in a bubble... but I also believe in being realistic. I haven't bought a single LEGO brick for investment since November 2015. Everything purchased since then has been for personal consumption and in fact, a few valuable sets that I only have one of (i.e. Maersk Train, 7905 Building Crane) are getting opened and built as part of a new LEGO city when we get home from our extended trip. Don't care, like the sets, want to build them.

I think negative posters are going to start having a tougher ride of it around here.... I sense a growing frustration among many members that the people who constantly post negative crap in the forums are going to be asked to behave or get lost. <insert Obi Wan - this is not the investment you're looking for meme here>

[jeff_14]

1 hour ago, exciter1 said:

I remember 8-9% interest rates at banks, but loans were 12-15%.  My Dad remembers 19% interest rates, so it could always get crazy again.

That will likely not happen again. Raising interest rates even a little in this environment could crash the economy, and unemployment is bad enough as it is. Historically, interest rates and inflation averaged less than 2% a year for centuries. We are returning to those times now that the post-WWII economic boom times have wound down. People's wages, adjusted for inflation, have not increased since the 1970s. This is why so many people borrow just to keep up with the Joneses. Raising rates would risk a repeat of 2007-2008 all over again like when the teaser mortgage rates expired and the bigger ones kicked in.

[exciter1]

1 minute ago, jeff_14 said:

That will likely not happen again. Raising interest rates even a little in this environment could crash the economy, and unemployment is bad enough as it is. Historically, interest rates and inflation averaged less than 2% a year for centuries. We are returning to those times now that the post-WWII economic boom times have wound down. People's wages, adjusted for inflation, have not increased since the 1970s. This is why so many people borrow just to keep up with the Joneses. Raising rates would risk a repeat of 2007-2008 all over again like when the teaser mortgage rates expired and the bigger ones kicked in.

I just watched "The Big Short" the other night. Good stuff...