LEGO Investing Future - As dark as Baseball Cards and Beanie Babies

[bricklyn]

So I've heard all the arguments from both sides. The side that says LEGO has stood the test of time as an investment, it is a different commodity, an active collectible that has always been able to reinvent itself due to concept of the toy.

Then there's the other side that says look at some of the past collectibles that have eventually flopped, the overall history of collectible return on investments and for the matter history itself, all good things must come to an end, right?

While LEGO is a good/great investment now, sites like this and many others are clearly showing that many people worldwide are doing the same thing, buying LEGO and stashing it for a future profit. Eventually, these stashes will have to be turned back to cash, but that could mean an overflow of product that dilutes the demand and turns the once hopeful returns into a pile of beanie babies. Supply and demand can be manipulated, but it will eventually show the truth and sometimes the truth ain't what we thought it was.

You still can succeed in this LEGO investment craze by following some simple rules.

Do what others aren't - blaze a trail and reap the rewards when you end up with one of the few LEGO Honus Wagner's.

Keep some, but flip as many as you can as quickly as you can - Stashing all that LEGO could end up costing you a ton, so why not deflect some of that cost by making some money now. LEGO is so unique that you don't have to wait very long for a sizable payday, you just have to be willing to do a little work.

Buy low, sell high - This seems like common sense, but I have been lured into paying full price for a cool new LEGO set countless times, just because how freakin awesome it is. There is no need to ever pay full price especially if you do your homework.

And the most important of all, keep some of your secrets to yourself - If everyone knows what you are doing as far as LEGO investments or any investments for that matter, everyone will do them thus, making those gold investments worth as much as tin.

[Jeff Mack]

YOU HAVE SECRETS AND YOU ARE KEEPING THEM FROM US!!!! Just kidding The one thing I will add to you list is having a little bit of luck when it comes to coming across a great deal. I think Ed mentioned in another post that he landing a great deal on the Star Wars Battle Packs at Target and he was able to grab quite a few of them. I think it was being at the right place at the right time.

[Ed Mack]

So I've heard all the arguments from both sides. The side that says LEGO has stood the test of time as an investment, it is a different commodity, an active collectible that has always been able to reinvent itself due to concept of the toy.

Then there's the other side that says look at some of the past collectibles that have eventually flopped, the overall history of collectible return on investments and for the matter history itself, all good things must come to an end, right?

While LEGO is a good/great investment now, sites like this and many others are clearly showing that many people worldwide are doing the same thing, buying LEGO and stashing it for a future profit. Eventually, these stashes will have to be turned back to cash, but that could mean an overflow of product that dilutes the demand and turns the once hopeful returns into a pile of beanie babies. Supply and demand can be manipulated, but it will eventually show the truth and sometimes the truth ain't what we thought it was.

You still can succeed in this LEGO investment craze by following some simple rules.

Do what others aren't - blaze a trail and reap the rewards when you end up with one of the few LEGO Honus Wagner's.

Keep some, but flip as many as you can as quickly as you can - Stashing all that LEGO could end up costing you a ton, so why not deflect some of that cost by making some money now. LEGO is so unique that you don't have to wait very long for a sizable payday, you just have to be willing to do a little work.

Buy low, sell high - This seems like common sense, but I have been lured into paying full price for a cool new LEGO set countless times, just because how freakin awesome it is. There is no need to ever pay full price especially if you do your homework.

And the most important of all, keep some of your secrets to yourself - If everyone knows what you are doing as far as LEGO investments or any investments for that matter, everyone will do them thus, making those gold investments worth as much as tin.

Excellent points...I love when the Bears come out! LOL Seriously though, it is always good to have contrasting points of view on the site. ;)

[stackables]

You can always play it safe and buy the sets you like. If they turn out to not be worth anything, you can always open it up and put it together (crazy idea). On the bright side, there is also several recent toy lines that are still popular eg transformers. I think legos fit into that category of toys. However, I am a little pessimistic (ex baseball card/comic collector) with using legos as an investment. More and more AFOL are holding onto their sealed sets and waiting to cash in which will only saturate the market lowering prices. To touch are your points: "Do what others aren

[Ed Mack]

You can always play it safe and buy the sets you like. If they turn out to not be worth anything, you can always open it up and put it together (crazy idea). On the bright side, there is also several recent toy lines that are still popular eg transformers. I think legos fit into that category of toys. However, I am a little pessimistic (ex baseball card/comic collector) with using legos as an investment. More and more AFOL are holding onto their sealed sets and waiting to cash in which will only saturate the market lowering prices.

To touch are your points:

"Do what others aren

[bricklyn]

You can always play it safe and buy the sets you like. If they turn out to not be worth anything, you can always open it up and put it together (crazy idea). On the bright side, there is also several recent toy lines that are still popular eg transformers. I think legos fit into that category of toys. However, I am a little pessimistic (ex baseball card/comic collector) with using legos as an investment. More and more AFOL are holding onto their sealed sets and waiting to cash in which will only saturate the market lowering prices.

(I love that LEGO can always be a toy again, that's why I have high hopes for investing in it. You will always have the two audiences the collector and the kid who just wants to play with it)

To touch are your points:

"Do what others aren

[Brickarmor]

Geez, where to begin... I fear this scenario (saturation of the aftermarket) is correct. Count me among the skeptical who fill their closets with a keen sense of impending doom. I wanted to write an article on this very topic, but after floating some ideas ideas in the blogosphere, it was just chum in the water. Not worth my time to put together something that will only be torn to shreds by self-interested rationalization and deliberate misunderstanding. When people have sunk thousands of dollars into hoarding children's toys in order to sell them to tomorrow's adults, they tend to get a bit bloodthirsty when it is suggested (from somewhere other than their subconscious) that it might be lunacy. Just maybe. I don't believe in optimism, but if I did the scenario in which the recent influx of AFOLs due to TLG's belated courting of adult collectors would continue indefinitely (barring an unforeseen decline of Lego products) translates into a much larger reservoir of buyers on the aftermarket than heretofore seen. I'll believe this when I see it. For some investors, a "collapse" would be having to sell for only twice what they paid. If you are concerned about the future of collecting, realize that 50 MMVs or FBs or ISs in your bunker isn't doing anyone any favors, all illogical retorts about making the aftermarket more buyer-friendly aside. I fully understand how unpopular this statement is, and to be making it on a site explicitly dedicated to Lego investing borders on sheer provocation; but the conditions of buying, collecting, and reselling have changed drastically in the past 5 years and are still in a state of unpredictable flux. To ignore these implications seems to me not only poor business acumen but also indifference to the collectors community itself (who else is "the aftermarket"?). Why would any reseller compete with other resellers to drive prices down out of some misguided altruism? The debate will go on until external factors resolve it, and all our "ifs-ands-buts" are unlikely to impact that resolution anyway.

[bricklyn]

BrickArmor: Well said. It's not hard to see which end of the spectrum you sit, and for all our sakes I hope you are wrong, or at least a little wrong. Like you said, we will have to wait and see how big the bubble is. I know someone who successfully collected thousands of sets ahead of the curve and made a quarter million selling off the collection over the last handful of years. If anyone frequents the BL forums, you know who I am talking about. Lets hope that the aftermarket for LEGO keeps growing and their happens to be a ravenous population of collectors waiting for all the LEGO sitting on our shelves.

[Ed Mack]

Geez, where to begin... I fear this scenario (saturation of the aftermarket) is correct. Count me among the skeptical who fill their closets with a keen sense of impending doom. I wanted to write an article on this very topic, but after floating some ideas ideas in the blogosphere, it was just chum in the water. Not worth my time to put together something that will only be torn to shreds by self-interested rationalization and deliberate misunderstanding. When people have sunk thousands of dollars into hoarding children's toys in order to sell them to tomorrow's adults, they tend to get a bit bloodthirsty when it is suggested (from somewhere other than their subconscious) that it might be lunacy. Just maybe. I don't believe in optimism, but if I did the scenario in which the recent influx of AFOLs due to TLG's belated courting of adult collectors would continue indefinitely (barring an unforeseen decline of Lego products) translates into a much larger reservoir of buyers on the aftermarket than heretofore seen. I'll believe this when I see it.

For some investors, a "collapse" would be having to sell for only twice what they paid. If you are concerned about the future of collecting, realize that 50 MMVs or FBs or ISs in your bunker isn't doing anyone any favors, all illogical retorts about making the aftermarket more buyer-friendly aside. I fully understand how unpopular this statement is, and to be making it on a site explicitly dedicated to Lego investing borders on sheer provocation; but the conditions of buying, collecting, and reselling have changed drastically in the past 5 years and are still in a state of unpredictable flux. To ignore these implications seems to me not only poor business acumen but also indifference to the collectors community itself (who else is "the aftermarket"?). Why would any reseller compete with other resellers to drive prices down out of some misguided altruism?

The debate will go on until external factors resolve it, and all our "ifs-ands-buts" are unlikely to impact that resolution anyway.

Nice post...As I have told you before, I would value an opposing view on the subject. This site needs people that are 'bears' on the subject. I hope you reconsider your thoughts on writing an article...

[Yogibara_rs]

Like any other market in the world this one will balance itself out, if necessary. I for one don't see a bubble but rather a bunch of pigs going to the slaughter. Those of us who collect and sell, and are happy with a nice size return, will keep this "after-market" going strong.

[Ed Mack]

BrickArmor:

Well said. It's not hard to see which end of the spectrum you sit, and for all our sakes I hope you are wrong, or at least a little wrong. Like you said, we will have to wait and see how big the bubble is. I know someone who successfully collected thousands of sets ahead of the curve and made a quarter million selling off the collection over the last handful of years. If anyone frequents the BL forums, you know who I am talking about.

Lets hope that the aftermarket for LEGO keeps growing and their happens to be a ravenous population of collectors waiting for all the LEGO sitting on our shelves.

I appreciate both your and BrickArmor's comments on the subject. I don't want BrickPicker to become a glass that's 'half full' all the time with respect to investing. There are plenty of great reasons to invest in LEGO bricks, but I can list a whole bunch of negative reasons as well. I believe the BrickPicker community would appreciate an opposing view on the subject of investing.

I try and promote LEGO and LEGO products as a general rule, but I will be the first one to tell you investing in LEGO sets is not easy and/or guaranteed. On a large scale, storage is a MAJOR issue. MAJOR!!! I have a basement, two cars and business filled with LEGO sets and it is only getting worse. I am running out of space and my wife is running out of patience.

Then there's the reselling of the LEGO sets and problems that arise with buyers, shipping, damages and commissions. Also, you are gambling that these sets will be worth anything in 5 or ten years if there is indeed a 'bubble.'

The one reoccurring theme that I believe AFOL investors and collectors miscalculate is the amount and influence of LEGO re-sellers and investors have on the current LEGO primary market. The couple of thousand serious re-sellers and investors that you see on these and other forums are such a small portion of the overall LEGO market, that even hoarding and dumping these sets all at the same time would be a minor issue IMO. Us big time collectors think we have an effect on LEGO prices, policies and sales practices, but really, we do not. How do you explain Ninjago and its popularity? How about Friends? Are the AFOLs buying these sets up? No...

We investors constantly overestimate our value and influence on LEGO products. If it was up to the investor, every set would be a Modular Building or UCS set. LEGO makes its money off of CITY, Ninjago, Friends and of course, STAR WARS. Who buys these? Kids! But what is great for the LEGO investor is that one day, these kids get older and then have the income to buy these sets they wanted 20 years ago and keep the secondary market prosperous.

Overall, it is a balancing act. I would like to see more negative vibes on LEGO investing from members. It makes for great forum threads and banter among members. While I hope LEGO investing is always on the upswing, I also want to educate AFOLs about the possible pitfalls and bad outcomes of investing in little plastic bricks...

Thanks for the quality posts...

[Brickarmor]

two cars ... filled with LEGO sets and it is only getting worse.

Wha?!

[Ed Mack]

Wha?!

Yes sir...My two cars are filled with boxes of LEGO sets. I can't see out the back windows. LOL

[ericholm]

Hi, I am not sure you will get any negative comments here as everyone using the site presumably is a lego investor. I think the only time this might happen is when someone make a huge loss and wants out! wether they share that with us is difficult to determine. From my perspective I have made good on early Potter sets based on a TV show here in the UK 'Antiques roadshow', many years ago experts were asked what could people buy today that would be a good future antique/investment and they mentioned the original boxed hogwarts castle. This sounded liek fun so I bought in and also bought the other smaller sets. Never looked back really due to increasing values of sets sold on ebay. Also I feel it is non-sense in suggesting the market will be flooded later on with investers ditching sets on the market, none of us will do this if others are at the same time, in this respect time is on our side right!

[Ed Mack]

Hi,

I am not sure you will get any negative comments here as everyone using the site presumably is a lego investor.

I think the only time this might happen is when someone make a huge loss and wants out! wether they share that with us is difficult to determine.

From my perspective I have made good on early Potter sets based on a TV show here in the UK 'Antiques roadshow', many years ago experts were asked what could people buy today that would be a good future antique/investment and they mentioned the original boxed hogwarts castle. This sounded liek fun so I bought in and also bought the other smaller sets. Never looked back really due to increasing values of sets sold on ebay.

Also I feel it is non-sense in suggesting the market will be flooded later on with investers ditching sets on the market, none of us will do this if others are at the same time, in this respect time is on our side right!

Well, I hope to see some differing opinions on the subject. Funny thing is, most people who find our site are curious to see what the values are. There are many "closet" investors out there. :)

[legotrader]

There is a different sort of love affair an AFOL has for a Lego set in comparison to a collector/investor of Beenie Babies, Baseball Cards or some other collectible of the moment. A true AFOL could just as easily rip open an old Lego set, build it, and feel good about the situation, even if the set lost most of its value. The Beenie Baby or Baseball Card investor is going to be pissed and throw the crappy investment in a box and put it in the attic, feeling sorry for themselves. It seems to be a never ending cycle with Lego sets. Play with them as a kid. Learn to love them with a passion. Grow up and put your passion aside for 20 years and then have kids of your own and reignite your passion and buy all those sets you missed out on for 20 years. Two things can derail this market in my opinion. Number one, Lego quality and creativity start to drop drastically or number two, the worldwide economy severely tanks...I mean really hits rock bottom. Other than that, I see a nice future for Lego and its fans.

[Medieval Guy]

This is a very interesting discussion. Here are some of my thoughts:

Buy Low, Sell High - I agree that this seems obvious, but I don't really know where to find the good deals. I'm relatively new to buying Lego online, and I haven't started investing, but it seems to me that Bricklink and Ebay are always very overpriced, and stores like Target never have the right set at the right price. That's just my experience.

Is the market srong enough? - I would definitely say that yes, it is, at least right now. It was mentioned that there are both collectors and children who are buying. It's always good to appeal to as many people as possible, and Lego does a good job at that.

Will the Economy Tank? - Obviously nobody can give a surefire answere to this question, but when I mentioned investing in Lego sets to my mom she pointed out that if times are tough, nobody will be spending money on something as trivial as Lego. I've heard that during the Great Depression, people still bought food, cosmetics, and alcohol, but apparently not toys.

We can always just play with the sets - That is at least some consolation, but who wants to play with 10 Death Stars? I guess the lesson here would be to buy only sets that you're interested in (or at least that's wow I'd do it, especially on my limited budget), and to vary the type of sets you buy. You should never have all your eggs in one basket, as they say.

Yes sir...My two cars are filled with boxes of LEGO sets. I can't see out the back windows. LOL

Aren't you afraid of thieves?

[LegoPodcaster]

This is a very interesting discussion. Here are some of my thoughts:

Buy Low, Sell High - I agree that this seems obvious, but I don't really know where to find the good deals. I'm relatively new to buying Lego online, and I haven't started investing, but it seems to me that Bricklink and Ebay are always very overpriced, and stores like Target never have the right set at the right price. That's just my experience.

Is the market srong enough? - I would definitely say that yes, it is, at least right now. It was mentioned that there are both collectors and children who are buying. It's always good to appeal to as many people as possible, and Lego does a good job at that.

Will the Economy Tank? - Obviously nobody can give a surefire answere to this question, but when I mentioned investing in Lego sets to my mom she pointed out that if times are tough, nobody will be spending money on something as trivial as Lego. I've heard that during the Great Depression, people still bought food, cosmetics, and alcohol, but apparently not toys.

We can always just play with the sets - That is at least some consolation, but who wants to play with 10 Death Stars? I guess the lesson here would be to buy only sets that you're interested in (or at least that's wow I'd do it, especially on my limited budget), and to vary the type of sets you buy. You should never have all your eggs in one basket, as they say.

Aren't you afraid of thieves?

I would agree with you on everything except the economy hurting LEGO. Ever since the economy started tanking in 2008 LEGO has only become much more popular. Just look at the Death Star, it's a $400 set released in 2008 that LEGO is still selling very well today.

[Ed Mack]

Aren't you afraid of thieves?

I would agree with you on everything except the economy hurting LEGO. Ever since the economy started tanking in 2008 LEGO has only become much more popular. Just look at the Death Star, it's a $400 set released in 2008 that LEGO is still selling very well today.

People might be looking for alternatives to other investments. Question is, will LEGO prices drop if the world economy improves if this theory is correct?

[BuildIT]

What a fantastic thread we have going here.... Will LEGO prices 'tank' if the economy improves? Excellent question. In my humble opinion...NO. We may see some adjustment in LEGO prices, but given both the investors and collectors out there in this vast world of ours it is very doubtful that prices will end up like sub-prime mortgages. Let us not forget that many wise and intelligent people are busy as we speak buying LEGO - the AFOL period is without doubt upon us. Whilst we do consider LEGO as a form of investment class (to touch on other forum comments), it does not exhibit the usual trends of a stock excahnge. To some degree, LEGO sets are finite, there is only so many to go around. We can't just keep buying into the 'stocks' - of one particular model or set. The exclusivity of sets is therefore almost taken for granted. It's this exclusivity that will always redeem an inherent value in LEGO. And I can pretty much guarantee that even if we see some of the 'bubble' bursting in LEGO, people will always be willing to offer me good hard-earned cash for my Imperial Star Destroyer or my Imperial Flagship at some point. I'm confident that LEGO will continue to provide more than its 'build' value alone. It does that now, and I reckon it will always do that.

[Ed Mack]

What a fantastic thread we have going here....

Will LEGO prices 'tank' if the economy improves? Excellent question. In my humble opinion...NO. We may see some adjustment in LEGO prices, but given both the investors and collectors out there in this vast world of ours it is very doubtful that prices will end up like sub-prime mortgages. Let us not forget that many wise and intelligent people are busy as we speak buying LEGO - the AFOL period is without doubt upon us.

Whilst we do consider LEGO as a form of investment class (to touch on other forum comments), it does not exhibit the usual trends of a stock excahnge. To some degree, LEGO sets are finite, there is only so many to go around. We can't just keep buying into the 'stocks' - of one particular model or set. The exclusivity of sets is therefore almost taken for granted. It's this exclusivity that will always redeem an inherent value in LEGO. And I can pretty much guarantee that even if we see some of the 'bubble' bursting in LEGO, people will always be willing to offer me good hard-earned cash for my Imperial Star Destroyer or my Imperial Flagship at some point.

I'm confident that LEGO will continue to provide more than its 'build' value alone. It does that now, and I reckon it will always do that.

Your point about LEGO sets being finite is an excellent point and one that works against the "Bubble Theory" in my opinion. Everyday, some(or many) MISB LEGO set is cracked open and built. Boxes are destroyed. Instructions are lost. Maybe some AFOL said "F" it and opened that 10179 Millennium Falcon and built it. Retired and sealed LEGO sets are a rare animal, and getting rarer with each passing day.

Yet the interest and demand for these sets are increasing as AFOLs, who were once kids with limited resources and a ravenous appetite to buy every LEGO set in existence, now have the discretionary income to buy the sets they played with as a kid. Until the mainstream media and households start paying attention to the LEGO investment revolution that is quietly taking place, I don't see the bubble bursting.

[BuildIT]

Your point about LEGO sets being finite is an excellent point and one that works against the "Bubble Theory" in my opinion. Everyday, some(or many) MISB LEGO set is cracked open and built. Boxes are destroyed. Instructions are lost. Maybe some AFOL said "F" it and opened that 10179 Millennium Falcon and built it. Retired and sealed LEGO sets are a rare animal, and getting rarer with each passing day.

Yet the interest and demand for these sets are increasing as AFOLs, who were once kids with limited resources and a ravenous appetite to buy every LEGO set in existence, now have the discretionary income to buy the sets they played with as a kid. Until the mainstream media and households start paying attention to the LEGO investment revolution that is quietly taking place, I don't see the bubble bursting.

"Boxes are destroyed. Instructions are lost"...and YES, between your response and my reply some AFOL has said "F" it, and started to build the set they have longed to build....and why not? We are, afterall, AFOL and the unquenchable lust to build is often just too great. It is a hunger that must be at some point satisfied...LOL.

I'm not sure I would like mainstream media or households to start truly paying attention to the LEGO investment world. And honestly, I don't think that they will. Take Hornby trains for example. Any switched on or intelligent person has seen or heard of their value, yet they don't rush out and exchange their savings or other investment vehicles, and place the proceeds into model trains.

I do agree that interest and demand for LEGO is most definitely increasing, but as you say, it is quietly taking place. Our bubble is pretty safe for some time.

[TheOrcKing]

Hmm.... There will always be risks involved in the world of collecting. Whether its comic books, baseball cards, or film memorabilia, we all know this when we decided to step forward unto the field. It's unavoidable. I could make a humongous list of all the different quotes that would sum up what we do & why we do it, as well as equally sized lists of reasons 'for collecting' and 'against collecting'. Instead, I'll just say what's on my mind and you can agree or disagree as you please. Whether we buy Lego sets to enjoy ourselves or place into storage to be sold at a later date (or maybe even a little bit of both), the one thing that stays true above all else is... the only people who buy from collectors are other collectors. Sure, there are hardcore fans of Lego that scour BrickLink (and other various sites) trying to find older sets they missed, and is willing to pay that enormous $100 pricetag for an item that originally retailed for $5. But what average person would, or could, even think about paying that much for anything, let alone a toy for their child. No, the only person that could even fathom buying a mint Millennium Falcon from eBay is a true collector, who in turn will eventually sell it to another collector, and so on & so forth. The only thing to stop this crazy train is when the box has become "handled once too many times", or someones little brat sneaks into your closest and tears the box open. There is no "magic eightball" for the road of investment, but I believe if we all play the game with some forethought (buying sets that you like yourself), modesty (buying one for yourself, buying one or two for later), and NOT get greedy (buying 10-20 of the same set, basically putting all eggs into one basket), things will play out well. In the end, you should only collect if you enjoy it to begin with. Going into this believing it will solve all of your financial problems is foolish. On a side note, I like the 'Power Miners' series and love the 'Pharaoh's Quest' sets, too. So, I guess that makes me a loser, too. Eh, Ed Mack? ;-)

[Ed Mack]

There is no "magic eightball" for the road of investment, but I believe if we all play the game with some forethought (buying sets that you like yourself), modesty (buying one for yourself, buying one or two for later), and NOT get greedy (buying 10-20 of the same set, basically putting all eggs into one basket), things will play out well.

In the end, you should only collect if you enjoy it to begin with.

Going into this believing it will solve all of your financial problems is foolish.

On a side note, I like the 'Power Miners' series and love the 'Pharaoh's Quest' sets, too.

So, I guess that makes me a loser, too.

Eh, Ed Mack? ;-)

I enjoyed your post. I quoted what I think is the key to successful LEGO investing. Buy what you like in moderation, diversify and don't expect to get rich and you can make a few bucks in a hobby that you love.

As for my love of LEGO sets that are "underperformers," add Space Police, Prince of Persia and Atlantis themes to the mix... LOL

[stephen_rockefeller]

"And the most important of all, keep some of your secrets to yourself"

Are there still secrets out there? With the internet and the internet everywhere, I do not think there are really any "secrets" to collecting. Seems like this site was designed to discuss those secrets