Financial Spread Betting?

[emes]

You would then be trading raw sewage, not investing in it.

 

You're missing the point. The underlying item is irrelevant. It's just a vehicle to transfer value.

[Quacs]

You would then be trading raw sewage, not investing in it.

 

You're hung up on financial venacular.  You can add whatever additonal meaning or parameters you want to the term "investing", but purchasing something with the intent of reselling it at a later date is "investing" in its most basic definition.

[emes]

http://www.investopedia.com/terms/i/investing.asp

 

Short-term trading, if the intent is to generate a profit, is a form of investing.

 

The bigger discussion that I think is more relevant here is whether or not one approach to investing is better than another?

 

My belief is that it is purely situational, and that strong investors have to be able to adjust and adapt to market conditions, and need to exploit multiple approaches to generate their desired returns.

[spener90]

Another way that you might look at what is done here, and I challenge you all to consider things this way, is that what we're really doing is agreeing to put up cash for a product now, that we will then sell to someone for a profit at a future point in time.

 

In this sense what you're really doing is providing future buyers with a high-interest loan. You have the cash now that you're willing to invest, and you "agree" to sell something to someone at a future date for a premium over the purchase price.

High-interest loan.  I like it!

 

Also, I've been doing some research on perfectly competitive markets, and I agree, I was wrong.  I made a few assumptions  , and while there are a few similarities (like none of us with the exception of emazers can influence the market price(s)), the big difference is that we don't have access to purchase things from Lego directly, and sets have retirement dates.  Just thought I would give credit where credit is due.     

 

Does this make the Death Star a perfectly competitive set though, haha, considering it will never, ever, ever, ever retire.

[Alcarin]

 

 

I think emes' larger point is that the term "investment" has changed over the years so that it now has a more sophisticated connotation that doesn't match its actual meaning. The Investopedia definition is a perfect illustration of the finance world's venacular: "traders" swap stocks daily whereas "investors" buy and hold commodities in a portfolio. Yet, when you boil it down there's no difference between the guy at JP Morgan that purchases SPDRs to add to his book of investments and anyone on this board that is trying to turnover Lego sets for profit. The vehicle is different, the concept is the same.

 

If i buy 5$ something and want to sell it for profit I dont feel like making an investment. If I buy 500$ worth of stock I feel like making an investment.

 

in the end words and phrases only describe what PEOPLE decide they describe.

 

 

 

 

The bigger discussion that I think is more relevant here is whether or not one approach to investing is better than another?

My belief is that it is purely situational, and that strong investors have to be able to adjust and adapt to market conditions, and need to exploit multiple approaches to generate their desired returns.

 

No approach of investing is better than other... the question is which one is EASIER ...

 

I agree about the second part though.

[spener90]

My advice for anything regarding investing; stock market, lego, etc.  Be extremely careful.  I prefer Lego over anything else, because I can hold it, and I also enjoy it.  I struggle with the stock market largely because I am not involved with what the company does.

[Quacs]

If i buy 5$ something and want to sell it for profit I dont feel like making an investment. If I buy 500$ worth of stock I feel like making an investment.

 

in the end words and phrases only describe what PEOPLE decide they describe.

 

Doesn't this post prove emes' point?  You've changed the definition in your mind so that "investing" has more gravity than its actual definition.  If you need convincing, look at Investopedia's definition that emes just posted.  Investments are not defined by an amount, a type, or a time window - it's defined by the intent to gain profit.   

 

Seaquest out on further discussion of the term "investing".

[Gondorian]

No approach of investing is better than other... the question is which one is EASIER ...

 

But "better" is subjective.  And being easy can be one aspect of that.

 

I think the main point I was trying to make after I took the focus from Financial Spreadbetting, which is not relevant discussion for this forum, to the question of whether we are investing or trading is about whether a given BrickPicker can state they have made profits or not.

 

Example: If I have spent

[Huskers1236]

Since this thread still doesn't have much Lego related, let's try not to turn it into a pissing match.  It has some good investing content, but if we're just going to argue about semantics and vernacular, I'll close it.  Thanks.

[ExoBro94]

Yeah but by that logic Shops(Toy shops) are investing also...

They are investing. When a shop orders stock, they effectively own it at that point. They can then do as they please with it. Generally they then sell it to customers at a retail price, compared to what they purchased it at which is a wholesale price. Basically they are doing the exact same thing that we are doing but they are selling current stock because they can get it at prices we can't. Who knows? Maybe some Mom & Pop shops realize that lego is valuable as hell after retirement and hold their leftovers for sale online rather than clearing out the stock.

[Quacs]

But "better" is subjective.  And being easy can be one aspect of that.

 

I think the main point I was trying to make after I took the focus from Financial Spreadbetting, which is not relevant discussion for this forum, to the question of whether we are investing or trading is about whether a given BrickPicker can state they have made profits or not.

 

Example: If I have spent

[emes]

High-interest loan.  I like it!

 

Also, I've been doing some research on perfectly competitive markets, and I agree, I was wrong.  I made a few assumptions  , and while there are a few similarities (like none of us with the exception of emazers can influence the market price(s)), the big difference is that we don't have access to purchase things from Lego directly, and sets have retirement dates.  Just thought I would give credit where credit is due.     

 

Does this make the Death Star a perfectly competitive set though, haha, considering it will never, ever, ever, ever retire.

 

I didn't mean my response in that thread as personally as it might have sounded...but I think what you were doing there is easy for any of us to do. It's easy to look at a theory, cherry-pick parts of it that meet our assumptions.

 

The one thing that really doesn't work with that theory and LEGO investing is that suddenly everyone will have perfect knowledge. I think you could literally search these forums and find a post where someone has claimed that every single set is a good investment. Maybe they're right, but clearly, we're all working with different information, as are all buyers.

 

It's fundamentally why TRU exists...low information buyers that don't know they're paying above market prices for items that are generally readily available. As resellers we deal with something similar, it's just that they are often high-information buyers that want to buy something that's no longer available, or not available in their specific market.

[emes]

No approach of investing is better than other... the question is which one is EASIER ...

 

I agree about the second part though.

 

Couldn't agree more...glad we could find some common ground.

[ExoBro94]

For myself, when I sell an unopened set for a profit, I take that profit and put it straight into the bank. I then take the amount of money I used to buy the set (amount needed to break even) and use that capital to reinvest. If investors use all of the capital that they receive from a sale to reinvest with, gains are effectively never realized.

[ExoBro94]

When I sell a used set however, 100% of the money I receive from the sale goes into the bank.

[Gondorian]

I feel like this thread has now derailed into useful territory.  Good job it wasn't closed!

 

Much to think about here.

 

I started the thread on "How often do you sell your Lego?" btw:

 

http://community.brickpicker.com/topic/4324-how-often-do-you-sell-your-lego

[Quacs]

Exo - I like your strategy to maintain a consistent cost inventory and then "pocket" your gains.  This is the epitome of the "wash/rinse/repeat" cycle.  t's nice because it ensures you don't over-invest.  While the downside is that you cap your gains (unless you add more inventory), when is maintaining some discipline ever a bad thing?

[emes]

For myself, when I sell an unopened set for a profit, I take that profit and put it straight into the bank. I then take the amount of money I used to buy the set (amount needed to break even) and use that capital to reinvest. If investors use all of the capital that they receive from a sale to reinvest with, gains are effectively never realized.

 

Agree with this wholeheartedly.

 

If you're going to do this then you need to think about what your targets are. One of those targets is how much capital you have invested at any point in time.

 

My wife started what she does a long time ago with 2 $100 gift cards. She has much more than that invested in various products today, and at the moment she is in growth mode, which means most profits are going right back into buying more things to be resold later.

[spener90]

when is maintaining some discipline ever a bad thing?

Please tell that to our politicians and financial sector, haha 

[Darth_Raichu]

Please tell that to our politicians and financial sector, haha 

There is no way to maintain discipline when you are playing with other people's money.  Especially when there is little to no personal consequenses to any actions

[JoshTX]

I've followed Exo's model in the past with investments made on things like action figures and other collectibles, before I paid any attention to Lego. It helped me save up enough money to make a couple extra house payments, as I was very disciplined with separating the money aside from the rest of my income and fees. I think the problem in a lot of cases though is that people probably don't manage their money diligently enough, and we tend to over-invest or overspend as a result, not able to remember how much we spent on something or where the money was used. I would recommend carrying multiple bank or savings accounts, or at the least being able to separate and track your numbers, so things don't get lost in the mix.  

[Guest eightbrick]

I don't invest in stocks, but am considering getting into tangible investments other than Lego.

[Grolim]

Look at the fun thread you guys get into while I'm asleep 

 

I won't add much as most of my thoughts run similar to things already put forward by emes and Quacs.  It's been a good read that's kept me entertained for a good portion of a boring meeting this morning