How many of you guys would Love to get all the Exclusives from 2007 and on!

[beeblet65]

very good article - 

 

i had most of these sets from 2007, however, i sold them all right after i built them because i felt i didn't want then anymore, stupid decision on my part!

[spener90]

They are - but not like a Cafe Corner would be. You have to list every single one of them. You have to ship them all separately. Thats the point.

 

They are possibly worth your time, but not as efficient time wise as big sets. But if its a hobby, its no big deal.

 

I hate shipping so I am getting out of the small set business.

Yes, but you can set the amount of a set that you have available, which really simplifies the re-listing process.

[M4x18]

The fees associated with selling are a big reason to prefer the big sets.  A 40 dollar set that doubles gives 40 in profit, of which half is eaten by shipping/fees.  A 100 dollar set that doubles gives 100, which can absorb the shipping/fees and you have more left.

 

Emazers, I agree with everything you say except Batman Arkham.  I just have trouble understanding why that would have the same demand as the other sets listed and I won't be buying that one.

 

 

Fees are, most of them, percentage values calculated on the selling price of the item, so an $80 item would get hit with something close, percentage-wise, as a $500 item.

 

Shipping fees are set in the listing description, you can be off margin by a few bucks but as you become more experienced you'd be able to sharply predict an item's shipping cost. And this should be paid by the buyer, or if you offer free shipping, making sure that your numbers add up.

 

What I would agree on, are the trips to the Postal Office. At least here, and as I stated on another thread, Correos puts the pain in Spain.

[sadowsk1]

For the shelf life some of the bigger sets are seeing these days I'm sure the investor that thought investing big into the GE, FB, and Live Star kick themselves on a regular basis seeing that they haven't had a return on any of their sets if they bought a year into their release.  They've been out so long and aren't going to see a large return for another few years because of the rise of buyers of these sets for resale.  I could buy a pet shop right now but if it's shelf life follows the FB and I have to wait a couple more years before it's not being sold anymore, and then wait years on top of that to make a profit, that formula might not work in a couple years from now.  In my own mind, I wouldn't buy an Ewok village now because I may potentially have another three years to buy it and Lego advertises when sets retire, why would I start buying it now?

[Ed Mack]

Here is the full list of the top performing sets from retail (% increase):

 

 

As you can see, well over half are small to medium sets.  My point is that there are many ways to invest.  Big and exclusive sets work for some people and not for others, but do not ignore small and medium sized sets in your Brickfoilio, it is a huge mistake.

[Jeff Mack]

Here I am adding this as well.  It may give a more current perspective with recent sets.  Again many of these sets are small to medium.

 

[chopstick]

I am investing half in small to medium sets and half into larger sets ($100+).  If I get to the point where my profits have exceeded my initial investment, I may go into all large sets.  If you are only playing with the house's money, go big. 

[Darth_Raichu]

For the shelf life some of the bigger sets are seeing these days I'm sure the investor that thought investing big into the GE, FB, and Live Star kick themselves on a regular basis seeing that they haven't had a return on any of their sets if they bought a year into their release.  They've been out so long and aren't going to see a large return for another few years because of the rise of buyers of these sets for resale.  I could buy a pet shop right now but if it's shelf life follows the FB and I have to wait a couple more years before it's not being sold anymore, and then wait years on top of that to make a profit, that formula might not work in a couple years from now.  In my own mind, I wouldn't buy an Ewok village now because I may potentially have another three years to buy it and Lego advertises when sets retire, why would I start buying it now?

That is the key for smaller investors.  Emazers may be ok with spending $24k last year and let it sit for 4 years to make $48k profit (assuming 300% ROI and all those sets retire this year), but I ain't got that kind of money  

Good for him to make the model works, but it took him several years to get all wheels running.  Moreover, that was back in the day when LEGO investing was known only to the select few.  With the increased competitions, how much longer will it take for new investors to make the same ROI percentage by following emazers' model ?

[Jeff Mack]

That is the key for smaller investors.  Emazers may be ok with spending $24k last year and let it sit for 4 years to make $48k profit (assuming 300% ROI and all those sets retire this year), but I ain't got that kind of money

Good for him to make the model works, but it took him several years to get all wheels running.  Moreover, that was back in the day when LEGO investing was known only to the select few.  With the increased competitions, how much longer will it take for new investors to make the same ROI percentage by following emazers' model ?

 

I think the key word you have here is "same".  Just like traditional stock investing, I am sure everyone would have loved to have gotten in on Apple, Google, etc back in the day, but that time has come and gone.  Things will never always be the same and people who have been doing this for a long time do have an advantage (obtained older sets that are already EOL).  You just need to set your expectations and have a number as to what will make you happy when doing this.  

[DoNotInsertIntoMouth]

If you don't hate shipping, small sets are not bad - for me that dampens the small set market though. All the shipping and the listing.

[imirish11]

Since $ Investments in Lego are determined by price AND quantity of units purchased, comparing % Growth  or even % CAGR across different priced sets is not always the best indicator of where you should place your investments. Why? Because the leverage of that x% changes based on the denominator. 100% Growth on a $10 unit will net you $10, whereas 100% Growth on $100 will net you 10x the amount. The #1 KEY FACTOR is expected rate of INVENTORY TURNOVER, relative to your expected CAGR. If 10 units x $10 ea. grow at 100% in half the amount of time it takes 1 unit x $100 ea. to grow at 100%, then you will obviously have the ability to make more with the lower priced units, and vice versa.

 

Why does inventory turnover matter? Because you value your time. % Growth per Annum is a very attractive statistic, but none of us live forever, so the 'A' in CAGR becomes important. At the Age of 64, Ed has fewer 'Annuals' left in his lifetime than some college kids saving up for the next keg party. The ultimate goal is to generate the biggest bankroll of cash in the shortest amount of time. What Ed points out is that these higher priced units have a MUCH HIGHER rate of inventory turnover, later in their lives...meaning in 2-4 years from now, Haunted House could turnover 10x per year at 100%, whereas if you were to instead have invested that $ in, say, Avenging Cycle's at $10 per unit, it could possibly take several years to turnover enough units to generate enough profit that those Haunted House's brought in just one year.

 

This is just in example, and everyone's valuations will differ slightly, but the principles remain the same. Get the idea? 2 items with equal CAGR will not necessarily have the same RATE of INVENTORY TURNOVER. More importantly, how does the rate of inventory turnover change, as the desired CAGR changes? Could it be possible that cutting your Expected CAGR in half could triple the rate at which your inventory turns over? Thus, when comparing LEGO investments between forum members, opinions will always VARY, based on your Expected CAGR, Expected Rate of Inventory Turnover, and the number of Annuals you expect to have left in your working lifetime.

[DoNotInsertIntoMouth]

It is not to say I wont buy small sets - I just really wait for good deals on them.

 

Spener mentioned the Captains. I got 30ish at 6.50 and I had 5 others at 10ish. I am selling all the ones I got at 6.50 currently for something that will net me about 150% return. Once they are sold off, I made a quick $200ish and I'm gonna invest it in another tower bridge most likely.

 

I agree small sets may prove better returns - they are just more work and harder for me to spot.

 

I'm curious on what people think - do you think it is easier to see that a Large Exclusive set will be a big winner, or a small set? I find I have a harder time predicting the small sets.

[Ed Mack]

Since $ Investments in Lego are determined by price AND quantity of units purchased, comparing % Growth  or even % CAGR across different priced sets is not always the best indicator of where you should place your investments. Why? Because the leverage of that x% changes based on the denominator. 100% Growth on a $10 unit will net you $10, whereas 100% Growth on $100 will net you 10x the amount. The #1 KEY FACTOR is expected rate of INVENTORY TURNOVER, relative to your expected CAGR. If 10 units x $10 ea. grow at 100% in half the amount of time it takes 1 unit x $100 ea. to grow at 100%, then you will obviously have the ability to make more with the lower priced units, and vice versa.

 

Why does inventory turnover matter? Because you value your time. % Growth per Annum is a very attractive statistic, but none of us live forever, so the 'A' in CAGR becomes important. At the Age of 64, Ed has fewer 'Annuals' left in his lifetime than some college kids saving up for the next keg party. The ultimate goal is to generate the biggest bankroll of cash in the shortest amount of time. What Ed points out is that these higher priced units have a MUCH HIGHER rate of inventory turnover, later in their lives...meaning in 2-4 years from now, Haunted House could turnover 10x per year at 100%, whereas if you were to instead have invested that $ in, say, Avenging Cycle's at $10 per unit, it could possibly take several years to turnover enough units to generate enough profit that those Haunted House's brought in just one year.

 

This is just in example, and everyone's valuations will differ slightly, but the principles remain the same. Get the idea? 2 items with equal CAGR will not necessarily have the same RATE of INVENTORY TURNOVER. More importantly, how does the rate of inventory turnover change, as the desired CAGR changes? Could it be possible that cutting your Expected CAGR in half could triple the rate at which your inventory turns over? Thus, when comparing LEGO investments between forum members, opinions will always VARY, based on your Expected CAGR, Expected Rate of Inventory Turnover, and the number of Annuals you expect to have left in your working lifetime.

Excellent point.  Different strokes for different folks is my point.  What works for one investor might not be an option for another.  I love large exclusive sets as well, but I also have quite a few smaller sets thrown in.  Small sets can make money for people on a budget or limited with space.  But remember one thing, if every Tom, Dick, Harry or Ed buys the same large sets(...and this I know they do!), how much will the growth be affected by an overabundance of a particular large and exclusive set?

[Darth_Raichu]

I think the key word you have here is "same". Just like traditional stock investing, I am sure everyone would have loved to have gotten in on Apple, Google, etc back in the day, but that time has come and gone. Things will never always be the same and people who have been doing this for a long time do have an advantage (obtained older sets that are already EOL). You just need to set your expectations and have a number as to what will make you happy when doing this.

 

Of course.  However, the past (Apple, Google, Market Street, UCS MF, etc) is already gone, the now and future are what we have to work with.  I was questioning whether the same investing strategy / model would be as effective in the current environment.  Lets look at it this way, had emazers started from scratch today, would he be able to achieve a similar level of ROI in the same amount of time by just stockpiling the current $100+ sets and exclusives ?

[brickolodon]

The fees associated with selling are a big reason to prefer the big sets.  A 40 dollar set that doubles gives 40 in profit, of which half is eaten by shipping/fees.  A 100 dollar set that doubles gives 100, which can absorb the shipping/fees and you have more left.

 

 

Agreed....I got experience (negative but not always) selling small/medium sets....all profit eaten by fees....for now i am trying get rid of all small/medium sets and get balanced portfolio large -70%...all others 30% (lol....that's reminds me my 401k plan)

....selling small sets in bundles and polybags in lots other way to get more profit and quick turnaround time.....