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Interesting (if generic) piece on Lego collecting / investing in Saturday's Telegraph

BooTheMightyHamsterBooTheMightyHamster Northern edge of London, just before the dragons...Member Posts: 1,280
Half page piece in today's Telegraph (page 13), lifted from Brickpicker, about the potential return on investment with Lego, compared to gold, shares etc.
Pity they illustrated the Death Star II (worth £1,523!!) with a picture of the current DS playset.
xwingpilotkiki180703

Comments

  • xwingpilotxwingpilot UKMember Posts: 797
    edited August 2015
  • VeeKaChuVeeKaChu Lombard IL USAMember Posts: 4
    Wow, my wife and I have just gotten back into Lego in a big way, and today we're sorting through her father's 9v train sets, putting full sets together for resale.  Also have some massive totes with my son's stuff piled in, including several 90's castles... 

    I was *just* expounding on this very subject with her, because it's absolutely astounding the markups on retired product.   We see folks reselling NISB sets for essentially small fortunes, and it isn't a new phenomenon by any means.  

    I've worked in the financial industry for close to 20 years, and if there's one truism in selling commodities, it's that actual performance dictates price.  If people weren't willing to pay those 1000% markups, those prices would fall back to more reasonable levels...

    The only other explanation would be that all of those resellers are already independently wealthy and can afford to sit on unsold stock until they get their price.  That seems less likely to me though, which would indicate that retired Legos are one of the hottest commodities on the planet, yo!  

    New mantra- "2 of everything!" 
    kiki180703
  • Kevin_HyattKevin_Hyatt UKMember Posts: 778
    If everyone buys two of everything then the only one getting rich will be TLG!
    kiki180703
  • DedgeckoDedgecko Seattle, WAMember Posts: 799
    If everyone buys two of everything then the only one getting rich will be TLG!
    It's way too late for that.
  • theLEGOmantheLEGOman UKMember Posts: 1,507
    2 of everything is awesome.

    That's the tagline for the 2nd LEGO Movie, lol.
    Galactuskiki180703Kevin_Hyatt
  • SuperTrampSuperTramp City 17Member Posts: 1,021
    edited August 2015
    If anyone has a sealed Market Street they want to sell for £698 i'll take it.
  • FauchFauch FranceMember Posts: 2,244
    VeeKaChu said:

    The only other explanation would be that all of those resellers are already independently wealthy and can afford to sit on unsold stock until they get their price.  That seems less likely to me though, which would indicate that retired Legos are one of the hottest commodities on the planet, yo!  
    That seems quite likely to me that it would concern a minority of resellers, like those who can afford to buy dozens of the same big sets. though the problem is that reselling legos doesn't offer you the flexibility of a virtual stock exchange (good thing, because some investors would have no limit), so the wealthiest people would probably not bother.
  • LusiferSamLusiferSam MontanaMember Posts: 466
    Here's an article every one of should be reading that is buying into this Telegraph piece or believes their Lego collection is some super great investment (it's still a good read even if you don't).  It's on the baseball card market bubble.  It's the same thing that happened during the comic book bubble and beanie baby crazy.  The parallels to the current Lego market are scary.
    SumoLego
  • CCCCCC UKMember Posts: 17,393
    ^ It has been discussed many times before. Lego sets have an important difference to baseball cards, comic books and beanie babies. You can open them and use / sell the lego parts inside. Baseball cards are just paper with a baseball picture on. Comic books are just paper with pictures on. Beanie babies are just cloth and stuffing. Unless Lego (the bricks) somehow become worthless or Lego (the company) start selling otherwise empty collectable boxes of Billund air then the parallels are weak.

    A better system might come along which means significantly less people want lego bricks any more. Lego might start slaughtering kittens for fun and turn the public against the company and their product. Then the product may lose its value. However, it's unlikely.

    That isn't to say people are over-paying for some sets. Lego could re-release a CC or UCS MF if they wanted to, and kill off the value of the ones people have bought as an investment. However, those old ones will still have an intrinsic value more than a piece of paper.
    dougtsroxiokiki180703SumoLego
  • dougtsdougts Oregon, USAMember Posts: 4,112
    ^ exactly. The component pieces of a LEGO set have their own individual value and a robust array of marketplaces for buying and selling those pieces, establishing the actual obtainable value of them, not just a theoretical one (as in the old price guide system for cards/comics)

    The component pieces of baseball cards, comic books, and beanie babies are all worth essentially zero.
  • TigerMothTigerMoth Member Posts: 2,343
    If TLG start slaughtering kittens, old LEGO is likely to rise in value rather than fall. People might not want to put money in TLG's coffers, but there would be little point in selling off what they already had. If they wanted any more, they would have to buy from somewhere else - i.e. either from resellers or second-hand. Effectively, production of "permissable" LEGO would have ceased and the limited reserves would become more valuable.
  • CCCCCC UKMember Posts: 17,393
    Not if many people were disgusted with Lego and wanted to rid themselves of it. 
  • TigerMothTigerMoth Member Posts: 2,343
    I think there's a big difference between expressing disgust and inconveniencing yourself too much. Whilst some would undoutedly do as you suggest, I imagine the majority would find ways to justify continuing as near normally as possible!
  • LusiferSamLusiferSam MontanaMember Posts: 466
    edited September 2015
    This is a longer than normal post for me, sorry for any typos, misspellings or bad grammar I’ve missed.

    The fact the sets have components have a price is a very important difference.  It's similar to how coins and stamps have face value and why they're less prone to bubbles.  But its important to noted that even the ability to part a set out is not a protection against a market collapse.

    Let's take Cafe Corner as an example.  Using the average prices on BrickLink, you could bricklink the set for around $1,1236.69 new or $824.20 used.  These are less than average prices of new and used Cafe Corners, $2,189.90 and $1,115.31.  That means the whole is great than the sum of it’s parts.  In other words the you’re better keeping the set whole (not surprising).

    Now let’s play what if.  What if the rare or highly desirable elements came down in price?  I’m going to call this a normalized price.  I’ve averaged the rare or hard to find elements’ price to put them more in line with the prices of the same element in different colors are or what similar elements are going for.  This works out to $461.61.  This is still more than sets if you cut the price in half, but the margins have tightened considerably.

    What if there is a total collapse and Care Corner is now “worthless” and selling for much less than MSRP?  In this scenario I’m assuming parts are only worth the current minimums.  Again the rate elements have been averaged out to put them in line with a low market value.  Under this assumption the price is $65.91.  In this case you're losing money no matter what.

    I don’t believe either scenario is accurate, they are just of illustrative purposes.  The first is the more likely of the two, but there are a ton of assumptions that I’ve made.  These prices are not meant to represent real prices, they are just averages and ignores the fact that no one  seller has all of these pieces at these prices.

    Another point is the speculative collectors that the Telegraph article is aimed are unlikely to understand the secondary parts market, like BrickLink or Brick Owl.  They’re really only going to be familiar with things like eBay.  Yes, there are articles about the value of certain bricks and BrickLink.  But those are written even worst and are more idiotic than the Telegraph piece.
  • CCCCCC UKMember Posts: 17,393
    Yes, re-release of once rare parts can drop prices significantly. It happens all the time to some extent. For example, the price of dark blueish grey torsos will drop due to the CMF spectre. Previously this torso was only available in the Ewok Village. However, it is unlikely that Lego will reissue a part that has not been used for many years. They will normally use a closest modern match which is in production. That is why the rare parts in CC and other sets stay rare.
    SumoLego
  • SumoLegoSumoLego New YorkMember Posts: 11,596
    Tumbler wheels come to mind, unless they put them in a random Creator or other set...
  • sir_Bricksalotsir_Bricksalot UKMember Posts: 110
    SumoLego said:
    Tumbler wheels come to mind, unless they put them in a random Creator or other set...
    I was looking at the tumbler wheels and couldn't believe how much they were going for.  Add in the mini figs and you're looking at about 50% of the total set price.
  • LusiferSamLusiferSam MontanaMember Posts: 466
    I'm talking a decrease in demand, not an increase of availability.  I see it has different sides of the same coin.  The effect is the same, but the cause is different.  Understanding that difference is key to understanding the point I'm trying to make.

    One of the best examples I can think of for increased availability dropping the price of an item is the Maersk Blue helmets.  Those used to vie for the top spots of the most expensive elements.  And now?  Let's just say the people that bought those shortly before the announcement of 10219 won't be a return on their an "investment" anytime soon.
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