zondag 17 januari 2016

Is Lego investing worth it?

Today, I`m putting some of my thoughts and opinions down on this, something I`ve been thinking over since the `Lego is worth more then gold` hype of articles washed over us during the holiday season.

Now, let me say one thing first on the matter... get your numbers right before jumping into this adventure.

If people ask me this, as someone who was years ago in the toy trading business himself, I would first ask them if they

a. KNOW anything about Lego apart from the articles they read on this
b. If they aim for the long term risk.

If they answer `no` on both questions... then the answer is definitly NO. 

The problem these articles tend to cause is that now people looking for a quick flip run off to the local supermarkets and toy stores, clean out the racks of Friends, Ninjago, Chima and other City sets.  They then rush to eBay and local add sites, and toss them on there at high retail prices... and will be stuck with lots of boxes for years and years, probably never even recuperating from their investment.

There is something like a `golden investment rule` on which sets are likely to raise in value, a sort of Holy Trinity on the matter, and if you look at the lists of sets raised highly, they will show up a lot.

1. High end exclusives, likes the UCS series, Ideas or Modulars.
2. High end Technic sets
3. High end Star Wars sets, preferably with `only unique to that set` minifigures.

But there is more at play here.  Other rather safe bets used to be iconic sets from POPULAR franchises, so put back those Prince of Persia and Lone Ranger sets in the racks.  Think Harry Potter`s Hogwarts Express train, or the Pirates of the Carribean Black Pearl.  These are prime examples of sets having gone up by x5 in just a few measly years from their retirement.  Expect the Tower of Orthanc going up by the same factor in the coming years.

So do I just run off to the stores now and grab me all those then?  Well, there are other factors at play now.

It`s a fact that Lego has increased immensely in popularity just the past two years, but this also brings about something called `buyer awareness`.  Don`t even think that your current stock bought Modular will go to the heights of the Green Grocer, because:

1. Lego releases more of them these days
2. People KNOW that those sets will become rare once retired.  

Two or three years ago, they all risked it, or didn`t know better, to hold out and hopefully snatch it on the secondary market for a bargain.  This however never materialised and the prices kept on rising and rising. 
Now, people know this, and they don`t wait until it goes out, as soon as they want it, they buy it, and don`t risk of missing out.  Surely, some buy it to re-sell, or `scalp` it as it is often referred to.  But with less `wanters` on the aftermarket, and more available to start with, this can be a very expensive investment that can take years before paying itself back.  Not to mention you need to put it all somewhere in the meantime, and must keep it pristine.

Then there are those that buy up all the small sets and part it out on BrickLink.  This could be a wielding a profit in the end, as if you currently look at BrickLink there are just under 9000 stores for about 7 million visitors until this day.  That roughly equals about one store for every 777 visitors, but it is nowhere listed these are UNIQUE visitors, let alone actual buyers.

Compared to eBay or Amazon, BL is small.  But also cheaper on costs if you want to start a store there and try to sell off excess pieces, but this also means if you want to `get a quick profit` on it with the `regular sets`, you`re in for a sour ride.  Not enough buyers for something they can find in every store.  As a European, take in that the States usually has far lower prices due to clearances at Walmart and such (I saw the Phantom for one pass earlier this week in a FB post for 2 dollars clearance...) and you can`t compete with them.

Parting it all out might be intresting then, but that requires a LOT of work and maintenance and not suited for the quick return newbie.

So to return to the initial idea, is Lego worth more then gold?  Yes, it is, IF you have the funds to seriously invest in it, the space to safely storage it and the patience to wait it out and PRAYING that the bubble that is currently taking hold, and is estimated (not by me, but by various online soruces) to last up to 5 years tops still.

But if you want to make a fortune with the regular sets and stuff you get a 20% off from RRP in stores and such these days, take into account that Legends of Chima according to BrickPicker for one is currently turning around at... a 70% DEcrease from it`s RRP, so that would mean not only a 50% rise to break even, but even more and longer to actually become a wise investment.

And there are not so flattering words for investors buying in at a 50% loss...

So really, if you want to finance your hobby, are you sure that playing and gambling on the market is then your actual hobby instead of just having fun with Lego bricks?  BrickLink is a great tool to either get old sets for your collection at great, not even expensive bargains (30 year old complete Police Stations for 35 euro and such), and to liquidate any excess parts that won`t be falling in your general `area of building`, or on the flip side getting those pieces you DO need without having to buy a lot of sets.  But as a real tool of the trade as a non-professional merchant, it`s a huge risk.

If you DO want to play the investor game and are willing to take the risk, there is a nice book out there called `Bricks to Riches` by Amanda Moak.  I have it in my Legobrary and it is a valuable tool for both budding investor, as it is like me for someone just wanting to get the hang of how BrickLink`s interface works.  But I wish you the best of luck, because without wanting to invest 1000s of euro in starting out, not having a lot of space to store it, and especially if you don`t have a clue what is `hot` and what not on the market these days, you`re in for the ride of your life... from a mysery point of view.

No, Lego is not worth more then gold these days.  It was for those that saw it coming 5 years ago (Taj Mahal, Green Grocer, UCS Milennium Falcon to name a few), but that are a select few and the train has since left the station.

Don`t just jump on the bandwagon now if unprepared!

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