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Hey everyone,
I'm both excited and slightly frightened to have discovered this site. I know what side my wife will weigh in on there. :-) Been interesting to read a bunch of the posts though and I love the analysis of the market.
About me: Mid 30's, child of the 80s, now a dad with two little ones. I was a huge Lego fan through age 10 or so...drifted after that as many do. Now, my son is 4 1/2 and a Lego fiend. I was both proud and sad when we came home the other day and he quickly put together the TMNT Krang's Escape set, following the instructions, without asking for any help. MOSTLY proud though.
Instinctively, when he started to show a hint of interest in Lego a couple of years back, I started to pack a couple of sets away - Star Wars of course, along with the Master Builder subscriptions and a couple of small City sets. As a long-time eBay'er, I noted quickly (and slammed my head against the desk many times) the rising prices of past sets. After reselling a Sandcrawler recently that I had picked up a couple of years ago, it was certainly pretty clear to me that Lego will continue to appreciate in value.
Why I do and don't represent the bubble
I've been giving this some thought and reading the discussions on the boards. On the one hand, I represent the bubble threat exactly - older collector, some disposable income, capable of sitting on sets for multiple years, familiar with eBay and the secondary market. I agree that a lot of people like me discovering this concept will inevitably lead to price pressures of some sort.
BUT at the same time, I think I also represent a greater segment of people out there, and something that will be in an endless supply - people with young kids who are rediscovering the magic of Lego with their children. Most of us will never even consider saving sets as an investment, we just remember the fun of building, sorting, and creating of our youths. I'm sure most of you have had a conversation about Legos many times where people probably think you're crazy to pack away these sets - so I don't know how much of the new growth in the market is really focused on investing.
In the end, there's another factor that gives me confidence in Lego. As one of the mods pointed out in another thread, a yellow 2x2 made today, fits perfectly with a yellow 2x2 from 20 years ago. And that really sets Lego apart from other toys. My mother, bless her heart, never let me sell my childhood Legos at any garage sale, no matter how much I pleaded. The fact I can now pull those out, and watch my son recreate scenes from his imagination using both Anakin Skywalker, and my old blue Space minifig, is really cool.
I also have some experience in collecting bubbles - I veered away from Lego in the mid-80s because I feverishly collected baseball cards instead, as I'm sure many of you did. I still have in fact a nice little collection of unopened vintage packs - although I am converting some of that inventory over to Lego now. (always happy to talk trade, haha :-))
Baseball cards crashed - and have never really recovered - due to a few factors IMO:
1. Oversupply in the early 90s. Pretty well documented.
2. The addition of insert cards/chase cards in the early-mid 90s.
3. Rising prices of even entry level packs.
Lego could certainly be subject to #1, but as many have stated, so far that doesn't look like an issue. 2 and 3 are interesting though. For those not familiar, chase cards and inserts shifted the focus of collectors from what had been working for 40+ years. Instead of chasing the rookie cards of top players, or trying to build a complete set, collectors focused more on this scratch ticket lottery system of trying to get lucky with a 1 in 10 autographed card, or game used patch, or whatever. This cratered the market for the base set. In many cases, the non-insert cards in a pack are somewhat worthless, depending on the set.
Think about how this could apply to Lego. If Lego started creating special minifigs - only inserted in certain unmarked sets - it could shift the market considerably. It could create a positive effect - an unopened set with a possible rare figure could be worth more. But I think just as likely you'd end up with more people buying the sets for that lottery ticket effect, and less for the set itself, which in the long term I believe would be damaging to the base of Lego fans who come back again and again for the sets and figures themselves. Not for the disappointment that they "lost" because they didn't get a rare figure out of the set they bought.
#3 is interesting as well. The baseball card industry basically priced out the bread and butter of their base. When I was a kid, a pack cost 35 cents. Now - for the packs you REALLY want for the hot inserts - they can be $5-$10 or more! Kids have limited disposable income of course. Probably only takes a few times where you spend $50 on cards and don't land a great insert before you're just thinking you should have bought that Xbox game instead.
So while it's true Lego is still expensive, you have something to show for it. You also know what you're getting. Imagine if Lego said "hey, we're going to reproduce a new Cloud City set - but instead of one 1500 piece set, we're going to sell it in packs. $5 for a 50 piece pack...collect them all! Oh, and sorry if you get any duplicates, you'll just have to buy more packs!" In fact, if anyone from Lego reads this, please don't do this. :-)
So I think the future of Lego investing is bright. There may not be Eiffel Tower-sized returns for everyone in the future, but compared to other collectables and investments, it looks pretty darn good.
For me it still comes back to fun as well. I have a Death Star stashed, but not for investing. That baby is going to magically appear some rainy weekend day, randomly, when my son is 9 or 10. Can't wait.
(Does that win anything for longest first post ever?)