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Throwing Money Away: Why Not Buy Everything?


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As a general rule of thumb in not just Lego Investing, but in collecting in general, in terms of what will appreciate in value, is that if it displays well,  it will do well.

 There have been many recent articles, all over the web, in local papers and on the radio. They're saying that LEGO investing is better than gold. It's sensationalist. It excites the imaginatio

I don't know if the sole purpose of this website is for investment research. I like to think of it as a community of LEGO fans, collectors, and pure investors. Some people obviously

Thanks @thoroakenfelder for this insightful and sobering article. On selling these for parts, the current BL 6 month average for all Prince of Persia parts combined is $298. Using my standard "threshold rule" of (purchase price * 2) > (75% of BL value), this would mean that you have a chance at actually making money (excl. labor) of these parts if you bought the combined sets for $111.75, or 41.5% off of RRP. So even selling this for parts is unlikely to make a good return .....

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Small correction.  PoP didn't have an elephant, that was back in the old Adventurers line.  I actually think most of the Lone Ranger line and at least Battle of Alamut are really well done.  Just bad source material so nobody cared.  Bought at the right price, even junk can make you money and a lot of this was had at 50% off or better.

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Seems like a bit more emphasis could be put on the clearance bit. If you bought some of the niftier sets for 50% and sold them for anywhere near retail you probably did fine for yourself. There are relatively few things worth buying at full retail really. The average set is more likely to be a stinker than a big winner, but even duds like those mentioned here can be worth it on deep discounts. 

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To anyone who has read this, my apologies. The parts in red were from my review of the article and were only meant to highlight that I didn't fully understand the author's intent. The article is being taken offline until it can be corrected. :(

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1 minute ago, gregpj said:

To anyone who has read this, my apologies. The parts in red were from my review of the article and were only meant to highlight that I didn't fully understand the author's intent. The article is being taken offline until it can be corrected. :(

No problem :) I was also confused about the "handing out $5 bills" comment in his article, good to see you had highlighted it as well :)

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1 hour ago, exciter1 said:

Don't ask some people here how much they made with Lone Ranger and Galaxy Squad.  It will make you sick, with envy.

 

1 hour ago, Muffin Cup said:

Seems like a bit more emphasis could be put on the clearance bit. If you bought some of the niftier sets for 50% and sold them for anywhere near retail you probably did fine for yourself. There are relatively few things worth buying at full retail really. The average set is more likely to be a stinker than a big winner, but even duds like those mentioned here can be worth it on deep discounts. 

 

1 hour ago, KShine said:

Basing performance on MSRP can sometimes work, but can also be deceiving - I prefer using the average daily retail price (of large retailers), over the life of a set.

 

All of these points are valid. I do not dispute that a savvy investor, someone with more time in the saddle as it were, could and probably did make money on even these turkeys. You could even cherry pick the good sets out and show that it's still possible to profit on certain things.

However, the point of this blog was to illustrate the folly of running headlong into LEGO investing without knowing the product, the history, and assuming that all LEGO is gold that will increase in price. Also, it points up the assumption that even if it doesn't go up, you won't lose money. I could have lingered longer over the costs of long term storage of sets, needing to allocate shelving and space for each item, the financial aspect of storing them for a long time as they wait to be sold.

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Everyone got their sets at different prices. You have to have a baseline or you can't discuss and compare these things. MSRP is as good as a baseline as any. Or daily average retail price as someone mentioned, but I am sure not going to calculate that for every set. Just because Frank got a set for $1 at a closing Kmart doesn't make it a winner. Maybe for Frank, but we aren't only talking about Frank, much to Frank's chagrin.

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8 minutes ago, thoroakenfelder said:

 

 

 

All of these points are valid. I do not dispute that a savvy investor, someone with more time in the saddle as it were, could and probably did make money on even these turkeys. You could even cherry pick the good sets out and show that it's still possible to profit on certain things.

However, the point of this blog was to illustrate the folly of running headlong into LEGO investing without knowing the product, the history, and assuming that all LEGO is gold that will increase in price. Also, it points up the assumption that even if it doesn't go up, you won't lose money. I could have lingered longer over the costs of long term storage of sets, needing to allocate shelving and space for each item, the financial aspect of storing them for a long time as they wait to be sold.

And that is why you need to _love_ LEGO, the product, to make the best out of this game .... there are tons of cool MOCs you can make with PoP or Lone Ranger parts ....

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19 minutes ago, MarxMarvelous said:

Everyone got their sets at different prices. You have to have a baseline or you can't discuss and compare these things. MSRP is as good as a baseline as any. Or daily average retail price as someone mentioned, but I am sure not going to calculate that for every set. Just because Frank got a set for $1 at a closing Kmart doesn't make it a winner. Maybe for Frank, but we aren't only talking about Frank, much to Frank's chagrin.

If you never buy sets at MSRP, is that really your baseline?

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It's definitely more risky to invest in new themes like Lone Ranger and Prince of Persia. But if we consider only exclusives/hard to find sets I don't think there are a lot of sets that have decreased in value.

If you spread out your investments and buy mostly 'safe' sets you'll be fine. I do think a lot of people here take a gamble from time-to-time and buy something from a new theme like Lone Ranger if they like the sets, but I doubt most people would put a significant percentage in that. Besides, most of the time it's quite obvious which sets/themes will do well.

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11 minutes ago, jbacunn said:

I have to disagree on the comment about the quality of the LR sets. I thought most of them were pretty cool and I did make money with them when buying at 50% discount.  

Agreed, nice sets just not very investment worthy.

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22 minutes ago, Phil B said:

And that is why you need to _love_ LEGO, the product, to make the best out of this game .... there are tons of cool MOCs you can make with PoP or Lone Ranger parts ....

I agree that you really need to have a passion behind the Lego products and not just a desire to make quick money. If you are only in it for the money you are more likely to fail in my opinion. I've had a passion for Lego ever since I received my first Lego set decades ago and the Lego secondary market is a fun way to continue this passion and hopefully make a modest profit. I only buy sets for re-sale that I personally find fun to build and think are of a quality design. If the theme doesn't appeal to me I'm not going to invest in it unless they are on super-deep discount. Like anything, invest cautiously.

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16 minutes ago, exciter1 said:

If you never buy sets at MSRP, is that really your baseline?

It's not about me. The baseline is for EVERYONE to compare and discuss. Clearly when making your own calculations and data, you would use your buy in. When talking about a set in GENERAL terms with EVERYONE else and comparing you have to have a baseline. Not everyone could get the set for the price I did. Everyone could get it for MSRP.

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8 minutes ago, MarxMarvelous said:

It's not about me. The baseline is for EVERYONE to compare and discuss. Clearly when making your own calculations and data, you would use your buy in. When talking about a set in GENERAL terms with EVERYONE else and comparing you have to have a baseline. Not everyone could get the set for the price I did. Everyone could get it for MSRP.

Exactly ... it's easy to see how you can make money off of Spaceports bought for $1. The question is if the same SpacePort bought for $89 (still a 25% discount over RRP) is going to make money or not ..... let alone those bought for $119.

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Good article. 

I like to fact that you allude to these stacks of unsold inventories. Clearly the loss of flexibilty through a high working capital with low turnover is an important element which makes the difference between a good and a mediocre business. 

On this, a whole article should be dedicated. Why are metalbeard SC or HC tricky investments for me, but do i have maxed out exposure to Red5? 

For exactly that reason. How fast can you move the product! Keep it in mind. Nobody wants a stock full of galaxy, lone ranger and fire stations...

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1 hour ago, jbacunn said:

I have to disagree on the comment about the quality of the LR sets. I thought most of them were pretty cool and I did make money with them when buying at 50% discount.  

The sets may be good, but they would have to be exceptional to counteract the negative momentum of the toxic property.

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3 hours ago, KShine said:

Basing performance on MSRP can sometimes work, but can also be deceiving - I prefer using the average daily retail price (of large retailers), over the life of a set.

Basing performance on MSRP is the only fair way to go really, not everyone in the world can buy from USA Walmart or Toys are Us etc.... so for statistics to work MSRP has to be used... 

 

Its only logical. 

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9 minutes ago, Alcarin said:

Basing performance on MSRP is the only fair way to go really, not everyone in the world can buy from USA Walmart or Toys are Us etc.... so for statistics to work MSRP has to be used... 

 

Its only logical. 

Also, and maybe I misunderstood, I thought that the cagr was based off msrp.

 

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12 minutes ago, Alcarin said:

Basing performance on MSRP is the only fair way to go really, not everyone in the world can buy from USA Walmart or Toys are Us etc.... so for statistics to work MSRP has to be used... 

 

Its only logical. 

It could be done by country. Besides, MSRP's vary by country as well

1 minute ago, thoroakenfelder said:

Also, and maybe I misunderstood, I thought that the cagr was based off msrp.

 

Yes, CAGR is off msrp.

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