I've officially divested from LEGO

[Val-E]

4 hours ago, steelmelt said:

I stopped buying for investment purposes about 2 years ago.  I have been slowly selling since.  Selling is so much funner than buying, but it's just something you lack a lot of control over.  This season will be very telling for the resale market.  I do think the hold times on these sets are going to be more extended than I thought to make a decent profit.  I'm not in a rush though.  

I´d argue that buying is more fun - till it gets out of control.

Finding FB´s or TH´s and Dragon Sanctuaries long after they sold out or waiting it out for that 70% clearance are hugely satisfying. I understand that nowadays with more clearances and the retiring soon tags, buying has become much less interesting.

[Bat man]

5 hours ago, KShine said:

There are lots of things that are wrong nowadays, but I still insist that knock-offs do not hurt the sellers of rare LEGO very much (true collectors have never accepted fakes, and they never will).

The fakes do hurt LEGO the company, and they also hurt the flippers of non rare minifigs.

Basically, if your customer is someone who considers their purchase to be a disposable item, then yes you might be affected by the fakes.

Why don’t you think knock-offs aren’t hurting sellers of the legitimate rare retired sets? The entire reason knock-offs even exist is to undercut these sellers by offering their over-priced items for much less. It would be irrational for us to pretend that consumers of knock-offs were truly never potential customers to the rare/retired market simply because they ultimately decided to save money and compromise with the substitute product. 

TLG isn’t hurt directly by the sale of knock-off rare & retired sets, as they aren’t competing to sell these retired sets. They’ve already made their money on these sets.

The knock-offs truly hurt TLG by competing directly for the consumers available cash, as they are reducing the discretionary income of LEGO’s potential consumers. TLG faces this same threat from many unrelated markets though, namely video games, cell phones, travel industry, etc...

[Val-E]

The people who want the original will buy the original, however that doesn´t stop them bargaining the price down thanks to the knock-off option existing. It´s a buyer´s market.

The people who want the set cheap and are not particular about whether it is genuine or not, will likely go for the knock-off rather than a new or used original.

Knock-offs hurt everyone as they show how much money TLG is making from each set purely on production costs. Of course there are less R+D, licensing, artwork costs but the difference is especially large on the big exclusives and compared with secondary market prices.

We also have to remember that knock-offs reach the parts that TLG and many resellers can´t or don´t want to due to scam risk.

[Ciglione]

People with low budgets previously would buy the official lego sets. Even if they were more expensive due to retirement and scarcity. They just had to safe money for some time to be able to buy them. There simply were no alternatives.

Now with the knock-offs they have a cheaper alternative. So they can buy more sets for less money.

Just my 0.02 

[Val-E]

1 hour ago, Ciglione said:

People with low budgets previously would buy the official lego sets. Even if they were more expensive due to retirement and scarcity. They just had to safe money for some time to be able to buy them. There simply were no alternatives.

Now with the knock-offs they have a cheaper alternative. So they can buy more sets for less money.

Just my 0.02 

Your 0.02 is now worth only 0.01 if you invested in Lego.

[Legojona]

48 minutes ago, Val-E said:

Your 0.02 is now worth only 0.01 if you invested in Lego.

Are people really losing money here? I think you guys mistake small profits for losing money.

[KShine]

4 hours ago, Bat man said:

Why don’t you think knock-offs aren’t hurting sellers of the legitimate rare retired sets? The entire reason knock-offs even exist is to undercut these sellers by offering their over-priced items for much less. It would be irrational for us to pretend that consumers of knock-offs were truly never potential customers to the rare/retired market simply because they ultimately decided to save money and compromise with the substitute product. 

TLG isn’t hurt directly by the sale of knock-off rare & retired sets, as they aren’t competing to sell these retired sets. They’ve already made their money on these sets.

The knock-offs truly hurt TLG by competing directly for the consumers available cash, as they are reducing the discretionary income of LEGO’s potential consumers. TLG faces this same threat from many unrelated markets though, namely video games, cell phones, travel industry, etc...

The buyer of that $100 knock-off was never ever going to buy my original set for $1,000 - so I didn't lose that sale.

Regarding TLG, if their customer is someone who considers their purchase to be a disposable item (seeing it as a toy to be played with, lost and scattered around, only to be thrown away in a year or two), they might as well spend less for a bigger/better fake set (since they already consider the purchase to be without value). Also, since most of the current sets are available as fakes, many will prefer to spend less on the fake garbage now, than to spend much more for the actual LEGO (if they expect it to be worthless later).

At this point though, the perceived threat of the fakes (warranted or not) does have an impact on values, since many investors have reacted with fear (selling too soon), forcing down prices, as many have looked to lock in their gains.

Edited September 22, 2017 by KShine

[marcandre]

Another bubble thread? I have slowed down but I'll always buy & sell Lego unless it totally bottoms out. It's just a hobby for me though, nothing I really depend on. Was over 300 sets at one point but now have around 100. I can deal with the ups and downs of set values. The most disheartening thing for me have been scammers. Getting an A-Z claiming a $400 set is fake just enrages me. If anything makes me quit it's going to be a few more of those. 

[Val-E]

35 minutes ago, Legojona said:

Are people really losing money here? I think you guys mistake small profits for losing money.

Profits are down so his 0.02 stash is now worth less, especially as he wants to get out AND has lots of Ninjago and exclusives that are sliding.

[Migration]

The buyer of that $100 knock-off was never ever going to buy my original set for $1,000 - so I didn't lose that sale.
Regarding TLG, if their customer is someone who considers their purchase to be a disposable item (seeing it as a toy to be played with, lost and scattered around, only to be thrown away in a year or two), they might as well spend less for a bigger/better fake set (since they already consider the purchase to be without value). Also, since most of the current sets are available as fakes, many will prefer to spend less on the fake garbage now, than to spend much more for the actual LEGO (if they expect it to be worthless later).
At this point though, the perceived threat of the fakes (warranted or not) does have an impact on values, since many investors have reacted with fear (selling too soon), forcing down prices, as many have looked to lock in their gains.

Actually the buyer of that $100 knock off undercut you on that rare set when he sold it and replaced it with the knock off.

[Sandwraith]

Posted in this type of thread before, but i slowed down about a year ago. 

My main reason was i bought a condo, so i wanted all the extra cash i could towards the down payment, after i moved i just wasn't seeing the same returns i did a couple years ago and began to value my time/sanity over the returns i was seeing. I think my first investment purchase in Lego was 2012, and it was an amazing 4 years or so of great ROI's, so i can't complain, it funded my new place

I'll still jump on any smaller set that looks like it will be a winner, and take advantage of sets with stock issues (Saturn V), but gone are the days of stocking up on large quantities of the big sets for me.

[LegoSteve]

On 9/20/2017 at 11:24 PM, Bat man said:

I’m not sure about what is driving the market down, maybe it’s kids shifting their interest away from LEGO, maybe it’s knock offs, maybe it’s TLG rereleases, maybe it’s spending patterns of households? I do know TLG will implement policies to defend THEIR profits, and these policies aren’t necessarily good for investors. 

For example, look at the trend of once profitable sets, such as the tumbler, 76023. I routinely sold this set for $310-320 on eBay. The average price now by my metric is $270-280.

$280 * 13% fees =  $243 revenue

If you want to be competitive you have to offer free or discounted shipping, on a set such as 76023, you’re looking at $20-30 just for shipping. 

Which brings your revenue down to $213-223

Set initially cost $199 * .06 sales tax = $211. 

(even though I didn’t pay full price for every set, I manage FIFO) 

Bringing net profit to $2-12, and that’s without counting any opportunity costs associated with the time to sell, package and ship. 

 

Just a couple comments on this post and by no means am I trying to talk people into staying in the LEGO game.  If anybody out there wants to divest just pick up the phone and give me a ring.

I see that you paid full price for this set.  Hmm.  Not sure when you purchased these sets.  Hopefully you weren't following the hoard at the tail end.  I only have 2 of these sets and I think I paid around $145 each.  Remember you make just as much money in the purchase as in the sale of an item.  I may have mentioned this in the past but during the time the hoard was buying up Tumblers at MSRP during it's last month, I was buying up Imperial Hotels for about $86.  Now, the IH hasn't performed as good as I would like, I'm still sitting on north of 75 of them BUT it's performing much better than The Tumbler.

It is true that people aren't doubling their money like they used to but I still take comfort in the fact that when I total up all of my labor I still make over $100 an hour.  Example: Yesterday I pulled the trigger on 50 units os a non-LEGO item.  MSRP is 99.95 and I got them for about $77 which is a bit high for me.  In a perfect world I could've got them for $66.  Anyway, There was little work involved in getting this item and I didn't have to run all over town to do it.  Each unit is individually boxed and will be delivered to my house by UPS next week.  During December this Item should go for $150 easy.  There's very little work involved and because they are already individually boxed all I will need to do is scrape off the shipping label and add a new one to it.

In short: Never buy the cool shiny sets that everyone else wants and as always, buy low and sell high. Cheers!

[Val-E]

1 hour ago, LegoSteve said:

Just a couple comments on this post and by no means am I trying to talk people into staying in the LEGO game.  If anybody out there wants to divest just pick up the phone and give me a ring.

I see that you paid full price for this set.  Hmm.  Not sure when you purchased these sets.  Hopefully you weren't following the hoard at the tail end.  I only have 2 of these sets and I think I paid around $145 each. 

We know now that Tumbler is a poor buy at full RRP but, at the time, it was considered a no brainer. Just look at all the pre release optimism on a similar level to UCS MF.

Short life, unlikely to be remade, exclusive minifgure bladi bladi bla. That was the height of lego speculation - the day it sold out was the highest traffic on this forum and from then on, it has been a downhill slide pricewise. This set is still doing better than any 2016 D2C retirement.

 

Edited September 22, 2017 by Val-E

[Phil B]

This set is still doing better than any 2016 retirement.
 

Dragon Sanctuary anyone?

[Val-E]

12 minutes ago, Phil B said:

Dragon Sanctuary anyone?

I meant to say exclusives.

[waddamon]

I'm still over 100%.  Selling regularly.  My death stars are dragging me down.  But clearing them out one at a time.

[BrickSamurai]

On 9/21/2017 at 5:21 PM, TabbyBoy said:

I'm glad I saw the writing on the wall 10 months ago and stopped buying when I did. It really is game over and I made the right choice by moving onto other things. The killers for me in order were...

1. eBay fees and scammers.

Reason 1 would be the only reason I would consider divesting since it's only part time to collect what I really want.

Scammers a dime a dozen out there.

[fossilrock]

I don't know if anyone collected McFarland toys in the early days of that company but there was a great 5 year run where many figures were like printing money if you bought cases..  then it waned..  I feel we are in that waning period but this has been predicted for years now so it was bound to happen.  I also have bought very little this year and am selling down our stock.. I figure by next year I'll be out of all but the sets I want to hold for another 5 years or so which is mostly Star Wars UCS and lotr sets

Edited September 23, 2017 by fossilrock

[Sfcommando14]

It really feels like there are several camps, and each is in a different state of mind. The "buy and wait" crowd is out, as sets no longer seem to be rising over time like they used to. The "Amazon FBA crowd" has an insatiable set of buyers and can turn cheap Lego into profit without much effort or thought, so they don't care. The "just flipping some sets to pay for my collection" crowd is somewhere in between, depending on how badly they did selecting sets in 2015. But rehashing the same arguments on thread after thread is tiresome.

Oh and the fourth is "bitter Euros", who are just bitter European resellers who complain endlessly and then come back the next day to continue complaining. You know who you are.

 

[Val-E]

47 minutes ago, Sfcommando14 said:

It really feels like there are several camps, and each is in a different state of mind. The "buy and wait" crowd is out, as sets no longer seem to be rising over time like they used to. The "Amazon FBA crowd" has an insatiable set of buyers and can turn cheap Lego into profit without much effort or thought, so they don't care. The "just flipping some sets to pay for my collection" crowd is somewhere in between, depending on how badly they did selecting sets in 2015. But rehashing the same arguments on thread after thread is tiresome.

Oh and the fourth is "bitter Euros", who are just bitter European resellers who complain endlessly and then come back the next day to continue complaining. You know who you are.

 

I think that´s a very valid summary but it does not preclude people jumping from one camp to another as the market evolves. IIRC @TabbyBoy, @Ciglione, @KShine and myself (amongst many others) were certainly not complaining back in the day (we were too busy selling) when there were easier pickings from modulars, Star Wars and even City and the first IDEAS sets, which made a lot of people very very wealthy and saw no other way than the high priest of Lego investing @emazers business model.

Another point is that the European buyers may be a minority on this forum, but Europe has a bigger population and GDP than the US. On the other hand, there is much greater diversity country by country and "union" is now an oxymoron. When some of us started saying there would be difficult times ahead more than 2 years ago now, we were a minute minority but we were proved right - within our market and selling context. It was clear that too many people were getting in on speculating with the same dogmatic buy and hold plan and no plan B.

TLG already recognised falling US (and now European too) demand was one of the main reasons for declining results, so you guys are clearly not immune to the virus - maybe you´ll just catch it later. Gingerbread House lady has a lot of work on her hands.

Edited September 23, 2017 by Val-E

[Ciglione]

3 hours ago, Val-E said:

I think that´s a very valid summary but it does not preclude people jumping from one camp to another as the market evolves. IIRC @TabbyBoy, @Ciglione, @KShine and myself (amongst many others) were certainly not complaining back in the day (we were too busy selling) when there were easier pickings from modulars, Star Wars and even City and the first IDEAS sets, which made a lot of people very very wealthy and saw no other way than the high priest of Lego investing @emazers business model.

 

The nice thing about previous years was also that there were many more mom's and pop's shops to go to and find already retired sets at nice prices. So when you got home and you would be entering your purchases in your brickfolio those sets already showed a nice profit. That was awesome! And very satisfactory. Now unfortunately those times are over. Many smaller shops have closed or are already depleted by my dear collegues. Add to this that previously the investor community was more serious and did not have the urge to sell their sets at ridiculously low prices. There was more of a telepathic agreement amongst resellers to keep the prices up at a certain level.

I guess many people here can relate to what I wrote above.

[Val-E]

And a lot of those shops also moved to online selling. I had so many haunts to go to where I could get retired stuff but then they put it all on Ebay/Amazon and were able to sell there.

 

 

[labfreak7]

The amount of hype and publicity that Lego reselling got in 2014 also hurt resellers. News Articles almost promised a get rich quick scheme selling Lego. So many jumped in spending thousands of dollars thinking they could double or triple their money in less than a year. Those investors 2-3 years later are now learning the horrible truth that no, the market is over saturated, and breaking even in some cases is a daunting task. Investing in anything is risky. This "sure thing" is proving not to be.

 

[Val-E]

6 minutes ago, labfreak7 said:

The amount of hype and publicity that Lego reselling got in 2014 also hurt resellers. News Articles almost promised a get rich quick scheme selling Lego. So many jumped in spending thousands of dollars thinking they could double or triple their money in less than a year. Those investors 2-3 years later are now learning the horrible truth that no, the market is over saturated, and breaking even in some cases is a daunting task. Investing in anything is risky. This "sure thing" is proving not to be.

 

We haven´t heard much from the people that were buying exclusives at well over RRP a few years back. Wonder how that went?

[labfreak7]