Are there too many Lego investors out there now???

[TheOrcKing]

Seriously though how many people belong to this site, and how many have been made aware of investing by this site in the last year. A few 10,000s? This sounds like a lot but worldwide I doubt it will not affect prices that much. But if it does and your sets only go up by 50% in 3 years rather than the 100-200% now its still a better investment than the bank, or most shares.

You're notion inspired me to try making a quick pie chart but the numbers between potential investors and projected world population was so great, it didn't work and gave me errors. I tweaked it every which way from Sunday and the best percentage I could get was an entire 1%. Out of the possible seven billion people living on Earth currently, there maybe barely enough to equal one whole percent.

Of course, nothing is set in stone and there isn't any real way of knowing the precise amount for either value as well as potential buyers but still even under the best (or worst) of circumstances, the investors "don't amount to a hill of beans in this crazy world".

the key of LEGO investing is buy the lowest possible. If you manage to find the lowest price on WORLD! you cannot fail unless you buy Atlantis etc

Certainly. Those Atlantis sets will drown you!

Lower entry fee gives more breathing room to roll with the punches as value goes up and down like rollercoaster as you said.

[StarCityBrickCompany]

Yes, without a doubt. This isn't the end of the LEGO world - but the best of times have past.

[OzGadget]

The reason I ask this question is because I'm wondering if its too late to jump on the Lego investing bandwagon??? It is so tempting to do so with the popularity of Legos right now, and seeing some of the great returns on some sets after EOL.

 

However, when will the investor supply out number the consumer demand? Its seems to me that a great number of the posts on Brickpicker are members talking about how they have 40 of this set, and 60 of that set and so on, and how cheap they got each set.  With only a limited number of places to unload all these sets, coupled with the increasing number of investors buying and stock piling huge quantities. Not to mention Lego is mass producing many of their sets these days. Wont this in time dilute the market and cause the secondary market prices to fall?  All these sets will eventually flood the markets after EOL, and investors/sellers will be competing against each other causing price wars and market value deflation. If there is a Lego bubble will it be caused by investors and Lego fan/collectors turned investors?

I think the biggest misconception of investing in Lego is that you will make lots of money. Sure as it has been said with some of the people in this forum that the buy cheaply lots of sets and are worried about the saturation of the secondary market. If you spend a sizable amount of money with the intent to make a profit in the future (either short term or long term), you hopefully have picked the sets that will be potentially profitable over time.

Picking sets that will accrue in value is an educated guess at best. You rely on instinct and luck with purchasing items at the time they are released by Lego.

As it has been also mentioned in this thread, sites like BrickLink specialize in specific pieces as well as sets. Maybe the spare parts market is the way to go. There are a number of individual pieces that are become valuable as they are items within sets that are rare or of special significance. An example would be the radar dish on the Millennium Falcon (10179). This has been selling at $30+

Also, eBay is the biggest marketplace for purchases but is not the only one. As previously mentioned, BrickLink is another medium for investors to sell off their sets.

To say that the market is saturated with investors is not necessarily correct. There are always going to be different type of investors as much as there are different types of collectors. From the polybag sets to the large boxed sets, there will be a diverse customer base. As to the value of the sets decreasing due to the number of sets being available for sale, it seems that it is hard to gauge the market as to when to bring your items out of storage.

My only opinion I would share is that for all of the investment returns a seller is hoping to get when they finally list an item out of their stock, please make your mark up reasonable but not excessive. We have all seen the overly priced items listed and wonder if the item will sell. It is a buyer's market, not a seller's market.

For any investor selling their stocks, I do hope you get the price you are seeking and may all of your choices for investment sets be the right one.

[sadowsk1]

I think there are more investors than there were before.  I envision holding onto sets longer which isn't a big deal.

[StarCityBrickCompany]

To say that the market is saturated with investors is not necessarily correct. There are always going to be different type of investors as much as there are different types of collectors. From the polybag sets to the large boxed sets, there will be a diverse customer base. As to the value of the sets decreasing due to the number of sets being available for sale, it seems that it is hard to gauge the market as to when to bring your items out of storage.

My only opinion I would share is that for all of the investment returns a seller is hoping to get when they finally list an item out of their stock, please make your mark up reasonable but not excessive. We have all seen the overly priced items listed and wonder if the item will sell. It is a buyer's market, not a seller's market. 

 

You are saying "that market is saturated with investors is not necessarily correct", but also saying that it is now a buyers market, and we just need to expect less profit?

[OzGadget]

You are saying "that market is saturated with investors is not necessarily correct", but also saying that it is now a buyers market, and we just need to expect less profit?

I would like to firstly say that I am not knocking the idea of investing in Lego. Some do wine, property and automobiles as their investment medium. I am one of those who buy Lego off investors.

What I was inferring is that there are always going to be buyers and therefore a demand for sets. Some sets will be in demand more than others and therefore the profit off a set will be subjective to the want of the buyer and the selling price of the investor.

The potential buyer may judge their desire for the set on the asking price. If it is reasonable and justified then their decision to purchase will be a positive one. If the asking price is outside of their budget, the potential buyer may reconsider the sale.

As a general question, what percentage on top of the original purchase price would you be expecting (on average) from a set when you list it of sale. I know this is a subjective question and there are lots of things to take into consideration.

As to it being a buyers market, without the people paying the sets you may list, you have no reason to buy up sets for future investment.

[Ed Mack]

The key to the future of LEGO investing is restrained production by LEGO and the continued EOL of sets. A large ramp up in production or excessive production runs(10188) will destroy the secondary market.

[OzGadget]

The key to the future of LEGO investing is restrained production by LEGO and the continued EOL of sets. A large ramp up in production or excessive production runs(10188) will destroy the secondary market.

I had to google the set you made reference to but once I saw it was the DeathStar I realized what you meant. Such a set could have been a potentially profitable set I'd the production numbers were reduced. I've seen this being repeated with 10220 -VW T1 Camper.

[exciter1]

The vast majority of LEGO sets are purchased by children.  When the kids stop buying, that is the time to start worrying.

 

I don't think interest in Lego is slowing with kids at all.  I can only count on one hand the number of times I was in the Lego aisle and a parent isn't buying their kid a set.

 

I was thinking the same. Looks like there are more and more Lego investors now, and I only started purchasing Lego as an investment a month ago. I already find it really hard to find good prices (in Canada!) and the sets I have, I have to resist the urge to open it up and build them haha!

 

Maybe there are better things to sink investment money into in Canada?

 

I tend to agree with Emazers and TheDarkness.  New investors will likely become frustrated when they don't realize immediate returns.  Investors need to be patient to buy and patient to sell.  I made many mistakes when I first started investing, including buying sets that weren't a great deal or getting good deals, but on lousy sets.  It's not easy to realize that 10% off a HH or an Orc Forge is a buy, but 30% off a Goblin King Battle is a pass.  I don't think there will be many 5 baggers anymore, but there will be plenty of doubles.  10188 should be a decent case study.  Large (suspected) investor supply and a high demand set.  If it languishes after retirement then I would have some concern.     

 

Immediate returns don't require good CAGR ratings.  If you acquire multiples of a sought after set for 50% off or more, flip it for 30% profit immediately or a few months later.  Roll that money up into buying bigger sets for long term investments.  The perfect time to do this is during Christmas and July clearance seasons.  Wait a few months for the quick flippers to get rid of their stock where they sell low and then start listing the near term retired sets or sought after EOL stuff for MSRP or a little more.  It doesn't take much to turn decent profits.  It's just a little more up front work with the smaller sets.

[M4x18]

Patience + right sets + cheap prices (optional) = profits.

 

Take away any of the first two and you are bound for losses/reduced profits.

 

The opportunity will always be there, it's just a matter of what you do while seizing it.

[spener90]

In my mind the profits will always be there...more investors just means that the prices just go up slower. (If it is a problem.)  Once a set is retired...eventually they will all be sold.

 

 

EDIT When I think about worst case scenario, I just imagine having to hold sets longer than I wanted to.

My worst case scenario is having to sell a set for a small profit, or small loss at worst.  The idea of that doesn't particularly worry me.

 

I also don't worry to much because I feel the majority of investors miss key sets.  Examples: Hayabusa, Sungnyemun, Winter Village sets.

[Spartikis]

LEGO used to be an easy investment in the early 2000s, all you had to do was buy literally any starwars set and you could expect 3-4x return on your investment. Those days are long gone, most starwars sets loose money now, modular buildings arent retiring and turning profits like they used too, its a tough market. There are a lot more investors than there used to be as well, the only bright side is that LEGO is a bit more popular than it used to be, if you do your research and are good at predicting the market there are still good profits to be made.

[DoNotInsertIntoMouth]

You guys have to remember too that Lego is getting more popular and there are more people in the world than ever. This helps a ton. If there are 50 million more people in the US in 30 years, it wont matter that there are more investors.

[CNH1974]

At the end of the day, any investment is a risk. Are you prepared to risk that your investment's value may go down as well as up.

 

If you are not prepared to take the risk then put your money somewhere safe for guaranteed low returns. 

 

Also, the a lot of the sets we talk about went EOL before this community existed. How many significant sets have gone EOL since this site went live? This site has been around for 18 months?? ish?? So has something going EOL Jan 2012 had time to appreciate significantly.

 

My portfolio is small compared to a lot of people here and the only set I have that has been EOL for 6 months or more is 10193. And although this set is up 30% on RRP, recent sales have been mainly flippers cashing in. Good on-em I say. Once they have done, most likely after this christmas we may get a better idea how this set will perform in the longer term.

 

What we really want is sets we have been talking about to go EOL. Like:

Fire Brigade

Grand Emporium

Tower Bridge

Haunted House

Death Star!! - Now that "will" be the test!

[Darth_Raichu]

Here is the thing about this LEGO business. Anyone need to sell their sets (ie. be a retailer) to turn profit. At the end of the day, those pretty little $ in everyone's brickfolio are just numbers until the sets are sold. The whole process of retailing is not easy and not everyone is cut out for it.  Many newcomers will realize this in 6 months - 1 year time and will simply leave the market.

 

 

The key to the future of LEGO investing is restrained production by LEGO and the continued EOL of sets. A large ramp up in production or excessive production runs(10188) will destroy the secondary market.

Now this I have to agree.  With TLG opening new factories all over the world, the supply side will get much bigger in the not too distant future.  What to do then ?

http://www.youtube.com/watch?v=bW7Op86ox9g

[spener90]

My question is. Does anyone really think that the majority of sets when retired will start selling for under MSRP? I don't see it, even with sets that have been around for a long time.  The biggest risk for Lego investing is if we experience a massive exit from the toy.  Otherwise, the worst case scenario for me is breaking even.  Which when comparing it to a stock, I'm not complaining.

[Diabolos80]

Will the Haunted House be worth $700 4 years after eol? Probably not. Will it be worth $300 2 years after eol? Probably so. If that's not a good ROI for you, then there is no pleasing you.

[akohns]

If every person who buys Lego holds their purchases for later resale then I would worry but that will never happen. So many members here are hobby investors as well as probably everyone on BrickLink and look at how well that site has done over the years. Talk about diversity, Lego can be sold as a box set conveniently containing all included parts for sale in a single container or take out those very same pieces and sell each individually. Don't forget parts over time can actually lose their clutch power and need to be replaced with a brand new replacement. It's a consistent cycle of rinse & repeat.

....Wait, did I just contribute to another bubble thread? Ah dang it, I promised myself I wouldn't do this anymore!

Agreed,

I'd start to worry when people who are buying on the secondary market are primarily keeping things in the box. Other collectable markets have burst because it's just a collectable and the majority of the time any one of us sells a discontinued set that's new it very quickly looses that status and the higher value.

[steakyboy]

Only been investing since February, so am processing it all. Someone mentioned Atlantis. My son LOVED those sets. It was really his first shot at LEGOs as he got an Atlantis set as a gift. So funny what a fail they are investing wise. He still loves the little shark and hammerhead bad guys. Glad I keyed in on the 10212s I stumbled on back in February.

[Studebricker]

The short answer is yes, there are "too many" Lego investors.  But as others have said, a lot of these guys are looking for a quick buck and/or don't know what they're doing.  The market will weed them out eventually.  I am more bummed with just the constant rehash of sets, which renders more and more "new" sets as not worth stocking up on.  In a way, that is inevitable when the SW license keeps getting renewed, but it would just be nice if Lego could be a bit more creative with their remakes.

[CNH1974]

Don't worry, in a year or so's time there should be a whole new array of new sets for TLC to make :)