BrickBroker

Life is an education unto itself. Society now benefits from more worldwide human interaction than we've ever had in the past (although, it may not always be physical). As long as we all keep our eyes and ears open and keep paying it forward, we all advance. Yes, I chose the name BrickBroker because that is what I do. I did not think of the ramifications of that name on this site, hindsight. I learned about this site via BrickBlogger and joined back in early summer of 2012, I think the site had not been around for too long before that, but I'm not too sure. Many forms of investing are not for many people. Most of the investments I participate in are not available to the general public. I did write a big check to get into the masonry industry, and I can tell you, you do not work with real stone without getting dirt under your fingernails. I'm very active in the investments that I want to be active in. A perk of my position, I guess. At the same time, you are correct, I have also written checks and walked away, leaving those in charge to handle things, and I have also written checks and provided a literal wealth of consulting along with the investment. Each situation is different. I do not even think a concerted effort would yield a proper return. From all of the work I have done educating myself on the subject, purchasing thousands of LEGO sets (or hundreds of thousands, maybe even millions) is not even possible. You can only go so far picking up deals on Amazon or eBay before you've exhausted your supply source, and then you're in the horrible position of having idle money....and having to wait before you can cash out. I'm willing to bet this type of micro investing tops out at about $1M in yearly revenues, and just looking at the involvement, that is a ton of work for $1M in revenues. Anyone else reading please understand the difference between revenues and profits before you go flaming. Stocks are volatile, no argument there. I only know what I know from watching Bloomberg, the rest I leave up to my professionals. We can continue to dissect Apple, but it's history has already been written. Looking at the fundamentals, it is still a solid buy, and if you bought at $700 hoping for over $1K, well, hang in there, it will take a few years but the dividends will pay back the losses unless the share price continues to drop. Investments always have risk, and I mean no offense, but by taking the position of "well even if this market tanks, I'll still have LEGO bricks" position is simply a cop-out of that risk. It seems like a denial mechanism to avoid having to deal with actually losing. I have seen that position taken many times as I've read through the boards by many different people. To me, it is the equivalent of someone who really likes ice cream, so they buy a Baskin Robbins 31 franchise, and declare their exit strategy as: "Well, I really like ice cream, so if this business tanks at least I can eat all of the ice cream!" With the example of Lucent and other businesses that are transitioning....it happens, it is all a part of the cycle. Industries rise up from the ashes of their predecessors. It will happen again, and again, and again. When was the last time anyone picked up a newspaper? I think denial and fear of change are what get people hung up. When a door shuts, another opens...but you have to be brave enough to walk through into the unknown....sure you can keep pounding on the closed door to be let back in, but it's probably not going to happen. With regards to the taxes, again, I'm no accountant, but if you are engaged in business and you are earning income on that business, you need to report that income and pay the taxes on it. The venue of said business (whether physical or virtual) does not matter. Think your accountant will be responsible if they made a mistake on your returns? They will not, you will still have to pay, and you will have to pay some nice penalties too. Unfortunately, I know this from experience. You'll also get the added benefit of paying your accounting firm for the hours they spend dealing with the IRS agents, you know, to really rub salt in the wound. I do not subscribe to the have and have-not discussion. My earliest years were spent being raised in a trailer park in the early 80's, up until highschool it did not get much better. I worked my ass off to be able to go to school to get a solid education, then I worked my ass off in my first job post college. I did strike it lucky as the company I was working for was acquired and that triggered a decent payout for me. I could have blown it all like most of the people I worked with....but instead I put it all to work. The opportunities for everything you want in this world are all around you, but you have to be willing to work very, very hard for them. BrickBroker

I would agree that I do not understand the micro investing of LEGO...I will easily agree that there is a lot of labor involved, and it has to be time consuming, regardless of how seamless others make it out to be. I just look at the effort for the return...and it's simply not enough. I accustomed to earning much bigger returns. Then again, I have also sustained some pretty big losses. Regardless, I am still way ahead. I'm confused about the capital gains statement though...paying taxes is just part of the game. I have never not invested because I would have tax implications. As far as I understand it with eBay, or with any business, report the income, and pay the taxes. If you are not set up as some sort of legal entity I think you can claim up to a certain amount as hobby income, but I'm no tax guru, your accountants can better advise you. The control aspect of most investments is an illusion in my opinion. You may have control over one thing, but not everything. If I understand this particular class of speculation correctly, the control you have are what your entry price is, and I guess there is some satisfaction to looking in your closet and seeing your investment, although that is not really a control. But other than the entry price, what else are you in control of? With the case of Apple...well it's pretty simple if you ask me. Their visionary is dead. No more magic devices are being innovated. The decline was predicted, and a lot of people made a ton of money shorting the stock down from 600-500, and there are still people out there doing it daily. Even at $450 it is still a bargain, and do not forget the dividends. The company will return an entire share purchase in dividends in 5 years. That's money making money. I am also a business owner, and I'm sorry to hear that yours is off so much. I can not say the same for mine. I'm in the stone, concrete, and glass business. Our demographics are really, really wealthy people, and we do it all from the smallest stonework to huge retaining walls. It's all about positioning. I do know that people are hurting out there, and that really sucks, but it is not the same for everyone. Some people are thriving and have been. I have read the consensus, and you are right on with your demographics. Everyone seems to be "doing this for fun." So I say keep having fun. Who really cares what one random person on the internet thinks? Cheers, BrickBroker

As one of those creators of the site I would welcome a well written blog article on any negative aspects of LEGO investing and trading. Call it what you will, it is a means to make money. Maybe your intentions are honorable, maybe you are full of it and are trying to scare people out of the business for personal benefit, only time will tell. So far you've come across as slightly condescending. As for a 5% return, I don't think most people would bother either, but who is talking about 5% returns? Monthly maybe. LOL. The opportunity is here for you to share your point of view with thousands of people. I look forward to reading it. Challenge accepted. Again, what anyone does for a living and what they do with that living is their business. My written words have no tone or inflection, but they are very direct. Not everyone is prepared to hear a differing opinion. 5% monthly return? Let's look at some simple math about that; You start with $10,000 in capital. Invest it all in various LEGO sets. So, now you have exhausted your capital. You're at zero capital, but you have $10K in LEGO. You spend 20 hours driving around all your local stores, and buying online. Call it $100 in fuel/wear on your vehicle. So far so good. Now you have to wait for the "EOL" until your investment can really start to appreciate, right? So you wait that 12-18-24 months from the time you bought in. I'll give you the bennie and say it all goes EOL 12 months past release. So it all matured in 12 months, yay! Now the only thing left to do is sell it, right? You check out eBay and low and behold, your speculation's value has grown by 50% (all based on what other sellers are selling the similar items)!!! You started with 10,000 and now it is worth $15,000. Good on you. So you get in there, take your pictures and write your listings, how long is that going to take? 8 hours? Maybe you use a listing software that templates all of your stuff so you can save time. That's just good efficiency, but you lose a little bit of that authentic feel by doing that, so your sets do not quite sell as well as what you previously researched. You liquidate it all for $14,500, and you sell everything over a one month time frame. You expend about 40 hours of labor packaging, shipping, responding to customer inquiries, and offering customer support. Packaging supplies for $10K in LEGO may cost anywhere from $250-500. Secure boxes are not inexpensive, and you can not risk a damage shipment at this point of the game. I'll be generous and call it $250. Now the real fun begins. So you have that $14,500 gross from your sales. You did not pay for anyone's shipping costs, so we need to add that to your gross income, as that is the total money you will receive via your Paypal payments. Shipping costs will run anywhere from 7.5% to 10%, but we'll just use 7.5% $14,500 x 7.5% = $1087.5 Your total gross income is up to 15,587.50. Paypal gets their money first. Call it 3% 15,587.50 x 3% = $467.63 Now eBay wants their cut, of the enhanced total of $15,587.50. The fees can range anywhere from 10-15% unless you are a powerseller (which you are not, you're an investor, not a store owner, right?) I'll shoot the middle and call it 12.5%. 15,587.50 x 12.5% = $1948.44 Your time has value, whether you choose to factor it in or not. I'm calling it $10/hr. You put in roughly 68 hours of labor, so that is $680. So now it's time to do the subtracting. You originally brought in $15,587.50 to your Paypal account, way up from the 10K you initially invested. The itemized costs are $3,446.07 15,587.50 - $3,446.07 = 12,141.43 Now deduct your original investment of $10K 12,141.43 - $10,000 = $2,141.43 Your payout is $2.141.43. Which does not look so bad until you realize that you sat on that money for 13 months, and you had to put in 68 hours of labor to extract that money. You can only do it every 12 months, because you do not have $10,000 to invest every month, and you are not turning the previous months 10,000 in to $15,000 every month. So divide that return by 12. $178.45 That is your return on a monthly basis. If you are running this cycle more rapidly call yourself what you are, a toy store owner, a business owner even, but you are not an investor, not at all. Please keep in mind the above scenario makes some extremely generous assumptions. You're not likely to get a 50% return, and you are not likely to liquidate it all in a months time. It's probably going to take you more time to answer questions, pack and ship, than I have estimated. I think I have hit the high points and I'm out of time. I'll check back in the morning with my flamesuit on. BrickBroker

What anyone does with their money is their business. If you want to clear off a whole shelf of toys or buy a whole toy store it makes no difference to me. I do not have kids, so it's impossible to tug those heart strings, and as far as AFOLs go, I am in that crowd for sure, I will clean off a shelf to get what I want, if that is what I want to do. Supply issues are LEGO's problem. If anyone reads my words and is discouraged, well, that was not my intention at all. Go out there and buy that LEGO! I mean that, seriously, buy it all, I do not care. If you break down the real math, I think you will probably agree that you'd be better off getting a second job at McDonalds. Still, no one has addressed the argument I have put forth regarding your carrying costs and opportunity costs/loss, no one has infinite capital, and if they do, they are not investing in something like this. Instead, everyone wants to bash the different opinion and instead brag about how "successful" they are at LEGO speculating. I'm not going to argue with you guys. I'll wait patiently for the posts about how you liquidated, bought a yacht, mansion, and a Ferrari all from LEGO speculations. I have a feeling I will be waiting a long, long time. BrickBroker

I read in another thread the site's creators were asking for those with opposing views or the "Bears" to come out and speak their minds. I brought my views. Apparently I ruffled some feathers, and now I'm unwelcome for having an opposing view? BrickBroker

Yep, BrickBroker. Not: LEGOsetre-seller. Think masonry... I just think it's reasonable to consider that what you are doing is nothing close to investing. That is all I am saying. It's glorified trading entirely on speculation and emotion, and the exit is that you are hopeful you can sell an item on eBay or Amazon or some other site purely based on what someone before you sold an item for. That is hardly a sound investment strategy. Hope is not a strategy. Who will address the carrying cost or opportunity cost/loss argument I put forth? Do the math, think about what your space costs, what else you could do with it that could be more profitable. Hey, if using your home and car as storage for your LEGO investment is the best use for them then by all means go for it. Personally, I'm not getting involved in an investment for "possible" 5% return. That's not enough risk, certainly not enough reward, and I'll have to put a lot of the work into it, or hire people which would then further dilute the return...no thanks. BrickBroker (Masonry, not plastics)

Good point. I do report earnings from my sales. I'm not sure what the actual percentage is off the top of my head, but let's say 15 percent, which brings the $5.71 down to $4.85. Do not forget to deduct all of your carrying cost (space is not free, even in your home, utilities, etc, all have a value) from that final $4.85. Now look at your opportunity loss. What is opportunity loss? It's the cost of being in your investment, that would keep you from other investments (liquidity). Say an awesome deal comes around on a 10179...but your capital is all tied up waiting for your sets to "mature" in value, let alone waiting to find a buyer at that "mature" price. You have to let the opportunity pass...basically, losing the opportunity to earn a greater return... I'm intrigued that not one person has not mentioned (in any thread I have read here) their carrying costs, or their opportunity loss. Factor that against your CAGR and once you realize you are perpetually running in the red, you'll probably give this whole LEGO speculating (do not fool yourself, it's not an investment) thing up. The name of the game is liquidity. Keeping your money moving, not "parking" it indefinitely in hopes that you will get a return down the road (a paltry 5% per year, if you're really, really lucky). Hope is not an effective business or investment strategy. Leave the LEGO on the shelves for the kids or the AFOLS, keep your $50 in your pocket and save it up. Once you have $10,000 meet with an investment specialist and turn the money over to them. They'll at least get you a real return, and you wont have to bother with all of this shipping, Paypal, Ebay, etc....after all, you wanted to invest right? Or maybe you wanted to run a toy store...If it's the latter just keep on buying the LEGO. BrickBroker

Texas is a right-to-work state, so you won't have the union garbage that goes on in the two other major ports (Long Beach & NY). The port of Houston is rapidly becoming the busiest port in the US, and they have infrastructure projects in the works to make it the largest. Logistics also make Texas a viable location to move goods out in a fan direction as opposed to trying to get it from one coast to the other. The tax structure is not as favorable as it is in other states, but when you lump right-to-work on top of everything else, it becomes one of the best places to operate certain businesses from. BrickBroker

LEGO does their US distribution from Roanoke, TX care of Global Supply Solutions. It used to be done from Enfield, CT by themselves, but during their near bankruptcy they finally listened to their consultants and focused on what they were good at (developing products we love), and turned over things they were less efficient at (distribution) to other people. (GSS). BrickBroker

I also found that pretty suspect. It is a little odd when someone randomly comes up on 2,000 or so battle-packish-value sets. I am not saying that random deals do not often occur, as they do, but usually someone who sells large quantities of something like this would be able to access deals like it again and again. ...My thoughts anyway. BB

Lame deal. Someone is trying to unload 2,000 at once...most likely because they thought they would sell them and earn anywhere from $12-17 each (much like the responses here). Obviously, that has not happened, and now they are trying to unload them quickly. @ $7 each, you're 14K into the deal on a slow burning-low margin item. With this type of market plan, you will only be in business until you run out of money (probably try to liquidate your stock as a last resort like this poor soul). The desire is for a fast burning-low margin item. If the burn rate is too fast, you can increase your margin to slow down the burn to maximize the return, and of course ideally (THIS IS NOT POSSIBLE WITH RETIRED LEGO) you could restock the fast-burner... I know, I know, but all retired LEGO is valuable, right? Wrong, it's not. Most are flat out dogs that under perform, and once you factor in your opportunity cost/loss against your CAGR you're probably taking a paper loss too. I'd bite at $1.50- maybe even go $2 per unit, that would make it worthwhile, but at $7 you should run, not walk away. BrickBroker