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    The End of Life is the Start of Profits


    As a casual LEGO collector, I always keep an eye out for sets that are worth investing in. Obviously, the intention and goal of LEGO investing is ultimately to make a profit. Therefore, it is crucial for the casual investor to maximize their investment dollar which is usually achieved only after a set is retired, or in LEGO parlance, reached its end of life (EOL). It is no secret that the single biggest factor in LEGO investing and set appreciation is EOL. In simplest terms, no EOL, no profit.

    For the LEGO investor, nothing is more eagerly anticipated and perhaps simultaneously dreaded than the three letters: EOL. For many casual LEGO investors, EOL comes far too fast and for others far too late. Many times EOL comes quite unexpectedly. One day a set is seemingly there and the next it is “Out of Stock” or “Call for Availability.” Neither is good if you are the LEGO investor on the outside looking in. There are many EOL theories and prognosticators to be found online with varying claims of purported LEGO sources and inside information. Amidst all the speculation one thing is sure: Unless you work for The LEGO Group (TLG) and have actual product life cycle knowledge, it is all just pure speculation and educated guesses. Regardless of this fact, it is nevertheless fun and potentially profitable to engage in this activity. Virtually every LEGO investor does it. Historically, TLG uses a maddeningly and infinitely flexible two-year EOL rule1 where many sets see their production run end. I like to sum up the phenomenon with three main EOL categories or scenarios which I call: exception, perception, and deception.

    Missing out on a great LEGO set is a gut-wrenching feeling that happens all too often for the casual LEGO investor. The two-year rule is nothing more than a vague LEGO barometer for when a set might go EOL. As with almost every rule there are exceptions...in this case many exceptions! Attempting to identify a bright line EOL rule is a true fool’s errand. The following examples are but a few exceptions to the LEGO two-year EOL rule. The first and perhaps most extreme EOL exception would be the Holiday Train set (10173). It was available for only one meager holiday season in 2006 and then poof. The original RRP in 2006 was $89 and today it is valued at upwards of $3002. Granted this was a special occasion set, but still that short a lifespan is a tough pill to swallow if you had any hope of acquiring it. Another notable exception set that many casual investors may have missed out on is the Trade Federation MTT (7662) which was released in late 2007 for $99 and went EOL in late 2008 with just a little over one year in production. The value of this set today is nearly $400, which is a whopping 285% increase. One other lofty example of an EOL set exception to the two-year rule is the VW Beetle (10187) released in 2008 and reached EOL status in December of 2009 for a total lifespan of less than 20 months. The original RRP was $119 and the current value today is listed at about $350, a nearly 200% increase. Unfortunately, there are many more sets that fit into the exception category, like Market Street (10190) and Grand Carousel (10196) to name just two. Both of which make me feel like kicking myself for missing! These exceptions to the EOL rule highlight the perils and pitfalls of LEGO investing, and any investors that snatched up these exceptions to the two-year EOL rule were very fortunate indeed.

    So we looked at a few exceptions to the two-year EOL guideline, now on to the bulk of the rule. It stands to reason that a rule should have a large number of examples that support it. In other words, for exceptions to exist, there must be a collective perception of what is supposed to happen. There are numerous examples of the two-year EOL rule that, if observed, still allowed casual investors to make a tidy profit. A favorite set of mine that falls into this category is The Eiffel Tower (10181). Released in late 2007 and going EOL in late 2009, this set is a great example of an almost exact two-year production run. The original RRP for The Eiffel Tower was $199. The current value now stands at an impressively tall $850, which translates to a not too shabby 326% increase. Another fine example of a great investment set with a routine two year production life is Jabba’s Sail Barge (6210). This awesome set was released in 2006 with a modest RRP of $75. Today this set typically commands a price exceeding $400 which equates to a 445% increase on investment. Perhaps the Holy Grail of the LEGO Modular world and the best example of the two-year production life cycle was set 10182 Café Corner. Café Corner lasted a full two years from 2007 to 2009. The mind boggling original bargain RRP of $139 has now ballooned to a staggering $1,136, for a 700%+ increase in value! Other notable sets that fall squarely within the two-year EOL sweet spot are the Taj Mahal (10189); the Green Grocer (10185); The Millennium Falcon (10179); Vader’s TIE Advanced (10175) and loads more. It is hard to claim any surprise or generate much sympathy for missing out on any set that stuck around for at least two years. Two years represents the common perception of the average LEGO production lifespan and is often the determining factor when facing an investment purchase of different sets: Go for the set that is the furthest along in its production run and you are usually safe. That is unless you are the victim of LEGO deception.

    LEGO deception is nothing more than those sets that have outlived their welcome for the casual investor yet simply refuse to die a natural death. That is not to say that the general public agrees with that sentiment; in fact, they obviously do not or else these sets would not still be hanging around years after their debuts. A perfect example of EOL deception is the Medieval Market Village (10193). This set came out in 2008 and is still available today. Currently LEGO Shop at Home (S&H) lists this set as not being available until August of this year. Does this mean it is finally nearing EOL? The two-year EOL rule would dictate this result but this set seems to have some strong legs and remains very popular. It may still have some life left in it. The original RRP of $99 is still an outstanding deal. The current value is listed at about $92 which is a 6% decrease from RRP. Interestingly, the value of this set has actually increased 6% over the last month. It seems like investors might start to realize some modest gains in the next six months if it does end up going EOL this summer or fall. Another set that is still available long past the two year EOL rule is the Fire Brigade (10197). This set was released in September 2009 and was thought to be a likely candidate for EOL at Christmas 2011! As of today it is still going strong with no signs of letting up, even after the release of the Modular Town Hall (10224) in March. There has been much speculation surrounding the Modular theme and how many different active sets it can support at any given time. For several weeks this spring most major outlets did not have the Fire Brigade in stock, including S@H and Amazon. This led to a small bubble in value that has since popped and has now returned to near original RRP. Finally, one cannot ignore the biggest and most extreme example of LEGO EOL deception: The Death Star (10188). For many casual LEGO investors it was this set that brought them out of their Dark Ages. So it is somewhat ironic that this set is still available four years later! In fact, it is still a LEGO best seller on Amazon, even with a massive RRP of $399. Unfortunately, the current value is “just” $383 (It is probably selling under RRP due to sales from Toys 'R Us BOGO and reselling these sets on EBAY auctions for less than RRP) and certainly does not mirror the impressive fire power of the real and fully operational Death Star it so wonderfully emulates.

    Many factors play a role in applying the LEGO two year EOL guideline. Certainly popularity, profit, theme and price all help to dictate the lifespan of a specific set and each one of those factors could be analyzed in great detail. For most casual LEGO investors, that is just not particularly practical or productive. For now, it is best to keep an eye out for sets that are nearing the two year mark and use your best LEGO judgment. One point that should be made though is that many LEGO sets, large and small, get discounted substantially right before EOL and you have to be very vigilant in your quest for these deals. The bottom line is, if you really want a set, buy the set. Don't risk reaching EOL and losing the set to higher secondary market prices in order to save a couple of dollars. As with any investment, there is a large element of chance involved, but that's the fun part, right? Jump too early and you may sit around with many large boxes in every room of your home and lose out on future sales and deals. Wait too long, looking for that big discount, and you will only wish you had many large boxes in every room of your home. Guess the EOL correctly and you can buy that LEGO set below MSRP and sell it two years later for triple the MSRP. As they say, “Timing is everything.”  
     

    1 All time frames discussed here are nothing more than approximations as TLG does not provide much transparency into the EOL process or actual production end dates.
    2 All values are for new sets and in US dollars and taken from Brickpicker.com.
     

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