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    The LEGO December Effect


    I was messing around with some of the data in the price guide and came across something I had recognized before but had never really paid much attention to. As most of you probably know from your LEGO investing experience, December is usually recognized as the best single month in which to sell some of your precious investments. More specifically, this trend seems to affect especially hard the modulars, large scale models and the UCS so I will be focusing on those in this first article.

    I selected 18 different and large sets from the themes I mentioned above and that were released before 2010, so most of them have been out of the shelves for around 3 years already. Also, the prices are based on the last 12 months showed on Brickpicker's Price Guide. Let's see some of the results:
     

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    As you can see above, most of the sets that are part of the themes I mentioned above share the same price drop once the December comes around. Even more, some of the sets above actually experience their lowest price of the whole year during the holidays. There are only a couple of exceptions in the table, so I think it is pretty safe to say that this "December effect" is actually more common than I originally thought.

    It is somewhat hard for me to explain this effect other than by checking the number of sold listings over the past 12 months in BP's Price Guide. There is a widespread belief that December is the investor's best bet to maximize profits, so it seems likely that a lot of people just wait to sell during this period and as a consequence increase the supply of the sets. If you actually go ahead a check the number of sold listings, in effect most of the ones in the table present the highest number of sold copies during this month. This is probably one of the major causes for the dip in value most of them experience

    Other than that, when I digged a little deeper I noticed that this seems to be the case only with a small number of the popular themes. Some other themes do in fact present a spike in price around the holidays, making the phenomenon a little harder to understand. Price of the sets may also be a factor as the sets from the themes included in the table tend to be the pricier ones, maybe causing the increase in supply to really manifest itself very sharply.

    What does this mean for the LEGO investor? well, it would seem that sellers of the themes above should really consider getting rid of their inventory at some other point around the year, otherwise the data seems to suggest they will be taking quite a hit by selling when everyone else is as well.

    This short blog article was just a little over the surface kind of analysis, but I felt that it was very important for me to throw it out there and start some level of discussion about the reasons and the validity of this December Effect. I am sure some of you have more insights on this, and I would really like to see your comments.
     

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    This data kind of surprises me, yet it makes perfect sense.  The vast majority of eBay sales around XMAS time   must be to Moms and Dads who are looking to buy that last second gift for their little ones and are willing to pay top dollar for them, thus jacking up the overall average of sold LEGO sets.  Mommy isn't buying little Timmy a $3000 10179 Millennium Falcon.  LOL

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    Great stuff man, very interesting indeed!

     

    I have a small theory of perhaps it being some sort of "collector effect".  As Ed rightly points out above, Mommy isn't buying a set like one of these for their kid for Xmas.  These sets all appeal to collectors in main part.  Maybe collectors have less disposable income at Xmas as they are busy buying gifts for others and they buy their own collectible sets throughout other times of the year?  

     

    Something to keep an eye on for sure

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    here is my guess on why this happens. this is an issue of supply and demand. there are more sets available during the December timeframe, because there is a perception that this month is a good time to unload sets. the higher supply brings the price point down. if the demand skyrocketed during December, then it might be a different story, but I am guessing it is only slightly higher than normal.

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    Excellent catch, FC.

     

    I think someone had a comment in the forum that the months may play a role as well.  If I recall, BP's November values are from October sales, while December values are from November sales.  Did you account for this already in the table, i.e. "December" sales is actually BP's data reported around January 15?

     

    Again, great job.

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    Thanks all for the comments, I do agree with most of you that the increased supply from investors trying to get rid of their inventory in December probably is the major cause of this. Most people think that they will be getting the most money, when it seems to be the opposite.


    @Quacs: Yes, I think it was Ed who mentioned that, but I took the values from the charts in the price guide. According to him, the chart info matches the actual month. So the December values are actually from December. Thanks for the comment!

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    Great information.  It would be interesting to see this data one more level down by week to see if all of December is lower or maybe just the closer you get to Christmas.  Also, along those lines the same would be for November.  Maybe it's really a Holiday effect; however, it's not confined to just December as we tend to think about it a lot of the time.  That data might suggest an optimal time to sell that spans across November and December.

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