Yield and addiction

[MoonKill]

Question on yield.

I'm a long term investor in the stock market. I love its passive nature, you buy stock, sit back and wait for its dividends to roll in.

Investing in Lego is similar to commodity investing. In other forms I hate commodity investing, if you're stuck with a commodity that doesn't go up, you can't even take solace in the fact it will be paying dividends while it's in the doldrums. Lego on the other hand has this strange addictive pull, I don't know what it is that attracts me to it, generally I hate non passive investments (by non passive I mean the fact you have to box the products up and ship them hoping you don't catch a bad buyer that derails any profit from your hoard, not to mention the hoard itself, my office looks like a Lego shop more than an office)

Due to some recent news articles on Lego as a viable investment form, I can see a lot more people jumping on the bandwagon lately, thus I see everyone's yields being put under pressure for a short time until those Johnny-come-lately investors get their fingers burnt and walk away.

What's the minimum yield you guys would do this for? Personally if I don't get more that 15% a year from the time I've held an item, I consider it a waste of time and wish I'd just put the money in to the stock market with my other savings. I fear my current stock may take some time to shift thus reducing my over all yield target.

My other question is, why is Lego investing so addictive? Is it just it's accessibility (i.e. Low buy in) or is it just the game of working out what sets will make you Lego rich?

MoonKill.

[c_rpg]

Hello, and welcome

The question of yield has been brought up a number of times, but the answer is different for every member. It's true that you need to get at least a certain yield % to make it worth it, but it's difficult to say what the exact number is. There's things like shipping costs and fees you need to take care of, which you can account for pretty easily. Other factors are more difficult to estimate, such as the time you put in and the risk factor of buying sets.

Also keep in mind that yield in % might be great on paper, but if you have to send out 10 different small sets and only get 15%, your actual profit in cash will be very low.

People also just love to do this, even if they only make a small profit. To some it's just a hobby like any other (or an excuse to buy Lego )

 

I think the second part of your question is more interesting, but again it's going to vary for everyone. First and foremost, a lot of us are Lego fans, so that means we'd end up buying Lego anyway. There's other factors, which are more psychological such as nostalgia and the love of collecting things.

I'm sure there's varying degrees of hoarders over here too, who just can't help but buy stuff. A certain amount of self-control is certainly required. That's why most people agree you need to set a budget.

I would definitely agree that buying Lego can be an addiction, because you get a certain sense of fulfillment or high when you buy stuff.

This topic has been discussed a bit as well, though perhaps not as much. This article from January comes to mind:

 

 

[waddamon]

Maybe semantics, but Lego has no yield.  You have appreciation or depreciation, equivelant to your return.  My net realized return on sold sets is >90%.  The hold period on these sales has been 6months to two years.  I have a healthy 6 figure portfolio.  Some delayed retirements and remakes have stifled what I had expected by the end of this year.  I would say that 85% of my portfolio is retired.  I would never do this because I love to build Lego.  I like making money better, this investment strategy has to return more than other commodities due to the nature of it.

[MoonKill]

@waddamon

I've always considered 'convenience yield' an exact definition of Lego investing. (At least when comparing to my other more mainstream forms of investment).

I too love Lego as a fan, my rule is to never invest in sets I don't want for my own personal display purposes.

I told myself 12 months ago, no more Lego investing till my current stock is gone and see how the market is. As soon as the 'retiring soon' signs went up the other week, I bought another 15 sets. Hence my first post; what is it about this product I can't ignore?

Maybe it's just the wheeler dealer in me that wants to get out, or what C_rpg suggested it's the hoarder deep inside.

In the past Lego investing has far out performed my equity investing (only in % return terms, as my Lego hold only makes up about 1% of all my investments, very few of my stocks have returned such high capital gains in such a short period of time).

I fear that Lego investing in the coming years will come more in line with my other investment returns, making it pointless. I just hope I can resist future 3 for 2 offers and a like.

MoonKill

[legopocalypse]

[waddamon]

It is still a great game, just choosing what will generate the best return is harder.  I also don't have long term hold plans anymore, less than 5 years.   Hoarding can be counted productive, I fought that for a while.  This had been my lowest capital investment year by far.

[AirborneAFOL]

I'd estimate 95%+ of people who frequent this site are best described as "collectors", not "investors" in the academic sense of the word.

We're just collectors who have come to find a way to monetize our hobby. If reselling markets were shut down entirely tomorrow, we'd still doing much the same we are now - simply buying in quantities of 1-2 instead of 10-100.

The collector mentality is the crux of the "addiction" part of things.

[Val-E]

Addiction to buying cheap is a serious problem many of us face. I know of people that suffer from the same thing buying DVD´s, power tools and shirts that they never wear, use or sell because the price was too good to refuse.