
Brokering Bricks: The World of Lego Investing - areoform
https://medium.com/wisecrack/brokering-bricks-the-world-of-lego-investing-66d1a59fc206
======
iooi
As a kid I adored Lego. I think fondly of all the time I spent playing with my
collection and all the creations I made.

As I entered my early teen years my collection had grown considerably and it
was taking up a lot of space, and I was spending less and less time with Lego.
I knew a younger kid down the block who was in the peak of his Lego phase and
I donated my entire collection -- around five or so 30 gallon trash bags.

A couple of years after that, when I was just shy of 17 years old, I was
diagnosed with Hodgkin's Lymphoma and had to take some time off of school to
go through chemotherapy. Naturally I had a lot of time on my hands. For some
reason I _really_ wanted to play with my old Lego, but I didn't have any
around anymore.

I found some of my favorite sets on eBay and was able to purchase them albeit
for quite the markup. It was great to get to experience those older sets and
fulfill that spat of nostalgia. On the other hand, it was a huge bummer. I was
obviously on a limited budget and every set was 2-4x what they were
originally.

I understand Lego can't possibly keep producing every set forever, but this
kind of speculation described in the article seriously ruins the experience
for a lot of people. It's not a simple supply and demand situation if people
are hoarding sets and creating artificial scarcity.

Lego is big enough as a company to put these people out of business, they
would just have to occasionally re-release older sets that are ludicrously
overpriced in the second-hand market.

Lego holds a really special place in my heart as I'm sure it does for a lot of
the people mentioned in the article, I'm just not sure if they are aware of
the consequences of their behavior on some of the less fortunate that want to
experience Lego for what it is meant for -- playing.

~~~
Max_aaa
Or they can have a website where one can order a set and have a robot setup
the kits from standard bricks.

This should work for the majority of sets and would require a relatively small
set of custom bricks.

~~~
froindt
I'm an industrial engineer and geek out about manufacturing stuff.

Lego used to make custom pieces _all_ the time. That, along with other
missteps, nearly killed the company.

Product variety means changeovers (switching molds in the plastic injection
molding machines). More quality problems will occur. Low volume parts for one
set may use a tiny fraction of the mold's useful life, making the unit cost
much higher than a 2x4 brick. You need more inventory to successfully fulfill
any bulk order you receive. You also need to store the molds in an environment
where they won't degrade over time.

Single Minute Exchange of Dies (SMED) and Economic Order Quantity (EOQ) work
hand in hand dictating how to economically run a facility like this. EOQ
considers storage costs, the fixed cost to setup the tool, demand per unit
time, and time value of money to minimize the per-unit cost.

SMED reduces the fixed costs which are spread across a batch of pieces. This
is the lever you can pull to reduce batch sizes, reduce inventory levels,
reduce working capital, and help maximize profits.

To your specific comment, the difficulty lies in fulfillment. Making sure the
robot picks up the right number of pieces which are unceremoniously ejected
from the injection molder in no particular order. Having inventory of all the
pieces people want - or having a relatively long lead time hoping you get
enough demand to run batches on a make-to-order basis. SMED would make this a
much more viable business model.

This article goes into more depth on the turnaround they went through.

[https://www.theguardian.com/lifeandstyle/2017/jun/04/how-
leg...](https://www.theguardian.com/lifeandstyle/2017/jun/04/how-lego-clicked-
the-super-brand-that-reinvented-itself)

[https://en.m.wikipedia.org/wiki/Single-
minute_exchange_of_di...](https://en.m.wikipedia.org/wiki/Single-
minute_exchange_of_die)

[https://en.m.wikipedia.org/wiki/Economic_order_quantity](https://en.m.wikipedia.org/wiki/Economic_order_quantity)

~~~
systemtest
The upside of custom pieces is that I was able to identify all my LEGO sets
from a single pile of bricks. By grabbing the custom pieces and looking them
up in online databases, I could see which sets they were used in. It was
usually two or three sets and based on my memory I would pick the one I most
likely owned. Going by the database I was able to grab all other bricks
belonging to that set and build the item. I would mark the missing bricks
online, tear everything down and put it in a ziplock bag labeled with the
number of set. After a couple of days of going through the pile I was able to
find all my LEGO sets and have them separated in labelled ziplock bags. I can
now browse through my personal database of LEGO sets, pick one, find the
ziplock bag and build it. It's also nicely preserved for future generations.

~~~
bane
It's weird, I never cared for the sets the bricks came in, I just wanted
bricks. I _might_ build the set once, and then tear it up and never again. I
usually ended up tossing or segregating the really special pieces somewhere
else so they wouldn't pollute my buckets of normal pieces. I never really
understood that other people actually really were into the sets and as I grew
up, and as Lego got more and more into the ultra specialized sets, the magic
went away and I stopped enjoying them as much.

------
droithomme
Lego has brought back into production a couple of extremely popular sets, but
as new and improved better models. One was the Millennium Falcon UCS set,
another is the Imperial Star Destroyer UCS which is the first example the
article gives. The article notes the Star Destroyer sold for $280 and is now
going for $1500. But it's not selling for $1500 if you look carefully at the
listings. Since the new version was released the bottom has fallen out of the
market for the older version. Also, the high prices tend to be for unopened
sealed boxes, stored somewhere for many years. Obviously there is a very small
number of those brand new old stock and with each sale and opening the number
decreases. Obviously unopened sealed new sets of long out of print and highly
desirable models are going to be expensive. For someone that just wants the
set, desirable used sets sell for considerably less than new sealed ones. Also
most sets don't really appreciate that much. The ones that do tend to be the
very large sets that cost a lot, in particular modular buildings and certain
Star Wars sets.

The people that speculate on these stockpile them when Lego is still selling
them. Lego makes more of each set until sales slow down enough, then they
discontinue the set. Most sets are sold for at least 2 years before retiring.
No one is deprived of any sets because the speculators are buying new sets.
There's not a limited supply of sets during the time the sets are in
production. The speculation mostly goes to Lego's bottom line and
profitability. Most speculators don't make money because it's hard to guess
what rare set will be one of the few that becomes worth a lot more than you
paid for it. For the others, you might be able to sell for what you paid, but
then you may have to cover the cost of shipping a big heavy box far away, and
if it arrives damaged or bent yet was advertised new, they'll file a return.

In short, this is not really a great way to get rich and these sets are not
really investments.

------
primitivesuave
I used to conduct arbitrage of individual Lego bricks on bricklink.com when I
was in high school. Was a great way to make a couple extra bucks and amass the
Legos I needed for some really big builds. Surprisingly the most lucrative
investment was not sets, but rather the minifigures - discontinued minifigs,
especially the Star Wars ones, could 10x in value within a year.

------
dwoozle
The risk reward profile of the S&P 500 is way better. Buy Legos if you like
them, sell them opportunistically, but don’t get into it as an asset class.

------
xref
I’ve recently gotten back into wanting some Pirate Lego sets from when I was
young, but to play with not as an investment. Purchasing used-but-complete
sets are actually cheaper when adjusted for inflation than when new, at least
if you put a little effort into shopping (eBay price alerts for example)

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AdrienLemaire
Sorry if I'm starting an off-topic discussion here, but I can't read the
article due to Medium's reading quota.
[https://i.imgur.com/uWY1kaw.png](https://i.imgur.com/uWY1kaw.png)

I don't think I have spent that much time on their site, didn't try to. Maybe
the fact that many of HackerNews' link go to medium and I started following HN
actively recently?

Have people here just accepted to pay Medium 5$/month?

~~~
counterpig
Nah just open in incognito.

Also only some articles are premium(those with a star) that means that the
people who write them actually make money from the subscription.

~~~
AdrienLemaire
Got it, thanks!

------
jrrrr
I've begun gradually giving my ~30-year-old childhood Legos to my son, and am
impressed with how well they've held up. I haven't noticed any yellowing or
fading.

I wonder if the new plant-based plastics will have the same longevity.

------
v3nn
Looking for the kraggle...

