But such product tie-ins are just the start. Cartoon Network runs Lego-themed shows all day, with characters made out of Lego bricks, or so-called minifigs, or mini-figures. There's also a line of Lego-themed video games that allow players to traverse digital terrains made out of Lego bricks and tied to popular characters such as Batman and Harry Potter.
Yet, what makes Lego bricks a potential bonanza for investors is how the Lego Group controls the supply of sets. The company often produces new sets, say a new Star Wars spaceship for a year or two, and then will stop producing it.
Once popular sets are "retired," or no longer being produced, consumers who want one have no other choice than to hit eBay or other online marketplaces to buy it, often for multiples above the original price. The scarcity of desired sets can drive their prices to unbelievable heights.
Millennium Falcon Pays Off
One example still considered a pinnacle success story of Lego investing is a set released in 2007 for $500, called the Ultimate Collector's Millennium Falcon.
The 5,195-piece re-creation of Han Solo's battered noble star fighter from Star Wars now sells, new, for $2,165, according to data collected by BrickPicker.com, a site dedicated to Lego investors. That's a staggering 34% compound average annual gain over the five years. "It keeps ticking up. I wonder where it will stop," says Ed Maciorowski, co-founder of BrickPicker.com, and a Lego investor himself.
Maciorowski has more than 3,000 sets, with an estimated value of more than $100,000, he says. He's accumulating the sets, holding onto them, waiting to sell them in a few years to generate money to pay for his son's college tuition. They're stuffed in his house, closets and in his office.
After seeing a few of his sets skyrocket in value, a year ago, Maciorowski approached his brother Jeff, a computer whiz, to design a website that would help Lego investors boost their returns. BrickPicker keeps a "portfolio" of all the sets owned by an investor and fetches market prices by seeing how the sets are selling on online marketplaces such as eBay and Amazon. "These things are gold," Jeff says.
Investing in Lego bricks, to Maciorowski, is much more prudent than most mainstream investments, especially stocks, which he isn't fond of. He narrowly ended up selling many of his stocks and other investments just before the tech bubble burst, but watched as other investors lost fortunes in paper wealth.
To him, the tangibility and global appeal of Lego bricks make them a worthwhile investment. "Even if the price of the set tanks, I still have the set," he says. "I have a couple of mutual funds, but I don't pay much attention to them."
BrickPicker, though, does borrow a page from traditional investing. The site presents Lego set prices much like an online broker would spotlight stocks by providing price charts that look much like stock price charts. There are more than 9,000 Lego sets on the BrickPicker database, which is actually a bigger universe of stocks than most investors consider.
For some investors, the stakes are lower. Joshua Hanlon, 16, is a high school sophomore in Osceloa, Ind. He's holding 50 sets, which range in value from $10 to $400. He started investing a year ago, mainly after realizing he could use profit from selling sets to buy more.
After making a tidy profit selling the Lego Emerald Night and a large Star Wars Republic Dropship set, Hanlon first saw the potential. Now his parents and siblings give him money to invest in Lego bricks, too.
The Not-So-Fun Downside
While investors report making money, there are major perils to be aware of. One of the biggest problems is storage. Lego sets come in large boxes filled with hundreds of tiny bricks and an instruction manual.
Lego investors need to keep the boxes in pristine new condition in order to get top dollar for the sets. The issue of storage can be especially problematic if a set is physically large and the Lego Group keeps producing it. The Lego Death Star set, which sells for $400, is an example. Investors keep accumulating the set, which comes in a 23-inch-by-20-inch box. Investors are stockpiling the large boxes, thinking the set will be worth twice the $400 list price once the set is discontinued. But the Lego Group keeps making it, even though it was introduced in 2008.
Water damage, theft and fire are also big risks, Ed Maciorowski says. Most investors must get special insurance policies that cover collectibles, because the value of most Lego portfolios exceeds the limits offered on most homeowner policies.
There's also a risk that an investor won't buy the right sets. Some themes of Lego sets don't resonate with consumers, so the resale value can be below the price the investors paid. One theme, Atlantis, which featured underwater themes and vehicles, "didn't pan out," Maciorowski says. Neither did sets based on an Egyptian theme, called Pharaoh's Quest, nor sets based on the movie Prince of Persia.
There's also the risk that the Lego market might fade if consumers lose interest in the plastic bricks, Maciorowski says. And there's a constant fear by investors, who are making money, that the run will end if the Lego Group started to flood the market with more sets than the market can bear or if too many speculators buy sets and dump them at the same time in the future. Other collectible markets, such as baseball cards, have crashed due to oversupply, he says. And commissions to sell the sets can be high, with Amazon and eBay taking 15% of the selling price depending on which service sellers use.
So far, the Lego Group doesn't appear to have much interest in controlling the buying and selling of sets by investors, Maciorowski says. The company is primarily focused on kids, and does produce some more advanced sets that appeal to collectors.
"We are very fortunate to have fans of all ages, all of whom have different passions and interests related to the Lego brand, but we don't closely follow after market activity," Michael McNally, brand relations director of Lego, says in an e-mailed response.
But as long as the money keeps rolling in, investors are willing to take the bet. "I'm looking to grow and go larger scale," Hanlon says. "I've never thought about investing in anything else."
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