The incredible profitability of investment in Lego parts in resale | Economy



Ole Kirk Christiansen he founded Lego in 1932 in the small Danish town of Billund. At first it was a family business of wooden toys, but a fire burned the factory in 1942. Four years later the company acquired a new machinery to produce plastic parts. After years of testing, the iconic Lego brick was patented in 1958. Six decades later the invention has become not only a very lucrative business for the company - it remains in the hands of the founding family and in 2017 it billed almost 4,700 million euros. euros and earned 1,050 million-, but also in one of the best investments in history.

A study led by Victoria Dobrynskaya and Julia Kishilova, researchers from the Russian Higher School of Economics, concludes that the revaluation in the secondary market of the Lego items during the period 1987-2015 was higher than the stock, bonds or any of the raw materials. In particular, the average annual profitability of the Lego index made by these two economists obtained a profitability during this period of 11% annually (8% in real terms). "The popularity of Lego items as a financial asset is due in part to the fact that this alternative investment does not belong to the luxury segment like wines, cars or watches and, therefore, is accessible to the small saver" explain the authors of the study.

The articles that reproduce films like 'Star Wars' are those that are most appreciated

In addition to the impressive profitability, this toy combines other characteristics most appreciated by investors in a globalized and interconnected market: it offers the ability to Diversification of portfolios. The research concludes that its value has a low correlation "with the market situation and its volatility". If you had to compare your behavior with another asset, the most similar pattern would be the evolution in the stock market of small cap companies. These characteristics give the price of acrylonitrile parts a resistance similar to their hardness in real life. "They can be considered a refuge asset. Even during years of economic and financial crisis like 2002 and 2008 the Lego market offered positive returns. "

As with other alternative investments, one of the risks of investing in Lego sets is that transactions take place in an unregulated market and that, at certain times, there may be situations of illiquidity for both buyers and sellers. However, the Russian researchers point out that in the case of the mythical brick plays its great popularity. In 2010, a macro survey of more than 3,000 people crowned Lego as the "most popular toy of all time". In addition, in the classification of the most famous brands in the world, prepared by the consultant Young & Rubicam, the Danish company shares the podium with Coca-Cola and Disney. Another factor in their favor is that the construction of Lego objects is not just a children's game, but hundreds of thousands of adults continue to use bricks as a hobby. These characteristics, according to Dobrynskaya and Kishilova, translate into the existence of a "huge secondary market for new and second-hand Lego items", in which through platforms such as eBay "thousands of objects are exchanged each day".

The Lego index was revalued by 11% annual average between 1987 and 2015

In the making of the Lego index, a sample of 2,322 different Lego articles was used. The researchers found an important dispersion in the evolution of prices, with items that had annual revaluations of 600% and others whose prices fell by 50%. In general, the most demanded sets are those of architecture and those inspired by great cinematographic successes. One of the biggest hits was the Lego game about the Star Wars character Darth Revan that came out in 2014 for $ 3.99 and a year later its price on eBay reached $ 28.46, a premium of 613% . "The main investors in Lego are toy fans and collectors. But the presence in financial media of news related to the high profitability of these items in secondary markets are attracting the attention of other investors, "they conclude.

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