TIE #014: Stop Listening to Dave Ramsey, He is Making You Poor
My response to the Dave Ramsey show and their take on LEGO investing
Apparently you hate money. If you didn’t, you’d be using Rakuten every time you shop on websites like Walmart and Target to save money.
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In case you haven’t seen it, two hosts of the Dave Ramsey Show (not Dave Ramsey himself) posted a video with their reaction to the idea of LEGO investing.
While I wish it was Dave himself in the video, I have no doubt he agrees with the two gentlemen.
I am going to tackle their statements, given my advocation and participation in this type of investing.
While I am obviously biased, I will do my best to remain objective.
“Snapshot studies like this suck”
The first thing the two hosts touched on was the 11% historical annual return on investment cited for sealed LEGO sets.
They incorrectly assume that it is data from the last decade only.
Not just that, but they are unaware of the specific boost in value sealed LEGO sets see 0-24 months post-retirement.
An analysis focusing on compounding profits via this phenomenon would see annual returns upwards of 50-100%.
If you think I’m joking, read this post.
While this information wouldn’t have changed their minds, it’s an important piece of information that even many LEGO investors ignore.
“They’re just like Beanie Babies”
The next comparison the two hosts make is to Beanie Babies and how they were a failed investment idea fueled by speculation and collection.
While LEGOs investing is fueled by collectors, this analogy ignores both:
The established history of LEGOs as a toy and investment
The sealed/un-sealed supply phenomenon
Beanie Babies never had an established history as a core children’s toy that spanned decades like LEGO has.
LEGOs have been a better investment than gold and the stock market since 1987 if you just bought an held the whole time.
To act like this is a “new” idea, is willful ignorance.
The established track record is due in-part to LEGOs only making a strict number of sets before they are retired.
As new sets are opened over time, the remaining sealed sets naturally increase in value due to the shrinking supply and maintained demand for LEGOs.
This is why sealed boxes of Pokémon cards have also been a great investment for over two decades running.
“It’s risky”
LEGO investing has little risk from a appreciation/depreciation aspect.
It is plain fact that every retired and sealed LEGO set known to man has appreciated or at least held it’s retail value over time.
Every last one.
This means there is only downside if you invest with debt or end up needing to cash out all of your capital overnight.
Beyond that, there is only upside.
It’s clear they misunderstand the risk profile of LEGO investing when one of the hosts mentions the possibility of the LEGO stock price going down.
LEGO isn’t publicly traded.
LEGO investing is a simple game of supply and demand.
Like I already mentioned, supply is fixed and limited to a only a few years for each set.
Demand has remained constant and only grown in recent years as they’ve started to target adult consumers.
Do you see the world walking away from buying one of the best toys on the market overnight?
I sure don’t.
With the current supply/demand dynamics, LEGOs will remain a great investment.
If the LEGO market falls, all of the other markets will fall as much or even more.
When you are ready, there are two different ways I can help you:
If you are interested in starting an efficient one-person online business, I recommend starting with one of the following:
Textbook Flipping Mastery - My in-depth guide on how to start a high-margin Amazon e-commerce business.
LEGO Investing Mastery - My in-depth guide on how to start a long-term “buy, hold, and sell” LEGO investing business.
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