TIE #089: The Deflationary Power of LEGO and Pokémon Card Investing

You simply do not understand how impactful it is.

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When people stumble upon my content, I imagine they feel a bit confused when they learn that I invest money into expensive forms of plastic and cardboard.

“LEGO and Pokémon Booster Box investing? WTF is wrong with this guy?”

Most assume that I’m talking about investing with pennies, you know, a few hundred dollars here or there and never come back.

A few of the smart ones recognize that both of my portfolios are worth more than my house… and stick around to learn more.

To reward those of you who take this endeavor seriously, I want to take a moment to highlight why I like LEGO and Pokémon so much.

Reason #1: Demand

LEGO and Pokémon have a stranglehold on everyone between the ages of 3 and 45.

They aren’t fads, they are mainstays.

I don’t think anyone would argue against this.

Reason #2: Deflation

You know how the price of everything has gone up over your lifetime? That’s called inflation.

I’ll spare you the details of why this happens, but it is an intentional side effect of our monetary system.

Well, sealed toys and sealed trading cards have the opposite dynamic.

A set number of them are made and then they’re never made again.

Not only that, but the amount of them that exist goes down over time because people open them.

There are very few assets or items you can buy that do this.

The only other items that do this include:

1. Shoes (which degrade and become unwearable rather quickly)

2. Whiskey/Wine (hard to sell)

3. Watches (high ticket)

4. Comics (niche market)

5. Art (no one cares about art)

6. Bitcoin (can’t touch it)

7. Classic cars (no liquidity)

While some of those other items have potential, they have drawbacks that leave me preferring LEGO and Pokémon.

The truth is that the power of this deflationary phenomenon is overlooked by just about everyone.

Even you are underestimating it right now.

You simply do not understand how impactful it is.

It is an investors dream.

The sad part is that most people hear “Pokémon” or “LEGO” and instantly dismiss the idea of investing in them as childish.

Is it easier to boot up your Robinhood app and buy some stock?

Of course it is.

However, both of the portfolios I document here have outperformed the S&P 500 on any timeframe you could ever choose.

LEGO: 101.8% (since Jan 1, 2023)

S&P 500: 56.3% (since Jan 1, 2023 after outperforming the average by over 2x)

Pokémon: 165.4% (since Jan 1, 2022)

S&P 500: 26% (since Jan 1, 2022)

I still invest in the stock market, but I enjoy the process of running an investing business.

I love doing the research, I love making buys, I love waiting longer than other people are willing to, I love selling the investments, and I love writing about it all.

Finding a process you enjoy is often more valuable than sticking to what is “most efficient”

Hope you learned something.

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This post is not financial or investment advice.

I am simply informing you of what I have done with my own capital.

What you choose to do with your capital is at your own discretion.

While I will always vouch for the content I publish and the ideas I teach, there are limits to what I’m legally allowed to encourage without putting myself in harms way.