A study concludes that the mythical plastic blocks rented more than any other asset for 28 years. Victoria Dobrynskaya and Julia Kishilova are researchers at the Russian University Higher School of Economics. They did a research on Legos. It turns out that appreciation in the secondary market of Lego items during the period 1987-2015 was high. Higher than that of stocks, bonds or any of the raw materials.
The two economists made an average annual profitability of the Lego index. It obtained a profitability of 11% per year (8% in real terms).
” Legos are very popular items as financial assets. This is due to the fact that this alternative investment does not belong to the luxury segment.
It is, therefore, accessible to the small saver.” Explain the study authors.
The market situation
In addition to the impressive profitability, this toy has other characteristics. Legos are most appreciated by investors in a globalized and interconnected market. Investing in them offers the ability to diversify portfolios.
The research concludes that its value has a low correlation “with the market situation and its volatility.” Its behavior was compared with another asset. The most similar pattern was the stock market performance of small capitalization companies.
“They can be considered an active haven. Even during years of economic and financial crisis like 2002 and 2008 the Lego market offered positive returns.”
There are risks of investing in Lego sets. Transactions take place in an unregulated market. Situations of illiquidity can arise for both buyers and sellers. However, in the case of Lego, a great popularity plays in its favor. In 2010, a macro-survey of more than 3,000 people crowned Lego.
“ The most popular toy of all time”.
In the classification of the most famous brands in the world, the Danish company shares the podium with Coca-Cola and Disney.
Also, building Lego objects is not just child’s play. Hundreds of thousands of adults still use bricks as a hobby. According to Dobrynskaya and Kishilova, proves the existence of a
“huge secondary market for new and second-hand Lego items. Thousands of objects are exchanged every day”.
The Lego index appreciated 11% on an annual average between 1987 and 2015.
A sample of 2,322 different Lego items was used in the construction of the Lego index. The researchers found a significant dispersion in the evolution of prices. Articles that had annual revaluations of 600%. Also, others whose prices fell by 50%. The most popular sets are those of architecture and those inspired by great film successes. One of the biggest hits was Lego’s Star Wars character Darth Revan. It was released in 2014 for $ 3.99. 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 they are present in financial media and news related to high profitability. This is attracting the attention of other types of investors.” They conclude.