(jolly piano music)
- [Narrator] For Lego enthusiast, Lucas Lettrick.
These aren't just toys
- [Lucas] This is the Lego Creator Palace Cinema.
- [Narrator] They're serious money-makers that he buys
and sells for profit.
The biggest online database
of collectible Lego sets
lists 1.2 billion worth of the toys around the world.
- Lego Tron up here
we're in the 3 to $400 range.
This Lego Tie Fighter $200 a piece
is what these are selling.
The returns that I typically will see
is somewhere between 150 to 250% on a Lego set.
- [Narrator] Researchers say
Lettrick is one of tens of thousands
who concerned by the recent volatility of stocks and bonds
are betting on the reliable returns
from this tiny but growing market.
- The average return on other collectibles
like wines or art, or automobiles, stamps,
are generally lower than Lego.
- [Narrator] This is niche markets,
a series that examines small lesser known markets
that despite their size punched well above their weight.
- There we go.
All right. - And this one.
- [Narrator] Lettrick is an insurance broker in Pennsylvania
and grew up playing with Lego.
- I kind of got outta Lego, obviously, like most people do,
but then when I had my first boy Bruce,
we started building some Lego sets
and that's kinda what rekindled the passion
and kinda the memories.
(playful music)
- [Narrator] This nostalgic hobby with his children
turned into a lucrative investment strategy
when Lettrick walked into a Target about five years ago.
- I saw a Lego set, Lego Ninjago, Destiny's Bounty
and I remember thinking to myself at that time
I could literally just take this,
put it up online, sell it, and double my money.
- [Narrator] Since then, he says
he's invested around $65,000
into building a collection of Lego's most profitable sets.
The toys in this room typically cost
anywhere from $30 to over $500 at stores.
- So this is the 1989 batmobile.
This- - For Lettrick,
the most important factor in Lego investing
is knowing how to spot a winning set.
- You think Lego, you might think child,
but Lego is really geared a lot of their sets nowadays
towards the adult collectors.
(ambient music)
- [Narrator] Larger sets like these
target the growing community of adult fans of Lego
who call themselves AFOLs.
Rather than toys to play with,
they're usually looking for display pieces
and can afford these more expensive sets.
- You've got the informational plaque,
you've got kind of this stand to display
some of the iconic figures from the movie.
So it's a really beautiful set.
- [Narrator] To turn a profit on these kits.
Lettrick, makes sure he gets in at a low price
so he scours the market for sets Lego is about to retire
or stop producing.
The official Lego store and other retailers
usually sell them at a discount
to clear their stock,
sometimes as much as 40% off.
- This actually just retired this past year
and I ended up picking it up a couple of them
2 or 3 of them for $200 a piece.
Within just a short period, 6 to 12 months,
this has already jumped up to 400 to $500
I believe is what this is selling on eBay.
(playful music)
- [Narrator] But in order to make a larger profit
Lettrick says it takes patience
usually holding sets for 2 to 3 years before selling.
- Do you want a pristine set that's sealed?
That's what a collector's looking for.
You wanna make sure you're storing it on the right shelving.
You wanna make sure that you're keeping humidity low.
- [Narrator] Lettrick says he spends 2 to 5 hours a week
on his Lego investments,
and while it's more time-consuming
than other items in his portfolio,
he says his Lego sets have seen
the most stable growth this year.
- You don't get a lot of fluctuation
with the prices going way down, way up
like we're obviously seeing right now with the stock market,
it's very volatile.
(ambient music)
- [Narrator] Economists say
that's because a Lego market moves more slowly
than traditional investments.
- When some news come to the market
the stock market reacts very quickly on the same day.
Lego is much less liquid market.
- [Narrator] Victoria Dobrynskaya is an associate professor
at the Higher School of Economics University in Moscow.
Since 2016, she's been specializing in
the Lego secondary or reselling market,
analyzing three decades of financial data
about the niche investment.
She says the law of supply and demand
helps Lego in the same way as other collectibles
like luxury watches or fine wine.
- Once a bottle of wine is open, open and drunk
so it disappears from the market, right?
The same with Lego.
- [Narrator] But what gives Lego the advantage
over other collectibles, she says, is it's affordability.
- Generally, other alternative investments
are more expensive
so the potential returns are somehow lower.
I mean, if a Lego set appreciates by $5,
if initially its price was $1, then it's a huge return.
- [Narrator] The Lego Group didn't respond
to requests for comment
about the growth of the resellers market
and its impact on the company's product strategy.
- [Lucas] There are times when you're gonna get
box damage like that.
- [Narrator] But high-end Lego sets can come in
thousands of pieces
some of which may be rare or newly designed.
So buyers expect the cardboard boxes that hold them
to remain sealed and in near-perfect condition.
- When you buy them distantly on eBay
or on some other platform, you cannot check it.
So you need to be sure that it is fully sealed,
because if a rare part is missing
that would be a very big problem.
(playful music)
- [Narrator] This niche market is also at the mercy
of pop culture trends
where the franchises and themes investors buy today
may not be relevant years down the road.
- That's just kinda part of doing business and investment,
sometimes you win, sometimes you lose a little bit,
but typically if you do it right
it all shakes out in the end.