The Energon Pub

There is often debate whether Transformer collectors should keep their collection MISB (Mint In Sealed Box) for investment's sake. Almost all agree that a MISB figure retains more value than a loose figure. Some Transformers fans balk at the idea and throw around the mantra "free them from their plastic prisons!" Others prefer to keep their collection preserved in its original state, beautiful box art and all.

So who is right? Is there even a right and wrong answer to this debate? Let's examine each perspective, and in the end make an educated decision.

The Investor

The typical Transformer investor buys Transformers mainly because he or she has a genuine love of the toys.

They choose to buy something they enjoy and carry the satisfaction that their collection will someday be worth more than what he or she paid. In the meantime, they enjoy having the figures in MISB state. The more pristine the box, the deeper the satisfaction - especially for older Generation One (G1) figures. Some go as far to have them graded by the AFA (Action Figure Authority, http://www.toygrader.com/). AFA graded figures receive a specific rating recognized by the toy collecting community, thereby increasing the value of the figure and giving the owner of an AFA graded figure an even deeper level of satisfaction.

In general, toys and collectables are a poor long-term investment unless you choose the right toys in which to invest. Collectables often peak at a certain price and don't continue to grow in value at a steady rate after that. Exclusive or hard to find figures are the general exception, as well as figures in a rare, well preserved state (such as AFA graded figures). The rule of thumb with any collectable is that something is only worth what another is willing to pay for it. This makes toy investing a higher risk than a more conservative approach, such as a CD or mutual fund.

G1 Transformers, however, seem to be a special circumstance fueled by an ingenious marketing strategy perfected 25 years ago. Many G1 toys have increased in value at very high rates. A $100 figure then (Fort Max) still MISB sells for over $1200 today. That's a 1,100 percent margin! In comparison, say you took a $100 and invested it in a 10 year 5% CD (compounded annually). At the end of ten years you would only have $163. In 20 years, $265.50. While Fort Max is a flagship example, the average margin on MISB G1 toys seems to hover at a 500% to 1000% return on the original investment (or roughly 5 to 10 times its original selling price). Inflation has not been taken into consideration here, for the sake of simplicity.


Surprises can come along that devalue a collectable toy. Reissues, for example can fulfill some of the demand for a once rare figure by making them more affordable. The original may still fetch a higher price, but maybe not as much as it would have before the reissue. There are plenty of collectors who specialize in original G1 toys (no reissues) to stabilize the price of the vintage figures.

Popularity of the character, the quantity originally available, exclusivity of the figure, regions of distribution, the age of the toy, the difficulty of maintaining the toy in good condition (G1 Swoop, for example), or an event that triggers a revival of interest (like the new movie) each play a factor in the value of a collectable figure. The best investments are exclusives like this year's Botcon set where you could quickly resell it for an instant 300% to 500% return.



On the flip side, let's examine another common viewpoint.

The Toy Liberator


The vast majority of toys are opened and played with by children - the target market. Although Hasbro and other major toy companies occasionally cater to adult collectors, they are in the business of selling toys to children and their primary focus will always be the child market.

The adult "toy liberator" buys Transformers for the same main reason as the investor - he or she loves Transformers. The difference is that these people would much prefer to open up the box and free the figure from its cardboard prison. They like to transform the figure, pose it in various stances, and later often retire it to a shelf filled with many other "freed" toys. These figures are always available to be moved around, posed in battle scenes, picked up and transformed, and maybe even swooshed around the room now and then. Sometimes they end up in storage or collecting layers of dust on the shelf, but they are admired, enjoyed, and played with.

Loose G1 Transformers also have increased in value, despite the lack of a box and pristine condition. The average return on investment of a loose G1 Transformers in decent condition hovers in the 200% to 600% range (or 2 to 6 times the original selling price). Although not as big of a margin as MISB toys, they still carry their own weight as far as investing goes. Usually these are bought by other collectors of loose toys wishing to fill a gap in his or her collection.

Some collectors are on the fence between MISB collecting and loose figure collecting, so they open their toys but preserve the boxes. While the inclusion of a box might boost the sale of a figure, it will usually not boost it to the sale price of a MISB figure. Therefore the resale values lie somewhere in between loose and MISB value. Some may never plan to resell, but just can't bear to throw anything away (often referred to as "packrats" )

There are many collectors out there who never plan to sell their toys. Such a thought is never a consideration. Ten, twenty, or thirty years from now such feelings of attachment may subside, but the point is that many collectors could care less about the collectable value of the toy and are more concerned with what the figure is worth to them.

Other Considerations


Transformers are special. You can see that by just visiting this site - so many adults still hooked on them after so many years. That, in time, might fade. Thirty years from now, the generation that did not grow up with G1 toys may not value them in mass the way we do today. Values can drop as time goes on because it is the nostalgia factor that has kept Transformers going for so long. Just because it is old does not mean it is valuable. I had a large amount of one billion year old rocks in my backyard that I could not even give away. Like I wrote before, a collectable is only worth what somebody is willing to pay. Take away the target market for vintage G1 figures and the values will drop. Or maybe Transformers will somehow stand the test of time. It does not seem like Hasbro has plans of ever stopping the Transformers brand, but over long periods of time things do change.


Decision Time


So are Transformers a worthwhile investment? The answer all depends on you. If you love the toys but want to be able to cash out on them later in life, then maybe MISB collecting is for you. If your idea of enjoyment is to open it up and play with the figure, that is a good choice too. Or maybe you choose not to think of it as an investment and just love the toys.

Unfortunately, no matter how vast or complete your collection is, you will not be able to make enough money to retire and live well off of it (unless you are lucky and list your collection on eBay for $1 million and some fool bids on it it).


Therein lies the heart of the matter. Keep your collection boxed or open them up because it suits your taste. There is nothing wrong with that. Collect these toys because you love them. The money is a nice second, if it is even a consideration. Although G1 Transformers have a high return margin, it is still a relatively little amount of money. You won't be able to retire off of income generated by selling your Transformers. For that, you’re far better off investing in coastal real estate.

On that note...

For those older members looking to make money on their favorite hobby, maybe investing in Hasbro stock would be a prudent idea. You can view Hasbro's stock history from 1985 to Spring of 2007:
Here
or
Here

You'll notice they were at an all time high of about $33 a few weeks ago. HAS stock has dropped a bit to $27 as of today (Aug. 8, 2007). Those who had the foresight to invest two years ago have been making money. On Aug. 7, 2006 the stock was at $18.50 per share.

Hasbro pretty much dominates the US toy market and is in control of many favorite collectables as well as classic and modern games and toys. Here is an interesting take on Hasbro from Forbes magazine, written about two months ago but still relevant.

Forbes Article

Hasbro's next movie venture will be a live action GI-Joe film. Whether the film is successful or not, chances are a GI-Joe revival is on the way. Hasbro has already released 25th anniversary GI-Joe figures and more are coming. Hasbro should be commended for diversifying their business over several major brands. Interest will wax and wane, but as long as something is hot during the calmer times, Hasbro will continue to thrive well into the future. This will always be good news for Transformer fans.

While stock investments always carry a risk, collectors often have company insight. Had you of invested some money in Hasbro when the movie was announced about two years ago, you would have made some money. It may be too late now. Hasbro may not be the best stock around, but there certainly is some novelty factor in having a Hasbro stock certificate. You could even get one framed:

oneshare.com

or

frameastock.com

First off let me say, that is a very well written article. It was interesting and does a good job in detailing the various facets of TF investing/collecting. Also, in the post that follows, I am not debating you (I think we have similar viewpoints), just expressing my opinions on the subject.

Secondly, as you mentioned, I agree that TF's on the whole are not the best investing strategy. 10+ years from now, modern TFs will not perform the same as G1s are currently because they are produced in higher quantities and there are more MIB collectors now (greater supply in the future). In fact, I think that the only TFs that will ever really have the potential for serious returns going forward are MIMB G1's like the Fort Max you mentioned and items produced in more limited quantities (exclusives and the like). I just don't see modern TFs producing similar returns.

But regardless of how modern TFs will perform in the future (and I agree it is somewhat debatable), the fact of the matter is, if you're looking to invest - your money is better off elsewhere (especially if you're picking up TFs now - whose prices are up because of the movie and renewed interest - and thus will ultimately produce lower yields). You mention the returns TFs like Fort Max have brought, but in the same span, the Dow Jones has gone from 1000 to 14000. Like you said, if you want to retire, pick up some real estate (and it's a good time to buy!), or if funds are limited some cheap stocks/mutual funds. Traditional investments certainly can carry varying degrees of risk, but at least you won't have to worry about scissor-armed toddlers ruining your everything in one fell swoop.

Collecting TF's may ultimately earn you a few bucks, but they will not fund your retirement. My final words of wisdom are similar to yours. If collecting TFs brings you joy because you love the bots or the nostalgia you're on the right path - but if you're in it for the money you will ultimately be disappointed with your "investment".

I keep my collection MISB not for investment reasons ( Toys are a horrible investment, Beanie Babies) but because that is how I enjoy them. My collection is a visual stimulation for me, for others touch stimulates them, they need to touch, transform the toy and if that is what they enjoy, who am I to judge what drives another person. But for the touchy guys don't judge the MISB guys harshly for not enjoying their collection in the same fashion as you do.

Thanks for the comments. It really does come down to whatever makes you happy, and nobody can tell you that you are right or wrong for collecting a certain way.

That was a great little piece to read. I dont have any problems with people that dont open their toys. I understand that they can enjoy them just as much as I can when I open mine. I had many G1 tf when I was a kid (3-5) but they were toys to me and who know where they are now. I started collecting again with the movie coming out and Ive really enjoyed the figures out of box. I dont think that any of these toys will be worth much down the road, opened or not and thats part of the reason I opened them. They only figure I have unopened is a 08 Bumblebee that I do see being worth something one day. (I have an opened one as well to touch and transform) Collecting these action figures is somewhat exciting for a 26 yr old guy like me and it actually sparks my imagination. Its fun to transform ironhide and see my 2 yr old go woah!!

hmm, another good read.
you and cp should start a opinionated newspaper

Well thought out, reasoned and written article. The collecting marketplace is hot right now. Might be time to cash in on it to take advantage of what can be made from what I have . Something to consider. Might stop being a completist and start going after those exclusives that are released in the various lines in the future.

Soundwave04 wrote:scissor-armed toddlers

I'm picturing Edward Sissorhands crossed with Childsplay. Most disturbing.

This is good because it is something of an epanded continuation of a conversation I was having in another thread. And I have often stated that toy collecting is a poor investment over all. Certainly you can make money but I wouldn't expect it or plan on it.

It is amazing though how adimate some people are on the whole open vs MISB debate. Collecting should be entirely about enjoying the things you can afford to have. How you choose to keep them should be your own business. But we should make it a point to inform those well intentioned but misguided individuals with dreams of a huge payoff down the road that they are wasting their time and their money would be better spent else where.

A CD might not have the same rate of return as a TF could potentially have. But it does have a gareenteed rate of return. As do many other investments.

Redimus wrote:Good interesting read.

I think there is a subgroup of the 'Toy Liberator' which you missed.
Those that buy their tfs simply for the love, and have no intention at all of seeling their collection off. I would very much count myself in that subgroup.

I meant to expand on that in my original post but kind of glazed over it. I added a short paragraph about this. Thanks for bringing it to my attention.

Very, Very good read. All points are good. I myself is a toy collector and not for investment. I collect more than TF toys. I also have Zoids models and Gundam models which I soo love to display. I also have a very large Star Wars collection and a large Star Trek collection.

But another point that you missed is the ROOM factor. I have 3 bookcase of Zoid models and 8 shelves of Gundam models and I am haveing problem displaying everything!
If I were to open all the TF toys I have they would be all over the place and I be tripping over them.

For me this not for investement. I just like toys that i enjoy. And coming from a lager family(I have 4 other brothers and didnt have toys of my own) this is my way of having my own toys.


just my 2 cents.


blkbitcloud1

blkbitcloud1 wrote:Very, Very good read. All points are good. I myself is a toy collector and not for investment. I collect more than TF toys. I also have Zoids models and Gundam models which I soo love to display. I also have a very large Star Wars collection and a large Star Trek collection.

But another point that you missed is the ROOM factor. I have 3 bookcase of Zoid models and 8 shelves of Gundam models and I am haveing problem displaying everything!
If I were to open all the TF toys I have they would be all over the place and I be tripping over them.

For me this not for investement. I just like toys that i enjoy. And coming from a lager family(I have 4 other brothers and didnt have toys of my own) this is my way of having my own toys.


just my 2 cents.


blkbitcloud1

I think the room, or displaying your Transformers, could be a whole article onto itself and is a bit off topic from my original intent. But yes, room space certainly becomes a factor at some point.

A few years ago, when I started, I thought I'd just get a few. Ha! 500 figs later...

Can't care less for the value of my Transformers as I don't plan on re-selling them anytime soon. Althought I do like to know what they're worth. Sometimes.

Good read! Front paged and credited!

Very good read, but putting TFormers for investments is kind of moot. They take a rediculuouly long time to gain in value.

interesting. The takara generation prior to TF was the 'micronauts' (1976-1981 ish)kids who grew up with a pared down version of takaras japanese 'microman' series (which incidentally is where many of the first Tf came from eg megatron/soundwave). The prices for those was very high around 5-6 years ago but seems to have faded as that lot of collectors early 30's to early 40's have finally got their fix through ebay and the net. Mint boxed vehicles and especially carded figured from the line still fetch good prices but only really rare japanese boxed toys command anything like what we see in the TF market and of course on the strength of TF the old microman versions of 'megatron' etc are stil sought after.

Cyber-Kun wrote:Very good read, but putting TFormers for investments is kind of moot. They take a rediculuouly long time to gain in value.

Not really. Check the prices things go for on ebay these days. As Counterpunch pointed out in his article the price hick started last year before the movie came out.

I have many bots boxed, shelved, and stored for prosperity.

I also have alot of bots that I actively set up and play with. However, I do my best to keep them in good shape and if one should break even alittle, I'm right on Ebay looking for one for parts reguardless of how the bot ranks in value.

However, for me, it's not abot the money.

I have thousands of Bots, if I sold them I could buy a house, but I don't buy to resell(well sometimes), I buy to have, why, TF are one of my many loves in life.

So basicly, my collecting is something for me that I will enjoy into my old age and hope that my saving, investments and what notwil be enough to have either my display room turned into a mosuliem, or at least pay the grave digger enough to digg a hole deep enough to push them all in on top of me when I'm gone.

I know you can't take it with you, but I'll dam sure try!

Great paper there Lapse, made for good reading, and got straight to the point.

It all depends on what you want to do with your figures. Display them? Transform them? Pose them? Sell them at a convention in a few decades? It's all about choice and personal tastes. Not to mention, even though your awesome, mint-condition MISB figures are worth a lot, does that always mean you're going to sell it? I don't know, I have a feeling that many if not most of us have some sort of emotional connection with (at least some) of our figures.

Yeah, I buy my Transformers for ME. I wouldn't sell mine off for anything in the world.

Not to demean the article but I thought it's be something about how owning shares in Hasbro right now is so good...

An idea...

<."

Great article LOR. I agree with what you are saying and I hope those who are new to TF collecting can gain valuable insight from this.

microclone wrote:interesting. The takara generation prior to TF was the 'micronauts' (1976-1981 ish)kids who grew up with a pared down version of takaras japanese 'microman' series (which incidentally is where many of the first Tf came from eg megatron/soundwave). The prices for those was very high around 5-6 years ago but seems to have faded as that lot of collectors early 30's to early 40's have finally got their fix through ebay and the net. Mint boxed vehicles and especially carded figured from the line still fetch good prices but only really rare japanese boxed toys command anything like what we see in the TF market and of course on the strength of TF the old microman versions of 'megatron' etc are stil sought after.

^too true. Plus thanks to Romando and eventually Takara releasing reissues of most of the vintage Microman figures drove down the prices these figures were fetching.

Enjoyed reading it. Thanks for sharing, and crushing my dreams (I'm kidding...)!