Transformers as an Investment

Transformers News: Transformers as an Investment

Wednesday, August 8th, 2007 5:13PM CDT

Categories: Toy News, Site Articles
Posted by: Hotrod   Views: 22,874

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The latest Seibertron.com site article comes to us courtesy of our own Lapse Of Reason. In this article Lapse Of Reason looks at the debate of whether Transformer collectors should keep their collection MISB for investment's sake. Without further delay here is Lapse Of Reason's article:

There is often debate whether Transformer collectors should keep their collection MISB 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 it's 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. Often collectables peak at a certain price and don't continue to grow in value at a steady rate. Exclusive or hard to find figures are the general exception, as well as figures in a rare, well preserved state. The rule of thumb with any collectable is 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 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 (Mint In Sealed Box) sells for over $1200 today. That's an 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 of return 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 is currently still a strong enough market for collectors of "original G1 toys only" 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, or 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) all play a factor in the value of a collectable figure. The best investments are exclusives like this year's Botcon set where you could flip it and get 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.

There are also 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.

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. 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.
Credit(s): Lapse Of Reason
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Re: Transformers as an Investment (271038)
Posted by Anonymous on August 8th, 2007 @ 5:14pm CDT
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.
Re: Transformers as an Investment (271043)
Posted by Hotrod on August 8th, 2007 @ 5:17pm CDT
Good read! Front paged and credited!
Re: Transformers as an Investment (271049)
Posted by Cyber-Kun on August 8th, 2007 @ 5:22pm CDT
Very good read, but putting TFormers for investments is kind of moot. They take a rediculuouly long time to gain in value.
Re: Transformers as an Investment (271062)
Posted by microclone on August 8th, 2007 @ 5:33pm CDT
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.
Re: Transformers as an Investment (271069)
Posted by Hotrod on August 8th, 2007 @ 5:35pm CDT
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.
Re: Transformers as an Investment (271107)
Posted by Liege Evilmus on August 8th, 2007 @ 6:02pm CDT
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!
Re: Transformers as an Investment (271108)
Posted by i_amtrunks on August 8th, 2007 @ 6:03pm CDT
Great paper there Lapse, made for good reading, and got straight to the point.
Re: Transformers as an Investment (271114)
Posted by 1337W422102 on August 8th, 2007 @ 6:05pm CDT
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.
Re: Transformers as an Investment (271155)
Posted by Damolisher on August 8th, 2007 @ 6:19pm CDT
Yeah, I buy my Transformers for ME. I wouldn't sell mine off for anything in the world.
Re: Transformers as an Investment (271175)
Posted by Primus C-00 on August 8th, 2007 @ 6:32pm CDT
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...

<."
Re: Transformers as an Investment (271222)
Posted by SnapTrap on August 8th, 2007 @ 7:00pm CDT
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.
Re: Transformers as an Investment (271223)
Posted by Tigertrack on August 8th, 2007 @ 7:00pm CDT
Enjoyed reading it. Thanks for sharing, and crushing my dreams (I'm kidding...)!
Re: Transformers as an Investment (271250)
Posted by Masterchip on August 8th, 2007 @ 7:09pm CDT
Excellent read

For me it's hard. I mean I'm 14, a new collector to the series. It's hard to see them in their prisons. I want to open them, but when I opened my classics Grimlock, It just felt....wrong. I mean I open my boxes, read the instruction manuals, and often play with my friend's opened transformers, but I don't take my toy out of the box and out of the twist ties to play with. I'm in the gray zone and it kills me! HELP!!!!
Re: Transformers as an Investment (271262)
Posted by Megatron Wolf on August 8th, 2007 @ 7:13pm CDT
Nice article. I for one mainly open my figures so i can play with them and display them in battle scenes you know enjoy them. But i also buy some to keep in the box. If its one i like a lot ill buy 2 or three of them. One to keep MIB one to open and display one to play with and or customize. The figures that ive opend i dont plan on selling because they are like family to me. Im 21 and ive been collecting since i was either 2 or 3. I dont feel i could sell something ive had and enjoyed for that long. The only ones i plan to sell when im an old man are the ones i have doubles or triples of. Hell i may not even sell them. I may just pass some down to my family. I love this franchise and i will continue loving it. As long as there are Transformers ill buy them. That is the curse of a true fan.
Re: Transformers as an Investment (271264)
Posted by Lapse Of Reason on August 8th, 2007 @ 7:14pm CDT
Thanks to all those who had something nice or constructive to say. I updated the end of the article to add another question to ponder: What about investing in Hasbro stock?
Re: Transformers as an Investment (271269)
Posted by Zeds on August 8th, 2007 @ 7:16pm CDT
Masterchip wrote:Excellent read

For me it's hard. I mean I'm 14, a new collector to the series. It's hard to see them in their prisons. I want to open them, but when I opened my classics Grimlock, It just felt....wrong. I mean I open my boxes, read the instruction manuals, and often play with my friend's opened transformers, but I don't take my toy out of the box and out of the twist ties to play with. I'm in the gray zone and it kills me! HELP!!!!


Buy doubles of the ones that you want to collect and still open. I have done that with many figs from many different lines. I keep mine MISB/MOSC and buy doubles of ones that I want to open and display. '08 BB easily falls into that category.
Re: Transformers as an Investment (271309)
Posted by Lapse Of Reason on August 8th, 2007 @ 7:36pm CDT
For those reading from the news page: To read the updated version, go to the article from the toys forum. I added some interesting information on HAsbro stock.

Thanks for the FP Hotrod!
Re: Transformers as an Investment (271314)
Posted by Slumble B on August 8th, 2007 @ 7:38pm CDT
I have no problem with people who keep their TFs MISB. Hey its there money and their toys, so they can do whatever they want.

Me, I like mine out of the box. I like to pose them and display them and all that good stuff like everyone else. I'm kind of in that middle group now because I'm going to start keeping the boxes. That way if I get too many TFs and get sick of displaying it I can put it back in its box and no harm will be done to it. Many of my other collections have been ruined by me mis storing them after I was done displaying.

Also I think in the current toy market that selling toys for a profit is all short term. Look at '08 BB. In a couple of months we will all have it, but since its such a hot item right now, people will pay double or triple the MSRP. Its all about finding whats hot and in demand and selling it then.

SB
Re: Transformers as an Investment (271319)
Posted by Liege Evilmus on August 8th, 2007 @ 7:40pm CDT
-Z- G1 Snarl Rules wrote:
Masterchip wrote:Excellent read

For me it's hard. I mean I'm 14, a new collector to the series. It's hard to see them in their prisons. I want to open them, but when I opened my classics Grimlock, It just felt....wrong. I mean I open my boxes, read the instruction manuals, and often play with my friend's opened transformers, but I don't take my toy out of the box and out of the twist ties to play with. I'm in the gray zone and it kills me! HELP!!!!


Buy doubles of the ones that you want to collect and still open. I have done that with many figs from many different lines. I keep mine MISB/MOSC and buy doubles of ones that I want to open and display. '08 BB easily falls into that category.


Agreeed, I have doubles of all The ones I would like to keep sealed for prosperity.

Some past figs like BW AirRazor I got long after the series ended and know she's near imposible to find loose in good shape at an affordable rate, so she stayes boxed.

However, much like the second hand G1 Galvatron that I just got that's pretty beat up, if I find a complete version of a bot it will join the battle.

I already have a G1 Galvatron in a fairly decent box, but the fig is in great shape, still to keep him that way and still enjoy this guy, I picked up a $20 complete less than perfect on Ebay.

I would love a second loosy mint, still the great things about less than perfects is that you don't mind modifying them. Also, it's a cheap way to both preserve and enjoy vintage bots as well as current bots who will one day fit that catagory.

Still, I feel it important to say that the Galvatron I keep boxed isn't for investment sake, but realy it's for Galvatron's sake. Same goes for all my boxed bots!

I'm to the point in collecting that unless its a fig that is basicly a drone like the Energon/Cybertron terrorcons, I'm either buying bots to open and enjoy with seconds on the ones I realy like, or getting seconds to keep active as their boxed counterparts stay safe, or vice versa as I normaly open the figs I buy.

I believe I owe this mindset to a toy add that I saw in the back of a comic years ago that said something like

"toys, vintage in the package, alive outside the box"

That always stuck with me and truth be told, I enjoy my collected pieces more that I can display, set up, and use, as apose to the ones I just look at.
Re: Transformers as an Investment (271325)
Posted by Lapse Of Reason on August 8th, 2007 @ 7:45pm CDT
Slumble Beast wrote:
Also I think in the current toy market that selling toys for a profit is all short term. Look at '08 BB. In a couple of months we will all have it, but since its such a hot item right now, people will pay double or triple the MSRP. Its all about finding whats hot and in demand and selling it then.

SB


This is certainly true. The best investment toys were ones you could flip right away for two, three, or more times the price.

Personally, I have only a few Masterpiece and Botcon boxes. Maybe 6 total out of 500 figures. I buy to open them up and keep the figures. Most boxes either get thrown away or sold. I'd rather pass the toys down to my kids or grandkids before I die rather than sell them off. Of course, if I was ever in a real pinch at least I know I have something of value.

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