Monday , 4 July 2022

High-Grade Collectible Toys Make Great Alternative Investments!

Collectible toys share the same characteristics as some of the most investable assets, like art and fine wine. They’re scarce; price is dependent on condition; they’re sought-after, and unlike some other investments, they invoke powerful memories of our childhood. Let’s explore. 👇There’s a reason we’re so bullish on this stuff! Words: 1062

This version of the original article by Stefan Von Imhof (alts.co) has been edited [ ] and abridged (…) to provide you with a faster and easier read. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

Unless you’ve been living under a rock, you’ve probably heard the sound of 💩 hitting the fan this week. Terra’s USD peg was obliterated, equity markets are in the toilet, and crypto is just as bad. Bitcoin and Ethereum were supposed to be a hedge against equities but are now basically the exact same graph. Now, more than ever, investors are looking for asset classes that are truly uncorrelated with everything else so this week’s issue is all about toys. Yes, we’re talking Star Wars, Barbie dolls, G.I. Joes and Transformers. If you think this asset class is just fun & games, think again. Sealed, highly-graded toys make legendary collectibles…

Toys as an asset class

…Thinking of toys as investments is nothing new. Markets have shown that, over time, holding some toys as investments is a legitimate way of diversifying any investment portfolio. [For example…since 1987, LEGOs had an 11% annual rate of return — higher than the stock market and…tin toys that cost a nickel 100 years ago can regularly sell for a couple of thousand dollars. For evidence, look at the results for this Mickey Mouse toy: it recently sold for $13,200. Not too shabby!

Why do toys make good investments?

Scarcity

This one is obvious. Toys will naturally become scarce with time. The boxes are meant to be ripped apart. They’re meant to be played with, used and abused, until the toy is beyond repair. Over the years, beat-up toys get moved around, thrown away, lost, decapitated, or buried in the mud somewhere...

Nostalgia

Toys from the 1980s have a particular appeal to Gen X and Millennials. For many children of the 1970s and 1980s, that period captures a certain kind of magic. Each generation experiences the same sort of nostalgia with different toys – our grandparents remember wooden puppies fondly, we remember lightsabers, etc…

Condition

Who kept their toys in their original boxes? Certainly not me, but if left encased on its card back (the cardboard) or inside of a “blister” (the plastic covering), toys can be worth multiples of their loose (unboxed) variants.

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An original 1959 Barbie, still unboxed, will fetch $10,000 – $20,000 at auction

How are graded toys valued?

Like sports cards and video games, toy collectibles are graded based on a scale provided by the Collectible Grading Authority (CGA). The grading company has been around for nearly 20 years. It plays an important role in setting prices for toys and card-backs in their allotted conditions.

Grading companies add value by authenticating items. They verify that a toy has always been sealed, and carefully notes the conditions of the box that led to a certain grade. A graded toy can add hundreds of dollars to its value compared to an equally conditioned but ungraded version.

With the advent of a grading system for toys, collectors have a method to help them figure out the value of their collections in the face of Action Figure Authority, a division within CGA.

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Toys are graded on a 10 – 100 scale, going by increments of five past 70

Here’s the crazy part – the condition of the actual toy is only a small part of the entire process. More likely than not, a toy will have much more value if it has never been taken out of the box.

  • The blisters are judged against damage like ink marks and staples and
  • the card-backs and boxes are judged on “creasing, rolling, tearing, scuffing, scratching, lifting, print marks, loss of gloss, soiling, discoloring, edge wear, nicks, punctures, ink or foreign marks, peg hole punch, tape repair, price sticker, sticker tear, sticker residue, water damage, bubbling, and attached foreign objects” so really, it’s just as much toy grading as it’s grading the condition of a box.

All of the above nuances lead to the conclusion that finding old card-back toys in really good condition is pretty rare.

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An ungraded Transformer will command a lower price at auction than a graded one.

George Lucas: The Steve Jobs of toys

Before Star Wars’ release in 1977, the most popular toys were based on the most popular television shows or those with the best advertisements. Toys from movies didn’t have the same staying power; movies would hit the cinemas and be gone in one to two months, whereas TV shows lasted years, and so did reminders to buy their toys.

George Lucas was a visionary not just in his filmmaking career but in the characters he brought to life. He knew that they would become iconic and would make great toys. Imagine if Lucas had come of age in today’s NFT world; Star Wars may have started as the greatest NFT collection.

Lucas had such conviction that he waited until just six months before the film’s release to license his toys when it’s typically done two years before because he was afraid that competitors would steal his ideas.

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Star Wars toys have outsold the movies by $7 billion!

Lucas was rejected by every single toymaker, except for Cincinnati-based Kenner. At that point, General Mills owned Kenner and had several successful toys under its belt, but Star Wars would prove to be special. The partnership, as it turned out, was a perfect match…

Where do we go from here?

Action figures from Star Wars, Transformers, and Star Trek have been extremely successful. It’s what today’s NFT projects aspire to be and to do – build engaging narratives and mythology into a set of characters that enchant fans so where do we go from here?

Well, it wouldn’t be so far-fetched to see some Harry Potter action figures or Frozen dolls that you can buy for a few bucks today selling for ten times the amount in 20 or 30 years?

At Alts.co, we use our proprietary Toy Index to track historical sales and the trend is showing an emerging market with low enough prices to be considered accessible.

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Our index and historical auctions tell us that it’s not far-fetched at all. It’s very likely!

 

 

 

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