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
. Something to consider. Might stop being a completist and start going after those exclusives that are released in the various lines in the future.
