Photo: Morphy Auctions
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"They're not toys! They're investments!"
It's been a common pop culture trope in TV and movies for decades: a cheap laugh at the expense of the - well, how to put this - nerd who collects rare toys in their mint condition packaging. But what happens after the punch line? Like forty years after the punch line?
Today, one remarkably forward-thinking dad is having the last laugh.
Back in the 1970s and 1980s, a father to Star Wars fanatics adopted the habit of purchasing Star Wars action figures for his children. Nothing particularly unusual about that. Less typical, though: he bought multiple of each toy, one to be played with and the others to be tucked away for safekeeping.
By happenstance, the gentleman was speaking to his friend at an antique coin-operator show, and he mentioned he was thinking of selling his kids' Star Wars toy collection. The friend is the CEO of Morphy Auctions, and when he discovered the "collection" was actually mint condition, carded figures still in their original Kenner shipping cartons, the reaction was disbelief.
The collection, now known as "The Morphy Find," sold at Morphy Auctions last week. With over 250 lots consisting of over 420 figures, total sales crossed $760k. The top result was the $41,820 paid for a very early and very rare Luke Skywalker action figure with a double-telescoping lightsaber. On more than one occasion, over $1,000 was paid for empty, original cardboard Kenner case boxes, emphasizing the rarity of the overall find.
Back when the toys debuted in the late '70s and early '80s, retail prices were generally in the $1.99 - $2.99 range. However, included in the find were some more expensive toys, like playsets. So for simplicity's sake, let's say on average he paid $4 per toy, inclusive of shipping. That may be aggressive to the high side, but we think we'll find that a $1 difference in the cost basis isn't going to be the difference maker in this multi-decade investment. We count 426 figures in the Morphy Find. At a cost of $4, that's a $1,704 outlay in total. In today's dollars, that's close to $5,000. Not nothing.
Again for simplicity, we'll say he bought all the toys in 1983 to make it an even forty years. The total appreciation amounts to 44,778%, and on an annual basis, that's 16.5%. Even if you deduct the 20% buyer's premium from the sale proceeds, the annual return is 16.0%.
For reference, over the same time period, the annualized return of the S&P 500 with dividends reinvested was 11.2%.
So go ahead and laugh it up at the toy "investor," but one dad is laughing all the way to the bank. We can all probably agree: selling multiple empty cardboard boxes for over $1,000 is among the more impressive Jedi mind tricks we've seen.
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