1/10 of a Score and 8 months ago, CARS the diecast line began.

Other than sharks with lasers, we have it all.

We have highly sought after limited editions and we have pegwarmers.

We have controversy and complete agreement.

It’s art, it’s fun on wheels, it’s class, it’s cool, but bottom line, what is my damn collection worth?

Well, the bad example are all the people who went to work for Lehman Brothers – the company has been around for 160 freakin’ years and collapsed ultimately in a few days so if almost no one saw that coming, who is to guess what is going to happen with CARS, the diecast line? What’s INVESTMENT-GRADE again?

Maybe the best analogy is a perfect ski run … the Sun is out, as you work your way down the run, the snow is just perfect – not slushy or icy, it gives you just the right cushion to keep your speed but carrying the speed you want to go – you’re carving your own line on fresh powder … there are moments that you almost lose it but you find satisfaction in hanging on and regaining control, faster, slower, you control the universe … and at the bottom of the hill, you spray to a stop like the great alpine skier you are … how often does that happen? For those 10-minutes, you are master of the universe and all that you survey …

That is CARS, the diecast line …

When you are standing at the top of the hill, you have no idea what’s going to happen 2 seconds from now … but that’s the ride, right?

But the analogy is apt because CARS is sunny until 2011 (when CARS2 comes out).

It is a something that will NEVER go out of fashion or style (diecast cars). No matter how hologramy we get, kids of all ages will never stop wanting to roll a tiny CAR across something. Then they might chew on it, gnaw at the tires and snap the antenna off but it’s all good.

That’s good for everyone involved from those who open the CARS as soon as the register spits out the receipt to those who take it home and lock it in a second plastic protective home. That is the fun of play and the fun of collecting – you decide what you love best.

As with Lehman Brothers, there are no promises as to how long it might last but this line has a lot going for it:

It starts with the creative and perfectionist mind of John Lasseter and Pixar who treat nothing as disposable or as a trifle. They create films not as a whim with topical sitcom jokes but films that you want to see again and again and that every generation will see it with fresh eyes.

This is also property nurtured by the masters of character licensing longevity – Disney.

Then brought to 3D metal life by the best of the best at Mattel. While Pixar brought the characters to life on-screen, the CARS design team at Mattel has equally & impressively captured the essence of each character and its personality in metal form.

And this was all done during a time when practically every toy is considered disposable. Toys are bought for the car trip to the aquarium – if the arm snaps off, whatever … but for CARS … just one look and everyone is hooked. Once you see the quality, you can’t put it down and you start to look around for the checklist.

With CARS, you don’t have to explain why you are collecting it.

Why do people collect Rolexes? Same reason. You don’t have to know anything about watches to see the quality and tradition built into each one …

And that’s always a good thing.

Of course, CARS is mass market so unlike something like a Rolex, it is not really limited but on the other hand, the cost of entry as a collector is very low … $1 will get you in the loose club and $3.50 for one new on card … and you are on your way.

Of course, when you buy something and hold onto to it, you want to know that it’s value will maintain a relative value but that belief is, of course, reasonable, unreasonable, crass and logical 🙂 … all at once … because we all make reasonable and unreasonable buying decisions … sometimes knowingly … $8 for a coffee with a double shot and whip cream that you drink in 5 minutes? What’s that, about $1,800 a year if you drink one everyday at work? So, maybe you don’t want one every working day but if you’re out with co-workers, you going to forgo spending $8 to just have ‘water?’ 🙂 … Or a company that should have full knowledge in a buying decision involving it’s OWN STOCK SHARES? Merrill Lynch spent some $5 BILLION dollars buying back its own stock at around $75 a share last year (Merrill is trading at about $12 now) … think maybe they regret spending that $5 billion a year ago? But as others point out, you shouldn’t buy CARS as an investment instrument but frankly, as we all found out 2 months ago, there were a lot of investment instruments we should not have bought as investment instruments 🙁

But CARS is definitely not just throwing a cash down a hole … the last three Motor Speedway of the South sets sold for $1,200 on average (eBay) – not too many investment instruments this year has delivered you a 300% return in 6 months … but on the other hand, it is only $900 dollars, a nice return but not exactly like breaking Harry Winston in Paris … because a return on investment is your call and your standards. Obviously an “investment” quality instrument such as stocks or bonds have an august trading venue versus trading and selling CARS here or on eBay but then again, would you rather own a Sarge on a Desert back card or Frank’s Crab Shack whose stock trades on some obscure “penny stock exchange” for $.15 a share? Or anyone stepping up to load up on GM, Ford or Chrysler shares these days?

The bottom line is the “trading marketplace.”

Because stock/bonds/commodity contracts are standardized – you know what you are buying – and there is generally always a buyer – even if you have to knock the price down to huge paper loss from what you purchased it for. This year, sadly, we can cite literally thousands of examples. You might want to sell GM for $20 a share but sadly, this year, right now, someone is only willing to buy it from you for about $3.50 … (yes, about the price of ONE Mattel Disney Pixar CAR … BTW).

The main advantage to stock/bonds/commodity contracts is there is a massive marketplace where people are always willing to buy and sell and even if you have to lose 90% of your initial investment cost, you can sell it in literally seconds but not every stock – just nearly all the ones on the NYSE and NASDAQ (in the US) … there are many stocks on the smaller exchanges where you cannot execute an order in seconds or even minutes.

Also, keep in mind, people buy these things specifically as an investment instrument, factoring in the cost the “ease” of re-selling or buying more (there are also tax benefits but we’ll ignore those for this argument).

CARS are toys (to state the obvious).

They are intended as playthings but just because something has a “main” use does not preclude it from carrying value.

Obvious examples include real life cars and of course, your house. Or even more “accepted” collectibles such as paintings, stamps or coins.

Like CARS (or other toys), there are marketplaces to sell and buy but they generally cannot be done instantly or in seconds … on the high end, obviously having an apartment on Park Avenue or a Van Gogh means selling is easier but it’s still not instantaneously. So, while CARS or toys are not necessarily thought of an investment opportunity, they can be and while it’s not the equivilient of a share of GE and all the implied and stated benefits, it’s also not like buying a cup of coffee for $3.50 where there is in effect, virtually no secondary market (sir, would you like to buy a cup of coffee I bought not more than :45 seconds ago, 10% off? 20%?) and no real residual value even for yourself after a few minutes.

So CARS is neither the best investment opportunity nor the worst.

Of course, CARS are like any mass produced item – its worth is valued on its scarcity or PERCEIVED scarcity while the guy who holds GM stock certificate 4,500 versus GM stock certificate 800,000,671,009 holds something of exact equal value but then that is the difference between stocks and a 1/50 Andy Warhol print … they are completely different marketplaces. You could also argue for the most part, our tax code is set up for buying stock & bonds and not so much anything else as investment instruments … without going into great detail, writing off a stock loss is a couple lines on your tax return, writing off part of a painting purchase requires your accountant to work a little harder 🙂 … so there are a lot of factors at work here.

Another difference is again perception. Let’s say you bought GM at $20. If GM drops to the price of a single CAR and you decide to throw up your arms and ‘give up,’ you call or click your brokerage account and sell it – after commission and fees, maybe you clear $3 a share but you still “cash out.” But if you buy a CAR for $3.60 (Boost?) and realize you can’t “sell it.” It’s value is not actually zero, I’m sure someone will give you a dollar for it but you just don’t want to make an effort to sell it because of perception … a “toy” is not worth your effort unless you can get back $4? $5 or more? So, your perception is that it’s a total loss when the reality is that its value has not fallen to zero but that because buyers can generally find it without much effort so their accorded value is low and your perception is that you will work very hard to either lose some money in the transaction or make not much …

But what is the FUTURE VALUE or REPLACEMENT VALUE of that CAR?

It may not be apparent today but tomorrow? Or not tomorrow literally but tomorrow six months from now? Six years from now? I don’t know. But neither does anyone else.

Cut to the Chase? The ‘perfect collectors storm’ scenario is that CARS 2 is a MASSIVE hit in 2011 and every CAR released to June 2011 from CARS (ONE) is “retired.”

Will that scenario happen? Unlikely but anything is possible. Should you plan on that? No, not really. I’m just telling you what the perfect collecting to sell scenario is …

All I’m saying is it’s worth considering …

If you count everything (Storytellers, Cars Toons, etc …), by 2011, we might have 300 CARS released (Scary is that I’m NOT exaggerating) … how exactly is Mattel going to keep re-re-releasing them? Let’s say they all get pushed to the “Classics” line, how many retailers are going to stock the “Classics” line and new CARS2 line which presumably will be released at the same rate …

There are 20 CARS that won’t change but even something like Radiator Springs McQueen – if he does not appear “dressed” like that in CAR2, are we going to keep seeing him re-re-re-released? Mattel might use the same mold with a different paint scheme and expression and it’s “Italy Miglia Lightning McQueen,” (presuming he appears as such in CARS2, of course) … so what’s now the value of Radiator Springs McQueen”retired?”

Maybe very little change – maybe still worth $3 in 2011 … or maybe more … or maybe less? Is the Supercharged version worth more because that was the first release of him as that CAR? Or maybe the Race O Rama “short  June 2009” cards because that was the lowest card run (I’m just throwing it out obviously as it’s not June 2009 yet).

And here you can cite Starwars in a different manner. The older than 2000 releases are so hard to complete or so expensive, most SW collectors who are not in have just given up …just as new CARS2 collectors in 2011 might look back and think, maybe I should start with the Supercharged … it’s about 40ish CARS to collect … what’s the going price for a full set? $165? $200? 500? Will people be scared off or encouraged?

I’d like to tell you. What would be worth it for you to sell in 2011? So, rounding up to $4 a CAR means you get back pretty much what you paid for it last year – about $165. Now, we’re not going to have much inflation for 12-18 months so when 2011 rolls around, you have not really lost much of your investment but remember, in theory, you could have invested that $165 to buy stock.bonds.mutual funds, etc … so are you wiser/richer/poorer or dumber? You tell me. What is it worth it to you to buy and hold these SC CARS? $200 worth it? $500 or …

Of course, unlike most stock/bond/fund holdings, where you pretty much get a statement each month – not very much art. CARS, on the other hand, you can display as art. So, what do you value that, right? Then if you’re doing it with your kids? Like the MasterCard commercial says – Priceless. Or even a set for yourself, right? What’s the value of play and fun? So, let’s also NOT get caught up – this is money that could go in the 401k … the most extreme example is of an elderly miser who dies from heat exposure or no heat but has $2.8 million in the bank? Of course, you want to strike a balance and there are no set answers or standards.

And while we don’t want kids to get too wrapped up with the whole-toys-sell-value thing, a little for the right age is appropriate – learning about present value, future value and monetary opportunity costs …

And sure, the greater perceived value is the CARS sealed on cards but instead of selling a set of SC cards for $200 sealed in 2011, maybe you sell the set for $100 loose … worth it or not? Can you get $100 of value rolling it around on your shelf and making CAR noises? Or in some cases, inappropriate dialogue? 🙂

And of course, value is measured perception-wise and bottom-line numbers wise, right?

Let’s say a sealed SC set is worth $250 in 2011 … about a 35% return for 4 years, not great but unless the market turns around – certainly not horrible … on the other hand, you’ve only made about $20 a year … let’s say loose is now worth $100 so you’ve “lost” $150 dollars in total return … on the other hand, is it worth about $30 a year to play with your CARS? Or about $2.50 a month? So the bottom line is you can measure things in many different ways. Some is perception and some is bottom line … no one likes to think you might lose 60% of the perceived top value of something but on the other hand, if that 60% is $2.50 a month … what are you really losing?

But since we’re being totally optimistic, let’s go totally pessimistic … Since the retailers won’t carry the Classics line, Mattel sells it on mattycollector so while some of the older & rarer CARS have some value – 90% of the CARS pre CARS2 are worth between $2 and $4 … is that okay? Is that terrible? Is that horrible?

So, no blanket statements apply – after all, what would you want? One share of GM or an authentic Apple Mac iCar Piston Cup racer loose?

So CARS is all things to all people today, tomorrow, 6 months from now and 3 years from now … just as NO ONE can tell what the value of GM stock share will be in June 2011?

To paraphrase a line from North Dallas Forty – one football player laments that when he says it’s a game, they (the owners) tell him it’s a business and when he says it’s a business, they tell him it’s a game …

Same here.

If you call CARS’ toys, someone will tell you it’s an investment … if you say it’s an investment, someone will tell you it’s just a toy.

And to circle back, CARS are everything. They are art. They are a business. They are fun. They are ebay fodder. They are priceless. They are exactly $3.49. They are MSOS valuable. They are Bug Mouth McQueen. But that’s what’s great about them. You can see the first Elvis RV on the pegs and think $39.99 eBay … or you can think, “That is going to look so cool on my shelf,” or from the kids POV, “Man, that Elvis RV will be able to smash so many other CARS at the same time!”

To steal another old saying, “Come for the art of the diecast CARS, stay for the investment return 🙂 …”

If you’re here for the play and art appreciation – you are all set. If you’re just here for the money, it might work out … no one can say and no one can say what you value as value. Meanwhile, vroom, vrrom, vrroom …

So, CARS – the journey is the reward – and the reward points.