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Monday, March 24, 2008

Chrono Trigger; A Better Investment Than Apple

August 23, 1995, the day after Chrono Trigger on Super Nintendo is released you walk into a store and buy it for $69.99. When you get home a new X-Files begins and you put the RPG to the side, forgotten. That same day your dad buys one share of Apple stock for a split-adjusted $11.38, and one share of Microsoft for $6.12.

Fast forward to February 3, 2008. Your old man's share in Apple is worth $133.75 and Microsoft, $30.45. That same day you find your sealed copy of Chrono Trigger in an old storage box and decide to look online to see how much its worth. Turns out your copy of Chrono Trigger sells for $1,217. The game gave you a 25.7% annual rate of return, much better than your dad's 22.0% return with Apple and 13.6% return with Microsoft!

Chart of Annual Rate of Return for Chrono Trigger and Other Investments
Annualized Rate of Return for Chrono Trigger

Considerations when buying video games as an investment:

  • The game has to stay sealed for it to keep its value. The Chrono Trigger cartridge only sells for $50-60 by itself.
  • If you keep the game sealed you can't play it. Stock certificates aren't much fun to play with though so the alternative isn't much better.
  • Video game prices are very wide ranging, not all of them are Chrono Trigger's. Many sell for only a few bucks. A sealed Metal Gear for NES recently sold for $86. A 2.8% annual return, which is barely more than inflation.
  • You have to store the games in a safe place so you still have them after 12 years. You don't want your game collection to share the fate of so many baseball card collections - thrown out by mom when you go to college (why mom? why?)


UPDATE
There seems to be some confusion about the prices and adjusting them for stock splits. The prices used in the analysis do take into account stock splits for Apple and Microsoft. Apple was trading at $45.50 on 8/23/95, but they had 2 stock splits between then and now so the price used in the analysis is $11.38 ($45.50 divided by 4).

Microsoft is the same. It was trading at $97.88 on 8/23/95 but the stock split 4 times. So the price used in the analysis is $6.12 ($97.88 divided by 16).

I hope this clears up any confusion. Sorry I didn't make this clearer in the initial write-up.

Historic stock prices from Marketwatch.com. Inflation numbers provided by InflationData.com. Rates of return calculated using this annual rate of return calculator.

See Complete NES Price List
See Complete Super NES Price List

20 comments :

mndrix said...

Darn! Video games aren't allowed as IRA investments.

Anonymous said...

If only I had the money to buy more than one copy of games that I buy...

Anonymous said...

I'm not exactly familiar with the stock history of any of the companies, but I'm wondering if Microsoft's shares split so that the invest would actually have been larger. Just wondering.

Anonymous said...

However, Microsoft has split 4 times since 1995 and Apple twice. Therefore 1 share of Microsoft in 1995 is worth $487.20 now while 1 share of Apple is worth $535. That makes the stock investment worth about the same as Chrono Trigger.

Anonymous said...

well, it is the best game ever, so I kind of understand.

JJ Hendricks said...

The prices in the analysis are split adjusted so it already takes into account the stock splits for Apple and Microsoft during this 12 year period.

TanookiTravis said...

Now, where did I put that sealed copy again? I wonder if it's behind my 300 shares of Google stock I bought a few years ago. Ahhhh, I'll just look later, those can't be worth much.

Anonymous said...

You would also need to take into account money earned from dividend payments (by both Microsoft and Apple stocks). I don't have the inclination to do that at the moment, but I'm pretty sure that would put both ahead, especially in such an extended period of time (with all dividends being reinvested into the stock, of course).

Collect videogames because you enjoy them, not because you expect to get rich off them someday.

racketboy said...

Interesting idea....
Although Apple had the dead period up until like 1998 when the iMac hit.

They also just recently took a huge hit when the market overall took a dive this year.

I'm also curious if we will see more sealed Chrono Triggers and if they will top $1000 again.

Anonymous said...

Your site's video game price chart top Chrono Trigger out at about $57

JJ Hendricks said...

I 100% agree with one of the Anonymous posts that said: "Collect videogames because you enjoy them, not because you expect to get rich off them someday." I don't really think video games are a great investment. Sure there are cases you would have made money but overall I think it is a losing proposition.

Addressing the dividend issue another poster brought up. The returns in the article do not included dividends. After looking into it though I don't think it makes a big difference in the returns. Apple hasn't paid a dividend since 21-Nov-95. Microsoft started paying a dividend in early 2003 but only pays 1.5% currently. Even with reinvested dividends from 2003 on, the return probably wouldn't increase more than 1% point.

RE: The post about our site showing Chrono Trigger at $57. It is true. Our site tracks the average prices though so it usually represents the price of just the game, not a complete game that is sealed (Our complete methodology). We are working to track new game prices in near future.

Anonymous said...

That's horrible. First off, rarely anyone buys a single share in any company. Even if you are investing in mutual funds, it's more than one share per company. So right off the bat your investment will increase exponentially, depending on how many shares you buy. And just because a collectors item is valued at say $1200, you'll be hard pressed to sell it at that price. Where as a stock will sell at it's listed price....everytime. A video game is NOT a good investment vehicle. Just collect it for the love man! Do it for the love!

V_Translanka said...

And thus another reason why ROMs/ISOs are totally awesome! Buy the game, keep it sealed, and then emulate the **** out of it! HA!

Anonymous said...

Wow! So all I have to do is buy decent copies of Chrono Trigger and shrink-wrap them, and I'll be in the money!

gvn2fly said...

Why is that almost everybody around here take it like it's a serious proposition... frackers! Get a life and have some fun!

NES Online said...

Hahahaha I love this approach to video game collecting. Well thought out piece. The only problem is that once more people start collecting it brings doen the overall value of the product. Look at sports cards, once everyone started collecting them in the 90's, it devalued the entire industry since collections were no longer rare.

I think I got over $1,200 worth of fun by opening and playing my cop of Chrono Trigger!

JJ Hendricks said...

@NESOnline - I agree completely. Values on future games will not be as high, especially for sealed games. I know lots of collectors know who buy sealed copies of games for their collections so they won't be as rare in the future.

Chrono Trigger is an awesome game, but I wouldn't pay $1,200 for it now so I don't think I got as much entertainment out of it as you.

Macbook 13 said...

Great blog, I think Apple is still a good investment.

James Morgan - Puritan Financial Advisor said...

The game gave you a 25.7% annual rate of return, much better than your dad's 22.0% return with Apple and 13.6% return with Microsoft!

Anonymous said...

Really, and how much did the person who bought Super Tennis or Pilotwings make when they put those games away 'sealed?' You are looking at one of the rarest games (to find factory sealed) and assuming it represents the market as a whole. For every Apple Computer; there is also an e-toys or pets.com. This is a very misleading representation of the market; and as a video game dealer, I cringe when people tell me they are putting a video game away for 'future growth.' These are NOT good investments at all. There isn't even a yearly price guide for these items (something that coins, currency, and comic books have). Let me know when video game collecting reaches mass audience appeal like coins and comic books. Even as a successful dealer, I still don't see this happening. I can get a lot of factory sealed video games really cheap. I once bought sealed Atari 2600 games for $0.65 each and sold them for $20 each. Trust me, there is a lot of this stuff sitting in wholesale warehouses. My recent buys include factory sealed copies of Zelda and Super Mario Bros. These will hit eBay soon (both will be graded and sold). In conclusion, be very CAREFUL in this market.

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