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Monday, March 31, 2008

Chrono Trigger; A Better Investment Than Apple - VideoGamePriceCharts.com Blog

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?)

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.
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