How I Beat the Stock Market By Playing Pinball

A common question on pinball forums is the one about whether pinball is a good investment in a financial sense.

A typical response is “don’t buy pinball machines for investment purposes” and “buy stocks if you want to invest.”

Well I would like to publicly state that those people are dead wrong. At least they are based on my 15 years of easily killing the stock market with my own pinball machines.

Over the years, I have bought and sold hundreds of machines. I can’t revisit all of those deals — as it would take me all day.

Let’s just look at the games that I currently have in my main game room.

My garage games are all fixer uppers and those get kind of hard to properly determine the return.

This is because any game that needs serious work is going to be cheap. You have to put blood, sweat, and tears (and money) into them to get them nice again.

These would not be fair to compare against stocks, which do not require anything but money.

A more fair comparison to the stock market are games that I have purchased fully working and in nice shape.

So let’s do a quick review of such games:

Creature from the Black Lagoon Pinball MachineCreature from the Black Lagoon

  • Purchased 1998 for $1300 from a vending company.
  • Estimated current value: $3500

Return on investment:

  • Annualized return: 7.61%
  • Return for the entire period: 169.16%

Over the years we have played this 2779 times. So at 50 cents per game, Creature has provided $1389.50 worth of entertainment. Minus roughly $75 in parts (bulbs, rubbers, Cliffy protector) used over the years and you have a dividend of $1314.50.

Did I beat the market?

Yes beat it by $1,378.31 and including dividends beat it by $2692.81.

White Water

  • Purchased in 2000 for $1100 at the Allentown Pinball Show.
  • Estimated current value: $2750

Return on investment:

  • Annualized return: 8.79%
  • Return for the entire period: 150%

Over the years we have played this 2576 times at 50 cents per game. So White Water has provided $1288 worth of entertainment. Minus roughly $150 in parts (bulbs, rubbers, a few replacement boulder caps) used over the years and you have a dividend of $1138.

Did I beat the market?

Yes beat it by $1,263.78 and including dividends beat it by $2401.78.

Shadow

  • Gathered via trade for a Johnny Mnemonic in 2001 that I purchased for $1100 from a retailer.
  • Estimated current value: $2000

Return on investment:

  • Annualized return: 5.84%
  • Return for the entire period: 81.81%

Over the years we have played Shadow 2284 times at 50 cents per game. So Shadow has provided $1142 worth of entertainment. Minus roughly $75 in parts (bulbs, rubbers, replacement plastics) used over the years and you have a dividend of $1067.

Did I beat the market?

Yes beat it by $332.34 and including dividends beat it by $1399.34.

Twilight Zone (Sample)

  • Purchased 2010 for $2600 from another collector.
  • Estimated current value: $5000 — as this is a true sample game with a third magnet, playfield differences, and different cabinet art. This commands a bit of a premium value.

Return on investment:

  • Annualized return: 41.38%
  • Return for the entire period: 92.29%

No plays on the Twilight Zone yet. Am I pathetic or what? It has some optos that need replacing and I still have not found the time to get to it.

Did I beat the market?

Yes beat it by $1,833.30.

Revenge from Mars

  • Traded for equivalent of $2200 in 2009 (a Junk Yard machine).
  • Current value $2600 (the RFM is pristine).

Return on investment:

  • Annualized return: 5.37%
  • Return for the entire period: 18.18%

Total plays on the RFM is 732 at 50 cents per game comes to a dividend of $366.

Did I beat the market?

No the market beat me by $805.23. Finally the market got me on one! However factoring in dividends the loss is only $439.23.

Fish Tales

  • Purchased in 2009 for $900 from another collector.
  • Current value $1800

Return on investment:

  • Annualized return: 29.31%
  • Return for the entire period: 100%

Not sure on exact total plays on the Fish Tales, as audits were erased during a recent ROM upgrade.

Did I beat the market?

Yes beat it by $507.71

Bride of Pinbot

  • 2010 Traded for a Whirlwind pinball valued at $750 in return value, but needed a CPU repair and ramps were bad. Spent $200 on ramps and $150 on new CPU. So total invested is $1100.
  • Current value $1500

Return on investment:

  • Annualized return: 16.12%
  • Return for the entire period: 30.43%

Not sure on exact total plays on The Bride, as audits were erased during a ROM change.

Did I beat the market?

Yes beat it by $135.60.

And since gains really only count once you make the sale. Let’s look at a recent game I sold.

Monster Bash

I sold my Monster Bash back in October to raise some cash for a new home.

  • Bought for $3800 in 2007 from another collector.
  • Sold 2011 for $5400.

Return on investment:

  • Annualized return: 7.9828%
  • Return for the entire period: 42.1052%

I don’t know how many plays I put on it, but at least 500 certainly. Did not spend any money on parts for it. So total estimated dividend of $250.

Did I beat the market?

This sale beat the market by $1,182.88 and including dividends beat it by $1432.88.

Final Scorecard

Pinball 7 to Stock Market 1

If you factor in the value of the games that have been played (at the traditional 50 cents per game location price) I have excelled what I would have made on the market (based on S&P 500) by $9964.19.

If you place no value at all on the games played, I still beat the market by $5828.69.

I only wish I had put all of my money into pinball machines. I had a large sum to invest in 2000 and actually considered putting it all into pinball machines.

Instead I put it into the market and lost most of it. A $100,000 investment turned into around $25,000 within a year (a very bad year for tech stocks, my penchant at the time).

You win some, you lose some I guess.

Will pinball machines continue to be a good investment?

Only The Shadow knows I guess, but considering how desirable the 80′s and 90′s classics are — I feel very good about my own personal investments.

These games are just so amazing and well crafted. Even brand new premium limited editions games (selling for $6000 – $7000) do not fully compare to these classics (at least for me).

And pinball machines certainly provide a ton more fun than investments in the stock market. Nobody can argue with that.

So next time you have some spare money to invest, you may want to consider buying a classic pinball machine instead.

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