They have been shouting correction for 2 years now .... then again, when 512TRs hit $175k at auction then the world is completely nuts
I think many more cars are bought on finance than people realize. I don't think this proves its a bubble, but its important to note.
Now is the PERFECT time to test/validate "our Market Hypothesis".....with the Dow crumbling, world economic activity slowing and our own government's honesty in serious doubt...IF the collector car market is truly a "safe haven" while simulataneoulsy a providing legitimate investing alternative....mantra has been "where else to put money to work etc etc"....NOW we will (should) see the true colors of market participants (owners). The Dow wash-out may show "weak hands" (speculators/dealers and such) due to "repos comng", eg similiar to a MARGIN call....or conversely, collector car price accerleration as stock market money comes into this "investment class" as "most purchases have been in cash". All these sentiments, statements,language, rationale and bs (new ART market !)have been used to explain the explosive market ......Well, now we may have come upon the tipping point with days of reckoning dead ahead. What say ye? Jack
What did you buy today? Anything? I bought some equities, remember what Buffett says when everyone is selling, buy. Nothing goes straight up and corrections are the catylast for future gains. It happens in every market. Where are all the gold bugs, anyone? anywhere? The future is the future and I don't have a crystal ball, but if you buy a car and it's pure speculation, as I have said before, be very careful. There are many costs associated with buying, owning and selling automobiles. Plus, liquidity may be an issue if you are heavily leveraged. I don't see any major crash in the collector car market, with a 10% downturn in the equities market. Not really anything frightening there.
The difference this time around compared to 1989 is there are probably less classic ferrari's today as the last 20 yrs saw these cars flat to low prices, and some were used, and used heavily. The other piece, we have more Billionaire's today than back then , and the car production number of Daytona's is still a finite number. God isn't making any more. At best, prices will stay flat - even if some cars are over leveraged, I find it highly unlikely that more than 400 cars ( 15% of Dino's ) are leveraged and will hit the market at the same time to flood the market and effect the rest of the owners. If that would happen , I suspect we have a much bigger world problem occurring than all these classic cars going for sale.
Euro drops - Ferraris gather strength. Ferrari 500 TRC - Chassis: 06XX - 7M Euro. Done. Zurich Prediction is that the Euro will swing 1=1 with the Swiss Franc. Euro Currency Future looks far worst. Shift is to London for security. Good cars harder to find and buy for currencies.
If there is a crash, it will first appear in the Dino market. The faster it rises, the better chance it will fall faster. This market is 100% speculative.
I was told the buyer of the 50HP American Underslung at the Bonhams Simeone sale was a guy in his mid-late 40's. (~$1.4M). A second T-head Mercer Raceabout this year will be sold this weekend at the dragone sale, estimate $2.5-3M. It is a 1912 so the buyer will not be a guy who had the wall poster in his dorm room. If you are a new connoisseur with a collection of Ralph Stein books and a few trips to Simeone or Petersons you'll educate your palette soon enough! Sent from my iPad using Tapatalk
200 to 300% appreciation is what we have seen so far over this last cycle. People that jump in on the way up on any investment justify it (if they feel the need to) with the same words: "This time is different.." Buffet put it well when he called the coming bust of the housing market as a bitter pill that only becomes more difficult to swallow, the bigger it gets.
I was told(but haven't confirmed) that the American Underslung was purchased for a new automotive museum funded by a Nascar driver(MW).
As I recall, at least according to reports from Kass, Buffet was on the verge of going bust, completely belly up before he was bailed out like all the rest. He also said he didn't believe in gold because it was just something dug up from the ground when it was about $800 and shortly after that statement promptly doubled. There's an old adage in Hollywood that holds true everywhere... Nobody knows anything.
And this bubble is spreading beyond vintage Ferraris - When the 512TR crowd claims their run of the mill average 512s are under market value at $120k then the music is over! http://www.ferrarichat.com/forum/boxers-tr-m/465073-%24119k-89-tr-its-below-market-value-really.html#post143464295
The TR Virus is rapidly spreading to other cars. For example, there is a 1963 Corvette split-window coupe on eBay at $225K and there is even 1 bid on it, although reserve hasn't been met yet. What is interesting is that this car is not original and would badly flunk NCRS judging. Also in the Corvette arena, there is an increasing number of "rollers" and piles of rusty parts riveted to a Split-Window VIN plate coming to market. Veterans say this is another sign of an approaching end.
I am very surprised this thread is still active. Since 2008, with 3 rounds of quantitative easing the global supply of dollars have increased four fold from slightly less than 1T to 4T today. Although they talk of ending QE3, it is more likely than not QE4 will be launched shortly there after. This means that every dollar that is in your bank, it has been 'devalued' by 75%. The devaluation of your money will likely to continue. People with money know this that is why everyone with money is running after 'hard assets' like real property, fine art, classic cars, etc. The demand for these assets drive up prices and the prices appreciation then further fuels more demand. There may have been crashes in the past but there has been no other time in the history of the USA when we have been printing so much money. Since 2008, I believe most of the Ferrari's in the 60's have increased 4 times in value (based on the charts I see on Hagerty.com). Therefore in real money (if the dollar is money) terms the values have stayed the same. I dont see this market slowing down ever so as long as the Fed maintains its loose monetary policy (i.e. printing money to everyone's detriment) and low interest rates. Unless you are selling your Ferrari's this year for financial reasons (retirement, college, debt repayment, etc.), you will regret selling your classic Ferrari next year. The regret will keep growing each year that passes after that.
Thank you for the article. I used to think this was more than likely a bubble because of the rapid rise in valuations. But then it occurred to me what this article is saying- these objects were really undervalued financially by the market. The market is wider and deeper than ever before. I don't think we are likely to see a major reversal of the current values. Corrections are always possible though. So I say its not a bubble but just like anything, do your homework. And if you buy what you love- even if it loses a chunk of its market value- it will always hold value for you. Something different from most other investments. I look at cars as an investment in my sanity.
I stand by what I said before. The classic car market which now includes cars that were produced in the hundreds of thousands like 2002's are a reflection of a lot of money looking for a place to go. There is nothing wrong with that except that historically everything and I do mean everything that goes up meteorically come down eventually and usually with a crash. If the word bubble makes you queasy then maybe that says something more about you than the market. Also every bubble from tulips to housing was said to be somehow different and therefore immune from history.
I am sorry but I dont think we can draw a comparison between the Tulip bubble and a Ferrari bubble. Unlike a tulip, there is a finite and limited number of classic Ferrari's from the 60's/70's. Unlike an organic plant which we can create an infinite number of units, we cannot produce any more of these cars. Save for periods of economic shock which have nothing to do with the value of a masterpiece, fine art painted by the great masters ALWAYS increase in value each year. This will hold true for classic Ferrari's. There are probably a lot less number of 2 seater Enzo era Ferrari's than all the works of art Piccasso created in his long career. Money loses value each year because the central banks keep printing the stuff. Every year, each dollar will buy you less. Today even everyday common goods and commodities cost far more than in the past. A gallon of milk costs $3.50. 100 years ago it cost 35 cents. Is the Milk in a bubble? Even our government tells us things cost alot more today than it did in the past and it has nothing to do with any BUBBLE. Please see the link below to see what crushing effect of inflation and easy monetary policy does to our purchasing power. Dont keep money in your mattress, BUY A CLASSIC FERRARI TODAY! Average Food Prices: a snapshot of how much has changed over a century : Beyond the Numbers: U.S. Bureau of Labor Statistics
If my math on Carbon's serial number spreadsheet is correct, there were fewer than 7,000 Ferraris of any sort (including 2+2's and race cars) built before 1970. The estimates for the number of works produced by Picasso are all over them map, but the minimum estimate still seems to be 3 or 4 times the total number of Ferrari's produced before 1970. Normally, no market can survive the run-up that Ferraris have seen in the last couple of years without some kind of retrenchment. The difference this time may be that Ferraris are now recognized by the broader market as master works instead of just being recognized as such by gearheads. If this is the case, then retrenchment may not happen. It will be interesting to see what happens when interest rates rise. Right now there is literally almost no return when assets are parked in a bank, so this creates significant motivation to park assets in elsewhere, such as collectables. Some of that motivation may decrease when interest rates rise.
