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Discussion in 'Vintage Ferrari Market' started by Napolis, Jul 7, 2015.
Classic car investing not for the faint of heart
Good comments by you. The "investors" will probably get burned, although in my opinion the question is really about whether the 1950s-1960s cars have permanently risen to a new price level.
I'm sure that in the 1950s, there were people grumbling about how expensive Monets were, and how they would be coming back to their "normal level" soon!
The number of billionaires in the world has exploded, and the number of blue chip cars is finite. Highest price paid for a painting, about $300 mil. for a Paul Gauguin. Highest price paid for a car, $40-50 mil. for a classic Ferrari. Me, I'd take 6 screaming Ferrari's over 1 quiet painting. I'm not sure which investment would appreciate more, but I know which would bring more smiles.
There are less than 2000 billionaires in the world. We do a little work for several of them, in the top double and triple digits on the list. None of them are into collecting cars, few into art. However, there are hundreds of thousands collectible cars and art. The net must be a lot broader than just the billionaires.
To quote Jay Leno, until recently it was " a hobby where mere millionaires can compete with billionaires".
Because the original collectors appreciate better, do better homework, bought earlier and let's face it have a larger concentration of assets in cars. They don't buy cars once they have the multiple real estate, the boat and the private jet, stocks and bonds and use the surplus for buying cars. Most of them were putting a massive part of their disposable income into their passion. And no leverage.
This has partly changed with the acceleration of values, ,,and the billionaires are a good exit route for those who bought cars earlier.
But yes you can still collect different cars. I bought 4 cylinder Ferraris when no one wanted them ( and I am not talking during the previous century!!) drove 3 MM between the 2 of them, they were the underdogs of Ferrari , people ( some well known broker,,,) were making fun of the vibration, the small engine , their poor racing performances in period for the MD,,,until they realized that 860Monza had great pedigree, that some MD actually were successful in racing, and all of them had wonderful design, and when you drive them thousand miles ( provided you have earplugs,,)it is the experience of lifetime.
Ask the Admiral and Bryan, they don't have enough of driving their! Then collectors who could not afford a 375MM, or a 250MM specially the open ones, and the Vignale are not the best looking ones, came back and realized that an engine that was world champion in period cannot be so bad, and that a PF or Scaglietti design cannot be so bad and that 750Monza in particular had a distinguished pedigree even if few of them were factory race cars. But Phil Hill in 1955 and 56 season was quite good!
So you can collect art and no be able to buy a Vermeer or a Rembrandt, or a Van Ghogh, or even a top Picasso. But you can still know and appreciate art,,and be happy, and possibly know better art than those who own any of the above masters.
Same for cars. After all I drove my cars much more than the owners before me, and for sure those after me. They pay and in a specific case I have in mind, they will pay much much more ,,but they will not enjoy it a fraction of what I did, partly because the value is today way too high. You can refer in the post and link I put on driving the LM in Tour Auto! Enjoy it!
I don't think he was inferring that only billionaires are pushing the demand for collectible cars. When I was working in the vintage/collector car market, I did business with a lot of folks in the tens-hundreds of million net-worth demo. Few billionaires, but they were playing too.
A lot of these guys in the lower net-worth demo would lease/finance the purchase of $250-600,000 examples. $6k/month payments, some probably filtered through business expenses. Keep the car a year or two, roll-into something new/different. Maybe make a couple of bucks in the process. The purchase/ownership/use of the vehicle was a hobby for them. The association with the cars, possibility for profit, and general thrill of the buy/sell experience was what intrigued them. They weren't saying "oh, I always dreamed of owning a 19XX XXXX." It was more what caught their eye that day, and any possible up-swing in value during their ownership. Sure, some were traditional enthusiasts who showed the cars and kept them long-term, but the majority were in-and-out of these cars within a couple of years. Sometimes less.
When you have a deep client-base with hundreds of cars in circulation, it's like a game of musical chairs. One guys gets out of his Aston seat looking for a 4-cam Porsche seat. Another gets up from his Daytona seat and moves into the Aston seat. Round-and-round it goes.
Well, this thread is now taking over the never ending "bubble due" thread? Convenient as it is much more compact!
Do as Pierre just said, don't drink and drive, don't dream and drive, just do drive them!
(BTW, the red whine during the TA was heavenly....),
Will see wat Montherey will bring, for now enjoy the miles.
Amen. Which reminds me, my Austin Healey has been under a cover for almost a year again. Time to dust her off and make sure the odometer is still functional! Lol
Paid $2,250 fifty five years ago (2/3 of one years salary) and it has been worth every penny! Great fun driving both track and street. Laguna Seca this August after The Quail.
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Will be at PB concours with my prewar Alfa and Tour d Elegance, hope to see you, if you have time happy to have diner, all the best
This is the trick, find something you love that is undervalued in todays market. Even if it's some six figure price, if you plan to hold the car for 5 to 10 years there could be a great financial reward in the future.
It's an interesting paradigm - none of the cars I own / owned were purchased as an investment, they were purchased because I wanted them.
Now with the appreciation curve, I find myself a little more sensitive to driving them - in my mind, this is completely wrong. I don't have a big bank account to care for something moderately damaging (although that's the point of insurance), I just want to drive.
I have kicked around the idea of selling and purchasing something different. It's an internal battle - keep or sell? Really pointless, and the market unfortunately affects me.
Maybe I need to buy more to tune it out???
My billionaire buddies care little for cars. Some have a handful of Ferraris and the like, but don't think twice about them. As far as investing goes, the focus tends to be on their business(es). I guess I had poor luck in the company I keep haha (just kidding... I think).
For those with a few hundred million, that money can evaporate pretty quickly if not "invested" (or spent) wisely. It often takes a generation or less to wipe out a decent fortune.
In (un)related news but related to "investing" I never fail to be shocked when some people who rise quickly (and likely spend a fair bit of coin on cars) can fall so fast (50 cent anyone???)
Actually, I'm no longer shocked at all!
My lord what a beautiful car.
Thank you, I obviously agree with your concise statement.
In one of my rare disagreements with Jim when he said "The bottom line is to buy a car that means something to you as an investor", I did not see my purchase as any kind of investment but purely emotion. Hopefully some people still buy cars that way.
PS One more view for Dave
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As for your view on cars as investments vs. emotion. I have very strong investment views on cars -- though those views change depending on the market (and I have made my current views very well known in other posts). Thing is, I buy cars 90% on emotion but with a strong dose of reality (mostly because I need to -- I am not very wealthy, certainly not by the standards around here!) What I have not done (yet) is buy based on investment prospects. I have weighed value when buying, but in my own most recent purchase, bought a car that I know will depreciate, instead of buying other cars that I think will hold value or appreciate over time (in my case, the cars I thought might appreciate are the 360 CS and GT3RS 997). I bought my car because A) I love how it drives and looks and B) I can live with it in Manhattan much easier than I could either of the other cars I considered.
So it is somewhere in the middle ground for me, at this time. There were other cars I also considered that I knew were much better investments (the car I chose is frankly the worst of the lot as an investment / value retention vehicle) but the notion of investment is pretty far down my list.
I will reiterate again, you have a spectacular car!
As often happens with the press I didn't say that.
I said buy something that means something to you and perhaps it will turn out to be an investment but who cares.
Precisely. As has been repeated in this forum, if you buy what you like, it won't matter which way the market swings. I recently purchased a car that I have been wanting for the past couple of years. I had been watching the market, and the prices were trending up. They hadn't skyrocketed, but again, trending up consistently. I figured I might as well get it now, because I still wanted it and could still afford it in the current market - perhaps I couldn't a year from now. Maybe they would be less expensive a year from now. Regardless, I made the purchase and have been tremendously pleased. I am confident I could sell it today for a profit, but she was obtained to enjoy. I've put 3,500 miles on her in 7 months. It took the previous owner over 3 years to do that. Flat-out through the esses at Watkins Glen. That's why I bought her, and that's how I will use her - not for the possible value now, or later.
Maybe, in 5-10 years, I will be itching for a change. I do hope she increases in value. But, not for profit. It will take a more impressive machine to equal or surpass the enjoyment I have received - and a more impressive machine will likely cost more...
That sounds more like you and I agree.
Now regarding the press and getting things right, it was interesting to see how a simple comment by my wife HelenAnn was twisted in the first sentence in this article: Ferrari owner driven by love of car
What she said was that I had bought the car before I had met her.
See you at The Quail.
After seeing how the media quoted (out of context) and/or misquoted me multiple times in my old financial markets role, I really and truly woke up to see how distorted a picture the media often paints, even when fed good information.
Facts are almost always of secondary importance vs. getting a "story"...
I actually feel bad for the public who rely on the media for translating the financial news of the day. Then again, even some financial professionals rely on that same media to help inform their own views... scary world!
Never mind fiscal news- how about any news?
All this talk about billionaires and not being into car is interesting to me. A couple of the local(ish) billionaires are very much into cars... Rob Walton being the biggest!
As is sometimes said in England - 'Cloggs to cloggs in 3 generations.'
The first generation starts to build the fortune, the second consolidates and further builds it and then the grandson blows the lot in half a lifetime! There are plenty of examples about.