Depressed asset values: what effect on Monterey auctions?

The relevant question, then, would be who are the buyers of vintage automobiles? Warren Buffet? Or a hedge fund manager from New York who made $100MM last year and is down 40% this year?

A relevant fact is that there are far, far fewer Rupert Murdochs or Warren Buffets than hedge fund managers in the world.

 

Another point being this: the number of wealthy individuals who are at all interested in collecting vintage cars is miniscule when compared to the number of wealthy individuals who collect art. I have no hard data confirming this, it's just based on the % of people I've met over the years who are at all interested in cars. Art appears to be a more mainstream passion among the wealthy, and vintage cars appears to be viewed as a quirky hobby.

I personally think that the market for vintage cars is strong and slowly growing, but not necessarily growing as fast as the market for art.

 

Res judicata.
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I guess we can all wait for Ralph Lauren and John Shirly to come in and buy a car, but i doubt that one person's action dominate a market. Over the past 12 months (including the upcoming auctions) at least 15 significant Ferraris were/are being auctioned.
To that point, some clear the market and some dont, but the conditions have become worse over the past 2 months and thus they wil have a harder time maintianing higher lvls.
You dont get rich by acting stupid and what you are reffering to is some part stupidity another part insensativity. Lets be fair, these guys act rationaly, and with everything going down, i doubt they will continue to buy as if nothing happend. Same could be claimed of them buying stocks, bonds or any other asset. Ultra rich ppl are as smart as you and i so im not sure why partical physics relate to thier action. if you want one print of a sale you will get that, but this dosnt keep a market going.

Dont think Murdoch or Buffet collect cars, but allot of real estate guys do, yes even Ferraris!

elad

 

Agree with the comments about car collecting not being viewed among the very wealthy quite the same way as collecting art. Also agree that a good part of the high-end collector car market is CEOs and other senior executives who have cashed out of companies and hedge fund and other Wall Street folks looking to spend their bonuses - lots of quick cash being used to "satisfy the dream". There aren't too many billionaires and even fewer who are participating in the collector car market.

Peter Kalikow is a well known example of a Ferrari collecting real estate guy. If he takes a major hit in the real estate market, he's probably not going to start dumping cars but he may decide not to buy some more.

 

Yes I was fortunate to watch the restoration on the Lusso. I interrupted the Lusso for about 9 mos while mike did my C4. Cant wait for this weekend. I can already see the Intercity transports headed up the 101 from LA.

Yippee !

 

Most everyone is focusing on the high end of the market. What ever happens to the McQueen car will not represent the meat and potatoes Ferrari market. Anyone want to speculate on how pricing will hold up for 250 GTE's, 330 GTC's or 365GTB4's? I havn't looked at what is being offered at Monterey this year. Are there any cars being offered of this type that we should watch to get an indication of market direction.

 

Hey....Guy is speaking tomorrow at Xerox Parc in Palo Alto, and I am going !
I also witness this type of behavior...when hotshot start-up VPs show up at Oracle...They are usually in their early 30s and just know it all...
Back to cars.
Even GTEs are doing OK. They are not top tier/blue chip cars, but if your wife says you must have a family car, and you need a classic 60s V12 with some lovely proportions....where are you gonna go? One just sold in Italy for $192K. It probably did not go to anyone whose house was just foreclosed.
I will see some of you guys at Concorso. After doing Quail last year I am coming as an FCA volunteer this time. I did the same at the F-car Nationals and highly recommend this insider method.

 

On the meat and potatoes end here, with cash to burn! It'll be fun to see what the rich guys do, but I'm feeding off the bottom and that's the end my eye is on.

 

About 400 in the US, 946 world-wide.....give or take.

 

You're right, at RM/Sotheby's 3 months ago the 275GTS ($580K), 250 GTE 2+2 ($196K), Dino 246GT ($180K) and 330 GTC ($226K) foretold doom for the auctions this week.......I can't wait to pick-up a Gulfstream 5 at a fire sale price now that the factory has shut down due to cancelled orders.......

 

There are a couple things that are very similar in the market now as the last Ferrari boom/bust of prices in 1989/1990.
1. Severe expansion of foreign wealth: Then Japan. Now Europe and China.
2. Equity Market bull/bear market turn: Then 1987 crash. Now boom and bust of real estate market.
3. Comparisons of Ferraris to Van Goghs and other art: Then and now we hear it as an excuse to buy multi-million $ cars. Then, Japanese were snatching up everything they could find that could be categorized as rare "art." Now, hedge fund and private equity guys are buying "art" with the same recklessness.
4. Speculation. Then, Ferrari's were bought and traded within months. Now, dealers are flipping cars at record profits.
5. The death of Ferrari. Sadly, Enzo's death was viewed as a catalyst to buy much like an artists demise. Now, that can't happen again.

So what is my prediction for the sale and my indicator of a top of the market?
I predict some cars will sell for records while others will be unsold even at fine bids.
I think more SPECULATORS will be buying rather than owners like 410SA who drive and enjoy these wonderful cars.
IMHO, I view a Ferrari as both an investment and a passion. One that should be driven and enjoyed to the fullest as intended by Enzo. If you make $ on it, that's a bonus!

Bottom line: the more speculators in the market place, the more likely it is that we are at a top of the market.

Read the "Extraordinary Popular Delusions & the Madness of Crowds" to find out how and why markets boom and bust due to human sentiment and speculation. Great book!

Hope this adds to the discussion.

____________________________________________
www.ferraridigest.com

 

Agreed!

 

Elad, no disrespect meant when calling you a generalist. It's a common disease. All of us have it to some extent or other, but with regard to the very collectible, highly desired Ferraris I truly believe that the current real estate woes, such as they exist in various markets are not a deterrent for the very few, very cash liquid buyers vying for a very rare piece of auto history. There is a large part of me that wishes for your scenario to become manifest as it would give me an opportunity to fill some holes in my modest collection, but I don't think it's going to happen with the cars I am interested in - 250 SWB, TDF's, Cal Spiders, 275GTB/4 competizione's. The prices of these multi million dollar cars also buttress the lower echelon like Lussos and Elenas because they somehow seem affordable at $600,000.
Regardless of what the market is doing today, several hundred people cashed in billions of dollars by the end of 2006 and they literally have money to burn, having gotten out of the market at the best time.
Whatever happens, I like the Monterey week for the parties and the food and the racing and especially wandering around Pebble Beach looking at what Ralph Lauren and Jon Shirley have wrought out of scrap metal.

 

I would've thought this is kinda common knowledge. Rare collectibles always create a market of their own...

 

anyone still doubt the fact that we are entering a recession?
feel free to pay 650k for an 250 Ellena, see you at 275k...
elad

 

How is the Daytona market?

 

I don't think there is any doubt we are recession bound and its going to be painful. Far more like 1991 than 2001 and recovery wont be as easy (exception being if the Feds move on a massive bailout of the mortgage industry to keep the crazy credit markets rolling).

But, it is equally inevitable that the dollar will weaken further and vintage Ferrari's do have a global appeal. The US muscle car market is going to take a beating given that such cars only have appeal here in the US. But vintage Ferrari's, Astons, Jags and other neat vintage euro vehicles have a strong global appeal and while the US is recession bound the rest of the world looks pretty good and the "new money" booming forth from places like Russia may very well sustain this market segment. Another thing is that with real estate values getting crushed (and I am convinced that values in many areas such as California, Florida and much of the north east will decline 50% or more from current levels) and the stock market increasingly risky people may decide to put their money in tangibles they can at least enjoy. The number of Daytonas (or SWB's) is never going to increase yet global demand will continue to increase and thus long term I have a hard time seeing prices decline substantially. They may decline somewhat in the short term, but long term I just don't see it.

I also think that comparing to the 1990-91 collector car market (something I find myself doing particularly since I was a pretty active trader/dealer in collector cars back then) isn't such a great comparison. Then the market was being driven by tons of speculators and dealers trading cars back and forth between each other. Today it does seem to be more end users/collectors who are holding onto the cars. I sense this because even though Daytona values have doubled over the past 3 years the apparent number of cars on the market at any given time has stayed about the same or perhaps even declined a bit. Back in 1991 as prices climbed the number of cars coming to market soared eventually pushing supply beyond demand in what became a musical chairs marketplace.



Terry

 

Would love to know too.

Bread and butter stuff not "Ford" spyders and Comp cars?

 

I still can't work out why in Aussie people pay high 300's for one and yet 150 will get you a Boxer with Aussie history from new and so many of the Aussie Daytona's have poor history, ex UK/US or have been restored.

 

I normally do not respond to posts this long... Not sure why... but this time, I thought it might be worth piping in.

I have been in Monterey for just a day. So far we have sold three cars including two F40s and an Alloy Comp SWB. We only came with five cars and none have even come off the truck. Our truck driver just called at 6:00AM and said there was a crowd of interested people wanting to see the Cal Spyder we just got and an RSR Porsche. I am not sure how they even knew what we were bringing them as both were surprises to the market. So far I would say there are plenty of deep pocket buyers willing to pay premiums to get great event cars which has been the trend for many, many months now.

I have no predictions on the auctions but feel pretty good my truck will be heading home light loaded.

On the other hand, I have far more money in the bank than good cars to sell. If anyone is in a panick to dump quality machines, I hope they contact me first!

Cheers,

Bill Noon

 

I am currently planning the launch of an on-demand, interactive business news channel for cable and Internet. I now know where to go to find my discussion panel!

 

We got some real smart people lurking on here...not a bad idea!

As Tspringer points out old Ferraris are a lot like land, they are a fixed quantity....but as the real estate market shows today the secret is knowing 'which' land!!!

Ocean view is good....mountain view is good.........and so on.....

Good to hear your report Mr. Noon, as always...have fun!

 

I think this is exactly right-- the number of cars coming onto the market is a key indicator of it's health, as is the case in any sort of market.