I Was About to Criticize Ferrari Market Letter's API When.......... | FerrariChat

I Was About to Criticize Ferrari Market Letter's API When..........

Discussion in 'Vintage Ferrari Market' started by dm_n_stuff, Dec 7, 2005.

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  1. dm_n_stuff

    dm_n_stuff Four Time F1 World Champ
    Lifetime Rossa Owner

    I looked at the most recent FML Asking Price Index.

    I have felt in the past that it often was slow to respond to market fluctuations. I guess that's mostly because of what it is based on.

    And then I thought, "What the hell is it based on?"

    YO CARBON, WHAT THE HELL IS IT BASED ON??

    Is it just cars listed in the FML?? Or is there some wider data base that it draws from?

    Example Dino 246GT this issue $87,480 up 32.48% from $66,029
    Dino 246 GTS $102,630 up 18.15% from $86,865

    These, I think, are at least within about 15% of what's really going on out there right now. For several months it seems they've been consistently much farther off.

    I love FML, don't get me wrong...................

    However, based on listings I've seen recently, and cars that I know are on the market, the numbers above reflect where Dinos were in maybe June, not now.

    So, back to my original question:

    YO CARBON, WHERE DOES FML GET ITS API FROM, EXACTLY?????

    DM
     
  2. Gerald Roush

    Gerald Roush Karting
    Honorary

    Apr 2, 2004
    225
    Atlanta, GA
    Full Name:
    Gerald L. Roush
    First of all, why are you asking Carbon? Carbon has only been working here for less than two years. I have been publishing the Ferrari Market Letter for 30 years . . . since before Carbon was even born!

    The Ferrari Market Letter Asking Price Index is based on EXACTLY what the name says . . . asking prices for Ferraris.

    These are culled from a variety of sources. How we calculate the Asking Price Index has been explained many times in the FML. It is the most cussed and discussed aspect of the publication. Yet it is the one thing I have the least control over.

    The figures in the Asking Price Index are calculated using PUBLISHED ASKING PRICES. They are NOT my numbers. They are the numbers the Ferrari selling community (i.e. you) put down, in print, for Ferraris they are trying to sell. In other words, while the FML Asking Price Index numbers are routinely criticized by the Ferrari public they are the Ferrari public’s own numbers. These are not MY numbers, they are YOUR numbers!

    I do not use just the ads in the Ferrari Market Letter for these figures. I use other published asking prices as well. Every two weeks all these asking prices are plugged into a table and then the asking price index is calculated. But it is not a simple arithmetic average. The formula first does a simple arithmetic average, and then using that figure eliminates any prices that are unrepresentative, specifically those that fall above or below our 50 percent rule. This eliminates the over-restored unrealistically priced garage queens as well as the rust-bucket restoration projects. There is also a time factor involved, in that the asking prices over the past three months (six issues) are also factored in on a declining scale.

    There are flaws in the system. Because of space limitations we do not break out the models by year, which can be important on newer models although it is irrelevant on the older cars. Nor do variations come into consideration, i.e. a short nose steel body three carb open driveshaft 275 GTB is lumped in with a long nose alloy body six carb torque tube 275 GTB.

    Let me explain the PURPOSE of the Asking Price Index which, by the way, has been published in the FML in one form or another as it was refined, for over 25 years. It was never intended to hold your hand and tell you what you should pay for a Ferrari. It was intended to show price trends. If asking prices are going up, then retail prices are almost certainly going up. If asking prices are going down, then retail prices are almost certainly going down. Many Ferrari buyers are concerned about such trends. Many of them still think Ferraris make good investments, or they at least don’t want their car to devaluate too fast.

    One way to use the FML Asking Price Index though is to simply consider this: If you are looking at a particular Ferrari and the seller’s asking price is way out of line with the FML API then simply ask WHY? Is it lower because there is something wrong with the car? Or is it higher because it is a pristine, concours-winning 99.5 point car?

    But if you want a value guide then buy a value guide. There are two excellent ones out there (although they get their fair share of criticism as well): The Black Book’s Cars of Particular Interest Collectible Vehicle Value Guide published quarterly and the N.A.D.A. Classic, Collectible, and Special Interest Car Appraisal Guide.

    I am aware that in general the FML API figures are “too high” if you insist on ignoring the fact they are ASKING PRICES and not RETAIL PRICES. But isn’t it a given fact that “nobody pays asking price”? I thought that haggling on the purchase price and getting the seller to drop the price was part of the buying process!

    Finally, I am often asked why I don’t use selling prices. I have been making this offer for years and to date nobody has come up with an answer. Find me a source of verifiable, accurate, Ferrari selling prices, for all models, in sufficient quantity and with a broad geographic range to be statistically viable, and I will use them.

    Finally, look at your "example" of Dino 246 GT prices.

    In the Current FML the Asking Price Index figure is $87,480. This being, in oversimplified terms, an AVERAGE. There are certainly examples out there for sale at higher prices, and there are certainly examples out there at lower prices.

    The latest Cavallino "Guida" listing gives a value range for 246 GT of $45,000 to $90,000

    The latest C.P.I. guide gives a value range of $39,900 to $91,200.

    The latest N.A.D.A. guide gives a value range of $31,700 to $71,500.

    So the FML figure is at the upper range of the various guides.

    So maybe a BETTER question for you to be asking is "How do Cavallino, C.P.I. and N.A.D.A. come up with their numbers?"
     
  3. Glassman

    Glassman F1 World Champ
    Rossa Subscribed Silver Subscribed

    Well I guess that just about clears it all up.
     
  4. El Wayne

    El Wayne F1 World Champ
    Staff Member Lifetime Rossa Owner

    Aug 1, 2002
    18,043
    San Marino, CA
    Full Name:
    L. Wayne Ausbrooks
  5. bobleb

    bobleb Formula 3

    Mar 9, 2004
    1,258
    Las Vegas, NV
    Full Name:
    Bob Lebenson
    Since I am most interested in a 250 PF Cab (series II), I was delighted to check the latest API, and find that the figure had dropped in the past 6 months (unlike most older models) from $200K to $186K.

    However, I was brought back to reality when I looked at the one classified ad in that issue, and saw a price of 275K. Euros.

    But if there is a $186K car for sale by anyone here, I'd love to hear from you.
     
  6. Horsefly

    Horsefly F1 Veteran

    May 14, 2002
    6,929
    Like anything else, the asking price and the getting price are 2 different things. Strange how everybody never wants to really talk about the getting price. The tax man is always listening and the reality of the getting price might put a kibosh on the pipe dreams of many wheeler dealers.
    "The market is up. Prices are going up. Better buy now".
    Yawn. The last thing that I would want is for prices on something to go UP. Rising prices may be good if you're already lounging on the deck of the ownership boat. But for most people who couldn't buy the 275GTB back in 1970, high prices are pretty much a guarantee that your Ferrari fantasy will exist in the coffetable picture book and not in the garage.
     
  7. dm_n_stuff

    dm_n_stuff Four Time F1 World Champ
    Lifetime Rossa Owner

    Gerald. Mostly because I see Carbon on here on a daily basis. If I thought a "Hey Gerald" approach would have worked this well, I would have used it.

    Nor would I use it to. It's a guideline, nothing more, nothing less. One that considerable work goes into, but it's not a hand holder, it's one source of input into a pricing strategy.

    Except perhaps in a rapidly increasing or declining market, where the time gap alone might be enough to throw off this indicator considerably.

    Except, again, in a rapidly moving market where the data, even if only a month or two old, can be off by 10-15%. But, as you say, it's an index of asking prices, not a price guide or bible. I think every source for pricing is taken with a grain of salt, and weighed against other sources for accuracy, or even plugged in to an average.

    You are of course right. Many folks, both buyers and sellers, will stretch the truth about what they paid (less usually than the truth) or what they got (higher number ) to show themselves in the best possible light, Making a "Selling Price Index" difficult and perhaps misleading.

    That's next on my list!!!

    Gerald. This was not meant as an assault on your methodology. It was quite simply, an inquiry into how you get to the numbers you give.

    Thanks for the enlightening look into the heart of FML, which I subscribe to, in large part to the good PR work that Carbon does on this site, and because of the informational quality of your market letter.

    Dave M.
     
  8. Smiles

    Smiles F1 World Champ
    Lifetime Rossa Owner

    Nov 20, 2003
    16,601
    Pittsburgh, PA
    Full Name:
    Matt F
    Thank you, Gerald, for taking the time to answer this question personally.

    As a subscriber to the FML, I appreciate it.

    --Matt Ferrari
     
  9. mroz

    mroz Formula Junior

    Nov 1, 2003
    296
    California
    Its refreshing to read a good logical answer. Great explanation Gerald! Hope you continue
    to publish to guide for another 30 years.
     
  10. matteouno

    matteouno Rookie

    Feb 26, 2005
    44
    studio city ca
    Full Name:
    matt b
    Well, I'll tell ya, I love reading all this hubbub about how high the numbers are for a 246 gt. Especially when I have one listed right now on the FerrariAds site. Just makes the idea of passing it on to the next lover of the car that much easier to think about...
     
  11. synchro

    synchro F1 Veteran

    Feb 14, 2005
    9,294
    CHNDLR
    Full Name:
    Scott
    I'm a long time subscriber of the FML, and generally tread lightly on the asking prices as I use it as input to develop my own market assessment. Actually I find the classifieds the #1 reason to subscribe to the FML

    PS - Happy belated Birthday Gerald
     
  12. ryalex

    ryalex Two Time F1 World Champ
    Consultant Owner

    Aug 6, 2003
    24,957
    Las Vegas, NV
    Full Name:
    Ryan Alexander
  13. dm_n_stuff

    dm_n_stuff Four Time F1 World Champ
    Lifetime Rossa Owner

    Gerald.

    Do you take ebay activity into account?

    How about other auction results? These are areas where asking price exists in the form of a reserve, or minimum acceptable bid in most instances. And where final results of the sale are published for all to see.

    I know there can be shill bidding, but I would think that's the exception rather than the rule.

    The question popped into my head after seeing the reference above to the ebay auction of that Dino. It went for $85K, which I consider a remarkable number considering the stated condition of the car.

    Dave M.
     

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