Well said. Do your research on prices instead of just looking at the ads (especially the dealer hype)
Basing market prices or fair value on what a dealer is asking or claims he is selling for is like letting your hairdresser service your Ferrari...
Exactly, but people are doing it. It is going on as we speak. This is another tiny bubble symptom. People are so caught up in this that they are resulting to this type of irrational behavior.
your chart is 5 years this is SPY 5 year chart. doesn't look that much different to me. Image Unavailable, Please Login
There are selected bubbles. Bubbles being price changes based on speculative rather than fundamental elements. Looking at the SP500 or DJIA vs. 2009 as a trough vs. peak is deceptive... as I also mentioned earlier, the downward drop / spiral was overdone in 09... that was clear to me then, as clear as the bubble is now. If you measure prices to adjust for that severe decline, the SP500 looks a lot more normal. If you compare car prices over a normalized period, the prices look massively out of whack. It isn't the NASDAQ that is necessarily a bubble, it is VC into tech shares. You think the investment into "XYZ" apps are not bubbles? Fine... I side completely with someone who has called this market before (Cuban) and with my own read. I'm very close to that market in a sense, and absolutely that area is a bubble. Are bonds in a bubble? Perhaps... Many would say yes, but that market is already unwinding. In fact, that unwind that is occurring is one of the potential catalysts for other markets to follow suit. The speculative element of why people are buying up cars points to the psychology of all this. It is when emotion and trying to "get in before others" or "get out before others" that helps cause bubbles (and oversold periods too).
Try doing a chart back to 2000 for both markets... or further... take away the trough period for the SP500 and see how it compares. Compare the price of a 308 in 2000. Or an F40 in 2000. Then look at the various stock indexes and see how they compare... If you took the Haggerty index for Ferraris, the price increase over that time is about 3.5x. That compares to the SP500 increase of about 2.0x on the back of incredible earnings growth over the period. The Ferraris in that index have not become meaningfully more scarce over that time frame. What has changed is sentiment and the massive speculative element. People can play with and manipulate numbers as much as they want to tell the story however they'd like. You cannot, however, overlook the behavioral element and that is the key piece here... reinforced by the message boards on Fchat. Higher price point expectations are driven by expectations themselves... virtuous (or vicious) cycle but not connected to anything that feels "fundamental" to me.
Also, I gain nothing from continuing to post on this topic and have no need to have people rethink things according to my own theories (and people are unlikely to change their own views anyways) so I'm officially "retiring" from these sorts of threads. Time will tell. Hopefully in 12-18 months time we can look back on my posting and laugh at how wrong I was If so, I'll have plenty of $$$ to more than make up for my hurt pride.
This is probably the best description of what is happening to the 308/Testarossa/355 market. It's people trying to get in and get piece of the action based on pure speculation. They can't participate in the "meaningful" part of the market, i.e. Daytonas, Supercars, 275's, 250's, etc. but they're trying to get on the train for profit. The blue chips are now stable and displaying signs of a healthy, rational market, as has been pointed out so that's not where the speculation is taking place. In fact, this is the single, most consistent, most defined part of a bubble (read "Devil Take the Hindmost"). It's when the highly marginal stuff gets trumped up and bought by the people on the fringe - either late to the party or not flush enough to participate in the blue chip part of the market. This is also where the highest amount of speculation is taking place currently. There may be people buying in these segments now for passion and they now have the money to buy what they've wanted. If those cars crash in prices, those folks will be largely unaffected as they didn't buy to resell. However, if you read through posts in the 355 section, you will find quotes like, "I wanted to buy before I got priced out of the market," or posts of people buying cars because the price was just "too good to pass up," and they immediately make references to flipping the car they just bought. Lastly, there have been a few posts by new people in these more modern segments asking which car they should buy that is going to appreciate the most. What does that point to? None of this really points to a market-wide bubble but rather some highly frothy sections. But again, if you're buying a car because you love it and you have the cash, who really cares? Buy the damn car.
And this is exactly what is driving the prices of the diablo as we speak. All of the people who wanted a Countach who were priced out received this inexplicable urge to go grab a diablo because it is "next in line" or going to jump in value. Had the market naturally been up, with a nice steady gain on the Countach, this would NEVER have happened. They would have just said eh, I'll just save my money for the countach or just gone about their day as normal. At the end of the day, the buyer wanted the Countach, not the Diablo. The perception begins to take over reality. But that perception, as Super_Dave has explained very well, is rooted in the expectation of the car going up in value quickly and very soon. Otherwise, if the Diablo were simply expected to go up someday (which many think it will, myself included) then the rush to go get it right this second would not be there. The perception is CLEARLY rooted in the speculation. Not fundamental at all.
I bought a Countach in 2013 at the RM sale in Monterey. I drove it for a bit and liked it but thought that maybe a Diablo would be better suited to me. Sold the Countach at the height. Looked for a Diablo and saw the prices were a little high. Sat on my hands for a couple of months and looked again: prices in the crazy category. Looked again last month: prices gone from crazy to retarded. Asked a couple of people about it and you know what they said? I'll give you one guess: "Early Diablos are going to be the next big thing. Buy one now while you can easily afford it. They're going to be on par with Countach prices soon." Needless to say, I still haven't bought one and don't really have any plans to now. I will check back in 18 months...
And again.... the signals keep flashing. Translation = Why should you buy a Diablo sir? Because you can buy it now, for way less than it is going to sell for in the next year and you can sell it at profit later! Better buy it now before it doubles in value! You made a wise choice in stepping off, and you'll get one for the market price soon. Off bubble topic, I have heard that the Diablo is pretty much Unanimously the more fun and easier to move than the Countach. I rode in SHamille's car last winter, it was a blast. The later more rare cars seem to pull in the big money, but that's going to obviously stop. Personally I'd love to have one of the early nineties models with no power steering or the SE30. And did you notice even my speculative comment about the later more rare cars? We're all sucked into the present environment on one side or the other. Which Diablo do you have your eye on grabbing?
What a tired thread. If you want to buy a car and understand / agree with current prices, buy it. If not, don't. There are no further points to make that haven't been made already.
Another insight I skipped over. For all of the people who supposedly "wanted a countach" and decided to go get the diablo post bubble. How come they didn't buy the CT when it was 90-140k? Wasn't that long ago. Obviously they didn't want it that bad because they could have bought it when it was inexpensive. So what gives? The absurd price upswing made them want it. 350 percent growth in two years not irrational enough for ya? How about 700? Image Unavailable, Please Login
There are several factors that contribute to the price increaees of recent years. Supply - the number of older Ferrari's is fixed. About 16 000 (pre 1980) carby Ferrari's in the entire world, with perhaps 1600 being transacted annually. As long as supply and demand are in equilibrium, prices are stable. Add another 300 or 400 buyers to the market ( an absurdly small number ) and demand increases by 20-25%. But supply is fixed, hence the prices increase. Assuming the average Ferrari buyer was 40 in 1990 and the average buyer is still 40 in 2015, the are about twice as many people in that age group now as there was in 1990. This is relevant because many people buy a collector car when they are older and financially established. You are seeing the bably boomers spending their kids inheritance. The number of people that can afford a Ferrari has increased dramatically, around 1 million new millionaires per year being created. Prices won't increase forever, nor are they immune from falling, they will simply find a new equilibrium. Without some major external event (global financial meltdown, plague, war, no oil etc) I would imagine that prices will only decline when tastes change and the current owners are too old to use the cars. Also, in absolute terms, most Ferrari's are sill cheap for the buyer (compared to their disposable wealth). If a car is now 300K, up from 100K several years ago, for most buyers people thats a "meh" - non event. If they want it, they buy it and don't have to give it a second thought . Comparing the collector car prices to shares / tulips / real estate bubble is not valid as by comparison there is essentially an unlimited supply or a substitute product. M
I agree with quite a bit of what you are saying. However, we all have to look at this thing from a distance and realize that these explanations are just what they are. They are interpretations on what is going on. All we are doing is pumping out theories on why the market is doing what is is doing. They are just that, theories. The market does not care about v12s, does not care about 3 pedals, etc. All it is, is a mirror into what things are changing hands for, that's it, and that is all. Yes, the number of these cars is fixed, and yes, the supply will slowly go down. But do you really think that that many of these things have "miraculously disappeared" within the past 2-3 years? Not a chance. Yes the market is up and I agree that we were due for a good price increase. But the increase that has happened is irrational and completely out of whack with actual value. The Mirror being held up to all of our faces CLEARLY shows this, but everyone is so involved in the craze that they are chosing to ignore it. Again, the Countaches sat around in a relatively healthy economic climate for under 150k just a few years ago and pre 2008. And there weren't very many takers. Nobody decided one day, oh man, that countach is such a cool car. I'm going to go get one right now. They sat around and bought NOTHING. Fast forward to the craze and the speculation. Throw in the dealers artificially inflating the price on top of that. Now they wake up, see that ridiculous price increase, and the PANIC sets in, causing them to act irrationally. So irrational, that they're even buying cars THAT THEY HAD NO INTENTION OF BUYING in the first place. Is that not a clear enough indicator? The only thing that changed in this story is the price increase. Not the icon factor, not the v12, three pedal factor. Without the dramatic price increase, there was normal healthy action, in accordance to the economy going up. And then the speculation set it in, and that's where you see the big spike in late 13. The market graph shows this. So either a great deal of these classics either inexplicably vanished off the face of the earth over a span of 2-3 months, or the price was manipulated. Take your pick. If it wasn't seriously rooted in speculation, then the chart would not be showing 90 degree arrows upward in value. That's why I compared it to tulips and real estate. To illustrate that that kind of increase is not natural or fundamental. When you peal away all of the layers without your gearhead hat on, it can be seen as well. I'm sure there are a small amount of buyers who for whatever reason decided to pull the trigger in the past few years. Fair enough, I'm actually one of them. I'd guess that would be 5-10 percent. The other 90% are the people who are getting overly emotional and feel that if they don't go and get x car tomorrow that they won't be able to afford it again, or are speculators. That whole 90 percent sector is not fundamental to the real value of the car. It's nothing more than a rat race. So if only a tiny percent of the buying going on is actually fundamental, then 90 percent of it IS NOT REAL. Hence the irrational price hike. Again, these are estimates, but it's easy to see that the speculative buyers outweigh the actual buyers big time. The harder the car is speculated, the harder it will fall. That for much is certain and cannot be debated. And the other funny thing, is that this is EXACTLY what happened in the 80s with the testarossas. The prices went so damn isane, that everybody was flipping them months after buying because of the bubble. That's A BIG reason why the value tanked so hard in the first place in the early 90s. The stock market began to crash, but the going price on the car was so sky high and out of touch with reality, that it had no choice but aim for sub-zero. And it's happening again, talk about poetic. It should end higher than where it started, but the decrease WILL be severe from where it is. And can you name any other time in present memory that this has happened other than the eighties and TODAY? Also, to further elaborate on supply and the claim that they aren't making anymore. The answer is yes, they are, they make new cars every year. We only think that the buyers want the three pedal, etc. We don't have any physical or fundamental proof of that. For all we know the buyers are scarfing up the cars because they just hit 25 years hold, or who knows what else. Also, I would strongly argue against the supply explanation. Especially when the market is completely saturated with this stuff sitting at dealers and for sale over the past few years. Higher supply should bring down or at least limit the price and it didn't. All I've seen is more and more museum cars on the market than ever before. Ready and waiting to cash in on the bubble. The higher the prices have gotten, the more rare cars have been offered for sale. If these things truly are poised to continue flying upward, then why are all of these people selling? If I had a Dino or a 512m Testarossa, I would not be putting it on the market if I though it had nowhere to go but up. I would be confining it to my garage. Those cars are up for grabs for a reason.
You have to consider that in 2008 the world was in the midst of the GFC, and by 2013 things had recovered and confidence has returned. Also, comparing prices with 8-9 years ago, you need to consider that at that time many of todays buyers where still funding their kids education etc. and where at a different stage of their life - not quite ready to buy a car yet Lastly, as people get in to their mid 50's and their friends start dying .. you suddenly realize that you'd better start working on your bucket list NOW. The fact is there is a big demographic blip in that age group with disposable income who are not afraid to spend it And when you start seeing the cars going up in price, you think to yourself, hey. I better get one now, not next year. I confined my comments to carby era Ferrari's as that to me is a distinct era which has posted strong price gains, like I said, you only need a few hundred extra people on the planet to decide to buy such a car before prices shift. Sure their will always be speculators, but I've yet to meet one. Every early car that I know about has ended up with an enthusiast to use. M
I have been offered 2 used LaFerraris, one at $3.2 and one around $3.6mil. I have no idea why or how they think the market is at $5mil
Many have stated that the very vintage cars, (carb stuff included) will be much more stable. This I do agree with. Just not on the Dino.
Maybe I am a good example, maybe not... I am 41 years old. I saw a Dino when I was in High School and fell in love. That is clearly an exception. Now that I am older, if you offered me a choice of a Dino or a Daytona, I would take the Dino. Regardless of what I own, a Dino is the funnest car I have driven. A Daytona doesn't do the same thing. I sold my 57 250 last year. It was awesome to drive, but in a much different way. I can't compare the two. There is a huge difference between driving balls out and having fun. I am not saying one is this and the other another, but you have to figure how/what/where you are driving before making some type of comparison. Shawn
exactly in the current modern/semi modern bubble there is no actual logic behind many asking prices.. in the past there was always some logic of retail dealer asking prices.. usually this logic was math. asking prices were some % profit about wholesale. some dealers wanted to make 10%, some 20%, some 30%.. but now , logic out the window in this modern bubble.. lets just ask 90% more than the car is worth becuase hey maybe somebody will pay it.. another example below Porsche 911 Speedster Convertible 2 Door | eBay
I'm not knocking the Dino. It's a very cool car, and I get why people are into it. Sorry if it came off that way. What makes me skeptical is the colossal and meteoric rate of growth over a short period of time. That's so funny it's comical. NO doubt, that's a valuable museum car. But what do you think that car was worth in early 2013? 80-120k probably? Man people really have lost their minds
