is the bubble due to burst?

I solemnly predict that the market will go up after this forthcoming crash, predicted now many years ago. ( reminding me the story of an old uncle of mine, when asked how he was doing, was answering, OK but everyday I am getting closer to the day of my death...true story!)

So I don't know when the market will start going up again, nor when the crash will materialize, but I firmly believe that after the crash the market will bounce back. Please note I am the first one to make this prediction and want to be recognized as such!!

 

Its tied to the economy. Financial crash---pop. But when???

 

4x in 8 years huh? Speechless, and this easily the worst post yet. The least you could have done is present a sound argument based on history or actual facts.

So price fluctuations of 6-7x in less than 24 months is realistic? LMAO. Sounds like you should go buy up some more cars then!

And again, your tone is such that you are not even considering for even a second that the market will correct. Classic

Ferrari Testarossa | eBay

 

I know this has been posted before, in 1991 a F40 cost 1 million sterling, this summer the actual same car sold for 700k Sterling ( Nigel Mansel's car ) so a loss of 30 % over 25 years is this the growth that everyone is talking about.. The market may have moved in the last 4 years but over 20 years has it. I spoke to a good friend today a uk dealer and they have sold 7 cars in the last 2 weeks with the average price of 1.5 to 2.5 million, so if this is a slowing market, I would love to see a bullish one.

 

You don't think that you're being a little condescending to other users on the board?

Would you be upset if took that tone with you? What if someone talked down to you and said that just because you bought two salvage titled Ferraris and flipped them as soon as you could make a couple of bucks, that doesn't make you an expert on Ferraris, an expert on the market, or an expert on anything remotely resembling passion or true enthusiasm. I don't think that you would like that one bit.

 

You win again my man. Score another, I bow to you. And you love to continue twisting other people's words and intentions. You don't have to be an expert on Ferraris to call a bubble either, keep flattering yourself.

And if I were in it for speculation or to flip, then why was I putting 4k miles a year on both of my cars? Because I wasn't enthusastic about driving them and was planning to acheive maximum mileage before selling? In order to decrease their value as much as possible? LOL

Talking down to people is your specialty, not mine. Saying that somebody who buys a Ferrari that had a small fender bender makes them automatically less of an enthusiast is your opinion. And I guess Charles Howard was less of a person for buying Seabiscuit. And all the people who bought the ex-racecar Ferraris that were banged up must be lesser enthusiasts too because the titles aren't branded as "clean". And trolling my posts seems to be one of your favorite hobbies. Good for you. Especially after I have repeatedly told you that I do not want to interact with you in any shape or form. Carry on

 

This was addressed. If you selectively choose peaks from other cycles, you can see whatever trend you want to construct. If you go a couple years post 91, F40 market was pretty soft after Japan bubble fully deflated and after Ferrari had a production run of the car that was about 3x what they originally said to the market.

So it all depends on the comparison point, which is why in that case you would normalize. So have a look at the hagerty valuations for an F40 over the past 10 years and compare the average price (even pre crash) to today.

F40s dont provide any different thrill today vs 2006 and they are equally iconic in both periods. The only real change is interest rates. The fed isnt sleeping at night because of outcomes like this, where assets are being bid up due to artificially low r rates and asset value speculation disconnected from fundamentals.

The Fed needs an intelligent policy of bringing rates to normal levels asap or we will see this continue to spread (it is also present in multiple real estate markets -- again).

 

How much was it worth between 1993 & 2001, there were cars being advertised ~£120k at one point

 

Early nineties it would have been around 150 GBP, I bought my car in 2000 and paid 200 GBP for her, she had 500 Klm and was a one owner car all original, I still have her and she has covered 1900klm now and is safely park in my garage.

 

You did a good job buying it at that time although driving it 100 km/year (to your mechanic vv?) is a waste of pleasure. I drove what you did in 15 years in one week.....And the smile is still on my face.

ciao
Oscar

 

Your problem is you have been spouting the same thing for many years. If any idiot had listened to you they would have sold and missed on mucho dollars, yen, pounds or whatever other currency you like. Additionally, when the correction comes and you claim to have seen it years earlier it will be meaningless.

Do this thread a favor and give a hard number on what you believe the new standard will be, this may lend some credibility to your non-stop "the sky is falling" pitch.

I do know each time I have to raise my insurance coverage there has been no push back and Grundy just told be they have an 8% increase expectation for the next year.

Nouriel Roubini had the same tactic and it never panned out. Just keep saying something so long that time actually catches up with the wrong message. Like saying we are going to have the worst winter in history, at some point it will come true.

 

Citing Roubini doesn't help your argument.

He flagged the credit/housing crisis publicly before the 08/09 crash and was pretty much spot on. I actually disagree on his current assessment of the market overall today, but only as a matter of magnitude and dispersion.

Again, being wrong on timing of when other people finally recognize a fact doesn't make someone wrong. Flat earth / round earth, and I could go on.

The whole "a broken clock is right twice a day" is not a valid response either, since we can look back and say with confidence and factual evidence, that prices in 2006, 2007 were wildly outside historical norms (housing values vs. incomes).

 

As an aside, that I'm sure I've mentioned previously, any time someone identifies a bubble there will be 10x as many people tearing them down.

I have seen it before, and I see it again here. Not surprising and it is human nature. But time will tell (as always) and when prices drop, they will drop hard. Not 10% Not 20% Instead the declines will be 40, 50, 60%+

For those that this doesn't matter, great. More power to them. To those that this matters, not so great.

The above is just my personal opinion, of course. However, I do not believe there has ever been a period of time where prices have run up as rapidly as they have, without a crash thereafter. If there is an example of such a run-up, without a crash, then I would love to see it.

 

Dave, serious question:

In your opinion based on your training, do you think that we will see a 50% or more decline in prices in the next two years? In other words, F40s for $700k, 288s for $1m, F50s for $650k or less? If you seriously think so, then I want to know because I want to have a full war chest.

I fully expect a 20% or 25% correction at some point. I would be surprised if it's more but I would love to be wrong, especially if I can plan for it.

I do know that bubbles get bigger than anyone can imagine before they pop, deflate, etc. so I really don't concern myself with talk that "it's too big and too strong for a major correction."

 

I personally believe so, but that's simply based on two factors. BTW, the prices you cite seem pretty reasonable. I don't expect the 288 to drop a whole lot... F40... well $700k seems historically pretty reasonable a level, no? Just thinking about what the price point has tended towards between the highs and lows? Sounds like you are expecting a 20-25% decline but in a sense, once it declines 20%, the additional 20% decline is easy to swallow, because of what I will describe below.

1) Fed policy as a catalyst: Fed has been delaying increasing rates, with the market gyrating up and down at each clue / timing adjustment. The market movements seem to hint at a divergence in expectations or notions of the cause-effect of the delay. The cause is clearly that the Fed is concerned about global growth -- so when the market is focused on that aspect, it sells off on hints of delayed rate increases. When the market focuses on the liquidity angle, it looks more dominated by momentum buyers (i.e., rates are low, borrowing remains liquid, lets buy shares). Because my take is that the fed needs to ratchet rates higher to give them the ability to cut during the next cyclical decline, the pauses or delays should be considered equity market negative news.

2) The speculative aspect of buying collector cars. When you don't get fantastic returns on cash in other asset classes (normal "investment" classes) like stocks and bonds, and you combine with cheap borrowing (cost of deploying the cash or cost of borrowing cash) then you see people start to funnel money into non-cash-generating assets (purely speculative supply/demand assets). I don't think ALL buyers of classic cars are speculating, but I think the buyers that are escalating prices are doing so because of the speculative element. Either direct speculation, or a fear that prices will rise in future and so better to buy now. Once those prices start to stop accelerating, the speculative buyers will leave the market. This would turn a vicious upwards price spiral into a vicious downward spiral. Again, the catalyst is slowing growth, lower net worth elsewhere, but the bubble itself is not necessarily "cyclical".

This is the short hand version. Insofar as timing, who knows really? Within 2 years? My guess is yes, but it is just a guess. I have more reasons to think it will occur in the next year, but it ultimately comes down to the two points above.

For you, since you have a bunch of nice cars, and seem to not have any liquidity requirements, I would personally not do anything different. Unless there is a car you don't really care to own longer-term, in which case why not sell now and maybe upgrade to something else in a couple years after prices get more reasonable?

 

I think it's worth adding that, while we all hate speculators (of course!), very low interest rates also reduce the opportunity cost for enthusiasts to buy a car. If you're getting 0%, why not park some money in a car?

This magnifies the effects which Dave is talking about, in my opinion.

 

I did that this year. I sold my Daytona, prototype Lamborghini Countach, 1973 Porsche Carrera RS, and BMW M1. I just didn't love them enough to keep them for life so I figured it was a good jumping off point. I might sell my 1967 911 r gruppe car next year depending on how much I use it. I don't do this for investment but if I don't love a car to keep long, long term, I would rather cut it loose if I'm not using it.

But other than that, everything that I own now will most likely be with me for life or until I can't drive a manual any more. I have the right tool for just about every job, in my opinion. That said, there are a couple of Ferraris that I do consider adding to my current collection, hence my question to you.

I appreciate your answers.

 

Whats driven prices. Cheap money, poor returns elsewhere, baby boomers retiring getting what they want, auctions, new cars being bloated isolated appliances, they are not makign new old cars. The list is endless and the reasons attract specualtors too, which drives things further..

At some point cheap money baby boomers and autions taper. We saw the same thing exactly with American muscle. In the interim many once basket case cars get saved and restored, prices dont collapse but the recorrect 20% and some cars that were overhyped collapse.

Now Dinos are not collasing, nor is the market, but Dinos were overhyped. Today a Dino is a 300-350K car, 2 years ago we saw 100K more. Boxers 2 years ago were lucksy to break 200K now they are 300-350. So we are in amarket now where overhgyped cars are finidng their natiral level, and some underappreciated cars are inedxing to their correct level.

Dytonas which are an idex of their own are flat. In gneral the market is at the top floor. Yes exceptional rare machines may fetch new records, but not toto many here are gto swb buyrs. Some cars still inmdexing up a bit, some like dinos indexing downa bit and most flat.

As for aircooled porche. Is a 72 911T worth 100k. Let me ask it another way, if you had to restore one to "collector" quality do you think it could be done for a mere 100k?

Is a cheap 308 at 40-50K a better buy than a low mileage great one at 80K, I would argue not.

The market is sorting the wheat from the chaff and indexing acordingly.

A 700K 599 stick is someone buying of a checklist, its a unrealistic and irrelevant high.

As for the big money on anolog 997.2 Gt Rs 4.0, porche is not stupid, they will m,ake something modern to capture that market.

When the free money goes, and the boomers have all bought their toys the market will recorrect, most cars will fall 20%, a number significantly more, and some will continue to become reckognised and rise.

meanwhile i love all those old great massers getting restored.

Meanwhile if you love cars and have great taste, there a re still many great older cars to buy reasonably, but if you have to follow the herd and buy badges then yes old cars are expensive.
Isos are a fortune, but a Gordon Keeble is a nicer car for far less. A v12 etype is a classic 60s style(know they were built ealry 70s) front engined V12, and with updates reliable, they also drive far better than the much admired(today) flat floor 6 and at 80K have to eb the bargain of the decade. You just know in time these will be 200K cars when Daytonas hit 1 mill. Ghiblis have yet to have their full flowering.

Meanwhile modials are a steal, the type of steal a Gt4 was when no one wnated them. Later modials with the Qv 3.2 and 3.4T motors also drive great as a classic ferrari should, yett he cars are practicaly free.

 

I think citing Roubini is a perfect example of dmwhite's argument. He's been a permabear... for years - a lot of people called the late aughts bubble (I know, I was one of them and profited from it), Roubini is a master of being the loudest person in the room. (after the fact)

Shiller by far is much more substance and less 'pazzaz'

When you're a bear for a decade - 2004-2014 - that's not something I call prognostication. He doubled down in 09 and said the US would not recover (so 1 for 2 is not great in my book) Around 2014 did he turn relatively bullish..which is funny because that's around the time I turned bearish.

Suffice it to say, not a fan of Nouriel.

 

If your garage on here is your current collection, it seems like a mix I aspire to one day be able to own (market correction or not).

Of course, I still enjoy cars today, as "normal" used sports car prices are still depreciating as they used to (aside from some limited editions).

Agree with boxerman on there being some "good deals" today too. There are some rather unloved cars. In the exotics area, I still think the XJ220 is a good deal today. At a much lower price point, 996 series turbos offer a Mezger engine, and overall great reliability and performance, still languishing at $50k for a solid example.

Many other cars never got caught up in the fever.

As for air cooled 911s. I would love to add a 993 turbo, but no way on earth at today's prices!

 

Couldn't agree more....

 

Lots of the bears stay negative too long. In fact, most do. Look past their own psychology and you can get nuggets of gold, however, in analysis (and a counterpoint voice to the masses).

I have mentioned in the past that people get too negative when things go south, and too positive when things go up. It is sometimes hard to invest when others are yelling about the sky falling.

Tried to get my own folks back into the market when the DOW was around 7k/8k. Couldn't push them too hard as they were effectively retired, and I didn't want to cause them to have heart attacks if things continued south much longer... but the rational thing to do in extreme market highs and lows, is to A) think for oneself and B) not get caught up in hysteria in either direction.

But you're right that persistent pessimism can be just as damaging and narrow-minded.

 

BTW, sometimes the best investors can be "one trick ponies" in identifying something glaring, and then not getting the subtleties and intricacies of more normal markets.

Had a conversation with such an individual not long after the crash. They did well (very, very, very well) during the crisis. Afterwards, however, they could not really form a coherent market view.

In any case, there is far greater value in reading and listening to the doom sayers like Roubini and others, than to listen to the cheerleaders, and then making personal, informed decisions on the various interpretations of the facts.

 

My profile has all of the cars I own and have owned. The "my garage" thing only has pictures of the four Ferraris I own now.

It's a good mix. Regardless of any big increases or decreases in prices, those cars won't be going anywhere.

 

Flat earth was a myth. With a majority of the population living near water they would see people leave in boats/ships dissappear over the horizon and return. This has been the accepted fact for many years.

Regarding a correction I'm not saying it will not happen. Disagreed with Jim G back in 09ish when he said we would see 200k 275 gtb. I said I'd buy eveyone I could afford, of course I could not afford 1, but they never even came close.

Roubini was way early on his hysteria, and actually lost a lot of his credibility. No one cares what he says now or even asks his opinion.