is the bubble due to burst?

Probably $3.3-4MM

 

Either side of $3m.

Color plays a huge role with these.

For example, if you want black, or its a rare livery, you'll pay a premium, in the USA.

 

With the Donald looking good so far ...Dow futures down 500 points ...at 22.08 in NYK. ( edit: over 700 down and counting after Trump gets Ohio)

So IF he wins what happens to the 'used' Ferrari market ? (if anything)

 

Buy coal

 

Nothing, most likely.

Makes cars more attractive. Money out of stock market, into cars.

 

The classic car market 'rolls' to its own drummer.

 

Market is up!

 

Don't think this has a big impact on classic cars or may be a slight positive. At the margin, it may increase confidence as rich will presumably have more after-tax dollars, stocks may go up if corporate tax rate drops.

 

Agreed.

All I know is I sold 2 big cars this week (F50 and 288 GTO) and that was before the elections, so the buyers paid no attention whatsoever to the potential outcome, and are probably even happier today with their decisions.

Life continues, the sky is not falling, and the "bubble" is not bursting for rare & beautiful cars.

My suggestion at this time would be - if anyone has ownership aspirations or dreams, this may turn out to be an excellent time to pursue them.

 

Everyone throws around the term "bubble" yet no one seems to really know what that means. It isn't rapid price appreciation. It isn't something being substantially "overvalued" to what it was historically and what it might be in the future. (Don't worry too much about the lack of precise knowledge; many PhDs at the Stanford GSB didn't know either).

Why was the tulip price in the 1700's referred to as a "bubble?"
What conditions are required for bubbles?

It is the ability to margin (borrow) against the asset to buy it, without the countervailing price influence of the doubter of the price being able to short against it - sell something they don't actually own. Yes, they can sell their own asset but they can't take the opposite position.

Hence, the buyers can multiply their purchases while the sellers can only have one offsetting sale, and hence the market mechanisms don't work.

Take out the ability to margin against the asset or allow a mechanism where people can sell short, and the conditions for a bubble don't exist.

The real estate bubble was created by people buying houses on margin, yet there was no way to effectively bet against house prices by shorting it. A few found a way to profit via bond insurance but that had no way to affect the underlying asset prices.

So enough talk about bubbles here...unless you can show me the mechanism such as existed in the later 1980's where there is substantially borrowing allowed recourse only to the underlying asset, the cars.

Plus the sudden collapse is when that credit is withdrawn and margin calls made, with the rush to sell to meet those calls.

 

This is true. But when it comes to vintage Ferraris, the key is enthusiasts versus speculators. Enthusiasts generally don't buy or sell to make money. Money is always important, but it is not the main motivation. Speculators don't care. Turn and burn is the nature of their game. So the more speculators in the game, the greater the risk of a bubble.

Postscript: One relatively new element today is scared money. There are plenty of New and Old Order Billionaires who are looking for safe places to park their money. Once upon a time, a Swiss bank account was all you needed. But that bird has flown. Valuable cars and artwork, however, are a different story. You can set up a shell company in one of dozens of jurisdictions and buy the car or art, and nobody knows anything. More importantly, there is no reporting to any taxing authorities. How this plays out remains to be seen.

 

I disagree. It was extremely easy to short the market leading into the 2001 dotcom crash for example, even for mom and pops, either sell Nasdaq futures or borrow single stocks and short them. Yet a "bubble" very much formed.

I would argue that even the housing market could be shorted by selling ABX as early as in 2006, although not by mom and pops, but still there was ample opportunity for anyone with an ISDA to sell AAA at 20 bps if they so wished - or Itraxx sub at 35 bps, for example - but they didn't.

 

It wasn't easy at all. The availability of borrow was extremely limited and price of borrow if available was very high on the dotcoms and more importantly many of the startup telecom companies that were the real loss.

The rest of the Nasdaq was not as driven.

You couldn't short the actual house price that a consumer was paying. You could borrow to buy, and could buy multiple, but you couldn't sell a house short. The other instruments were derivative and didn't run to the asset price. As I explained above.

And if you are arguing that there was borrow and people could short easily and cost effectively then it wasn't by definition a bubble.

 

Going by the results of RM's sale these past few days in Milan where all the lots were no reserve and the prices were astronomical (almost double the high estimate on average), I still want to know where all of this "the market is down 25% to 30% as a whole" bs is coming from.

 

I've asked this same question a few times using a different series of words and whenever I ask to see clean cars I can buy down 25 percent I get crickets.

 

Ask Boxerman. He says he painstakingly compiles data and it clearly states the market as whole is down 25% to 30% "and falling."

 

Well I'm too simple to buy the market, I just know how to buy cars!

 

What do you want to buy?

It's a buyer's market. You just have to know where to look.

 

I want to buy an a sub 5k mile f50 for 1M

 

So, $1MM for a sub 5,000 mile Ferrari F50

Should we use Hagerty to value? And their #4 value is $1.25MM, so at $1MM we're 20% "down" on a fair condition car. I'll be the first to say that's probably not going to happen

A client though just sold an alloy 6 275 for $2.7, yet this Italian Auction which apparently has reset everyone's appetite for the market, sold at $3MM+...

Who's the say which is the realistic #? I know where I lie, I live it everyday

 

Perhaps the RM Duemila Route results don't move the market up, but it certainly will assuage fears that the market is falling. +/- 500 lots, all at no reserve, most every marque, average or lesser condition doing strong money.

 

I disagree.

In the future this auction will be looked upon as the largest largess of the bubble.
Some of the results are rediculous.

I may be wrong, but I was also around in '89.

Matt

 

Agreed. I don't think that it should viewed as a harbinger that the market is moving up but rather a sign that it's not imploding, regardless of what people say about this "25% decline" across the board. I'm not saying that some cars didn't sell for way more than I think is right but a no reserve auction is the epitome of a free market.

FWIW, I think that as an overall, this market peaked in Monterey 2014 and what we have now is a healthy market movement, settling, and new price levels for certain cars stabilizing. It makes some of the results from this last sale a tiny bit curious but there are some cars that are still moving upward and in the long long term, they're most certainly moving upward.

 

My interpretation
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only problem is the graph doesnt have any calendar years on the axis. this thread was born 4 years ago i believe