is the bubble due to burst?

totally - otherwise all we wld have is a bunch of posts with links to the most current yahoo finance articles - and ill admit this debate is probably the highlight of my Saturday outside of kids sports and maybe driving a car!

 

Yeah, particularly with the weather so far today...

I will leave the debate now for others to shut me down, ignore me, or salivate at prospects of $600k f40s...

 

$600k f40s will happen if we get deflation - no doubt
rates stay low and we flirt with inflation its hard for me to see a pullback like that

 

WOW..SuperDave really knows stuff.,But what has that got to do with the classic car market.? Zilch.I have just looked back to how this thread started in 2013. Simple,where are Fcars going ? Well,I can tell you .Bought a Dino 2013,sold it 2014, made £100K,now on the market for £100k more than that. Is that showing a birst bubble? I think not.Could't give a toss about equity markets. .Dont understand them. Do know that classic cars will always be wanted.

 

In the meantime a 575SA with 7k miles just sold by a dealer for $460k.
I have one, just don't see that car worth that kind of money.
A bubble....

 

Looking forward to seeing the results of next Sat RM. FWIW there will be another 6sp 599 on the block:

2007 Ferrari 599 GTB HGTE | Villa Erba 2015 | RM Sotheby's

 

I stumbled across this thread and thought it was interesting to watch the dates and the timing of the comments and compare it to this thread:

http://www.ferrarichat.com/forum/other-off-topic-forum/5111-housing-market-bubble-when-will-end.html

 

Sherpa,you stumbled on this previous link,however,(a) it was eleven years ago,and (b) has nothing to do with either the housing market,or the car market in 2015. Both have evolved considerably since then. Over here ,we understood the 'sub-prime' mortgage scene,which very nearly pulled down the international banking system,inc big UK lenders. It was ,however,a reasonably good time to own property,and cars,and since then both are doing well. I personally think that this particular thread has run its distance now,and a fresh approach should be taken up by someone.

 

I thought that it was interesting what people were saying about a bubble while they were IN THE BUBBLE. That's the only reason that I posted it. I'm not saying that the housing market today bears any similarity to the housing market then. It's simply an interesting comparison of comments given the benefit of hindsight.

 

I thought it was very interesting to reread it - and ur point is spot on - when people start calling the bubble there's usually a lot of upside left - if we were in a normal non QE environment id put 24 to 36 months on it - given how much QE we have had globally id say we have another 7 to 10 yrs of this and maybe a lot more (and for those who this is a surprise to: we haven't really ended QE here, ie it hasn't been taken back and most likely wont ever be - the fed will hold these assets on their balance sheet forever).

as always, than an a quarter IF you can find a pay phone.

 

Exactly. People were calling for the bursting of the bubble 3 to 4 years out and it was not even close to the end. It was interesting to read the comments.

 

People tend to be early to the bubble talk, absolutely. Timing when it will go "pop" is the tough part.

Opinions will vary, which is why we have a market for prices (of virtually anything) with buyers and sellers at a given price.

Now, the fact a bubble doesn't deflate at a given time doesn't signify whether it existed at that time. Greenspan was very, very well aware of the bubble well ahead of it reaching the proportions it did but central bankers always want a controlled deflation, not a pop.

I'm curious to see how prices play out over the next few years...

Remember too that people are overly pessimistic at the bottom of cycles too, when people are selling. During the depths of the recession there was plenty talk of a very, very protracted stock market recovery and permanently (materially) higher unemployment.

I would not be a buyer in today's classic car market IF I was trying to get "value" and if the investment was material. As a long-term investment (10 years+) then it probably doesn't matter as much either.

 

They identified the phenomenon, just not the timing.

They were 3 years early to the peak. Vegas prices definitely typified the mad rush, same with Cali properties surrounding core markets.

That was on the back of a different sort of bubble bursting not long before that.

The problem is underestimating human psychology and group think, along with the incentives of those within a given market. Not to mention that the market forces in place to support rapid price increases (betting on the upside) based on speculative forces are much stronger than betting on the downside for speculative reasons. Typically it is much more expensive to take a short position, and in many cases, it is not possible to directly short an asset. If you want to speculate that the classic car market is overvalued, what can you do if you aren't already a participant in that market? If you want to speculate it is undervalued, you can enter the market and be a new buyer. You can even buy into the market with leverage (directly or indirectly).

The catalysts for an unwind are really hard to know beforehand. The existence for a need to unwind, however, is much easier to ascertain.

Even if I could speculate to the downside here, I likely wouldn't, because timing is such a big question.

 

Some this is all find to talk about from a hypothetical perspective - i.e. "if I was…" - but here's the fact of the matter:

If you are financially capable and you're buying a particular collectible car because you love it and you wanted one your whole life, you buy the best one you can when you can afford it. If that's now, it's now. If it's later, it's later. When the right car appears, you can't pass on it. If it goes down at some point, it goes down. Who cares. The car doesn't know what it's worth. It doesn't drive any differently if it's worth less or more. As a result, you buy when you can get it.

I don't really know much about cars as investments and how people would time that or when they would buy into the market. Stocks, yes. RE, yes. But I don't know how you could be so dispassionate about cars that you look at them as investments and pass up a chance to buy your dream car at a price you can live with because the market will go down at some point (and go up again at some point, too). You may never get that chance again. So all this talk about people saying they wouldn't buy now in this market, etc., are not talking about the cars as cars and things they love. They talk about them like they talk about stocks or bonds or RE, and I just don't know those kinds of people.

The flip side of that is the I have (and know others) who bought cars at great prices because they were great prices. But essentially these were great cars where the price was enticing enough to buy and try the car. If you don't like the car, you can sell and get your money back or a touch more. But that's not an investment mindset. That's still a car guy mindset. I've bought lots of cars to try out that I've always been interested in. When the time came to move them, sometimes it worked out in my favor financially but that's the sort of thing that I call good luck.

 

Yesterday a stranger knocked on my door and asked if I wanted to sell my Sunbeam Tiger. After showing him the car and yakking a bit he offered $50k for it. Didn't take it because I like the car and what else could I buy for that price that would be as much fun.

Bubble, I don't know. But I have owned the car since '01 and that is the first unsolicited offer to buy I have had.

 

Look, I agree on the passion vs. practicality perspective. But it isn't enthusiasts as a group driving prices to the stratosphere by themselves. There are a lot of buyers who are buying and then looking to flip. They (speculators / investors) are always in the market, but the concept of buying these as investments comes and goes in waves. The market right now is hot and has been hot for a while.

Generally speaking, I would not buy a car as an investment. That said, there are certain classes of cars that do act as investment vehicles (no pun intended). When people are afraid of driving their cars because of their values, then it looks more and more like an investment and not a passion buy.

I'm a hard core enthusiast that can be considered outside this market because I simply can't afford these cars, at least not within comfort of being able to pay the prices asked right now... If F40s are priced at sub $600k (or some amount lower than today) then I will be a buyer, assuming my life circumstances allow me to enjoy the car as well and not just put it in a glass box.

Just because I'm not in that speculative group, however, does not mean I ignore what I see going on. For me, personally, I really enjoy the cars I currently have and can't complain.

Like I admitted earlier, for those with such means that a hit to their personal equity of a couple million doesn't matter, then none of this really matters. I would completely agree with the logic that they should buy what they want to buy. In fact, I'm a capitalist through and through, so all of this is expected and understandable...

I also think debating this on here does no harm. Despite the number of words I write, it is easy enough to scroll past it. I also appreciate the other views that people have. This is a forum that has many highly successful people frequenting it, with very different backgrounds and expertise. So long as everything is kept civil, I enjoy these posts, including from those (the majority?) that disagree.

 

I agree and I did mean to add that the current rise in prices is not driven by passion but by speculation in the marketplace. Your points are correct in relation to that part of the marketplace. I was only offering the counterpoint that there are buyers in this marketplace who do not buy for investment and more on the basis of their passion.

 

We agree completely on that point.

Lots of different people buying into classic/vintage/exotic cars, with many different reasons.

With any assets of limited supply (and even some without!) there are the functional users, the long-term investors, and the speculators (and sometimes plenty of overlap depending on situation). Living in NYC, you can see the effect of "non-users" on valuations, when you look at the disconnect in median incomes within pockets of real estate vs. the pricing. Wealth needs a place to be parked!

 

Since this is vintage, I'm curious what you guys see when the "bubble" pops-- where do you see GTE or PF Coupe prices bottoming out?

Do you think there is any comparison to the market for, say impressionist paintings?

I would think at some point people thought "there must be a bubble in Monets, they can't really be worth millions?" and yet, the "bubble" never popped...

 

The main differences between real estate and vintage/art is that real estate is quite imobile and a mortgage is quite common so a crash is influencing many people. Vintage cars of some class and the high class art is rare. A bubble in real estate will have a huge effect on economy, a vintage car crash (pun intended) will effect a (unhappy) few.
No bubble for now and if it pops, well you still can drive it or enjoy it.

Ciao
Oscar

 

I also think debating this on here does no harm. Despite the number of words I write, it is easy enough to scroll past it. I also appreciate the other views that people have. This is a forum that has many highly successful people frequenting it, with very different backgrounds and expertise. So long as everything is kept civil, I enjoy these posts, including from those (the majority?) that disagree.[/QUOTE]

Have enjoyed this discussion. For a reference point I am in search of a TR currently.

Best regards

AK

 

There are at least 2,000 Monets in existence, and he was just one artist. So, not that different from vintage Ferraris, or arguably even a bit more common if you include the other impressionists...

 

That is wat I say, quite some rare vintage cars and art, but nothing compared to the real estate market, the latter can crash banks and countries.....

 

The buyers buying for passion are mostly not buying Dinos or names. To buy a great car for a reasonable price you have to have taste, and the courage of your conviction. Buying nearly any ferrari these days does not require taste or passion because you are buying a name.
A passion buy of a ferrari for a good price today, later mondial Ts are actualy great cars, a 355 in stick is a seminal ferrai, the chattering classes have not figured that out yet, but will overpay for a 599 stick. 10 years from now, a 355 will be one of the it cars to buy.

How about a merak?

the seminal car fo the past 15 years is a lotus elise.

A V12 vatage with a stick, you know one day it will be a 500K car, in any event if you thought you missed out on a daytona for 50K 35 years ago, why not a v12 vanatge stick for 120k now?

Yes most people want to buy names, and even two years ago had not figured out that a 60s maserati is every bit the equal of a similar period aston.

Enthusiasts dont necessarily have the courage of their convictions.
Many people dont have tatse, of those that do many lack courage, because named car that appreciates seems easier to spend the $$$ to buy and keep. The dynbaiomics of a market going up require speculators and enthusiasts believign in a particular marque and model.

The people not buyign a V12 vanatge now, those same people would not have bought a TR 5 years ago for 50K, but lament not getting one now when they are over 100k. The Tr the ugly duckling unloved, suddenly its an 80s icon and one of the last pure drivign ferraris.
If you think that, get a 355 now while they are low, perhaps the last edgy great drivign ferrari.

Is there a bubble? One thing for sure, with escalatign prices a lot of old cars are getting great restorations and the mechanical care they need. I dont see ropey rusty 13k dinos anymore, thats a good thing, many a car was saved. As an ethusiast, the cycle always saves a lot of cars thta otherwise woudl have disappeared through neglect. Its a natural cycle, good for the cars. Mayybe some become unobtanium, but if yout hink about ti, there are others just as appealing that are obtainable.

 

Please, Sean. With all due respect, that's total crap and that post is simply self-serving to your own bias in the cars that you bought and own (Don't' worry - we have similar taste and I love those cars too). Here's why:

There are lots of people buying Dinos now because they wanted one and couldn't buy one before when they were cheap. Now that the prices are high, GREAT ones are coming to market and they have been relatively steady in price for a couple of years now. The guys who want them don't care if they drop in price and at this point, it doesn't look like they're going up.

The guys looking to speculate are buying TR's, 308's, and 355's (which I love). That's how they're trying to break into the game because that's where they see the upside. They're not buying Dino's or other special Ferraris. The Dino guys have the money to buy great ones and they're happy to pay whatever it takes to own a spectacular one.

Also, lot's of people buy Ferraris because they love Ferraris. There's a lot more to it than the name. Furthermore, there's a learning curve to owning and caring for a Ferrari. Once you have that down, it makes it easier and more fun to buy others and it has nothing to do with some shallow decision based on the name.

Now if you said Daytonas, then I could possibly see that because by all accounts, Daytonas could be poised for a run for the vacuum left behind by the 275 2 cams. Dinos on the other hand aren't going anywhere. You buy those because you love them.