is the bubble due to burst?

Discussion in 'Vintage Ferrari Market' started by PFSEX, Jan 18, 2013.

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  1. PFSEX

    PFSEX Formula Junior

    Jun 30, 2006
    719
    Las Vegas
    Full Name:
    John Ratto
    I have been in this Ferrari madness for a long time. I owned cars in the late 1970s when they were worthless...saw prices gradually rise in the early 1980s...and then experienced the massive increases of the late 1980s.

    I also experienced the massive drop of the early 1990s. I remember a 'driver' 330 GTC at Fantasy Junction with an ask price of $60K (I think) and a sign on it saying 'kick a Ferrari - $50'.

    So, the question: Is $400K for a Dino a sustainable situation.
     
  2. merstheman

    merstheman F1 Rookie
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    Apr 13, 2007
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    Mario
    Watch the Arizona auctions... I'm not sure if the bubble - if it's even a bubble - is going to burst just yet..
     
  3. miurasv

    miurasv F1 Veteran
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    Nov 19, 2008
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    Steven Robertson
    Getting bigger at the moment.
     
  4. LamboRider

    LamboRider Formula Junior

    Feb 9, 2011
    463
    Getting frothy!
     
  5. cheesey

    cheesey Formula 3

    Jun 23, 2011
    1,880
    not really, in constant dollars prices are relatively cheap, even though the raw numbers appear to be large, especially for the cars that represent the best in class. The average examples are not bringing the lofty numbers, it's not saying that they have not shown significant appreciation. If there is a bubble to burst it won't be because of current pricing of the cars, it will be due to a change in a government's monetary policy or some other external events. Prices don't constantly go up, erosion in price is normal as new values are digested and fiscal policies change. Under current monetary policies, pricies are consistant with the economic climate and not expect to "burst". The purchasers paying the current prices are not acting on individual uneducated whim, but in concert with the collective wisdom with their advisors.
     
  6. Herky

    Herky Rookie

    May 16, 2011
    45
    Chicago, IL
    Full Name:
    Benjamin Schmitt
    In my humble opinion as long as interest rates are at zero and everyone has access to easy money, hard assets including Ferraris will move higher. Could individual models like the Dino ebb and flow, sure. But broadly, I don't see any way this slows down without another complete global economic implosion (ala 07-09). The zero interest rate policy could last much longer than anyone is prepared for (which is bad for everyone in the long term).
     
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  8. Herky

    Herky Rookie

    May 16, 2011
    45
    Chicago, IL
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    Benjamin Schmitt
    Exactly right. Need to look at values in real terms not nominal. Dow is at 15k but on an inflation adjusted basis we are well below the true market high.
     
  9. lucky73

    lucky73 Formula Junior

    Mar 13, 2008
    254
    its simple supply and demand, which determine price.

    a few other notes
    1) bubble may exist in newer cars, though some are fully depreciated. anything that was produced in large quantities suffers from supply exceeding demand so prices go lower.

    2) the enzo era cars aren't in a bubble, the uber wealthy will pay whatever it takes to collect/hoard/chase whatever they want. the prices suggest demand is far greater than supply and they aren't making any more of them.

    3) the larger some collections grow the less cars will be in circulation and only venue for sale will be auctions or luck.

    in my own opinion the enzo era cars, even if they max out, will never go down in any meaningful way. the fantastically wealthy tend to stay that wealthy and when a car costs a $1MM they are the only buyers.

    enzo era cars are more fun than fine art to collect, in my opinion.
     
  10. 335s

    335s Formula Junior

    Jan 17, 2007
    726
    SF Bay Area
    Full Name:
    T. Monma
    agree largely with previous poster....basically..money supply is key-the chairman of the Fed Reserve, the Chancellor of the Ex-Chequerey, and the Directors of the Euro Zone, AS WELL as China central banking comission are ALL chanting to fire up thge printing presses for full steam 22/7/365 printing of currencies...if ALL over print, the crash-when it comes, and come it will-will be unseen and immediate...hence the over used term: "crash"

    In the mean time, as far as peopons like us are concerned, all pre 1973 cars will eventually surpass 1M USD, its a matter of supply and demand for a bygone era....
    "Supercar ltd production cars", and we know exactly what THOSE are, can be included, the rest...
    when the music stops, there will not be anywhere near enough seats for arses....
    They made over 10K of some of these...these are-for the most part-just disposable(al be they quite costly in ALL aspects of ownership)USED CARS....FWIW
     
  11. jjmcd

    jjmcd Formula Junior

    Dec 3, 2004
    464
    I've heard this idea repeated endlessly, which implies that only the rarest, most desirable cars have been bid up. However, it seems like all Enzo-era Ferraris have appreciated substantially in the last few years, with the rise being particularly stratospheric for pre-1970 cars. It absolutely is a bubble and it will eventually burst.
     
  12. TheMayor

    TheMayor Five Time F1 World Champ
    Rossa Subscribed

    Feb 11, 2008
    53,049
    Vegas baby
    The crash will start from Dino's when people start to put junk up on the market trying to make a quick buck (and there's a lot of junk out there) and some fool will buy it and realize later it needs 100+ grand in restoration.

    Then, he'll dump it and so on and so on.

    Look for 1) crazy sale prices on bad Dino's or 2) softness in Dino prices and then you'll know it's starting.
     
  13. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,458
    There are certainly many good points to consider, but when it comes to monetary policy, the Treasury and Fed's actions are certainly increasing monetary supply by a multi-billion dollar amount per month. It has to go somewhere, and, to some extent, can explain run-ups in asset valuations. The bigger question is when monetary policy initiatives come to an end, will the inherent value of the asset itself justify the high-water marks established at a time of plentiful, cheap money. I rather doubt they will.

    But, the market for "important" cars will always be high, and perhaps will always appreciate notwithstanding a few de-valuations based on broader market conditions. The Wealthy class will always have the ability to acquire what they want, when they want. It's the marginal class(es) that are in doubt, but their purchase power is, in the loner term, more important for determining and sustaining asset values of the marginal tier(s) of cars. The $400K Dino? The $750K Lusso? The $1.6MM 275GTB? These are not the "blue chips" of the Ferrari world, and are, in part, being run up for all the reasons stated. I'm not sure I see them staying there indefinitely, however.

    Personally, I'm considering an acquisition of a 7-figure car, but I think the timing may not be right, based on the run-up and the high-water valuations. I'm happy to sit by and watch. If I miss it, another will come along.

    CW
     
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  15. italiangerman

    italiangerman Karting

    Jul 28, 2009
    80
    It's been brought up before but we have major forces at work that would support a bubble that would make Moet Chandon proud:
    **pre-boomers/early boomers at their prime years saying I'm going to indulge in my car passion big time
    **no age group grew up in a better time to fall in love with the cars that were built in their youth--the 50's/60's were the best. (Now is not bad at all either.)
    **the current economy makes for great rationalizations for those inclined to "invest" in cars of the golden era of coach building or any hard asset.

    All this makes for demand exceeding supply for these great cars for the next very few, ten at most, years. So the investment bet being made is one of timing the market, ie, finding the greater fool. I would hope that most of us dont see it as an investment at all---------rather a whole bunch of fun we dont mind paying for the ticket to ride.
     
  16. geno berns

    geno berns F1 Rookie
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    Oct 26, 2006
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    Geno
    There are junk Dinos available for $150K-$180K with great ones at $225K and up. Where do you get your information? You mean to say that there are blind people paying $400K for a junk Dinos? If that's the case than you're right...

    Geno

     
  17. John B

    John B Formula 3
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    May 27, 2003
    1,452
    NJ
    When the 1-Year T-Bill exceeds the Year over Year rate of change in the CPI Index, the easy money party is over. Until then, the night is young. Party on...

    1 Year T-Bill: 0.17%
    CPI YoY: 1.40%
     
  18. Kds

    Kds F1 World Champ

    Of course this bubble will burst.

    Is is just a matter of when.

    Do those of you who think you have steel balls, own a crystal one ???
     
  19. richardowen

    richardowen Formula Junior

    Apr 2, 2004
    835
    Montreal, Canada
    If you're talking about the Dino/356/early 911 market that will take at least 20 years. The reason being is that the target market is currently retiring so there is a healthy demand.

    Bill Noon said he has more contacts looking for a 300SL than the entire production. If that is any indication, then the 50s/60s classic cars market is going to be solid for some time.
     
  20. Onebugatti

    Onebugatti Formula Junior
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    Apr 2, 2008
    288
    Centre Europe
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    Christopher
    I've seen this strong wave 3 times in my life. The prices fail to go down on great cars. Legendary models are undervalued, as always. Dinos, GTE's, GTC/4's, and production cars will get sucked up and absorbed easy – there are masses of new money in the pockets of Ferrari type personalities and wannabees. The Ferrari world, as it stands today, is all about the evils of capitalism , no? Greed, Ego, Red, Fast, Powerful, me, myself, mine and Win at all cost. Having a Ferrari says something – and it’s not less of a statement nowadays. Ferrari equals a strong Identity, a highly charged statement of ownership. That identity means – I am smart, strong, I am a man in this man-world and I enter the track to win. Of course many can’t drive , but art collectors don't have to paint do they? All you need is money, and there is loads of it out there. Ferrari is an association, an elite members club where you can buy a membership easily just pick your model. Why would that change now , when so many ‘’new’’ players want to link into that mantra and the world is so open now ? We all remember what was in our garages 30 years ago, what we wanted, and what is there now. We only have regrets in selling and relief in not selling what we managed to keep. The one major thing that has changed is the borderless world is flooded with new money searching for a hands on identity in tangable investments and moveable securities. Cars are entering that formula. A Ferrari gives every man a way to the greens - actively, socially, and bragging rights. Creditably equals Capital. A vintage Ferrari in the garage is a very, very small part of the average man's wealth. A GTO is a major art holding. A small Monet haystack drawing ( of which there are many) is sucked up in value on the basis of the great value of the artist oil works. Values will shift as the market redefines supply and demand, but there will be no burst of the values of great cars- there just are too few to go around. There is massive new money hitting the markets now, and even non-cars guys are squirreling cars away. I visited a secret garage with 300 serious cars ( 23 Gullwings) - owner is unknown. At Retromobile Russians buying punch-drunk at the auctions over the phone. Last month in China four 30 year olds explaining in Mandarin to me they have all the money and need an identity for creditability by buying ''investment grade'' cars to keep in the west to use as ''tools'' . In Dubai 60 days ago I visited the owner of a fine Van Gogh who wanted to sell it and buy a few important Ferrari's - he used the word ''important''. He's had it for 25 years in a safe, now wants Ferraris in the garage. It’s no different than when I was a director at a Florida Art Museum and visited all the rich to see their collections they invested in. They knew nothing about art, they just had the money and wanted to be recognized. Much like the guys at the Breakers last month. That was 20 years ago, and if their money is gone now ( as money does disappear), they still have a few great pieces that have done well and are squirreled away. Don't worry about a bubble . The only bubble is the bubble heads who pay to much for the WRONG cars - and there are plenty wrong cars out there and actually plenty of bubble heads – so maybe Dinos are worth the bang...anyone have one for sale in shabby condition or trade a good one for my signed Picasso etching ?
     
    Chanosky likes this.
  21. Ferrari 308 Vetro

    Ferrari 308 Vetro F1 Rookie
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    Nov 12, 2012
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    Austria
    interesting, very interesting.

    i totaly agree with Christopher (Onebugatti) about what he is writing.

    In Monaco this year, RM Auction, they sold many cars, Ferraris for more than 1-2 Mio. up to 4 Euros, BUT, what is this when you look in the Harbor with all the boats, some of them have the costs per year and some "art" inside for the same Money.

    And for me, cars like this, Ferraris from the 50., 60., and early 70., they are like art!

    Interesting thread...
     
    Chanosky likes this.
  22. asianbond

    asianbond Formula 3
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    Nov 8, 2003
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    Chris A.
    My theory is the new "Wealth Factor". There are many many more millionaires/billioniares now than 20 years ago. The vintage ferrari market will never crash again. It may dip slightly. And when it does the savvy collectors will come in and buy more. I would buy every unit I can get my hands on.
     
  23. Onebugatti

    Onebugatti Formula Junior
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    Apr 2, 2008
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    Christopher
    Many years ago, Sotheby's decided to create a market for photographs. Before that, there was no real market for them. They rounded up a large number of collectors, explained to them why this is the ''new art opportunity ‘'. They taught courses to collectors and their agents and most of all they cataloged photographs in a reliable and concise way. They sponsored exhibits/shows .Then, they herded the buyers, agents, brokers, mercenaries and investors into a series of auctions, those first one's were experiments actually . They search out novice collectors that knew nothing about the subject but had the money, and made it a social event to purchase the photos. The way they cataloged and priced the works predicted a ''buy'' range . That led to values taking hold as predictable. It worked. They created an entire new market and the values increased on good ''cataloging'' of values. They made the market.

    In the cars, it was Dean Kruse who started the marketing at auctions, created a hype. It was Charles Howard , a London art dealer, who started to make cars investments. It was Tom Barrett that rocked the car market into ''investment'' quality for the big guys with money with egos. Tom was a P.T Barnum of a car seller, his full page ads and values were shocking. Both those people knew what a good car was. RM has emerged now, nearly as Sotheby's did - and their way of capturing clients is to move the client from Dinos to Lussos in a in-house exchange relationship that is easy- much like Sotheby's did with the photos. As cataloging becomes a finer part of the product credibility, along with Ferrari Certificates and other means of '' magic wand approval'' more ''investor/collectors'' will give credence to the recognized affirmations and expert reports. That process lends to in-range pricing to any Ferrari. The market is being defined right now for the future. The price of a SWB or GTO is getting the world's attention and even making the entire 250 series a preferred choice.

    What I see happening in the next 10 years is that collector's with 10 cars will narrow down the collections to 3 ''important'' Ferrari's - which will circulate cars for decades to come and push the ''important'' cars further to the levels of good oil painting, top watches and works of art. Ferrari was an artist, an artist engineer – this is true industrial art with a passion story attached. Ferrari was also a prolific industrial artist. His early works in the period of 1947-1962 are his prime work, there are enough of them to make a market with. Those early works will forever be his highest artist level of creation. Like Bugatti had a prime run of 10 years, Ferrari had nearly the same period. All of those particular 1950's cars are in real terms undervalued. When someone buys a Ferrari it is a reward to themselves , firstly. In addition it’s now an investment and the rest of it. As prices increase, a great Ferrari will be on everyone's bucket list - and once recognized as an object of great value , and as art, the values will march for decades on regardless any world fear.
     
  24. Ferrari 308 Vetro

    Ferrari 308 Vetro F1 Rookie
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    Nov 12, 2012
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    Thanks "onebugatti"

    cant find it in english, but here it is in german:

    [ame=http://www.youtube.com/watch?v=HeRJ0HqdbAs]SJB - GoMoPa: - Die Millionenblase - YouTube[/ame]

    "The Million Bubble"
     
  25. italiangerman

    italiangerman Karting

    Jul 28, 2009
    80
     
  26. silver1331

    silver1331 Formula Junior
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    Feb 9, 2009
    468
    In addition to the wealth preservation and hard asset benefits it is ultimately driven by supply and demand. For 60s and 70s cars you're talking very small unit numbers. 4k or so Dino's at the high end vs units in the hundreds for the 60s era cars. For perspective Ferrarichat has 116k members... If 20 people decide they want a GTE prices will move. No new supply and demand increases every day. Younger people as well are buying these cars (to enjoy, not as investments)
     
  27. Ferrari 308 Vetro

    Ferrari 308 Vetro F1 Rookie
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    Nov 12, 2012
    3,663
    Austria
    no more opinions?
     

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