The value of your old Ferrari surpassed your means...

65 Shelbys were bringing about 200k and have leveled off to about 180K. 65s had much lower production numbers than the 66s.
66 Shelbys were bringing about 180k and have leveled off to about 150K. And these prices were for rotisserie restored concours examples, which mine was not. In my car's current condition it was worth about 120K, but when the prices leveled off it fell to about what I sold it for. Mine was an original paint car showing quite a bit of wear, but it was all original. I don't think I put a dime in that car the entire time I owned it. I actually planned on keeping that car forever, but when the prices went thru the roof, I saw an opportunity to buy my first F-Car. I actually vasilated about selling the car and waited so long that the prices actually fell a little by the time I pulled the trigger. I had the car for 16 or 17 years and it was hard to finally come to terms with selling it.

 

How does one insure something like a 250GTO or an SWB? I assume that the greatest risk would be theft, as anything else could be rebuilt for far less than the value of the car. Of course, diminished value would play into it, but still...

 

What's the struggle, exactly? You could afford to run it before so that shouldn't be the issue. Is it that you feel guilty owning a car that is worth that much? If so, I say "why?". You had it before it was valuable, so you can't help it. I really don't see the problem.


Onno

 

To be objective a gain is only realized when an item is sold, not held!

You can project a gain, but as all of us in trade know, It ain't sold until the money is in the bank!

Comments not meant to be aggressive or confrontational.

 

Absolutely right.

 

100% correct.

 

Somewhere along the way I began to rank cars in the same standard as I do aircraft, they are simply machines. Guys that hang around an aircraft hangar have no more thought of leaning against the wing of a later model Beech Baron, worth as much a 288 GTO, as they would an old Mooney that is worth less than a lot of old 308's. And I have known many people of modest means who owned aircraft that are worth far in excess of all thier other assets combined.

I gave up the Ferrari dream in the early 80's when 308's were trading over $80K and climbing, when 250's went from $10K cars to selling over $2M. And that darn old Lusso. I have never even seen one, but before the 308 ever was, the Lusso called to me. I stopped looking or even caring back then, but the dream never truly fizzled. Now I will just wait until the 308 in worth $2M, sell one, and buy a Lusso when they are down low again. I know the 308 wont probably ever be worth that, and a Lusso might not ever trade under $50K again, but with any luck, thier values will cross again.

I dont care if I'm living in a double wide, if that opportunity ever presents itself again, I'm not going to stand around thinking about it. And with the way real estate has plummeted, Ferrari's arent any worse an investment. Probably today more than any other time in modern history, having a car worth as much or more than your house makes more sense than ever. At least when the market goes bust youll be able to drive off into the sunset, and in a Ferrari no less.

 

May respectfully suggest you get out more?

Seriously, it's wonderful to see and hear these machines in action. Then you'll appreciate the magic a lot more.

I'd be very intrigued for you to come up with an economic scenario that will make that happen. If you do, I suggest you switch careers to become a science fiction writer. Maybe you'll be able to buy the Lusso of the proceeds.


Onno

 

I think that in fact your 308 WILL be worth $2M+ and probably within the next 5 years. But thats probably not going to help you relative to buying a Lusso.... In a world where a Big Mac costs $1,000 things will stay relative.

I am interested in hearing opinions on volatility in the vintage car markets that will result from the US currency system collapse.



Terry

 

Terry,

the odd thing is that despite a very real (and substantial) devaluation of the currency over the past couple of years, many hard goods have not experienced the expected inflation that normally accompanies this type of trend. In fact, I would say the opposite is true. Many of us have been hit by both deflation of the currency and deflation in real property values to boot. Even placing real estate aside, many hard luxury goods have been hit doubly hard... just look at boats.

Ferrari prices in the US, appear to be on the low side compared to other countries despite the weakening dollar. This seems counter-intuitive to me and I wish I could say I understand it, but I don't.

 

This is very true. But the items that have seen downward price pressures are either associated with a massive bubble (housing) or are purely discretionary spending items that tend to get tossed aside in hard times. Even those items however are limited in deflationary ability by high commodities prices. This is why new boat prices are actually up even though used prices are falling apart and demand is way down. Still, a good argument can be made that the bulk of assets seeing strong deflationary pressures were assets that saw their prices and values pumped up by the housing bubble as folks took out massive quantities of home equity and spent it.

Year over year money supply is up almost 20%. In the long run that will yield inflation. Here is some interesting info:

http://www.oftwominds.com/blogjuly08/empire-debt7-08.html?ref=patrick.net


I have questions about how the Fed and Treasury is going to go about distributing all the money that is going to be created (printed) through this financial system debacle. Typically, they would shovel it through the banking system which would then lend it out. But today, due to the "credit crunch" disaster, banks are actually focusing on whether a loan can in fact be repaid or not before just handing out money. The American consumer is tapped out when it comes to loans, so regardless of interest rate the Fed's ability to pump money to the consumer through the banking system will be extremely limited (but one way the Fed will pump money to the consumer through the banking system will be through the FDIC... Total FDIC reserves now about under $50 Billion, losses over the next couple of years could easily exceed $1 Trillion. Congress will in effect give the FDIC a blank check thus channeling new money to consumers through propping up their otherwise worthless deposits). What is more likely to happen is a continuous stream of "stimulus packages" where the Govt. hands out money. Some of this will take the form of checks, some through expanding SBA loans, some through the Treasury buying mass quantities of GSE issued debt and some through expanded corporate welfare programs.

The end result of whatever strategies end up being utilized will be massive inflation. "Helicopter Ben" didn't get that nickname for nothing! Personally, I see things getting VERY bad. Most folks call me crazy.... Mr. Doom and Gloom..... oh well. They said the same thing in the summer of '06 when I said housing was going to collapse and mortgage lenders were going to get crushed and a year ago when I said oil was going way over $100 a barrel.



Terry

 

I'm still making payments on a car I could not afford to buy at prices five years ago. One more year and my 275gtb and it's restoration will be paid off. I hope twelve months from now it will be worth at least what I got into it. It has been a difficult five years working lot's of overtime but well worth it. I got used to taking the bus to work and not going out to dinner as much. It's kinda a nice feeling being totally broke but having that one special car you always wanted ready to drive or kinker with anytime you want. It would be difficult to sell at any price. Those who have followed the restoration know what I have been through with this car.

 

Hats off to you Sir! It'll be quite an achievement.


Onno

 

First off, I don't know of, and don't believe there is a Lusso anywhere within at least 400 miles of me. Until quite recently this area has been a desert as far as Ferrari's go. Thankfully that is changing these days, but I dont know of any Lusso's locally.

As to your second point, not that long ago Lusso's were trading in the $50K range. Less than three years ago I watched one sell on ebay for around $35K. Its was a decent driver with "okay" paint, nowhere near a show car but a decent driver. With QV's selling for over $40K at the time, I call that crossing paths.

Financial people said interest rates would never drop below 10%, then they said they would never go below 7%, and then the swore up and down we would never see interest rates near 4% like in the 1960's. I am sure when that guy bought that 250 GTO for $14M, he really thought he was going to make a killing. The values plummeted over 50% overnight and have still not recovered. So I guess if you believe the two cars can never cross paths value wise, your the one who should be writing science fiction. I believe ANYTHING can happen. I dont even know what our house will be worth 6 months from now. If the economy takes a nose dive the high value cars could take another big hit. All it would take is for a couple guys to start dumping cars cheap and the whole market could colapse.

 

Understand your point. My previous posts about art were along the same line because art is so much more extreme than cars which are cheap in comparison. I never imagined in my life that a painting could be worth more than I could imagine. The only way to deal with it is to buy things that you can afford when you buy them. Whether they end up being worth a lot or a little should not affect your ability to enjoy. The only asset class that I struggle with on this theory is wine. Somehow I feel like I cannot afford to drink my own wine collection which is crazy. The difference with wine is that once you open it, it is gone. At least cars or art can be enjoyed without consumming them!

 

1) Based on current prices of a 250 GTO, "that" guy (or any guy) who bought a 250 GTO for $14M and has definitely made a killing (even for folks in that snack bracket).
2) I think the only time a Lusso and a 308 will cross in value again is if a Lusso is tubling down a cliff and lands in pieces beside a parked 308.

Reality bites.

...Keith

 

No way did you see a running, driving Lusso sell for $35k in the last 10 years. Absolutely no way. $135k, yes, but $35k, only if it was a wreck and I doubt it even then.

When you say "Lusso" you do mean a 250GT/L, right? And not something else?

 

So with this very substancial financial gain. My question is how did you handle the gain from an income perspective? Anyone have information regarding long term capital gains.

 

Interesting question and one I've thought of asking as well. I do think it's quite deceptive to look at purchase /sell price soley towards establishing gains. I'm sure there are many "expenses" of ownership that could add to the cost basis over time (decreasing gains)... I just wonder whats allowed versus not allowed etc. Can you claim something for your restoration work time etc?

I also wonder what happens in cases where a car is sold overseas, and the proceeds are not brought back into the states?

 

I assumed that you, being a Ferrari fan, would visit a classic get together now and again. There are plenty of opportunities to see these cars. I have personally also not seen one "in-the-wild", just on the road somewhere, but many times at events.

As for my second point - I agree with Donv. I think your memory is letting you down - I have never seen a Lusso for 308 money since '92. But this is not even the point. The reason I think your outlook is so outlandish is: what is your underlying reasoning for assuming they will cross paths? The 308 is mass-produced V8, with timeless appeal but there are masses out there, they are (relatively) cheap to maintain, they attract a lot of middle-class enthousiasts with little money. And I'm all for that! But you cannot compare that with Lussos, who even if you can afford to buy them, require a lot of care and are much more expensive to own. They are close to 100 times rarer, and almost all will now have had famous owners at some stage. How can you assume they will cost the same in the future?

Let's put a bet on, shall we? If you are right, I'll buy you a 308 in 10 years time. If I'm right, you'll buy me a Lusso. On that bet, I am confident I can retire. How confident are you?


Onno

 

Yes, it was a 250GT/L, and yes, it had a "buy it now" on ebay of $35K or $37K and it was on there for days... It was a "driver" needing restoration, but was basically straight and looked "okay" as well as large pictures on ebay can show. Red with black interior, I may still have pictures of it. I believe that particular car was discussed on this forum. But because the enthusiast/collectors only want excellent examples, tatty cars just dont sell well at almost any price.

I wont make bets on what the market will do tomorrow, like I say, it can and will do anything it wants to. I'm not even that sure where its at today, it seems very volatile. Back in the early 30's you could buy cream of the crop luxury cars for pennies. If you had any pennies left that is. Big luxury cars were just not very well appreciated by the people standing in food lines watching them drive by, and they fell by the wayside. Today we are in a period where more and more of the radical left (Prius drivers?) are looking at automobiles with extreme hatred. If the politcal atmosphere towards automobiles continues to erode in that kind of direction, or becomes militant, how will it effect vintage exotic car values?

308 vs Lusso? Yes, the Lusso is hand built and somewhat rare at around 350 examples. The 308 is less hand built and not quite as rare, though the 80's and 90's were very hard on them and possibly as many as 75% are gone, at least the early cars anyway. The very people on this board saying they couldnt appreciate to high value are the very same people who couldnt believe the Dino prices skyrocketing. So IMHO its utterly impossible for anyone to know what tomorrow may bring. I dont, and neither do any of you.

 

Interesting that you pose this question as I immediately called my accountant and asked that same question. I knew that my bank would report any deposit of $20,000 or more to the Feds. My accountant told me that the IRS also limits the amount of a casualty loss that you may take each year, but you can carry over the remaining balance every year and keep chipping away at the casualty loss taking a deduction each year until that loss has been exhausted. But you can also use the entire casualty loss to offset a capital gain. I had over a 110K remaining from a casualty loss from the 90s that was being carried over from 2 houses that I built when the Real Estate Market went south. So it worked out for me. I would ask your accountant if you have any Casualty Losses being carried over. The other advice I received from my accountant was to always save every receipt and invoice for that car and that will increase you basis in the car, lowering your capital gain. I'm no accountant, but this is what my accountant told me and I proceeded on this basis.

 

Easy.... You can sell now and you owe the Feds 15% on your gain. OR, you can wait until after The Saviour is elected and you will get to pay 30% or more on your gains.




Terry