The fate of asset bubbles under the new regime.
Everyone is hoping that next Friday and Saturday, at Sotheby’s auction in Monterey, California, the global asset class of collector cars will finally pull out of their ugly funk that nearly matches that during the Financial Crisis. “Hope” is the right word. Because reality has already curdled. Sotheby’s brims with hope and flair:
Every August, the collector car world gathers to the Monterey Peninsula to see the magnificent roster of best-of-category and stunning rare automobiles that RM Sotheby’s has to offer. For over 30 years, it has been the pinnacle of collector car auctions and is known for setting new auction benchmarks with outstanding sales results.
This asset class of beautiful machines – ranging in price from a 1962 Ferrari 250 GTO Berlinetta that sold for $38.1 million in 2014 to classic American muscle cars that can be bought for a few thousand dollars – is in trouble.
The index for collector car prices in the August report by Hagerty, which specializes in insuring vintage automobiles, fell 1.0 point to 157.42. The index is now down 8% year-over-year, and down 15%, or 28.4 points, from its all-time high in August 2015 (186).
Unlike stock market indices, the Hagerty Market Index is adjusted for inflation via the Consumer Price Index. So these are “real” changes in price levels.
The index has now fallen nearly 7 points below the level of August 2014. That was three years ago! In fact, the index is now at the lowest level since March 2014.
The chart below from Hagerty’s August report shows how the index surged 83% on an inflation-adjusted basis from August 2009 to its peak in September 2015, and how it has since given up one-third of those gains. This is what the inflation and deflation of an asset bubble looks like (I added the dates):
During the Financial-Crisis, the index peaked in April 2008 at 121.0, then plunged 16% (20 points) to bottom out in August 2009 at 101.39. By then, the liquidity from the Fed’s zero-interest-rate policy and QE was washing across the world, and all asset prices began to soar.
The current drop of 15% from the peak in “real” terms is just below the 16% drop during the Financial Crisis. But the current 28.4-point-drop from the peak exceeds the 20-point drop during the Financial Crisis.
Concerning the current market, the Hagerty report added:
While the auction activity section of the rating had been kept strong by increases in the number of cars sold at auction so far this year, the trend hasn’t continued and auction activity decreased for the second consecutive month thanks to a 2% drop in the number of cars sold compared to last month.
Private sales activity also experienced its second consecutive decrease, again thanks to a small drop in the average sale price as well as a small drop in the number of vehicles selling for above their insured values.
The number of owners expressing the belief that the values of their vehicles are increasing continues to gradually decline, and this is true for the owners of both mainstream and high-end vehicles. The drop is particularly pronounced, however, for owners of previously hot models like the Ferrari 308 and Ford GT.
For the second month in a row, expert sentiment dropped more than any other section.
The asset class of vintage automobiles was among the first bubbles to pop. This didn’t happen in one fell swoop. It’s a gradual process that started in the fall of 2015, and observers brushed it off because it was just a minor down tick as so many before. But since then, it has become relentless and persistent, with plenty of ups and downs. Every expression of hope that it would end soon has been frustrated along the way.
And every day, there’s still hope. For example, back in May, the Hagerty report commented that “prices have started to normalize.” Since then, the index has continued its methodical decline.
This may be what asset class deflation looks like under the new regime. There will be talk of “plateauing,” as is currently the case in commercial real estate. Then there will be talk of prices “normalizing,” as is the case in collector cars. Then there will be talk of “buying opportunities,” and so on. And there are ups and downs, and this may drag on for years.
But month after month, buyers of vintage cars become a little less enthusiastic and sellers a little more eager. Yet, unlike during the Financial Crisis, there are no signs of panic. The tsunami of liquidity is as powerful as before. Financial conditions are easier than they were a year ago. There’s no forced selling. Just an orderly one-step-at-a-time asset bubble deflation.
Now the Fed is tightening. QE ended about the time the classic car bubble peaked. The Fed has raised its target for the federal funds rate four times so far in this cycle. It will likely announce the QE unwind in September and “another rate hike later this year,” New York Fed president William Dudley told the AP. And the below-target inflation is not a problem. Read… Fed’s Dudley Drops Bombshell: Low Inflation “Actually Might Be a Good Thing”
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I enjoy watching “What’s My Car Worth” and have noticed a trend in an episode on a few days ago. Almost every car hammered at less than what both expert and owner thought they would. This has not been the case on this show for awhile and I was glad they didn’t cherry pick to manipulate the show, or did they?
The trend you have noticed is correct.
I take umbrage with the following phrase in the article;
“and no one paid attention”…
I beg to differ with this blanket statement. Those who follow the auction sector, not only of automobiles but of wine, art, jewels, real estate, aircraft, heavy equipment, antique trains, etc. etc. etc. Have noticed a down trend in not only bids tendered but of attendance, along with the growing use of auction reserve lot status.
Its true that ‘all things come to they who are patient’. Now is not the time to buy, however that time draws ever closer.
The trend I see from Wolf’s chart is maybe a long term head and shoulders technical pattern, possibly very negative but we’re a few years away from knowing.
These “cars” are really baubles for billionaires. Is it really appropriate to consider them as an asset class like equities or real estate? And I’m aware but unconvinced of the argument that they hold value in periods of serious inflation.
“”These “cars” are really baubles for billionaires.””
Probably true for the higher priced stuff.
Probably NOT TRUE for the under $100k stuff. I and my friends that have classic cars in in the 50k to 200k range enjoy driving and working on such things – with the hope that IF we need a chunk of change we can sell one quickly and hopefully actually make a little money on it – OR at least not lose a bunch of money.
Meanwhile we have fun with them…..
Indexed for inflation, which we’re told is 2%.
RIIIIIIGHT….
Factor real inflation in of 5%+ and this index is even lower.
At the top of a bubble you will always see overpriced luxury real estate, luxury and collector cars, artwork and jewelry. One unfailingly reliable indicator of a top is a sudden drop in the prices of all this “bling”. We have rounded the turn and it’s a race to the bottom. Plan your moves accordingly.
Vintage you say?
http://www.speedhunters.com/2016/11/pur-sang-argentinas-classic-auto-artisans/
Maybe the fact you can get replicas that besides being newer look and work just like the original influences the vintage market.
But is not like the vintage market influences the regular economy much, is a collector market after all.
Vintage looking record players and stereos are big with the millennials now. The new players play vinyl records and plug into their computers. I think the younger crowd likes the styling of the old cars but not the grease.
I watched some auction out of Houston on tv over a month ago and this info is not a surprise. They were giving away the cars and they were beauties too.
I think if an analogue player like vinyl is plugged into a computer it goes back to digital. I don’t know why the resulting sound would be any different than studio remastered digital.
Of course the retro look is a seller but I think the true vinyl folks are into the cartridge (needle) for which you can easily spend 500.
I recently bought a refurbished NAD phono preamp with a USB output to transfer vinyl to 44k, 16 bit digital. My second turntable connects to the NAD preamp, and the USB goes into my iMac. This way, I get the best of both worlds.
My main system in the living room has a Linn table and arm that allows me to enjoy listening to vinyl; both newly purchased and in my collection. But my Lexus has a 12 disc Nakamichi carousel in the trunk, so I need to play CDs to listen to music I want to hear when driving.
The VinylStudio software that came with the NAD preamp works great to record albums that I burn into CDs on my iMac, and it’s easy to separate tracks on the CD for each song.
A 44k, 16 bit CD has limitations to reproduce music, and vinyl too has imperfections, but I prefer vinyl. Unfortunately, the world doesn’t seem smart enough to create demand for 96k, 24 bit SACDs. The Minnesota Orchestra has a great selection of SACD recordings though!
Dan, IMO that 96k is unnecessary (44k is nyquist rate) but 24bit is arguably a better idea (2*16.is only 65,536 where as 2^24 is ~16.8m, lol)
Seriously doubt a real human can hear any difference (ie:48kHz./16.8M levels vs 20kHz/65,535 levels) given most 30 somethings can’t hear beyond 15kHz. Unless perhaps you listen at very loud levels perhaps but your hearing loss will be rapid.
I recall being able to hear 16,535Hz but that was a very long time ago and might actually have been a harmonic
JMO, regards
Bought a ’66 Olds 442 about eight years ago.
Just sold it recently for exactly what I paid for it, and felt lucky.
I remember 2014/15 when prices of manual transmission Ferrari almost doubled overnight. They are pretty much back to where they were before, i.e. a 10% premium over the automated F1 version.
Collector cars are discretionary toys similar to boats, RVs, artwork and probably a good market barometer or canary in the coal mine.
I just sold my 72 Camaro Coupe a few months ago, I bought it 15 years ago for around $ 5500, did some slight upgrades / new engine, but it was pretty much original. I drove it regularly, not a show car , but clean. sold it for around $ 10,000, so I was happy for sure.
Whats the big deal?
The older rich men have all the collectible automobiles they desire. The Gen X, Y and Millennials may not be that much into any automobiles. There would be some of them interested for sure and that is why the market has slowed down and not crashed. And of course all the oldies haven’t died so there is a bit of a turnover.
I mean if you are a billionaire or that sort – how many bloody old manual seagull door-ed Mercedes Benz’ do you need. In addition to your 10 houses and helicopters and the 5th kid from the 4th wife?
Seriously even opulent consumption would have its limits!
Ask the Donald about that ;)
You mean Jay Leno?
Truth Always – I agree! Although I’ll be 55 next month, I’m at least 10 years younger than the average on here, and even I have nowhere near the amount of money required to own and operate a car.
My age and younger, largely see cars as a “necessary evil” and consider bragging about one’s car to be gauche. Not saying there aren’t a few motorheads among us, but the trend is, if you brag, you brag about how your home and work locations work out great with public transit, or about your bike.
You and your homeless friends are not the majority of society, nor are you a sizable minority. Your myopic views on life [posted daily] are quite bizarre! I know NO ONE who rides public transit or a bike (exercise is good though), let alone brags about it. Is your bragging a form of gratitude for taxpayer-funded subsidization?
P.S. How are you able to make the asinine assumption that your 55-year old self is younger than the average here?! You’re old; I can comfortably and confidently say that!
I have a Mercedes GL, but I choose to cycle wherever possible. Other people I know would drive 200 meters… But I like the exercise and also its free to cycle…
The constant paving of roads and whine for infrastucture upgrades is not based on tax-payer subsidies?
I contend that a group effort made by society to promote mass transit, walkable cities, and bike lanes, as opposed to mandating taxes and services to support the single-driver car commute and soul draining mall shopping for suburbanites is worth touting. I say this as a rural dweller who pays for every service and gets to wait for up to two weeks for phone line repair.
The fact that a 2,000 lbs car is required to move a 200 lbs person pretty much sums up the word, “Waste”.
Alex stated that he had nowhere near the ‘resources’ to own a car at age 55. I surmise he is probably realistically appraising the total cost of car ownership, including the idea of debt for the original purchase as well as depreciation and maintenance. If more people lived within their means, nay…lived under their means, this modern world would not be on the brink of collapse. Of course, then Wolf might have to find another theme for us to read about. :-)
Wow! What’s the origin of your outward anger?
“Rip up all city streets with jackhammers” and “sod the streets at once…. All public movement would be by foot and a fleet of bicycles, maintained by the city police force.”
HST’s sheriff campaign
I grew up in Manhattan, NYC. Everybody rode public transportation, even the rich rode the Fifth Ave. bus, because parking is a nightmare everywhere and you can never get a yellow cab when you need it. Now they probably use Uber.
Let’s see now: corporate destruction of public transit systems (a la Los Angeles Red Car trolley system) then replaced federally-funded interstate highways that were allowed to gut urban neighborhoods, oil depletion allowances, ongoing federal, state and local spending on roads and highways that dwarfs mass transit subsidies…
Still want to repeat the canard about “taxpayer funded subsidization” of mass transit?
Carlata,
Here on the east coast, many people who ride public transit daily, and bike to work when the weather permits. I leave in SE PA, and a train ride to/from Philadelphia reading a book with a few blocks of walking beats sitting in gridlock any day.
Are you on the west coast perhaps? I’ve visited the LA/OC area many times, and was amazed at the lack of public transit and the size of the highways.
Carlata – I am not subsidized, I pay an almost 20% income tax rate, keep myself healthy because my work depends on being physically fit and it feels good to be healthy so my medical expenses are minimal, and will still be working a few decades from now, so I’ll be supporting your unhealthy sagging self, don’t worry about it.
You clearly lack reading skills or you’re very new; several threads back there was quite the discussion of my high tax rate with several of the major players, Wolf included, weighing in. It came down to, none of them for the life of them could comprehend, initially, why I didn’t take the over-65 tax deduction. I had to explain very carefully and slowly that I am not in fact over 65.
I am not over 65, I don’t own stocks, and I’m not in the top 10% financially. I am as unusual here as a fluorine-based life form. There are a LOT of me out there. That’s what needs to be understood. The US in a sort of “Potemkin economy” with a lot more appearance than substance.
Yes, if you’re in the top 10% things are great. I’m in about the bottom 30%. Or let’s use economics-speak and say I’m in the bottom quintile, which would mean the bottom 20%. That’s the bottom fifth. That means 1 out of 5 people are doing about how I’m doing. Sure we might be weeding your garden or cleaning your pool. Or minding your kids. Or doing your taxes. Or tutoring your highschooler. Or, hell, teaching your collegian; look into what “adjunct professors” make.
I’m sorry your bubble does not allow people in it who ride public transpo; plenty of people do here. Sorry bikes are not a thing under your rock; they’re huge here. Sorry bragging about being “green” isn’t a bragging point, maybe coal-rolling is more of a thing where you are. This is why I post. To be that irritating voice from the non-top-10%
alex ~ I’ve read many of your comments, as I indicated “[posted daily]” ~ did you miss that?
You make less than $12k/YEAR I believe you’ve said (so really, your ~GINORMOUS!~ tax rate doesn’t impress me much). My property tax costs that much ($12k).
You’re free to DO AS YOU PLEASE ~ but like I indicated, your lifestyle choices [living in a warehouse I believe you said] are not the norm, nor are you a sizable minority. That said, DOTH THOU PROTEST TOO MUCH?
You chose your lifestyle ~ not I!
Interesting perspective Alex. We are the same age, but I see cars as an extension of one’s self and a ticket for freedom to travel and go where you want.
I have owned quite a few cars, motorbikes and bikes, but the thing I take satisfaction from is having the most performance/reliability for the buck. I have $11,000 into my mint ’95 Lexus SC400, and I’m proud to have such a sweet ride for what I’ve spent.
The cars in Monterey this weekend are gorgeous works of art and engineering, but even if I could write a check for a few million bucks to drive one away, I’m not sure if I would.
“I see cars as an extension of one’s self and a ticket for freedom to travel and go where you want.”
Because that’s how you’ve been trained and manipulated to view your things.
The quasi-religious, holier- than- thou ranting of these anti automobile types gets pretty boring.
Don’t like ( cars, boats, art, etc.) don’t buy one. Just spare us your sermons.
Yes, the Lexus 400 series is great. I drove a 1965 GTO in high school. 389 engine with three 2-barrell carbs and 4 speed manual tranny. I bet that baby is worth some money now!
The car/bike argument… you can own a reliable, fuel efficient honda/toyota for a very reasonable outlay… The 55 yo who cannot afford a car – really??? In Cali? If you don’t want a car I get it, but if you cannot afford in car in Cali then you are definitely in the minority.
My son studied in Europe and lives in NYC. He does not want a car.
Actually, I trained to race bikes on the road and velodrome (chose not to take HGH and EPO) and I have quite a collection of bikes including a $12,000 Wilier road bike.
But when I recently attended a wedding 200 miles from my home, I drove my Lexus and left the Wilier at home.
Dan Romig – I will have a car only if I need one, and frankly at some point in the future I may need one. I’m thinking of one of these “business vans” I see all over the place here. It seems Dodge/Mercedes, Ford, and Nissan all have competing models. They’re kind of boxy, and tend to be tall enough to stand up inside.
What’s nice about one of those is not only its use for business, but it can be used to carry a surfboard or kayak to the beach, go camping, drive to visit relatives, etc.
Nice on the viliers road bike. Mechanical engineering in cars, bikes, mo’cycles is all good. What’s kind of cool about bicycles is, every tool you need to work on ’em is relatively small, hand-operated, and the full collection of tools is relatively affordable even for a “hobby” bicycle enthusiast.
You know what else I think is cool, is 250cc motorcycles. It just seems like a neat size. Some of the modern 250s are amazing, too, like the Kawasaki EX250 and Honda’s got a single cylinder one with fuel injection.
Car ownership is always a matter of choice – and economics! I have owned many cars in my checkered career, many of which went on in auto history to become high-level classics( I cry myself to sleep at night, actually ). In any case, my current stable of vehicles includes a 1992 Fleetwood Cadillac, on which I have done all the work, except for a fuel pump – in the gas tank – and it looks and runs perfectly. A most beautiful car. These cars now sell for average $4,500 – 6,000 but they are becoming more and more scarce in prime condition. All to my good, plus the enjoyment of driving a classic full-sized American car. And that’s the name of the game, no matter the age or name of the vehicle.
You mean access to cheap debt.
i think the views on car ownership vary a lot depending on the area of the country you live in. i think urban dwellers tend to have a lower opinion of cars because parking is such a nuisance and expense and they have more options. i am alex’s age and love cars. i’ve owned some nice ones but i don’t see myself ever going back to car ownership. it’s much more convenient to just get a zipcar when i need to drive. the rest of the time it’s either mass transit or a bike.
Vintage cars are kind of a special segment. These are truelly for collectors and gear heads who appriciation the mechanics as styling of older cars or rare cars.
For me I appriciation cars mainly for road trips. I am fine dealing with cheap cars to get by in the city. But one day when my funds free up I would love to own a luxury SUV for camping and longer road trips. Sadly my wife gets car sick :(…
For me not becoming enamoured with cars for now is a matter of survival and making sure I have cash to buy a house when ready. Can’t afford a car habit yet.
For me having a car is a necessary evil
don’t really attach myself to car other than looking at it as an appliance
although bought a new audi last year on a whim… n
I hardly think the average age here is 65… How is bragging about your bike different than bragging about your car?
and producing dictatorship without tears, so to speak, producing a kind of painless concentration camp for entire societies, so that people will in fact have their liberties taken away from them, but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda or brainwashing, or brainwashing enhanced by pharmacological methods. And this seems to be the final revolution.” Aldous Huxley
alex – I am a little younger than you. I have never thought much of automobiles as more than a way to get from point A to point B. I don’t mind having a nicer car, but not at the cost that is generally incurred. That beings said, your way off base. The status symbol of the nice auto faded when the oil price spikes killed the giant SUVs. But it seems to have shifted to projecting “life style”. Thus you have the nimble little min-SUVs and the “Jeeps” for the more rugged sort.
It is a fairly clever way to down shift your status symbol projection to what you can afford. The case of the millennial is just even more so. Having been crushed by college loans and poor work prospects they gravitate toward what they can afford: which doesn’t include big houses or cars.
russell1200 – Where I am it’s a real mix. Smart cars to electric cars to thrifty Toyota Corollas and small pickups, 1960s/70s American iron with, usually, some very angry older white person behind the wheel (they really hate bikes and pedestrians) wowee new stuff like Teslas and Mirais, but trust me, the giant SUV is *not* an endangered species around here. They stayed on the road when gas prices shot up because 99% of ’em are financed, and they’re staying on the road now because gas is a bit more reasonable again, and to a lot of people, as the book was titled. “UR What You Drive” https://www.amazon.com/U-R-What-You-Drive/dp/0671638742
Where I live, it is considered macho to drive a huge pickup truck and to sometimes do so aggressively. It calls to mind the Latin phrase ‘currus magnus, mentula miniscula” – big car, small d**k.
If you think that’s dumb, read about “rolling coal” —
https://www.nytimes.com/2016/09/05/business/energy-environment/rolling-coal-in-diesel-trucks-to-rebel-and-provoke.html?mcubz=1
Is this the end of the road for vintage cars in Japan?
https://www.japantimes.co.jp/life/2017/08/05/lifestyle/end-road-vintage-cars-japan/
Am getting a 2000 Porsche Boxster “S” 3.2 repaired. New brake disks & pads all around, wheel bearing, struts, this and that. The drive chain was loose. In a nutshell: it never ends, financially. BUT you can buy a great fun convertible with a sweet flat-six engine cheaply.
Friends keep their vintage cars s t o r e d. Personally, I fear this will ruin those cars, TBH. (Had a Toyota truck corrode inside – my guess – after sitting in Venice CA for 8 months. The engine was never the same. Get rid of cars when you can’t drive them…
What goes up, must come down. This trend will be much stronger soon, IMHO. Hurry!
You are one IMS bearing failure away from a financial disaster, unless you enjoy subsidizing Porsche’s engineering design flaws. I have no idea where all this “German quality” nonsense comes from. I have had a couple of those cars and regret owning each one.
Your experience echoes what so many have said about their German cars. One guy told me “Each time one goes into the shop, it costs $800.” That was some years ago so with inflation expect a $1,000+ bill, and for what?
How far can “Fun to drive” go in explaining what for some is a status or pocketbook virtue-signaling tax? Janis Joplin had a point about that all those years ago.
Years ago had a Benz. The guy who worked on it drove a Ferrari the only one in town. One time he was working on a Japanese car’s engine for a friend and he said he was surprised and impressed to see that the big ends of the connecting rods were numbered so they remained mated to the upper half.
At least I think that was his observation it was a while ago and the first I’d heard of this stuff. But although he generally worked on expensive cars I know he was impressed with the build quality in a fairly basic car.
Yellen sees no bubbles. Of course, the Fed never does.
Maybe if when you retire at 60/65 buying one of these cars seems cool, but at 70/75 you want to sell and baby boomers are now selling…
The growing problem with this class.
Is that the vast majority of them are now also Dinosaurs and belong where what is left of the Dinosaurs are kept for public view.
They are impossible to park with any degree of safety from vandalism or theft so are unusable. Let alone the security levels required where they are stored.
They are not investments or even stores of wealth they are these days depreciating liabilities just like Boats (Unless you have a well equipped safe haven boat).
How are the other collectibles markets doing? Fine art, etc…
Good question. I think we see here the little people being squeezed out of assets, the way that before they were squeezed out of comfortable living. Or, if you want to describe it this way, more people are being reclassified as little.
I think the assets that mega-money enjoys will hold out longer.
Jewelry is now the great divide between the have and have nots of the female variety. I still own some silver jewelry, because it wasn’t worth selling when we needed the money. I get noticed when I wear it because most women don’t have real jewelry anymore. Even women who can afford jewelry are not wearing it out anymore, but they still have their wedding and engagement rings. I don’t.
If I wanted to buy a sort of collectible as a store of value or something that hopefully increases in value, I’d pick collectible guns.
There are a *lot* of them out there. So if you know how to buy them, you can get them far below present value for cash. Of course you want to transfer ownership legally, but there are a lot of people out there with really nice guns who’d let them go for a few hundred dollars, “rightnow”.
And they’ll only go up in value. They’re not making any more of 19xx model X’s.
But you have to buy at a significant markdown from present value. Because if we’re headed for another recession, their value may go down by quite a bit before climbing up again. In a recession, that’s the time to buy.
The stuff I’m familiar with: Pinball machines still going strong. People line up to buy the new ones in limited edition version ($9000-$10,000) and new titles tend to sell pretty well. The older desirable 90s machines still go for more than retail, hasn’t gone up but hasn’t gone down. $4000-$9000 usually.
Classic computers and video games seem to be going up. Nintendo, Commodore, etc. Depends on system and rarity, and how many people were into it. I think Youtube drives a lot of this.
I think I can partially answer this question. I run a website called http://www.antiquesage.com that is focused on the merits of investment grade art and antiques. In my opinion, investment grade antiques are portable, durable, scarce and often made from precious materials. There has been a massive split in the market between investment grade antiques and all the other collectible categories. Investment grade antiques have increased by a factor of 2 to 4 over the last 15 years while collectibles have declined by 25% to 80% over the same time period. Here is a link to an article I wrote on the topic: http://www.antiquesage.com/investment-grade-antiques-diverge-collectibles-market/
Interesting article. I think you’ve hit the nail on the head. When I look at my silver pieces, e.g. cutlery, tureen, I think that young people will have no interest in polishing it or entertaining formally. I suppose it will all be melted down for the value of the silver one day.
No worries. My 2002 Pontiac Bonneville and 2003 Saturn Ion, although both discontinued lines, are worth something to someone that needs a reliable automobile. Not so much for the pricey dust collectors.
Artwork continues to hold its value, because art is where the 1% can throw lots of money at one of a kind things. Consumer collectibles are passe, I have closets full of Hummel figures and such bought in the 50s now worth about they cost at the time. Asset inflation in collectibles (very desirable for buyers) is robust while consumer assets tend to lose value quickly. You might surmise that the size of mass market collectibles like Star Wars gear is what undermines its collectible value, but its also psychological. What does having Star Wars gear say about you? Obviously having a Picasso says something else.
I’ve always favored investments that you can enjoy and use. My brother is a musician and collects vintage Gibson guitars, which he plays. I have more classic tractors than I need, but they’re useful, and I enjoy them. How much pleasure do you get out of a share of Tesla stock? For some people vintage cars fit this concept, but they’re much more of a nuisance and a liability than guitars or tractors.
But there is risk that you will miss the exit. Isn’t much of the love for collectables nostalgia? Once the generation that has fond memories of some item pass then it’s likely that collectable might go down in value?
I know classic video games, the rare ones at least, have crazy values. Old computers are creeping up — kids are building 286 and 386 computer systems and you see 386 and 486 motherboards for $80+ on eBay now. But it’s mostly of interest to an age group hitting a point where they’re reminiscing about a certain time frame and now have money.
My son rebuilt my old Gateway. It looks older than dirt but it’s not, really retro.
He has a few of the old gaming machines. His old Sony playstation with a screen, works but needs some work. I think the mulex doesn’t get power anymore. Does anybody know who can repair them?
Old Farmer,
I’ve recently read that prices for old, heavy-duty tractors/farm equipment are soaring because, unlike digitally-gated contemporary ones that you only “license” from the manufacturers, they can actually be worked on and fixed.
Any truth to that?
This applies to all Vehicle’s and equipment not held by Corporate’s or large entities that large cash-flows and can quickly write off the cost of new equipment.
there is also an export market for repairable equipment to 2 Nd and 3 Rd world states.
No body I know grew up in a log cabin. But I have one on 30 acres off the grid in the mountains of SW MONTANA.
100 years from now, I promise you: YOUR OFFSPRING WILL THINK IT IS COOL.
I always enjoy reading Wolfstreet, especially the comments. IMO this column falls into a certain category: Wolf cherry picks a certain kind of bad news, then claims it is somehow indicative of larger economic trends. Some of his readers question whether a downtick in classic car prices indicates anything beyond mood changes among people of wealth.
Then there are insulting exhanges of the “why should I have to listen to your dumb ideas” variety. People paint themselves into rhetorical corners. Today’s best is, “I know NO ONE who rides public transit or a bike…let alone brags about it”.
Yes, I see this a bit as well. I believe it’s referred to as a kind of “doom porn”.
Good comment.
The general economy is doing pretty good per the reports coming out..
all time high employment
people are flush with money
stock/home prices all time high and ever rising
if there are issues, then this won’t happen
after all us economy is all driven by consumer spending 70% or so
Man, if I just hadn’t used that last Monet’ to start my grill I could probably trade it for a really nice Superbird!
The main market for art, is buy it, insure it, store it, borrow against it. Ie wash large quantities of dirty money into a clean loan.
Can’t believe nobody notices the incredibly costly parts for these cars. How about the television programs that depict the successful car restorer or even backyard mechanic restoring by buying parts at a dealer or auto zone.
There are many cars that are parted out because the parts are worth more than the whole.
Now there’s an abundance of these fixed up cars and market appetite is saturated. Reminds me of the 2000’s with everyone buying a house to fix it up.
Off the subject somewhat but only slightly.
I had an interesting morning visiting with my brother in law’s sister who is here visiting from Bethesda Md. She works for a brokerage who manages billion$ for the 1%. She is an accounts manager.. mostly just accounting stuff.. not making decisions about what to invest in..
Bottom line is that neither she nor anyone she works for ever looks beyond the bottom line of income.. She has no clue what is going on in the back ground as documented here by Wolf and discussed endlessly by all of us. (Wolf, thank you again sincerely) It is as if there is never anything but up with a few bumps. Can’t be.
I relayed some of my concerns and she said, “I hope none of that happens in my life time!” I said it will and she said she hoped it didn’t in at least the next 40 years!?!?!?!
Loraine said, the job of the investment community is to make sure people are invested and that the money keeps flowing. And even wondered why some client invested in European art or Faberge eggs because that took their money out of the markets which keeps it from growing.. I was a little speechless..
We certainly live in different worlds.
In generating an article on this subject, it might have been a good idea to have defined the terms vintage, classic and collector up front because, even within the confines of the field’s jargon, there is a lot of variation in what people mean when they use these words.
For me, most of the joy in tinkering with and driving old, rare cars went away when even the cheaper ones (i.e. Bugeye Sprite) turned into investments.
I have owned over 100 cars and motorcycles since starting to drive ( 2 – C1 and 2- C2 vettes), Mercedes(1956 GWing, 1957 220S Cab, 1951 220 B Cab, Four 220SE Coupes, Two 220SE Cabs.Two Grosser 600’s, 2 -230SL’s and a 250SL), 1956 Cobraized AC Bristol,1956 Cad Conv, 1965 Lincoln Convert. 1946 Indian, 1968 FLH and many others. Sold my last collectible car last month- a nice 450SLC. I had great difficulty getting $4,000 for it . I have been watching the collectible car market and believe it is just dying. Many owners like me – 74 and wanting to sell. It seems that the dealers and “collectors” are loaded up. I have seen many good (overpriced) cars on the market for a year or more. I bought very few cars from dealers over the years and would probably never buy at an auction. I think this market is in for a very big fall.
It’ll be a cold day when they pry my hoopties from my hands. Which reminds me, gotta finalize plans to take them with me when I do finally go….
mean chicken – Remember that red car in the beginning of the TV show “Chico And The Man”? We had essentially that car when I was a kid. It rode low like that and the best thing: Holes had rusted through the floor. You could look down and watch the road go by. One time we took sticks and dragged them on the road through the holes. My mom panicked and said, “What’s that???” and we pulled the sticks up real quick and said, “Nothing….”. Those holes were also handy for getting rid of stuff you were supposed to eat, but didn’t want to.
Hoopties are awesome.
Oh man Chico and the Man and Sanford and son? Those were the good ol days!
Meanwhile, the subprime car loan debt pyramid that Wolf has repeatedly highlighted is reaching crisis proportions. Will Trump, like Obama, force taxpayers to bail out the financial firms that foolishly extended credit to the manifestly un-creditworthy?
https://www.bloomberg.com/news/articles/2017-08-15/-deep-subprime-car-loans-hit-crisis-era-milestone-as-woes-mount
Subprime auto loans may sink a few smaller specialized lenders. There will be no bailouts. The big banks are not really threatened by it. Subprime auto loans are not big enough. ca. $250 billion, not $10 trillion. But it will hurt the automakers because they sell fewer cars.
I hope you’re right, Wolf. Lender recklessness and greed should have consequences.
strikes me that it was the generation before mine – those who came of age in the 50s – who really glorified the automobile…
most of that generation are dying off now, so the bubble in these vintage autos has probably run it’s course…
Yep boomers interest in the muscle cars might be passe as those who wanted 1 got 1, maybe regret blew the $$$ and ready to unload.
My 1st car was 74 Plymouth Duster with straight 6 and it was true lemon piece of junk… Had so much problems, shook when ac was turned on, countless trips to Sears to replace the battery and often refused to start… Why anyone would want those cars before 1st OPEC embargo is beyond me. I got a new toy 4 months ago – 14 Porsche Boxster. :)