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What Collateral Shortage? Collectible Cars Used As "Hard Assets"

Tyler Durden's picture




 

You know it's bad when... The central bank inspired nominal price surge in everything expensive has not quite exhausted the greater fool trend-chasing muppet "wealth-builders" yet. As HedgeCo reports, Classic Auto Funds Limited (CAF) is launching several investment partnerships using collectable classic cars as the "hard asset". Forget oil-wells, real estate, or precious metals, as Robert Minnick (senior managing partner at CAF) states confidently, "many investors are recognizing the rising returns in specific classic cars as a low-risk asset." A "low-risk" "investment" indeed... what could possibly go wrong?

 

As HedgeCo reports,

“Many investors are recognizing the rising returns in specific classic cars as a low-risk asset,” said Robert Minnick, Senior Managing Partner of CAF. “But they do not have the expertise to buy the right cars, nor do they wish to store and maintain them. We’re providing the investment vehicle for any individual who wants to own a piece of an Italian sports car, German sedan, or American muscle car as part of their financial portfolio.”

 

Similar to hard asset investments like fine art or wine, CAF operates by acquiring, storing, maintaining, and then selling the classic cars for its fund stakeholders. The first fund is already underway and is called “CAF/1: The Italian Restoration Fund”. CAF’s restoration team is currently hard at work refurbishing a 1971 Ferrari Dino 246 GT, a 1964 Ferrari 330 2+2, and a 1964 Maserati Mistral 3.5.

 

The Company also plans on having additional benefits for its members and fund investors by providing insider access to a wide range of car rallies, vintage racing, concours car shows and other special events that support the classic car lifestyle. “Regardless of your net worth, it takes time to become an insider,” said Michael Crenshaw, Executive Editor and Special Projects Manger for the Company. “CAF will provide a concierge-like service for members who want to enjoy their investments as a lifestyle and culture.”

Greatest Fool yet? Collateralized Tesla Obligations? Perhaps this is what Draghi intends to use to juice the European economy out of deflation? There's always some collateral left to bundle, securitize, and pitch to a willing (and incapable) investor community jealously regarding the 0.001% "wealth" gains...

 

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Fri, 04/18/2014 - 17:18 | 4673975 RaiZH
RaiZH's picture

Peak stupidity. 

Fri, 04/18/2014 - 17:23 | 4673988 ndotken
ndotken's picture

Sorry but not peak. Things are gonna get much more stupid than this ...

Fri, 04/18/2014 - 17:31 | 4673998 RaiZH
RaiZH's picture

Oh when does it end... I came across a guy once who thought vintage Coca Cola bottles were a safe haven o_o

Fri, 04/18/2014 - 17:38 | 4674024 0b1knob
0b1knob's picture

<  Deflation.

<  Inflation.

What is usually preceded by a collateral shortage?

Fri, 04/18/2014 - 17:43 | 4674035 quintago
quintago's picture

Answer: Collateral damage

Fri, 04/18/2014 - 18:42 | 4674219 Squid-puppets a...
Squid-puppets a-go-go's picture

I rehypothecated my car twenty seven times, then got caught speeding. The officer issued me 27 fines.

with apologies to Steven Wright

Fri, 04/18/2014 - 20:54 | 4674583 motorollin
motorollin's picture

Well here's an easy fix. Collateralize the debt, insure it, then sell it to widows and orphans. Poof! No more tickets.

Wondering where the income stream will come from? Fuck it, that's the investors' problem.

Fri, 04/18/2014 - 23:55 | 4674888 Four chan
Four chan's picture

i actually think this car thing is a great idea, with the way the fed has made

worthless the dollar every hard asset is going to skyrocket and you can have a ball in these while you wait.

Fri, 04/18/2014 - 18:58 | 4674259 robertocarlos
robertocarlos's picture

That's one vote for the D. Thanks Mako.

Fri, 04/18/2014 - 17:41 | 4674032 New World Chaos
New World Chaos's picture

Beanie Babies.  Each one Special Limited Edition with certificate of authenticity and a promise to never make more than a certain number.  But there is no promise about how many different Beanie Babies there will be.  Kind of like altcoins.

This car fund smells like a setup from the day it's born.  Get the muppets to buy toys which the big boys want.  Corzine will probably manage the fund.  Aaaaand it's gone... in 60 seconds!

Fri, 04/18/2014 - 18:16 | 4674127 cynicalskeptic
cynicalskeptic's picture

What had been a hobby for gearheads - those really interested in cars - is being ruined.  Sad thing is that even those that are really interested in old cars can often put them at risk by 'collecting' - more than a few collections went up in smoke when the storage warehouse burned

https://www.google.com/search?q=collector+cars+destroyed+in+fire&oq=coll...

You don't lose one car in a guy's garage but dozens - often very high value ones.

My father used to restore 30's and 40's cars - the people you saw at shows back then (in the 60's and 70's ) really were into cars -you had a pretty varied mix of those who did all the work themselves and a few CEO types who paid others to  do the work.  Now you have too many 'investors' buying up the rare and interesting stuff and warehousing the cars so they rarely see the light of day.

Some of the 'investors' don't have a clue - easy to fake some of the 'rarer' cars.  There are more big block Corvettes around now than were ever made by GM.   Hell you can build a 67 Camaro pretty much from scratch now - brand new body and repros for most parts.

Fri, 04/18/2014 - 18:37 | 4674202 RichardParker
RichardParker's picture

Wonder what will happen to the value of all those classic muscle cars, once the boomers are old enough to wear diapers and start dying off.  I might be willing to give them 20 grand or so for a completely original L88 corvette. Lol

Fri, 04/18/2014 - 19:56 | 4674422 El Crusty
El Crusty's picture

yeah i know the feeling. these "collectors just drive up the price of everything and they have absolutely no appreciation for the car itself, just it's perceived value. and they ALWAYS over pay on every car they buy. unless they immediately turn around and flip the car for a few grand more to one of the other clueless investors they will always lose money. always. people watch too much "reality TV" and think its so easy to buy a car, fix a couple things and flip it for twice what they paid for it.

when it comes to collectable cars there are only 2 people who ever make money on the deal. #1 is the auction houses where these fools flock to. they take 10%-20% right off the top in auction fees. the other? that person is the guy who kept his first car from when he was back in high school, probably only paid 2-3 grand for it and now is selling it for 30-40 grand to some dumbass in a suit who has no clue what a camshaft is. he'll find out about the shaft alright, but not the one he was hoping for...

Fri, 04/18/2014 - 17:51 | 4674058 i_call_you_my_base
i_call_you_my_base's picture

It never ends, it just gets worse, every day worse than the last, and then we all die. Good luck.

Fri, 04/18/2014 - 23:56 | 4674892 Four chan
Four chan's picture

every day is better than the next.

Fri, 04/18/2014 - 17:28 | 4674000 knukles
knukles's picture

Yes, we have no bananas

Fri, 04/18/2014 - 17:40 | 4674022 ZerOhead
ZerOhead's picture

They have absolutely no idea what peaks of stupidity these clowns are willing to ascend...

Fri, 04/18/2014 - 17:49 | 4674049 JPM Hater001
JPM Hater001's picture

I'm going to disagree.  I've seen the documentary Idiocracy...

Fri, 04/18/2014 - 17:51 | 4674057 debtor of last ...
debtor of last resort's picture

I welcome the rehypothecated Treasury-Ford.

Fri, 04/18/2014 - 18:34 | 4674194 Oquities
Oquities's picture

not really. there is such a thing as a Fiat car, but there are no fiat cars - they are all tangible assets, whether they appreciate or depreciate.  far superior to some fiat currencies if you know what cars to buy.

Fri, 04/18/2014 - 18:42 | 4674218 RichardParker
RichardParker's picture

Wouldn't owning a Fiat car be a liability instead of an asset? I mean they did 't call those cars Fix It Again Tony for nuthin'. Lol

Fri, 04/18/2014 - 18:44 | 4674223 Oquities
Oquities's picture

i don't know about the current Fiats, but the older Fiats were very unreliable, just like all fiat.

Fri, 04/18/2014 - 17:19 | 4673977 stant
stant's picture

Can I get a sub prime loan on that Shelby?

Fri, 04/18/2014 - 18:24 | 4674155 cynicalskeptic
cynicalskeptic's picture

Some Shelby serial numbers have 3 cars in existence now.  The original was wrecked early on but someone got the engine block and 'rebuilt' a whole car around it.  Someone else got what was left of the frame (Talking about a Cobra - AC based not Mustang based) and someone else got the cowl or other body part with a VIN on it.

Which is 'original'?   In reality, none of them.  They are all 'recreations more than 'restorations.'    

I can recreate a COPO 1969  427 Camaro for $50,000.  An 'original' one is 'worth' five times more?!?!  Most people couldn't tell the difference.

Fri, 04/18/2014 - 17:21 | 4673984 McMolotov
McMolotov's picture

Next up: vintage GI Joes as hard assets.

Fri, 04/18/2014 - 17:28 | 4674001 negative rates
negative rates's picture

Gi Jane looks wound up pretty tight too.

Fri, 04/18/2014 - 17:36 | 4674017 ZerOhead
ZerOhead's picture

Restore prosperity to America.

Reinflate the Beanie Baby Bubble NOW!

Fri, 04/18/2014 - 17:48 | 4674048 BlindMonkey
BlindMonkey's picture

"My doll's a whore."

Fri, 04/18/2014 - 17:51 | 4674059 NOTaREALmerican
NOTaREALmerican's picture

dot com.   IPO, baby!!

Fri, 04/18/2014 - 17:26 | 4673997 Conax
Conax's picture

Anything but PMs seems to be the idea.  The propaganda is so pervasive it even beguiles the monied class.

Fri, 04/18/2014 - 18:26 | 4674158 cynicalskeptic
cynicalskeptic's picture

You're seeing some ridiculous prices in the Art market.   Same reason.  The stuff gets bought and parked in a warehouse in a Customs tax-free zone in Zurich or somewhere.

Fri, 04/18/2014 - 17:30 | 4674005 lemonobrien
lemonobrien's picture

this is all baby boomer bullshit; what we're seeing is the death of a genreration and the sproutings of anew.

Fri, 04/18/2014 - 17:45 | 4674038 813kml
813kml's picture

I think the Boomers will get planted much sooner than they planned.

Fri, 04/18/2014 - 17:34 | 4674007 Smegley Wanxalot
Smegley Wanxalot's picture

If it's a very dependable and practicle used vehicle, like a truck, that is not overburdened with all the electro-connectivity-shit and NSA tracking software and is easy to fix on the fly, I can see where the vehicle could be worth some money soon.

Fri, 04/18/2014 - 17:52 | 4674061 BlindMonkey
Fri, 04/18/2014 - 17:54 | 4674065 sdmjake
sdmjake's picture

Amen Smegley. I have a classic car that is pretty dependable and, when not, is easy to fix. Its not worth much given rust n stuff but my old 1967 VW Camper Bus is awesome. (I've been offered much more than it is worth on a number of occasions) I love that it has a very basic engine and can be fixed with duct tape and baling wire if necessary (have used both fixes to get home before). No computer chips and stuff. Costs almost nothing to tag and insure. Screw those fancy cars.

Sat, 04/19/2014 - 12:00 | 4675545 bpj
bpj's picture

No air bags, I won't ride in it. Technology does have advantages. I once owned the classics, 59 beetle convertable, 63 Corvair Turbo Spyder, 66 Corvair turbo, 65 Mustang solid lifter 289, 67 beetle, and I can say with out any hesitation they were all rattle traps and my late model Accord trumps them all.

Muscle cars came of age when 80s cars were so anemic, however, now  you can buy a 6 passenger Audi and blow the doors of a Hemi Cuda by 2 seconds in a quarter mile, what's  the point anymore.

Fri, 04/18/2014 - 17:40 | 4674027 Oldwood
Oldwood's picture

Two great market motivators, fear and greed. People are desperate to find safety for their assets and also have an undying need to buy things that they think say they are cool, and definitely not a self indulgent wiener.   http://www.youtube.com/watch?v=fPS02EFgdfE

 

Fri, 04/18/2014 - 17:45 | 4674028 deflator
deflator's picture

 The, "get rich slowly buying stocks" crowd has to have something non-inflationary to cash their blue chips in on.

 

 The maintainance on classic cars is astronomical. For every winner there are a thousand losers..

Fri, 04/18/2014 - 17:55 | 4674066 negative rates
negative rates's picture

All the less risky to put your money there.

Fri, 04/18/2014 - 17:40 | 4674030 seek
seek's picture

An underground tank of the gas they run on would be a better long term investment, by far.

Fri, 04/18/2014 - 17:56 | 4674068 813kml
813kml's picture

But that '69 GTO will look badass cruising across the dystopian wasteland when we reach the 'Mad Max' stage of the game.  

Fri, 04/18/2014 - 17:48 | 4674046 Ranting Troglodyte
Ranting Troglodyte's picture

I knew my '93 Blazer would eventully become investment grade.

Fri, 04/18/2014 - 17:50 | 4674050 icanhasbailout
icanhasbailout's picture

YES!!! Holding onto those Hot Wheels is finally going to pay off!

Fri, 04/18/2014 - 17:50 | 4674052 BlindMonkey
BlindMonkey's picture

Can't wait until Uncle Sam is putting up fighter planes and warships as collateral. That will probably represent "peak stupid".

Fri, 04/18/2014 - 17:56 | 4674069 negative rates
negative rates's picture

It's just as easy to fly by wire um into the ground and then take the tax write off.

Fri, 04/18/2014 - 17:56 | 4674067 ThisIsBob
ThisIsBob's picture

Old cars, old houses, old women - the maintenance will kill 'ya.

Fri, 04/18/2014 - 18:09 | 4674107 Bunga Bunga
Bunga Bunga's picture

Let's use tulips as collateral.

Fri, 04/18/2014 - 18:13 | 4674117 Who was that ma...
Who was that masked man's picture

Thanks but I've already got all my money invested securely in tulips.

Fri, 04/18/2014 - 18:16 | 4674124 MrPoopypants
MrPoopypants's picture

Doesn't sound much more foolish than starting a fund based on Renaissance paintings and sculptures. Many of these cars are highly desirable and extremely rare. The point is, they are hedges against currency devaluation.

I would rather the wealthy plow their money into collectibles than PMs and commodities -- keeps gold, gas, and grains cheaper for the rest of us.

Fri, 04/18/2014 - 18:19 | 4674134 jonjon831983
jonjon831983's picture

"Thanks Ben Bernanke: Using A Shotgun As Down Payment For A Car"

04/03/2013 10:57 -0400

http://www.zerohedge.com/news/2013-04-03/thanks-ben-bernanke-using-shotg...

Fri, 04/18/2014 - 18:25 | 4674156 oooBooo
oooBooo's picture

Just wait until the baby boomers start selling.

 

 

 

Fri, 04/18/2014 - 18:33 | 4674189 cynicalskeptic
cynicalskeptic's picture

Men play with the objects tehy lusted for in their youth.  For my father's generation it was 30's Fords.  Now you're more likely to see a nicely restored one bought by a younger guy and hot rodded.  They're not all that fun to drive in their original state - mechanical brakes, flatheads that drop valves on unleaded gas.....

Guys in their 50's and 60's are into 50's and 60's Muscle cars - and given that there wasn't much worth anythign for most of the 70's and 80's these cars retain appeal for younger guys.

But the reality is that younger guys are far less interested.   My sons aren't that into cars.  The ones that are usually can't afford anything from that era.  I suspect it's a dying hobby as fewer and fewer grow up doing work on cars - the new ones are a real pain to work on.   Something to  be  said for the older ones though.  Easy to workon.

Fri, 04/18/2014 - 20:07 | 4674454 hesk
hesk's picture

I was talking about this with my High School buddy, Both of us were car guys in the 1990's. I bought a fixer upper 1970 Firebird for $800 in 1999. Fast forward to now and 4,000 to 5,000 thousand gets you a rusted out rolling shell. lol. I am currently re-enrolled at a local Penn State branch and have yet to meet or over hear kids talking about turning wrenches like I did in my late teens early 20ies.

Fri, 04/18/2014 - 21:00 | 4674594 Angus McHugepenis
Angus McHugepenis's picture

hesk & skeptic: I agree with you both on various levels. I'm 50 years old and grew up with my buddies in the 80's fixing up late 60's and early 70's muscle cars. Back then you could get them cheap and parts were plentiful. I recently had a guy offer me his 76 Ford one-ton dually with 60k original on it for $20,000 (that was the appraisal - he is the original owner). He was an old guy that didn't need the money so I didn't tell him to fuck off and tell him that replacement parts will be a bitch if somebody actually wants to use it. And if you can't use it, it's not worth it.

I'm not surprised that kids these days aren't interested in that history. Seriously, what are their own references... the Smart Car? It's too bad for the kids these days. Until you've driven one of those old muscle cars you can't possibly know how it feels. It's the same feeling my long ago girlfriend had when I taught her how to fire a shotgun for the first time. And she was anti-gun until she fired one.

 

Sat, 04/19/2014 - 09:06 | 4675237 El Hosel
El Hosel's picture

"Kids turning wrenches"..... LOL Maybe down on the farm or ranch, otherwise not so much.

Fri, 04/18/2014 - 18:52 | 4674241 A Nanny Moose
A Nanny Moose's picture

Trading in their Hot-Rods, and Harleys for a scooter store scooter, paid for by John Q. Taxpayer.

Just imagine....bike gangs...on mobility chairs

Fri, 04/18/2014 - 18:32 | 4674188 Joebloinvestor
Joebloinvestor's picture

I can't wait to see the shipping containers coming here filled with counterfeit cars.

Fri, 04/18/2014 - 22:10 | 4674737 optimator
optimator's picture

No big deal, after all you'll be buying it with counterfeit money.

Fri, 04/18/2014 - 18:39 | 4674209 Peter Pan
Peter Pan's picture

What next? Stamp collections, toy cars, football cards?

Why not borrow using your kidney as security?

There is no decent collateral left in this world other than unmined gold and silver.

Fri, 04/18/2014 - 18:49 | 4674231 cheetahbaby
cheetahbaby's picture

Buy at Mecum, sell at Barrett-Jackson....

Fri, 04/18/2014 - 19:07 | 4674288 shermacman
shermacman's picture

I have a 1996 Honda CRV with rust around all four doors and wheel wells! I'm rich! Ima gunna buy moar Amazon stock! See you at the yacht club, bitchz!!!

Fri, 04/18/2014 - 19:16 | 4674312 redwater
redwater's picture

I have gold, silver, crypto coins, guns, ammo, food and no debt, wife or kids.

I bought and restored an older/cheaper Porsche recently. Best piece of sanity I bought in a long while. Purely for fun and sanity's sake. The whole experience has been great from getting away from the craziness of the world.

If you've got the basics squared away, make sure you still keep living life.

If the zombie acopalypse happens, I'll be the one with the Guards Red Porsche Turbo with the top-mounted AK-47.

 

Fri, 04/18/2014 - 19:49 | 4674398 22winmag
22winmag's picture

I hear you. With food, fuel, and ammo stacked to the ceiling and a good stash of PMs, I went out and bought a '76 Olds 88 with 50,000 miles on the clock. Last year of the pillarless hardtop, last year of a real Olds 350. It's just for fun and it's a driveable reminder of simpler times.

Fri, 04/18/2014 - 20:10 | 4674460 hesk
hesk's picture

Great cars, I had an 71 Cutlass Supreme with the Olds Rocket 350. Kicking myself for selling it but just picked up an 87 Iroc z-28 to fill the void a bit.

Sat, 04/19/2014 - 03:17 | 4675055 stopthejunk1
stopthejunk1's picture

lol. Best thing about these old cars is - no electronics! EMP your ass off, I don't give a damn. My daily driver is a 1966 Chrysler. There's not a single chip in it, not even in the radio.

Fri, 04/18/2014 - 19:43 | 4674378 Last of the Mid...
Last of the Middle Class's picture

always wondered when the chinese would try to crack the car market. Jeep is over there now giving them all the info they need to duplicate their product under the auspices of building a car there. shouldn't be many years before the counterfeits show up. If the chinese ever penetrate the care market that will be the final nail in the coffin for the us.

Sat, 04/19/2014 - 03:15 | 4675054 stopthejunk1
stopthejunk1's picture

You won't live to see the day that there's a worthwhile car built in China.

Fri, 04/18/2014 - 19:48 | 4674396 TheFulishBastid
TheFulishBastid's picture

First thought:

 

Seems Legit

 

Second thought:

 

I could've pulled this scam.

Fri, 04/18/2014 - 20:54 | 4674584 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

40oz to freedom, silver that is, @$21.66/oz a hard asset; as a for a car, Honda civic 13 years old, 98k miles, easy fixens and 34 mpg.

If I learned one thing on ZH it is about hard, real asses, sorry assets.

 

Fri, 04/18/2014 - 21:48 | 4674681 Downtoolong
Downtoolong's picture

I delved briefly into exotic cars; a Ferrari 328 GTS. Not much of a collectible really, because, there were so many of them made. It was fun to drive though. It cornered like a jackrabit, and the aerodynamics make it more stable at 150mph than at 70 mph (honestly, that’s just what I’ve heard).

What I also learned from being involved in this experience is that most investment grade exotic cars are:

a)  Owned by rich people who never drive them, because, even they don’t want to pay $3k for a coolant pump or $10k for a full tune-up, or

b)   Owned by gambler style Investors and dealers who never drive them, who are highly leveraged, and who only rarely profit from their investment (think Tom Cruise in early scenes of Rain Man).

Like art, this is an investment that only makes sense among the rich who are willing to play the tax game among themselves (I’ll buy your Shelby Cobra 427 if you’ll buy my Van Gogh). If this is the best investment opportunity we can hope for we are truly fucked.

Sat, 04/19/2014 - 03:14 | 4675053 stopthejunk1
stopthejunk1's picture

Anyone that pays 10k for a tune-up, on any car, is a fucking moron.

You can do it yourself for $100, tops, if you're not a completely helpless, lazy nitwit.

Fri, 04/18/2014 - 22:15 | 4674746 SpasticGramps
SpasticGramps's picture

I'm collecting my shit out of the toilet and starting a firm to securitize it. What........Draghi is already doing it? Fuck.

Fri, 04/18/2014 - 22:30 | 4674782 NoDecaf
NoDecaf's picture

Why do I have this image in my head of the fund manager doing donuts in the parking lot before driving off into the desert sunset along with a couple of young hotties. Sitting in the office is the last "investor" looking out the window wondering what the celebration is all about.

Fri, 04/18/2014 - 23:02 | 4674827 Magnum
Magnum's picture

Mark my word. Buy a 1960s VW bus, westfalia if possible, in good condition.  Not easy to find.  Wait 5-10 years.  Double your fiat or better.

Sat, 04/19/2014 - 03:12 | 4675050 stopthejunk1
stopthejunk1's picture

Buying a hard asset is a good thing to do.

Buying assets that you don't understand and have no interest in (which is why you will never understand them) is just PLAIN FUCKING STUPID.

But since we have the baby boomers out there, there's a LOT of stupid money floating around.

Sat, 04/19/2014 - 05:21 | 4675099 el-greco
el-greco's picture

...in other words, they suggest investing in a molotov cocktail. a bunch of boys looking for a fun way to blow OPM.

Sat, 04/19/2014 - 08:52 | 4675228 fasTTcar
fasTTcar's picture

Just another step towards the paradise that is Venezuela:

 

http://www.csmonitor.com/World/Americas/2013/0924/Venezuela-where-used-c...

 

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