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Did The Classic Car Bubble Just Quietly Burst?
In May, Pablo Picasso’s De Women of Algiers (Version O) sold for a record $180 million at auction prompting us to remark that if the Fed's bubble busting team led by Stanley Fischer was looking for runaway inflation, it could have easily found it without any particular effort at Christie’s.
We went on to compare what may eventually be go down in history as “peak Picasso” with what looks like a bubble in $100 million homes: The nearly $200 million price tag for the “riot of colors focused on scantily dressed women” is, according to WSJ, reflective of the work’s “trophy” status which it earned as a result of its “ownership pedigree”. Translated from high-end art world parlance to plain English: for billionaires who have seen their obscene fortunes balloon under monetary policies designed to inflate financial assets at the expense of everything else (including market stability), purchasing art affords the buyer an even greater opportunity to “boast” than hoarding $100 million homes because after all, there a lot of mega mansions, but there’s only one vibrant, multi-hued Picasso riff on a Delacroix, so really, $180 million is a bargain, especially when most of the purchase price will be recouped by S&P 2,500, or SHCOMP 6,000 (depending on the nationality of the unnamed buyer).
But it’s not just rare art and obscene homes that appear to be reaching peak insanity, it’s collector cars as well which, incidentally, speaks to the same dynamic that’s driving the art and mega mansions markets: namely, the relentless, central bank-fueled run up in financial assets has given the ultra rich more money than they know how to spend, leading directly to hyperinflation in the types of things billionaires buy when they get bored. Take the 1955 Mercedes 300SL Gullwing, which has outpaced the six-year US equity rally:
Here’s some color from Jalopnik:
What you're seeing here, courtesy of the collector car market wizards over at Hagerty, is the price of a 1955 Mercedes 300SL Gullwing as compared to three major stock market indices and the price of gold. While the economy has been soaring for some, it's been a rocket ship to the greater reaches of the Universe for the world's obscenely wealthy.
And perhaps nowhere is that reflected greater than the price of one little old German car. For reference, one sold last August for $2,530,000.
(1955 Mercedes 300SL Gullwing)
So we're left to wonder the reasoning reasoning behind all the massive jump in valuations, and with much of economics, it's complex. First, and perhaps most apparent, there looks to be some sort of bubble economics at play. As Hagerty analyst Dave Kinney points out:
There continues to be some speculation that prices simply cannot continue this arc for much longer, though the "if" of this question is less insightful than the "when." That million-dollar answer is yet to have consensus.
[One big factor] .. is the .. rise in income inequality. As the wealthiest get even richer, they can afford to bid higher and higher prices on the highest-end of collector items.
As for broader market trends, here’s a look at how well German collector cars have fared in the now ubiquitous Keynesian trickle down ‘wealth effect’ monetary regime…
...and 1950s American “classics” have done even better...
But the bubble may now be showing signs of fatigue as Hagerty's "market rating" (a weighted algorithm to calculate the strength of the North American collector car market), just suffered its largest one month decline in 14 months.
Via Hargerty:
- Following May’s record high, the Hagerty Market Rating recorded its biggest decline of the last 14 months, falling a third of a point.
- May saw a 1/3 reduction in the number of cars offered at auction compared to May 2014, primarily due to single-collection sales tapering off.
- Following a strong year, private sales recorded the smallest gain this past month of the past 12 months.
- Insured values again set record highs, but month-over-month changes in both the broad and high-end markets slowed for the second consecutive month.
And some specifics from Jalopnik:
Hagerty uses its own proprietary market rating system which takes into account the difference between the value cars are insured for and how much they actually sell for, and according to the insurance company, the dip is fueled mostly by a drop in single-collection big sales. But it’s also fueled by big drops in sale prices of specific, popular cars as well:
1967-1973 Mercury Cougar - average sale price dropped 21% year-over-year and percent selling above insured value fell from 36% to 23%
Jaguar XJ-S - average sale price dropped 15% year-over-year and percent selling above insured value fell from 40% to 4%
Still, as you can see below, the bubble looks to be largely intact, and why shouldn't it be? After all, there was no surprise 'liftoff' today and based on the record $141 billion in buybacks US corporates announced in April (that's up 141% Y/Y in case you were wondering), stocks may trend even higher on the way to their date with 1937.

(Hagerty Market Index)
* * *
We'll leave you with what we said last month about greater fool-driven, billionaire trophy hunting: Neither art nor cars pay any dividends, so any purchase is merely a gamble on further price appreciation driven by even greater asset bubbles in the future.
Rest assured DM central banks will do their very best to ensure that these gambles pay off.
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Greed is the inventor of injustice as well as the current enforcer.
http://vimeo.com/channels/philiac/128759560
Injustice....wanting what you don't have yet think you deserve. Sounds a lot like greed.
What employer is not pay in fair wage, Boris is taking home in lunch box. During 1990s, Boris is fill entire fridge with fissile isotope.
Cuba has A LOT of classic cars in great condition, just saying...
Fixed it:
Cuba has A LOT of classic cars.
Most have had their v8 gas engines removed and replaced with Soviet built diesel engines. Lots of 4 doors, lots of people transporting cars, etc. No Corvettes, Ferraris, etc.
edit
The Federal Reserve has created bubbles everywhere. So many to pop.
I had a Benz gullwing. Meh, not that great.
Boris is drive Lada from Somara Oblast, but high proof vodka is corrosive engine block. Now Boris is share family bicycle.
Yep, hard to get into. Slide your ass in, hopefully the doors work. Astronomical rise in value over the years, sure love that part!
No.
A lot of these classic cars are just ugly (only old farts gona like um)
I dont understand why anyone would pay 70,000$ for a 100 year old benz.
You know whats IN?
69-90s cars (but you gota pick the creme of the crop)
People entering the 25~35 Year old group getting a little nostalgic. . . nothing like a Gt500 to get the blood boiling a bit.
As for all those Early 60s - 30s to 40s cars? lol junk.
And skip most of the 80s cars unless you are talking about the few exception (lambos, delorians, porsches Ferraris) you know all the cars only drug dealers and stock brokers drove in the 80s.
Then you have the early 90s cars . . . ;p
Lets face it, most everything made after 2001 kinda....sucks.
Like the new Spin-offs/re-hash of Classic American Muscle cars.... ugly knock offs with plastic parts.
Very few cars made after 2001 have the class of the 69's 70's 90's
The bubble didnt just pop, prices just need to becoem reasonable because a lot of these cars are in horrible condition . . . and need a lot of work ,all the good ones have been bought up already and no one is letting them go.
funny!
K-Car is nice reliant automobile:)
boris is secret canadian?
boris not wear real fur coat, is cruel.
Had all the muscle cars back in the day. They looked good but were pieces of crap. Noisy, rattles and squeaks, and brakes for shit, but they did have power. Lots of people died in them. A new SRT dodge is better than any of them....great suspension, brakes, comfort and reliability. I have some nostalgia for the old cars but I take one out and drive it and then find myself wishing to get back in my real car.
Nobody can hack the computer controls of your 1970, "Vanishing Point" Challenger, because it didn't have any. As Michael Hastings would be able to attest if he were alive to do so, your brand new car can be hacked and made to crash.
i am kowalski.
Which one of you said that?
" A new SRT dodge is better than any of them....great suspension, brakes, comfort and reliability."
Nigger please.
My '86 Mustang SVO will literally drive circles around your Chrysler garbage.
My '87 Chevy truck (with 500" big block Cadillac engine) weighs less, with more power. Wanna race? How many sheets of plywood can you fit in yours, and is the paint getting scratched of any concern?
My '79 Malibu with 400" SBC is no slouch either, and rides/handles/brakes just as good as any new car, while being far smaller and lighter too. Steel bumpers. No plastic shit to be found on that car.
Needless to say, even the oil filter (let alone everything else) on any of these costs a fraction of what yours does. Maintenance is cheap and easy....even fun.
You can keep that new shit. When the EMP comes, I'll still be driving....while your bitch ass is sitting on the side of the road. Maybe I'll pull the motor out of your piece of shit and put it in something more worthwhile...like a water pumping station.
Good evening wolf. Off topic here, but u seem to know this market. We have 2 rord racing concept cars built by Mclaren. FR200's. Ford focus. Only two in existence. Built in 2000. One in Fast Furious 2, cameo appearance. Google em, they were on the covers of a few magazines in 2001. Are they worth anything substantial? Is this bubble the time to sell?
Anything with points is a pain in the ass.
In April we were at Martins http://www.martinauctioneers.com/auctions/carriage.php
I was surprised to see a buggy sell for $1500 us jew dollars. Damn thing was only worth $400!
old cars are also good for teaching your kids how to keep up a car. can't hardly find the parts in a modern car, behind all them hoses and computers....
The only lessons our kids will need are how to declare bankruptcy and file for unemployment.
Everyone needs a good used getaway car that still runs without a computer. Don't care what year, make or model. Older pickups preferred. Anything you can learn how to fix yourself if it overheats or breaks down. Have certain parts stored in the back trunk just in case. Just as important as the GGGs.
+1
Just picked up a mid 80s Chevy the other day. Paint is shot, dash is cracked, other than that it's NICE. Previously owned by a state ag department, then bought in '90 by previous owner, who took care of it. Runs and drives like a brand new truck, old (peppy) 305 motor and all. Straight frame, not a speck of rust. $1200.
There are SOOO many good deals out there right now. It's a buyer's market. Take advantage of it.
i just saw a rusted out 365 porsche with no motor fail to sell at 71k.
Thieves are quick to squander their ill gotten gains. People who actually toil for it are not so quick to let it go...much to Hilsenrath's dispair.
When will the vintage electric guitar bubble pop?
Vintage Electric guitars popped when peak bubbles all popped in 08 after Lehman. Peak Vintage Drums popped at the same time. I have a number of Vintage Drums myself. I have a Slingerland Radio King Snare worth $1100. USD for the snare alone. If I list on EBay I am certain to sell quickly so it may be worth a bit more. Vintage stuff holds the price always.
ha! a bubble for the 1%'ers. gotta love that. the middle class had their turn at the trough, then it popped in 2008.
then the uber rich got thier 7 year bubble. now its gonna pop.
Neither art nor cars pay any dividends, so any purchase is merely a gamble on further price appreciation driven by even greater asset bubbles in the future...
NOR GOLD BITCHEZ HAHAHAHAHA!!!
Billionaire Beanie Babies FTW!
.
..
http://autoweek.com/article/car-life/collector-car-price-bubble-one-chart
Keep in mind that the quote above was published in January 2014, so, history has yet to rhyme it seems.
And, it's not a bubble until it bursts.... <a very good read>
The decline may be due to lots of collections selling lately. My first thought when I see the large private collections moving is the uber rich are liquidating because maybe they know something. Throwing that much inventory out in the market has got to move the pricing somewhat.
High-end collector cars aren't much fun; they're too pristine and expensive to drive. One bump from a shopping cart ruins a $6K paint job.
A friend of mine has an old Ford Fairlane 2-door hardtop with a big block in it. Spray painted primer gray, ratty upholstery, rear wheel wells have a patina of molten rubber, asphalt, & stone chips. It's got faded performance product stickers from the 1960's plastered all over the rear window and the back end is lifted somehow to accommodate a set of wide tires and formerly shiny chrome rims. He's a good mechanic and keeps the mechanicals in A1 condition. It's his big boy toy.
He takes it out and does burnouts on the back roads. Throws gravel all over Hell doing doughnuts in the company parking lot. Now that's a fun car!
Peak Barrett Jackson Car Auctions hit way back when a decade ago. The Classic Car market tanked out due to the glut and peak pricing. What is most telling in the future of trends in car markets for growth industry is the 'Rat Rod' car culture. Rat Rods are fetching quite a bit of interest and the money for parts. The rest of the car industry is dying out IMO. Billions in expected gains on appreciation have been lost since 08 and peak housing subprime loans. People will be lucky to get half their investment back when they opt to sell in the future. The Lemmings are most assuredly jumping off the cliffs worldwide on pricing today.
Challenger Hellcat. That car 40 years from now will be like a 1970 'Cuda today. And a pristine 1970 'Cuda by then will be worth...
Got a 71 Mach , 1949 Chris craft boat, a 3/4 scale p 51 mustang, and my pride and joy is the lauterbach hydro with stant in the cockpit in pic above, and my old hd sportster . These days I don't get to enjoy them much. Family comes first. No i am not rich ,just a old hillbilly from ky with bad habbits
Certain bikes are doing well.
RC-30's
750 F1's
for future investment, look for clean R-7's...They're due to go the way of the RC-30.....keep you're eyes out for 1992 900ss (only the black metallic ones, they bought less than 100 into the US)....also 93 750 SS (more rare then the "limited" Superlights)....good CLEAN 888's are gonna shoot through the roof in the next ten years.
I rebuild carbs for the old V4 Hondas. Shame the big Magna never really took off as a high dollar collectible. Or not. Cheap hp for an old classic that still hauls ass.
Ran 4 cylinder Chevys for years played around with 4 and 6 bmws too , but cutting a 8 cyl Chevy into a v 4 was just fun ss hell.Fast. As shit for a few laps then fell on its face. Fuel proplem running methenol
The figures are exactly right. An exchange deal I had with a german classic car company for a '57 300SL roadster went South about 5 yrs ago when the price suddenly doubled within months. Look at the prices of boat tail Alfa Spiders from the 60's and those have gone apeshit in recent months too. You could probably have picked one up for £5500 a couple of years ago, now they are going for 21k +. It's been crazy.
I don't think this trend is going to stop any time soon as long as can is being kicked into the future. It will take a gigantic reset to burst this classic car bubble.
Best car I remember was my 1969 AMC Ambassador in Agent Orange color.
Did it have the AM only radio?
I never could afford the upscale Ambassador.
Stuck with Matadors. 302 v-8 got almost 50 mpg...
of motor oil!!!
LOL, my dad bought a 69 AMC Ambassador used as a second car back in 1978. It was dark green. The interior was a slightly lighter shade of green. The car was ugly as fuck. I think it was an inline-5.
That was the first car i got to start as a 6 year old. Something was wrong with the starter solenoid, so when it wouldn't start someone (usually my mom) would have to pop the hood and fiddle with the solenoid. Then she'd yell for me to turn the key. I would and the car would start. It was so cool.
Who gives a crap about this so-called bubble? I've got a '64 pumped GTO goat, 2 - '57 Bel Air's, one '59 Apache double deluxe Fleetside with a radical 348 and a rare'76 Porsche 930 turbo race car from a famous owner, WTF you going to invest in that's better?? Dildos? Baby boomer's are retiring at record numbers and they want them back...
For me, it just a Hedge, I like good property too.
Nice collection. the GTO is of envy. Hang onto the Bel Air. You have a excellent Porshe. If not a daily driver, the engine seal replacement gets under my skin. Bought a 2003 911 carrera, it was a hit and run purchase experience. Fun for about 15 days. Then you felt the engine sounded like a sewing machine. No offence to owners out there. It just wasn't for me.
Die hard BMW fan. Once you drive a M series, you get stuck in your ways. Keep collecting vinatage cars..
Thanks Atomizer, never had an M series. May try one out!
I have one of those cars with entertainment screens in the back seat. I'll jump back into the rear seat at a traffic light to watch my redbox rental movie. Obviously kidding, stupid concept. I just care about HP/0-60 sec. One of my old BMW's had a old analog front console TV. The minute you hit 10 MPH, TV was disengaged. So the dumbfucks moved them to the back seats. No rear passengers, no TV, DVD usage. What a brillant concept the automotive cunts managed to figure out.
Call me when my '62 Fairlane is worth $100k. Yes, that is /s
No air bags. No ABS brakes. No crumple zones. No emissions bullshit.
Gotta love em, but wouldn't want to drive one much.
People the world over love classic cars and motorcycles.
Not only has that Gull Wing appreciated in value, if not registered hasnn't cost a cent in insurance or taxes, and if sold carefully no tax on the profit. And you can carefully drive it a little and show it to your friends in your garage. I went to school in the 60's with a guy that had a Gull Wing Mercedes. Had fun filling the tank as it held around 66 gallons. It once belonged to Onassis, racing stable I think. Me, I'd like a nice black 4 door rag top Mercedes 770K.
When I was a kid, my school locker was plastered with Mercedes photos. That was the car I was going to buy. The quality slowly dwindled. The 70-80's were built like tanks. Mid 90's, were signs of utter shit. Switched to BMW, and bought one. Never looked back. As a side note, whoever designed the Maybach should be shot. What a fucking eyesore.
The thing you appreciate about old cars is that all the engineering challenges had to be solved mechanically, without chips or printed circuit boards or microprocessors. Amazing ingenuity, especially the German cars. Obviously, no ABS brakes, airbags, cruise control, etc, but a real seat-of-your-pants driving experience.
My 1968 Camaro I paid $1,000 cash for in 1976 is Still worth More than $1,000.
I see rich morons paying $3,000 for a Mosin-Nagant rifle on gunbroker and then patting each other on the back like they're found a way to make their dick 12 inches long.
The foolishness is amazing.
Pythons and Diamondbacks suit me as my bubble of choice.
No. Where else are you going to put your money if you are a rich banker? Bonds?
I'll stay with my '86 Toyota pickup. Drive it once a week to the dump - custom paint job (1990 Cadillac Sky Blue) from an accident - 125K miles. 5 on the floor and a 4 low that will crawl up about any hill around. Gets a little moldy in the winter, but what the hell. My go-to vehicle if the SHTF. 17+ mpg. Gonna drive it until it's dirt, or I am - suspect I will go first. Love that SOB.
Thanks for the useful info well if you do take a good care and that to in a regular time span wise then you wont be witness for any trouble in long run . So always careful and follow strict resume to visit a service point and must know the general DIY stuff that will help you out when you alone in some place.