State of the Economy

[tabs]

As most of you know I follow collectable auctions around the world. While this is anecdotal evidence what I have been noticing is that Collectable prices remain strong to very strong at auction. With the good stuff blowing the doors off. So at least in this market place there doesn't seem to be weakness.

What I noticed over the years is that when a paticular asset class becomes soft another asset class becomes hot. With the RE, $, Bond markets being either under pressure or priced out and the Stock Market with volatility what is left except for hard assets?

This last weekend (Dec 8th and 9th) there were 7 gun auctions taking place. Three of them by Auction Houses devoted to nothing but firearms. One of them was a major auction that achieved nearly $11M in sales. With the smaller venues that I was following, prices might have been off ever so slightly. However with so many auctions going at once dilution is possible.

At the last 2 major auctions, sales were up roughly 30% over previous sales. With record sales in the $11M range each.

http://www.rockislandauction.com/

http://juliaauctions.net/firearms.asp#pastAUCTION

[BeyGon]

I think the people with money still have money, the people that are losing their houses didn't have any in the first place. They aren't going to the auctions.

[jyl]

The asset classes have to be of somewhat similar size for this comparison to work.

RE, FX, bond, and stock markets are so much larger than the "collectible" markets - I mean, billions of times larger - that money leaving the former cannot possibly take refuge in the latter.

I think the collectible markets - art, spoons, cars, what have you - simply reflects the wealth and spending psychology of the higher-income population.

[tabs]

I agree that folks with $$$ are the prime movers in this asset class. They are more financially stable and less effected by the the ups and downs of the economy. Usually older to. As of yet their spending hasn't changed.

Or maybe there hasn't been a speculative bubble develope as of yet? Allthough with the tremdous rise in prices over the past few years, to me it looks unbelievable.

Also each area of Collectable overall is not a hugh market place. That in of itself would keep prices more stable.

What I have been watching for is a speculative bubble and subsequent collapse like that in the art and collectable car market of the late 80s and early 90s.

[tabs]

Yesterdays (Dec 11) Moran Auction in Pasadena, CA. They are known for selling CA Plein Air paintings. This was one of their Antique/Collectable auctions. Comapare prices realized vs estimates. silver, jewelery, art objects were very strong, furniture on the weaker side and art was weak. Overall the auction was strong.

http://search.liveauctions.ebay.com/ws/search/LiveAuctionSearch?ahid=3122&ccn=Antiques+%26+Decorative+Arts&fis=2&frts=0&getresult=&isl=0&lc=1&sacti=23181

[Dantilla]

Real estate is what I know, so real estate is what I invest in.

I haven't been looking to buy real estate for the last few years. Too many people that don't know real estate jumped into the market, and messed up the basic rules. Now that they have left, I will soon begin looking to buy more real estate.

[the]

I used to follow collector car prices very closely, haven't done so much in the past few years, and was surprised to see that prices have gotten very high for many cars! Things like $250K Dinos, 356 Cabs at very high prices, etc.

[Dottore]

Weak dollar is THE big factor.

Collector cars are relatively cheap here, and if you talk to the auction houses they will tell you the big buyers are from Europe and Asia. That in turn drives the dollar prices up.

Bottom Line: You can't draw conclusions about the US economy by looking at collector car prices. We live in a global marketplace.

Thus spoke Dottore.

[Porsche-O-Phile]

I agree with both BeyGon and Dantilla. The time to buy is coming. The idiots will soon be flushed from the RE pipeline and on to the next Ponzi scheme.

Auctions seem a decent way to go, but not very reliable income and very slow growth.

Not a bad hedge though, from what tabs is saying.

[Hugh R]

Originally Posted by the

I used to follow collector car prices very closely, haven't done so much in the past few years, and was surprised to see that prices have gotten very high for many cars! Things like $250K Dinos, 356 Cabs at very high prices, etc.

Yup, sold my Aston Martin DB4 sight unseen, but with a few digital pics to the Prime Minister of Kuwait two months ago for that exact price. Who knows, in the long run, maybe I'm the fool.

[jyl]

I dunno, remember the last classic car bubble in the early 1990s (around the time of the last SoCal house bubble). Collectible Ferraris fell at least -50% in value after that one.

[tabs]

Finite group of items being chased by an ever expanding number of people.

Only a junker Daytona got down to 100K. The better ones only declined to 125K to 150K.

[tabs]

[QUOTE=Dottore;3641537]Weak dollar is THE big factor.

Collector cars are relatively cheap here, and if you talk to the auction houses they will tell you the big buyers are from Europe and Asia. That in turn drives the dollar prices up.

QUOTE]


Yhats why PWD sold his car too cheap.

[hardflex]

on the one hand, I think Auction house prices are artificially inflated to drive up interest and profits, and are not a good indicator of the economy.

On the other hand, my Brother sold his 61 MB 300sl Roadster for 350K this year to a Dutchman.

[legion]

There is a simple process for selling a "collectible" at an inflated price.

Step 1: Get a trade rag to write an article on your item. This will get it out in front of prospective buyers.

Step 2: Contract with a well-known auction house in your collectible's market. Do not accept a "no reserve" auction as this is the auction houses way of stealing the item from you (BJ)

Step 3: Fill the auction with shill bidders. Some auction houses will do this for you (BJ).

[kach22i]

Collectibles are the new gold, when things are down the price goes up.

[Dottore]

Originally Posted by hardflex

on the one hand, I think Auction house prices are artificially inflated to drive up interest and profits, and are not a good indicator of the economy.

On the other hand, my Brother sold his 61 MB 300sl Roadster for 350K this year to a Dutchman.

That's a good price only if the car was pretty ratty. If the car was a 2 or 2+ it would have sold for more than 400K Euro in Europe.

The good exchange rate is driving foreign buyers to the US. I just came back from New York - where the entire city is packed to the rafters with Italian and Brits doing their Christmas shopping.

So if you are looking at last years collector car prices in the US and thinking of selling today, you need to increase the price by at least what the dollar has depreciated against the Euro and Sterling; then you have to increase by normal inflation figures, AND THEN you should increase by another factor that reflects the increased demand from abroad because of the weak currency.

These factors combined explain the dramatic increase in the value of seriously collectible cars in the US in the past little while.

[hardflex]

2 or 2+, you mean, out of 10 or what?



Any idea what a 60's MB 600 sedan would be worth these days?

[Dottore]

Originally Posted by hardflex

2 or 2+, you mean, out of 10 or what?



Any idea what a 60's MB 600 sedan would be worth these days?

No. The usual scale is: 1 for concours condition cars, and then down to 4 or 5 for completely ratty cars. 2 or 2+ would be considered very, very good and original - but not perfect.

Not sure about a 600 sedan - but there are some good price guides in the back of Classic Car and Classic & Sports Car - the two big English publications that you can pick up at most major newstands. Kienle, the big German classic MB restorers will also have some good price guides and information, and were very helpful the few times I have dealt with them. I'm sure you could google them.

[9elf]

A lot of people still have money.

All those people that paid a ridiculous amount for their houses, that are now facing a reality check - well, they had to pay someone.