Quote:
Originally Posted by trader220
About a month ago I was at the Simeone car museum with my son for some sort of show. I struck up a conversation with a 20 something year old who had brought a pristine 55 Speedster and a Testa Rossa....I had to ask what he did for a living, figuring daddy was someone big. He worked for a company that buys cars you can invest in. They sold 2000 shares in the cars they bought. If the cars go up in value your shares should appreciate accordingly. Having been a trader for 20 plus years I asked him a few questions....
Who is the buyer when I want to sell my shares ( who provides liquidity who makes markets) ?
If I buy 1001 shares do I own the car?
Who sets the value of the cars if no live market in the shares is around?
When you trailer up the cars and drag them down from NY for a show who pays for that, or does it go against the value of the car (and therefore the shares)?
I didn't like any of the answers. I thanked him for his time.
There are some ways to invest in those high dollar cars without owning 100% of the car. That's not one I would get involved with.
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I’m an ex trader as well, and as soon as I saw these Rally Road types of ‘investments’, it sure seemed fishy to me. It appears to be a terrific way for whoever is managing the fund to live off of other people’s money and drive expensive cars under the ‘guise’ that it’s to get them out for exercise. Pooling your own money between a couple of buddies to fill a garage for yourselves is one thing, but this has scam written all over it. And assuming they have to keep marking their position to show gains to continue to perpetuate (the scheme) further investments, it’s a bubble waiting to be popped once a flood of investors want to cash out. There won’t be enough funds needed to do so, nor will they be able to raise the funds needed by liquidating the inventory, as anything like collectible cars takes either time or the right auction setting to get top dollar. Being in a time crunch to sell to meet investor demand is a sure fire way to sell below market. Anytime an offering makes claims that sound bogus, it’s probably because the entire offering itself is bogus. For instance, Rally Road claims...”During the offering you can see the car’s history (like who has owned it in the past) and the the value of similar cars sold over time, so investors can get a sense of historical pricing.” Really? I’ve never heard of having access to the name of every previous owner of every used car before. That’s not possible. Occasionally, some cars come with these records, but most don’t, and with those that don’t are they just pulling this information out of thin air?
Even if I’m wrong about all of this, and this is totally legit, what’s the point of it?!? The only reason any of us collect cars is for the pleasure of owning and driving them, this doesn’t even get you that. If you’re buying shares in anything for the primary purpose of making money on it, then buying shares in a company that generates income and profits is a much safer way to invest your money. Now if you really want to invest in a car collection, make sure you’re actually getting a car and its title, and not some fictitious share in a car collection you have no control over or enjoyment out of.
At least when we do take a loss on a car, there was some enjoyment gained out if its ownership and use, which has some value to it. Rally Road must sting pretty bad when you tell your buddy you lost 40k investing in a Ferrari, and they wonder why they never got a ride in it, and then you’ve got to tell them that you never actually owned it, even saw it in person, or got to use it at all! LMAO