The Porsche bubble will pop when U.S. Equities pop. Once interest rates increase, between 6-9 months later, blood will begin to be seen in the streets. The Dow Jones will capitulate down 50% and along with it will come luxury goods. I don't "think" this is a possible outcome. I am certain in my own mind and view of global and US economics. The Fed tried buying their way out since 2008 and has done nothing but made things far worse than ever imagined. It doesn't take much to do a websearch to get the viewpoints of the smartest and wealthiest people in the world. Soros, Paulson, Dalio, Icon, Tudor Jones, Druckenmiller.

^^^^^ +1

All that phony money will turn on itself!

I know folks that have said interest rates will skyrocket who have been saying this for 5+ years. If you are a bear and always a bear, you will be right sometime. Must be watching a lot of FOX news. I think the equity market has had the easy gains and it will be a stock picker market but 50% drop, no way.

50% would take us to 9, which is higher than the low a few years ago. Perspective I guess. BUT,,,if it does go, and I've sold my 2 cars and have cash in hand,,,,,,,can you imagine the deal I'll get on a 03 or 04 tt? Folks will start calling me a Carpet Bagger!

If the equity market or Porsche market does that, even though I have not sold out of either, I would buy the hell out of both.

HugoBear,

I am not debating nor being aggressive by saying this but you are the exact reason why it will drop 50%. And no, I don't watch Fox nor television for that matter. And I haven't been a bear and am not a bear at present until rates rise. Liquidity = the market. We are so overbought once the fed stops the liquidity, it's down we go. Believe me, I wish I was wrong and you were right.

The difference is if it drops, it won't be a V shaped recovery like in 2008 as the fed won't be there to save the day.

I could see us going down but not 50% in either market is all I am saying. As long as employment was not super adversely affected, I wouldn't even mind these markets coming back down a bit-it is healthy.

^^^^ Won't happen. The FED wont allow it. They'll just drop the interest rates back down and all will be happy. Free money. The only thing that will interfere is some kind of catastrophe that affects both sides of the pond,,,,Oh wait! That's coming too!!

Hugo,,,,your post interfered with my "^^^^^"

I don't think either of us could possibly claim to be right or wrong here….

One of you two should just drive east/south (about the same driving time) and buy my SC as an investment!!!!!!

I bought mine in 2011 and haven't put any voluntary non qualified money into the equity market since early last year. If this market does go really ugly though, I could be interested in a Cayman S.

And we are all headed back to living in huts and hunting squirrels to survive.

There is no such thing as “certainty” in any of the global capital markets. If there were the markets as we know them would then be easily predictable and therefore not exist as we know them. Think about it, if there was a given “certainty” who in the world would take the opposite side of that certainty? Those aren’t my opinions, that’s the market speaking just as it has since there has been markets.

Will the FED raise rates? Sure, they’re going to have to. Do you think they’re just going to take the Fed Funds rate from near zero to much much higher in the flash of a pan? Of course not. How much of a rate hike is already priced into the market, and when? If and when they do start to edge up rates, you’ll probably see a negative equity reaction and then a rally off that bottom. The market will want to speculate based on what the FED says going forward after the initial hike. Impending doom in the equity markets? Maybe… or maybe a couple years of flat returns while the metrics catch up to the price of the equity markets. We have had a heck of a run so you’re always going to have people call for doom.

Where have you gone Henry Blodget?

With regards to these cars, IMO you’re seeing the a couple things in the markets for them already. Pristine low miles cars are still brining top dollar. Same thing for lower production specialty models. They’ve passed on to collector status and sadly many will be stashed away and not driven. Does a rising tide lift all boats? Sure it does, but it’s not making a 123k miles 1991 run of the mill 964 C2 a $45k dollar car, at least not right now. Will some run of the mill ones sell at those kinds of prices? Sure but the bulk of the market is not there. Are they worth a lot more then 2 years ago, absolutely? You couldn’t give away one of those a few years ago and now you can pretty easily get solidly in the $30’s for them.

Just my 2 cents, but if you’re looking at these cars as investments and you’re not in the business of buying and selling collector cars you may make out on a flip or you may sell your own at a tidy price right now…. That’s a far far cry from building a portfolio of cars and making it work for you. If you’re okay with selling your car and sitting on the cash in hopes to buy one cheaper sometime down the road… go4it. Just don’t take it for granted that you’ll be able to do that. The market has a funny way of not letting you make easy money.

IIRC it was John Maynard Keynes who said… “The market can stay irrational longer than you can stay solvent.”

Bubble Shmubble.

I thought yours was a very well though out post. I would offer that there is one aspect of certainty: the capital stock of the United States, including population, is growing, and will continue to do so for the foreseeable future. This means that over the long term, the collective value of the U.S. stock market is to going go up:

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This has been true since the foundation of the Dow, and is something that is sufficiently certain to justify the wisdom of investing in an index with a long term outlook.

There may be no certainty except death & taxes, but the benefits of dollar cost averaging and long term investing are as close to certain as you can get.

And yes, hope you don't hit 67 in late 2008. But if you do, don't panic.

When you are considering the implications of this given, also consider that there are more people and more money now than 10 years ago, and there will be more of both in 2025.

But the supply of air-cooled Porsches manufactured is fixed. It ain't going up. So supply is relatively inelastic.

Preferences may change, of course -- and interest in old cars may wane with time. But you are decades from seeing enough old geezers dying off that 60s-80s Porsches have the limited appeal of Model Ts. (and even '23 Model T coupes are still worth a suitcase of money.)

The foam may blow off the top of the market (as Matt Monsen describes) -- but there is a firm floor rising below the foam.

^This.

I am probably going to be selling my 1973.5T with an older restoration and in above average condition for LOTS OF MONEY. The Pelican community will scratch their heads, probably say I am out of my mind and find the price ridiculous. But, the beauty of these cars is that somewhere on the planet someone with a boatload of cash who does not care about price will buy it at my asking price. The high probability is that that person never heard of Pelican! And so it goes. Supply and demand, long hood numbers dwindling, new Porsches loosing that uniqueness and for many that almost uncontrollable desire to have to have an older Porsche 911. Arrogant? Naw, just a Porsche enthusiast who has owned many Porsche's since 1975Bursting bubble? Your dreaming.

With Putin in charge, the economy could change in a tick. Scary.

COLB

You make excellent points. I fall into the trap of thinking like the institutional derivatives trader I was for 20 years. Basically I never had a time horizon much beyond 8 months to a year. Depending on what the underlying I was trading there would be months where I would have made thousands of trades, traded hundreds of thousands of options contracts and millions of shares of stock and the only trades I made where the contract I traded had a lifespan of more than 2 months were ones that I was assigned electronically and probably didn’t even notice on a busy day.

The points you make are absolutely spot on and looking back they correctly and smartly filled in exactly the point I was trying to make but came up a bit short. Its all about your time horizon.

I add to my long term holdings every month and all of them are broad based sector ETF’s. I am not a stock picker or a market timer, never was. I do have a different account where I trade SnP options and futures with a very short term outlook but the bulk of my net liq is all long term unleveraged ETF’s.

Thanks for the proper perspective. I agree with the fundamental economic principles you laid out about these cars too. The supply is finite, the demand is elastic. Right now we’re seeing high demand. Sometime in the future that demand will shift. The market may flatten, although I don’t think it will fall anytime in the reasonable future… you guys can define reasonable.