when will the bubble pop ?

[techweenie]

One thing I've noticed about the constant 'doom drumbeat' is that the bears will predict a crash for years and years and years and when they are eventually right -- even if it takes 10 years -- they will say 'I told you so.'

A couple weeks ago the Dow 'plunged' 40 points on a Tuesday morning and, as if on a dog whistle, all the bears came out of the woodwork saying 'this is it!' and by the end of the day, it was up and has risen 300 points since.

The bottom line is that intrinsic value is a damper on major value swings. The Tulip Mania people love to refer to wasn't about the price of tulip bulbs. It was about tulip bulb futures -- an extrinsic value.

[grnteufl11]

Look, There is a lot of money sloshing around out there, antique cars are the latest thing, just like Beanie Babies were a few years ago (god, what a comparison) ! Still Porsches are well designed/made objects and esp. air-cooled have a level of hand made feel that cannot be duplicated by even the 996s! I dont think there is that much of a bubble out there, yes, some price correction inevitable but those who want quality - PORSCHE!!!!!

[nota]

so 5 pages and I am the only one to state a date for the bubble to POP
WE WILL SEE COME FALL

[Sunroof]

Took my 1973.5T out for a long ride today with no less than six stops between lunch a cigar bar, coffee shops and a tow home!! See my thread on fuel pumps!!

I was amazed at the number of folks who approached me while siting down or near the car and made comments about the "high cost of these things"! Even the tow truck/flatbed driver mentioned that he knew these were expensive. So I was surprised that some who are probably sports car enthusiasts were well aware of the high cost (no figures discussed) of an early Porsche 911. Where did they get their information? They knew it was a longhood, despite my vanity plate saying A73911

So the world knows..................bubbles? I'll celebrate its sale with a big bubble bath Keep climbing boys.

[wesellptc]

FWIW, here's my take...........for the most part the general public has no clue what these cars are worth. they see it's a Porsche, and the perception is that it's gotta be worth 'BIG bucks'. I would get the same comments from folks with my '88 Carrera a few years ago when their value was a good bit less than now. Gotta be worth 30, 40, 50 grand they'd say.....I'd say 'okay, wanna buy it? I'll make you a heckuva deal'..........in the meantime, enjoy the ride my friends.

[comintern]

There is no bubble. The QE, bond purchases, et al. devalue the dollar. Hence the number of dollars needed to buy a classic Porsche goes up and up. Would take a heavy dose of deflation to impact low production classic car prices.

[Matt Monson]

A continued strong Euro is going to continue to exert pressure on this market as Europeans find them relatively cheap.

[COLB]

Originally Posted by comintern

There is no bubble. The QE, bond purchases, et al. devalue the dollar. Hence the number of dollars needed to buy a classic Porsche goes up and up. Would take a heavy dose of deflation to impact low production classic car prices.

This might be a valid theory if it actually mirrored any actual measures of inflation. But it doesn't.

Inflation has been bouncing around between 1-2% for 4 of the past 5 years -- the time period when we have seen the majority of the run-up in classic prices.

Also, Quantitative Easing is, at this point, only a theoretical influence on inflation: despite the near 0% interest rates generated by the Fed's bond purchase spree, little of this potential money has actually entered the economy in the form of loans, and is instead being held in higher bank reserves.

Some super-rich investors or alternative funds may be trying to hedge the perceived risk of future-QE driven inflation by buying things like cars, art, commodities, and other alternative investments. But that is probably more a reflection of extremely low interest rates than inflation -- and likely a small percentage of the classic car market.

For the vast majority of car owners, buying cars as investments is a myth wealthy men tell their wives to explain why they need 3 Ferraris.

[mattC2993]

Originally Posted by COLB

...Inflation has been bouncing around between 1-2% for 4 of the past 5 years

another myth

[COLB]

Originally Posted by mattC2993

another myth

The US numbers are legit. But I don't presume to speak for Canada.

The Loonie has taken a hit against the dollar since 2011...

[comintern]

Ya, CPI-U has been around 1.5% for the last 5 years.

Anyway, inflation is never across the board. Some prices deflate while others run up faster.

[NYNick]

"The sky is falling! The sky is falling!"

Chicken Little

[COLB]

Originally Posted by comintern

Ya, CPI-U has been around 1.5% for the last 5 years.

Anyway, inflation is never across the board. Some prices deflate while others run up faster.

Agreed.

My point was that the run-up in classic prices has very little to do with the relative buying power of the dollar, which has not actually changed much over the past 5 years.

Yes, the Euro is stronger, but the current E1.39 is only about 16% over its historical average of E1.18 to the dollar -- and well under the record E1.60. That has allowed Germans to indulge their desire to acquire the cars of their progeny, but can't come close to explaining the value jumps.

[mattC2993]

The markets are smarter than the government. If you print dollars they are worth less and you need more to buy the same asset. Its simple. I don't know of anything that has gone down in price when it comes to day to day expenses. There are of course other factors in classic car prices which is why some cars have not appreciated.

[Reddy Kilowatt]

Originally Posted by mattC2993

The markets are smarter than the government. If you print dollars they are worth less and you need more to buy the same asset. Its simple. I don't know of anything that has gone down in price when it comes to day to day expenses. There are of course other factors in classic car prices which is why some cars have not appreciated.

The inflation that's actually been observed (post QE) is much lower than classic econ theory would have predicted.

[mattC2993]

Originally Posted by Reddy Kilowatt

The inflation that's actually been observed (post QE) is much lower than classic econ theory would have predicted.

so far no fiat currency has ever survived by the way Just history but I digress.

[rayng]

hmm, i think this "bubble" is still bubbling:
Porsche 911 Turbo "S" | eBay

[COLB]

Originally Posted by mattC2993

so far no fiat currency has ever survived by the way Just history but I digress.

How long does it have to survive before you believe in it?

The US has been off the gold standard since the fdr administration, or since 68 depending how you look at it.

[mattC2993]

Originally Posted by COLB

How long does it have to survive before you believe in it?

The US has been off the gold standard since the fdr administration, or since 68 depending how you look at it.

I'm not a doomsdayer but we are supposed to learn from history. It might be decades before we see the impact of QE. Canada surely won't escape. I don't lie awake at night worrying about it. I'm currently enjoying the bubble having sold my 993 this weekend. I was done with it anyway. The 911E will follow because I don't have the time for a project these days leaving the 356A coupe which I will keep.

[COLB]

Originally Posted by mattC2993

I'm not a doomsdayer but we are supposed to learn from history.

Ok, but the modern financial system bears almost no resemblance to any previous financial system. Volatility goes hand and hand with growth potential. When you have a relatively fixed money supply, tied to a scarce commodity like gold, your growth potential is limited -- or the connection between your currency and its theoretical backing becomes so tenuous as to be nonexistent.

When Nixon put the final nail in the coffin of the gold standard, the US was holding about $15 billion in gold, with foreign and domestic currency obligations many multiples of that number.

It might be decades before we see the impact of QE.

Perhaps, but if the effects of QE are not felt for decades, it is difficult to imagine QE was a significant issue -- and the tenuous connection to decades old policy would lack credibility anyway.

Economists today can't even agree on the effects of government "stimulus" spending. Trying to connect current economic trend to decades old decisions is dubious at best. You may as well blame inflation in 2035 on the the vibrations of butterfly wings in 1978.

I'm currently enjoying the bubble having sold my 993 this weekend. I was done with it anyway. The 911E will follow because I don't have the time for a project these days leaving the 356A coupe which I will keep.

Nice fleet! I am totally jealous. Choosing one of those cars to keep is a tough call.