Classic car ''bubble'' and china crisis/stock market jitters
Discussion
George 500 said:
Is it? How much debt is actually wrapped up in classic cars? And how much debt do classic car owners have?
Debt and the quest for higher returns than cash is very much at the heart of this asset bubble.Most classics don't have car loans attached to them, no.
But elsewhere in their portfolios the rich are often very much leveraged and when the margin call comes it gets ugly and assets will need to be sold. If you have over 1m in cash you can borrow a lot more at very low rates in order to (hopefully) make a killing.
It's a market, and when the sentiment turns cold the movements can be sharp.
From the banks pov they don't like ordinary people, the risk and return on mortgages is not a good balance. But the banks want returns too, so lending to asset rich people at just a few % is great business. If it goes wrong they call in the loan and/or take over the assets.
A very interesting read - especially Donkey Apple, I do appreciate your contributions to such topics
My own thought is that you cannot decouple the high-end "GTO" market from what is happening at the lower "RS500" level, as at every price-point there is surely a more desirable car that has moved proportionally further away in value terms over the last few years. If/when the values start dropping at the top, surely this will quickly ripple down to the lowest levels
Also, one question I have which those more knowledgeable might answer - I understand that cars are classed as "wasting assets", so in a rising market any profits realised are free from capital gains tax. However, in a falling market, is it still possible to offset losses on such assets? If not, would this make investors more nervous of holding cars over the likes of stocks, in such a way that even a very minor blip could result in a massive sell-off?
My own thought is that you cannot decouple the high-end "GTO" market from what is happening at the lower "RS500" level, as at every price-point there is surely a more desirable car that has moved proportionally further away in value terms over the last few years. If/when the values start dropping at the top, surely this will quickly ripple down to the lowest levels
Also, one question I have which those more knowledgeable might answer - I understand that cars are classed as "wasting assets", so in a rising market any profits realised are free from capital gains tax. However, in a falling market, is it still possible to offset losses on such assets? If not, would this make investors more nervous of holding cars over the likes of stocks, in such a way that even a very minor blip could result in a massive sell-off?
Still staying on topic lads, Just been flicking through a copy of Total BMW dated February 2009.One of the featured cars is a BMW E9 CSL 3.0, A clean rust free car just restored but lacking paperwork sold for £8100 with £1400 fees through coys.
There is an e9 CSL in the same colour combination and freshly restored , Up at a well known and oft pricey BMW Specialist for £125000, i know the provenance might not be quite as good, But that's roughly a 1200% increase in value/asking price ... Bonkers :O
Regards.
There is an e9 CSL in the same colour combination and freshly restored , Up at a well known and oft pricey BMW Specialist for £125000, i know the provenance might not be quite as good, But that's roughly a 1200% increase in value/asking price ... Bonkers :O
Regards.
Leins said:
A very interesting read - especially Donkey Apple, I do appreciate your contributions to such topics
My own thought is that you cannot decouple the high-end "GTO" market from what is happening at the lower "RS500" level, as at every price-point there is surely a more desirable car that has moved proportionally further away in value terms over the last few years. If/when the values start dropping at the top, surely this will quickly ripple down to the lowest levels
Also, one question I have which those more knowledgeable might answer - I understand that cars are classed as "wasting assets", so in a rising market any profits realised are free from capital gains tax. However, in a falling market, is it still possible to offset losses on such assets? If not, would this make investors more nervous of holding cars over the likes of stocks, in such a way that even a very minor blip could result in a massive sell-off?
If it's tax free on the way up then it's tax free on the way down. I guess, in theory, you could find a way of transferring into a taxable wrapper such as a LTD and then book a loss at a later date but I doubt there is any way to do anything in a kosher fashion. My own thought is that you cannot decouple the high-end "GTO" market from what is happening at the lower "RS500" level, as at every price-point there is surely a more desirable car that has moved proportionally further away in value terms over the last few years. If/when the values start dropping at the top, surely this will quickly ripple down to the lowest levels
Also, one question I have which those more knowledgeable might answer - I understand that cars are classed as "wasting assets", so in a rising market any profits realised are free from capital gains tax. However, in a falling market, is it still possible to offset losses on such assets? If not, would this make investors more nervous of holding cars over the likes of stocks, in such a way that even a very minor blip could result in a massive sell-off?
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