$5M to invest in classics for long term..
Discussion
So a close friend who recently made alot of money by selling his business has asked me to work with him in putting together a collection of cars- he has no interest in quick flips and likes cars but isnt a mega car guy (he may not even see the cars let alone drive them!)- so very niche cars that he hasnt heard of or seen will not be of interest. All cars have to be sports cars. Acquisitons so far
1) Ferrari Enzo- Why?
-Last of normally aspirated hypercars (pre Hybrid drivetrains)
-Amazing dynamics and performance
-relative ease of ownership (!)
-Only made in small numbers
-Brutal looks
2) Mercedes Gullwing- Why?
-Awsome looks
-Relatively rare
-The best car from the best car company in the world
3) Lambo Miura
-Drop dead gorgeous looks
-Awesome perfomance in its time
-Did I say looks
4)A 60s Ferrari of some form
5)BMW Z8- awsome looks, clasic in the making
6)Alfa 8C- awsome looks, alfa is about to make a come back
The 1st three have been purchased. This leaves $1.5M to spend on 4-6. Whould you agree with my approach
1) Ferrari Enzo- Why?
-Last of normally aspirated hypercars (pre Hybrid drivetrains)
-Amazing dynamics and performance
-relative ease of ownership (!)
-Only made in small numbers
-Brutal looks
2) Mercedes Gullwing- Why?
-Awsome looks
-Relatively rare
-The best car from the best car company in the world
3) Lambo Miura
-Drop dead gorgeous looks
-Awesome perfomance in its time
-Did I say looks
4)A 60s Ferrari of some form
5)BMW Z8- awsome looks, clasic in the making
6)Alfa 8C- awsome looks, alfa is about to make a come back
The 1st three have been purchased. This leaves $1.5M to spend on 4-6. Whould you agree with my approach
Its great fun...that's for sure. Agreed on the Porsche GT. He loves them. However, I prefer the 911S and the 997 GT3 RS because they personify Porsche in a way that the Carrera doesn't (I also hate the GT on/off clutch)
He's looking at a 10+year time horizon and we both feel that when new money wakes up (China, India etc) start taking an interest, they will be of a generation that will recognize cars like Enzo.
The market is hot but his work brings him in close contact with some very wealthy people and they remain very bullish on classic cars and other asset classes. The money floating round at the very top is driving the activity and sees no sign of slowing.
He's looking at a 10+year time horizon and we both feel that when new money wakes up (China, India etc) start taking an interest, they will be of a generation that will recognize cars like Enzo.
The market is hot but his work brings him in close contact with some very wealthy people and they remain very bullish on classic cars and other asset classes. The money floating round at the very top is driving the activity and sees no sign of slowing.
TooMany2cvs said:
Is he actively trying to lose money? If so, I can help him out. I'll offer him far less hassle, far less uncertainty, but the exact same end result.
We'll ignore the fact that it's classic cars, and he's not a "car person". That's irrelevant.
He's a successful businessman, so get him to look at it purely as an investment. He's suggesting pumping money into an uncertain asset class that he doesn't understand at all. He knows so little about it that he wants advice from "an expert" - despite (and don't take this personally) that "expert"'s first response to be to jump onto a forum to ask. Even then, he wants to restrict himself to individual assets that he's "heard of". On top of that, it's an asset class with values that - in many eyes - are already in a bubble. On top of THAT, the individual assets require expensive storage and maintenance to retain value. There's very little in the way of ongoing income from them, and what there is is utterly unpredictable.
Does that sound like the description of a good investment?
Like I say, I'm happy to guarantee him a significant annual loss, without any of the hassle. PM for the bank details to send the regular, large payments to...
The $5m is money he can comfortably afford to lose. His view is that at least there is enjoyable metal left at the end if nothing else. He's lost more than that on stock and gained much more than that in the traditional investment market too. The issue is that he actually needs to diversify. The new breed of super rich (and yes we have come across a few between us) are in the same boat- how many houses, how much equity, how many hotels..etc can they buy. Cars float these guys' boats and that's what matters.We'll ignore the fact that it's classic cars, and he's not a "car person". That's irrelevant.
He's a successful businessman, so get him to look at it purely as an investment. He's suggesting pumping money into an uncertain asset class that he doesn't understand at all. He knows so little about it that he wants advice from "an expert" - despite (and don't take this personally) that "expert"'s first response to be to jump onto a forum to ask. Even then, he wants to restrict himself to individual assets that he's "heard of". On top of that, it's an asset class with values that - in many eyes - are already in a bubble. On top of THAT, the individual assets require expensive storage and maintenance to retain value. There's very little in the way of ongoing income from them, and what there is is utterly unpredictable.
Does that sound like the description of a good investment?
Like I say, I'm happy to guarantee him a significant annual loss, without any of the hassle. PM for the bank details to send the regular, large payments to...
Its all irrational unless you see these guys in action. There is a whole business network growing round it too. This common interest is seeing major business deals being set up in the same way that Golf used to. That $5M could generate quite a bit more just from the networking opportunities it creates.
Ferrari are tapping into this in a big way atm by setting up a whole networking platform through driving events etc.
thegreenhell said:
If these are just going to sit somewhere unloved and undriven for a long time, please direct him away from all the cars I like. He can keep the Enzo, but please tell him you made a mistake with the Gullwing and Miura. And definitely don't touch any Alfas. They rot and have terrible electrics you know 
The cars will be stored in Germany and there will be the opportunity to drive them..excpet the Enzo because its stupidly low kms and is to be the longest term investment out of all of them..Muzzer79 said:
Aswell as the Gullwing, etc I'd be looking at stuff which is in the bottom half of it's appreciation curve and going upwards.
70s, 80s or even 90s stuff.
Countach, Diablo limited editions.
F355, 550 Maranello Barchetta
993 Turbo S
Stuff like that. It may take a little while longer to gain, but if you buy wisely you should realise more gains?
Saying that, I'm always sceptical about people buying cars purely as investments and not to enjoy driving them.
Nice choices and I am steering him this way for $500k worth and leaving $1m for a classic 60s Ferrari of seome description. I am very bullish on the Z8 also70s, 80s or even 90s stuff.
Countach, Diablo limited editions.
F355, 550 Maranello Barchetta
993 Turbo S
Stuff like that. It may take a little while longer to gain, but if you buy wisely you should realise more gains?
Saying that, I'm always sceptical about people buying cars purely as investments and not to enjoy driving them.
TooMany2cvs said:
Paracetamol said:
The $5m is money he can comfortably afford to lose.
Great. Then I await the PM. I can even put together a very flash looking brochure and proposal, if it'd help?Paracetamol said:
His view is that at least there is enjoyable metal left at the end if nothing else.
Even if he won't ever see them, let alone drive them?Make mine a large slice of parrot crumble with custard, please.
Though, I am not exactly a 'one post' jockey. As I say, unless you spend time around the guys right at the top (and my mate is not at that level but spends time with them due to his business) you will begin to understand.
I am not sure an investment based on 2CVs is going to float his boat (however shiny your brochure.
Edited by Paracetamol on Thursday 6th February 07:18
johnfm said:
I think you are good ground with the Enzo and the gullwing.- THANKS
The Z8 and the 8c, less so.
Most old Ferrari will appreciate.
No Daytona?- He's not keen (Don't know why- he doesnt like the shape)
No 246 Dino? (these are now so inflated- the Miura isn't costing that much more and is a real hardcore V8)
No F40? (definitely - he wants to match it to the Enzo- hence the red seats in the Enzo that we selected)
No 356 Speedster? - definitely a possibility- I prefer it to the Carrera GT
No 904 or 906?- too niche for him
No Countach?- Diablo was but the Miura ticks that box unless something very interesting comes up
Compared to these, the Z8 and 8C are a bit lightweight, not as investments and as cars- I think you are right but this is a very long term investment and he may actually drive these too a little bit.
The Z8 and the 8c, less so.
Most old Ferrari will appreciate.
No Daytona?- He's not keen (Don't know why- he doesnt like the shape)
No 246 Dino? (these are now so inflated- the Miura isn't costing that much more and is a real hardcore V8)
No F40? (definitely - he wants to match it to the Enzo- hence the red seats in the Enzo that we selected)
No 356 Speedster? - definitely a possibility- I prefer it to the Carrera GT
No 904 or 906?- too niche for him
No Countach?- Diablo was but the Miura ticks that box unless something very interesting comes up
Compared to these, the Z8 and 8C are a bit lightweight, not as investments and as cars- I think you are right but this is a very long term investment and he may actually drive these too a little bit.
Hi Mr Magoo...all above board. Have been a PH'er for 10 years- Have much better things to do than troll around..
I was hoping to elicit the views of fellow PH'ers and enjoy some of the fun that I am having but alas, its always a few bitter folk who want to spoil the fun..never mind. I will keep you posted on the next acquisitions as they happen
I was hoping to elicit the views of fellow PH'ers and enjoy some of the fun that I am having but alas, its always a few bitter folk who want to spoil the fun..never mind. I will keep you posted on the next acquisitions as they happen
TooMany2cvs said:
And, right on cue, this link gets posted to another thread...
http://www.wilmotslitigation.co.uk/blog/2013/12/23...
http://www.wilmotslitigation.co.uk/blog/2013/12/23...
I will share this with my friend now. He'll find it hillarious
cardigankid said:
Not sure why you would bother with the Enzo - there are so many Ferrari & Lamborghini hypercars whose only distinction is that they cost nearly £1m and they are fast for their era but quickly superseded by production cars like the latest 458 which would leave an Enzo for near dead. Its a lot of money for something not that desirable and not that special.
The Enzo is already purchasedTo argue that a newer car has better performance than an older car so its not a classic is a pretty stupid argument! I dont know of a limited edition V12 Ferrari that 'isn't special or desirable'. In my little world even a humble Mondial is special!
The very fact that an Enzo trades for more than its new price is surely a testament its desirability.
The Enzo represents the last of the normally aspirated v12 hyper car Ferraris..now look at the F50. It wasn't deemed remarkable but now its fast rising..
Some of what we are doing is to try to work out what will be desirable to someone in their 20s or 30s now who will have the funds to buy such things in their 40s..hence the Enzo.
There is no magic formula but we are seeing some fallout on values of 40s and 50s cars as we see the number of people who were interested in such cars begin to diminish...
cardigankid said:
In principle he is doing the right thing as growing wealth across the globe means the sky is the limit for really collectible cars.
He needs to accept that like fine wines classic cars have to be kept in controlled environment and looked after.
Having made that point my list would include:-
1. James Hunt's Hesketh 308/1 coming up at RM Auctions at Monaco. Have a look at some other classic racing cars too.
2. Almost any Aston Martin despite what they said - old DB5 ' 6 probably OTT. Buy a 2+0 DBS Manual and a DB9.2 Volante
3. Jaguar X100 XKR 4.2-S Coupe & Convertible
4. Porsche 996 GT3 RS Red on White
5. Ferrari 575 HGTC Fiorano Pack forget the flip flop edition
6. Mercedes SLS AMG Black Edition Coupe
7. Jensen Interceptor 3
8. Bentley R Type Continental
9. Jaguar XK 150S 3.8
10. Vauxhall VX220 Turbo
Cannot. Lose.
Some great cars on this list..i think the SLS will be very desirable in years to come... He needs to accept that like fine wines classic cars have to be kept in controlled environment and looked after.
Having made that point my list would include:-
1. James Hunt's Hesketh 308/1 coming up at RM Auctions at Monaco. Have a look at some other classic racing cars too.
2. Almost any Aston Martin despite what they said - old DB5 ' 6 probably OTT. Buy a 2+0 DBS Manual and a DB9.2 Volante
3. Jaguar X100 XKR 4.2-S Coupe & Convertible
4. Porsche 996 GT3 RS Red on White
5. Ferrari 575 HGTC Fiorano Pack forget the flip flop edition
6. Mercedes SLS AMG Black Edition Coupe
7. Jensen Interceptor 3
8. Bentley R Type Continental
9. Jaguar XK 150S 3.8
10. Vauxhall VX220 Turbo
Cannot. Lose.
Mr. Magoo said:
Some of what we are doing is to try to work out what will be desirable to someone in their 20s or 30s now who will have the funds to buy such things in their 40s..hence the Enzo.
There is no magic formula but we are seeing some fallout on values of 40s and 50s cars as we see the number of people who were interested in such cars begin to diminish...
But there is a formula, its called compound interest. Your Enzo was what 650K USD new in 2003? I suspect it was about 1.2mio USD now. That's 6% compound in 10 years. Not a lot when you consider the servicing bills will reduce that interest to about 4%.
If you now extrapolate forward when the current 20 yrs olds are 40 you would hope that it continues its asset growth at the same rate of the last 10 yrs. Therefore it will be worth 4 mio+ USD in 2034. Again that's gross and not inclusive of storage, maintenance and the impact usage has on residuals. This also does not factor in any dip in exotic car values in a 30 year period.
Ah...so myopic Mr Magoo...you have to understand that the Enzo represents a small amount of the overall wealth of people who generally own them. They have much more than 650k invested in cash and other assets. Cars are usually a depreciating asset class and bought with disposable income, so when one goes up you cannot compare it to holding cash- for a car to not depreciate means its doing what 99.999% of new cars don't do- lose money. There is no magic formula but we are seeing some fallout on values of 40s and 50s cars as we see the number of people who were interested in such cars begin to diminish...
But there is a formula, its called compound interest. Your Enzo was what 650K USD new in 2003? I suspect it was about 1.2mio USD now. That's 6% compound in 10 years. Not a lot when you consider the servicing bills will reduce that interest to about 4%.
If you now extrapolate forward when the current 20 yrs olds are 40 you would hope that it continues its asset growth at the same rate of the last 10 yrs. Therefore it will be worth 4 mio+ USD in 2034. Again that's gross and not inclusive of storage, maintenance and the impact usage has on residuals. This also does not factor in any dip in exotic car values in a 30 year period.
Add to this, your assumed 4% does not take into account inflation either. Historically you would have received an average of around 3% pa from 2003 to 2014. Inflation would be 2pc pa and so your real rate was 1% pa on your 630k.
Further the investment in the Enzo is within a portfolio of cars- some of which are 'classic' classic whilst others are a long term punt.- and within the overall assets held, the cars themselves are diversified asset class.
We are seeing the rich get ever richer and to an extent that is beyond our understanding- its happened before (look at the wealth of the super rich Americans at the turn of the last century). This time round these guys have alot more choice of things to choose from and Ferraris are number 2 on their list after houses- hence the boom we are seeing.
Edited by Paracetamol on Saturday 8th March 01:18
lamboman100 said:
Cars as an investment are rather overrated (rollercoaster prices or high maintenance costs). Often just vanity purchases.
Farmland and wind turbines, or shares, are a more favourable bet (diminishing supply or instant liquidity).
If it must be cars, it will be worth going to visit some of the specialist storage companies. Chat with them for a few hours.
I met one last month who suggested the Porsche Carrera GT will triple in value in the next decade to a million quid. Rare, fast, reliable'ish, pretty, perceived gamechanger etc. Whether it pans out to a cool mill', who knows. But they will at least have an insider's feel for what cars are being stored and taken off the market right now.
Thanks- there is alot of talk around Carrera GTs right now...I could never get on with the clutch on them but they do look wonderfulFarmland and wind turbines, or shares, are a more favourable bet (diminishing supply or instant liquidity).
If it must be cars, it will be worth going to visit some of the specialist storage companies. Chat with them for a few hours.
I met one last month who suggested the Porsche Carrera GT will triple in value in the next decade to a million quid. Rare, fast, reliable'ish, pretty, perceived gamechanger etc. Whether it pans out to a cool mill', who knows. But they will at least have an insider's feel for what cars are being stored and taken off the market right now.
We thought long and hard about cars with racing heritage. We didn't proceed for 2 reasons
1. Neither of us is actually interested in racing and the cars will never be useable (remember that the worst case is that there is alot of desirable metal to play with if the market tanks- not the case with race cars)
2. The market is very small and when we have consulted like minded collectors, they do not show interest either.
1. Neither of us is actually interested in racing and the cars will never be useable (remember that the worst case is that there is alot of desirable metal to play with if the market tanks- not the case with race cars)
2. The market is very small and when we have consulted like minded collectors, they do not show interest either.
Well its been an active buying spree..
Cat 1 Classics:
Gullwing
Miura
250 GT Lusso
Daytona
Cat 2 Classics
E type
Pagoda
Cat 1 Modern Classics
Enzo
911 997 RS 4.0
Cat 2 Modern Classics
Aston Martin Vanquish
BMW Z8
Range Rover (1972)
BMW M3 E30
BMW M3 Evolution 2
Porsche 993 Turbo
BMW 2000 CS (1968)
Ferrari Testarossa (1988)
Final one for now will be the Carerra GT. We are light on Cat 2 classics... (E types, pagoda, 190sl etc...may soon be remedied
Cat 1 Classics:
Gullwing
Miura
250 GT Lusso
Daytona
Cat 2 Classics
E type
Pagoda
Cat 1 Modern Classics
Enzo
911 997 RS 4.0
Cat 2 Modern Classics
Aston Martin Vanquish
BMW Z8
Range Rover (1972)
BMW M3 E30
BMW M3 Evolution 2
Porsche 993 Turbo
BMW 2000 CS (1968)
Ferrari Testarossa (1988)
Final one for now will be the Carerra GT. We are light on Cat 2 classics... (E types, pagoda, 190sl etc...may soon be remedied
andy74b said:
Paracetamol said:
Well its been an active buying spree..
Cat 1 Classics:
Gullwing
Miura
250 GT Lusso
Daytona
Cat 2 Classics
E type
Pagoda
Cat 1 Modern Classics
Enzo
911 997 RS 4.0
Cat 2 Modern Classics
Aston Martin Vanquish
BMW Z8
Range Rover (1972)
BMW M3 E30
BMW M3 Evolution 2
Porsche 993 Turbo
BMW 2000 CS (1968)
Ferrari Testarossa (1988)
Final one for now will be the Carerra GT. We are light on Cat 2 classics... (E types, pagoda, 190sl etc...may soon be remedied
You have very well if bought all of the above for $5m?Cat 1 Classics:
Gullwing
Miura
250 GT Lusso
Daytona
Cat 2 Classics
E type
Pagoda
Cat 1 Modern Classics
Enzo
911 997 RS 4.0
Cat 2 Modern Classics
Aston Martin Vanquish
BMW Z8
Range Rover (1972)
BMW M3 E30
BMW M3 Evolution 2
Porsche 993 Turbo
BMW 2000 CS (1968)
Ferrari Testarossa (1988)
Final one for now will be the Carerra GT. We are light on Cat 2 classics... (E types, pagoda, 190sl etc...may soon be remedied
Custard Test..I am in my 40's and active on PH for over 10 years...I an not now going to start trolling for fun...there is a certain level of confidentiality I need to maintain about the cars and so no..I will not be posting pictures.
Gullwing is a 1957
Edited by Paracetamol on Thursday 24th April 15:04
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