Monday, May 2, 2016

Is the classic car market in a bubble ?

Today, we are discussing art and collectibles as an investment class. 

Daniel Pembrey of the Financial Times explains how over the last twenty years the benchmark FTSE 100 index has more than tripled when measured on a total return basis. The two-bedroom flat, which he sold 20 years ago and which offered south facing views over Clapham Common plus a blue heritage plaque honoring Graham Greene, has risen in value a multiple of five - and this doesn’t take into account the stream of rental income an investor could have received. But even the increase in London property prices pales in comparison to a memorable Aston Martin Zagato, which he could have bought 20 years ago for at £500,000. Another of the 19 made - licence plate 4 RTA, also California sage-colored - recently sold at a Sotheby’s auction in New York more than £10m at current exchange rates. That’s a twenty-fold increase, and while there are auction fees to consider, it also comes with an exemption from UK capital gains tax.

Pembrey also discusses an index of classic cars that might be characterized as the mid-to-top end, which confirms the out-performance of high-quality classic cars over recent years relative to asset classes such as prime London property. But can this strong performance continue - or are classic car and other collectible valuations heading for an expensive crash?

Over the course of my life I collected many things. However, I suppose that the best collections, which we can have, consist of a happy and harmonious family, good health, great moments with friends, and integrity.