classic cars vrs S&P 500 1986-2016

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
lomarica01
Posts: 204
Joined: Sun Jul 05, 2015 10:57 am

classic cars vrs S&P 500 1986-2016

Post by lomarica01 »

I was reading my month car magazine and since it was their 30th anniversary they compared the prices of cars when purchased in 1986 and what they would sell for today. The car of course include the most collectible Maserati, Porsche, Jaguar, corvette, Mercedes gull wing and Ferrari etc...

So what did better, "investing" in a classic car or the S&P 500?

I think we all know the answer the S&P 500!!

In my very unscientific review the average return on a classic car for example a 1965 Maserati purchased for $13,500 in 1986 and sold for $235,000 in 2016 had an average annual return of about 10%. The S&P 500 return was 12.6% with a GAGR of 11% (per Moneychimp.com). I could go on with more examples but even a 2016 $1.6mil gull wing only had a return of about 10% from an initial purchase price of $90,000 in 1986.

These returns do not include insurance, storage, auction commissions etc... so actual returns would be even lower.

Of course no one in this group would ever consider classic cars an investment and neither do I. But it is interesting when one actually runs some numbers, that cars that now sell for hundreds of thousands of dollars were not that great of an investment even though it sounds like they are based on the high prices they get.
Dimitri
Posts: 427
Joined: Sun May 31, 2015 10:51 pm

Re: classic cars vrs S&P 500 1986-2016

Post by Dimitri »

I think it is important what starting point we choose when comparing returns of classic cars versus the S&P 500.

The value of classic cars increased by 40 percent in 2014 on the previous year and by nearly 400 percent when compared with 2005, according to an index published by U.K. private bank Coutts on Tuesday.
The appreciation in classic cars—classified by Coutts as those that have been auctioned for more than $500,000 and have been sold more than 10 times—dwarves that of U.S. stocks, which put in a strong performance in 2014.


Read the full article at http://www.cnbc.com/2015/08/25/scared-b ... tocks.html
Let's never come here again because it would never be as much fun.
patrick
Posts: 1825
Joined: Fri Sep 04, 2009 3:39 am
Location: Mega-City One

Re: classic cars vrs S&P 500 1986-2016

Post by patrick »

I suspect that classic cars will always be valuable ... however a particular car has the risk of losing plenty of value if that particular car ceases to be considered classic.
User avatar
gilgamesh
Posts: 1607
Joined: Sun Jan 10, 2016 9:29 am

Re: classic cars vrs S&P 500 1986-2016

Post by gilgamesh »

Very interesting. I would have expected classic cars to do much better than S&P 500

However, to be fair we need to compare classic cars with 'classic stocks', where 'classic stocks' can be defined as the winners for whatever period in questions. Stocks will smoke the cars.

S&P 500 is akin to all cars, not just the cars that became classic.
orca91
Posts: 1223
Joined: Thu Mar 03, 2016 7:17 pm

Re: classic cars vrs S&P 500 1986-2016

Post by orca91 »

I think some classic cars can be investments. I certainly wouldn't make a portfolio out of them though. The depreciation is all gone and they tend to go up in value, so.... I wouldn't compare it to stocks though. I don't know of any classics that give out dividends and such. :happy

I agree about the starting point part. I am more of a muscle car fan. But, one almost couldn't give away a muscle car in the early/mid 80's... since the early 2000's they've been on quite a run though.

Unless one is a car guy/gal and enjoys the ownership as more of a hobby though, most should probably steer clear. Or, is someone just has plenty of extra money and wants to start a car collection...
supernova72
Posts: 78
Joined: Fri May 17, 2013 8:58 pm
Location: Seattle WA

Re: classic cars vrs S&P 500 1986-2016

Post by supernova72 »

I've been guilt of justifying keeping a 1972 Nova as the only vehicle I have that is gaining value right now :D

I paid $600 in 1989 for it. Numbers matching 350 V-8 car. To be fair, I stopped keeping track of the $$ I put into it about 10 yrs ago ($10.5K). However the fun factor of cruising has value as well (it's a driver not a show car). The biggest drawback is needing it in a garage which takes up one spot.

Car is insured for $18K which is close to fair market value for a non-SS 72 Nova.

Couldn't figure out how to add a pic of it here. Technically challenged :oops:
Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: classic cars vrs S&P 500 1986-2016

Post by Leeraar »

This is probably data mining. Did they start with a recommended list of "buys" in 1986, or did they have both the 2016 and 1986 data available to make their picks?

Collectibles of any kind are very risky propositions.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
inbox788
Posts: 8192
Joined: Thu Mar 15, 2012 5:24 pm

Re: classic cars vrs S&P 500 1986-2016

Post by inbox788 »

gilgamesh wrote:Very interesting. I would have expected classic cars to do much better than S&P 500

However, to be fair we need to compare classic cars with 'classic stocks', where 'classic stocks' can be defined as the winners for whatever period in questions. Stocks will smoke the cars.

S&P 500 is akin to all cars, not just the cars that became classic.
Why would you expect classic cars to outperform the SP500? There are probably some correlation between wealth and classic car prices, but it's difficult to decide which classic cars to include in the classic car index that may be equivalent to the SP500. And you surely can't call all old cars classic, so there will be an element of cherry picking more so than putting stocks into an index. I'm guessing there's high amount of survival bias in classic cars that's going to be important.

But even if it doesn't beat the SP500, classic cars may be a good investment if the alternative were a non-classic car. Surely you're not buying a classic car like a bar of gold to lock up in a safe and sell for profit years down the road. The enjoyment of buying a classic car is like buying a nice car that you drive around and show off and talk about, and if it were a non-classic car, you'd be talking about depreciation, insurance, etc. and the net would be costs. So not having to pay for the same benefit and actually getting a low return may turn out to be quite a good investment.

BTW, in 30 years, do you think Tesla and electric cars will have supplanted the internal combustion engine? What happens to classic cars then? Does the stopping of production drive prices sky high? Or does interest in ICE cars die off as the next generations pursue all the benefits of electric cars? Terrific efficiency, range, speed of charging as well as insane and ludicrous performance. I'd venture to say we'll see a doubling or quadrupling of some metrics. Imagine a range of 400 miles vs 200 miles. Or fast charging in 5 or 10 minutes vs 20 now. Or doubling in battery energy density, so only need half the batteries. Or the holy grail of solar charging that's worth the added weight and cost. Who will care about those ancient smelly and noisy that look so funny.
tim1999
Posts: 3864
Joined: Tue Dec 16, 2008 7:16 am

Re: classic cars vrs S&P 500 1986-2016

Post by tim1999 »

I am curious about what demographic trends will do to the collector car market. It always seemed like the "hot" cars on the collector/classic market were the ones where the people who were teenagers when they were new hit their peak earning years (say, age 45-60). Baby boomers have maybe 10-25 more years until most of them will be too old to even drive. I don't see millennials picking up the slack in the market.

There aren't a lot of 1980s or 1990s cars that will turn into collector/classic cars. A basic 1955 Ford sedan may have a following; nobody is going to be interested in restoring a 1987 Taurus. Even most of the "performance" cars of that era were dogs to drive or even worse, junky dogs.
Jack FFR1846
Posts: 13545
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: classic cars vrs S&P 500 1986-2016

Post by Jack FFR1846 »

It's very difficult to predict what car model will be in favor 10, 20, 30 years from now.

Certainly, we all remember cars we owned or could have owned in the 70's or 80's that would be worth a fortune today. I owned a 90 (E30) BMW M3 that I used as an occational driver, track car and autocross car. Sold it when my work gave me a car allowance but required a 4 door car. Sold it with 50k miles on it for $15k. I also passed up a superbird (a real one) for $2500. I couldn't come up with that kind of money back then unless I sold my daily driver, which I wasn't going to do.

On the other side of the coin, if one were to have bought an 05 Maserati Quattroporte (first year) for $129,000, today you'd have to compete with sellers at $25k.

05-11 Lotus Elises and 07-11 Exiges are already rising in value. Unique car that was imported with DOT waivers for those years only. Any small accident results in a total because body parts coming from England take over 6 months and insurance companies won't wait that long and Lotus requires replacement. No repairs. So the 6000 or so total numbers are dwindling and prices are going up.

I wouldn't go buying a car as an investment. Too much risk and unavoidable costs. Look what happened in Ferris Bueler's friend's garage.
Bogle: Smart Beta is stupid
User avatar
ClevrChico
Posts: 2029
Joined: Tue Apr 03, 2012 8:24 pm

Re: classic cars vrs S&P 500 1986-2016

Post by ClevrChico »

Cherokee8215 wrote:I am curious about what demographic trends will do to the collector car market. It always seemed like the "hot" cars on the collector/classic market were the ones where the people who were teenagers when they were new hit their peak earning years (say, age 45-60). Baby boomers have maybe 10-25 more years until most of them will be too old to even drive. I don't see millennials picking up the slack in the market.

There aren't a lot of 1980s or 1990s cars that will turn into collector/classic cars. A basic 1955 Ford sedan may have a following; nobody is going to be interested in restoring a 1987 Taurus. Even most of the "performance" cars of that era were dogs to drive or even worse, junky dogs.
I agree. Car culture is in for major changes. What appeal will a 57 Chevy have to a millennial? Probably about as much as a Model T means to me.
Valuethinker
Posts: 42469
Joined: Fri May 11, 2007 11:07 am

Re: classic cars vrs S&P 500 1986-2016

Post by Valuethinker »

ClevrChico wrote:
Cherokee8215 wrote:I am curious about what demographic trends will do to the collector car market. It always seemed like the "hot" cars on the collector/classic market were the ones where the people who were teenagers when they were new hit their peak earning years (say, age 45-60). Baby boomers have maybe 10-25 more years until most of them will be too old to even drive. I don't see millennials picking up the slack in the market.

There aren't a lot of 1980s or 1990s cars that will turn into collector/classic cars. A basic 1955 Ford sedan may have a following; nobody is going to be interested in restoring a 1987 Taurus. Even most of the "performance" cars of that era were dogs to drive or even worse, junky dogs.
I agree. Car culture is in for major changes. What appeal will a 57 Chevy have to a millennial? Probably about as much as a Model T means to me.
A relative tracks these things.

He says things like Ford Model Ts, As have come down in price. The owners of those are in their 80s, 90s, their estates are selling.

The hot cars now are indeed the "muscle" cars of sort of 1968-mid 70s, ie when we were teenagers. Ditto Harley Davidson.

Except now the Boomers are aging, and will need cash. So you can see how that market will go off the boil.

I agree the 80s and 90s did not seem to throw up a lot of "classic" cars. But of course future tastes are unpredictable-- it's hard to predict anything, especially the future.

Probably you are looking at "eternal classics" like Porsche. Establish a very close personal relationship with your garage mechanic if you buy an old Porsche ;-).
eucalyptus
Posts: 723
Joined: Tue Apr 24, 2007 1:24 pm

Re: classic cars vrs S&P 500 1986-2016

Post by eucalyptus »

The collector car market has gone insane in the past ten years. Huge appreciation, especially for the prestige Euro marques.

Large premiums are now being paid for manual shift cars.

Electric and self driving cars are bells tolling for the worlds of ice car collecting and racing. Those of us who were born into and love those worlds face extinction. Buy for enjoyment, not investment.
Post Reply