Classic Ferrari vs. Pension Fund - Ferrari Life
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post #1 of 53 Old 10-22-2009, 05:49 AM Thread Starter
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Classic Ferrari vs. Pension Fund

Gents,
An unusual battle perhaps but a thought has just occured to me... At this time of year I usually top up the pension fund, which of late has performed particularly badly.

Here's the thought; instead of putting it all into a pension fund, is there a possible argument for buying a classic Ferrari with a view to selling it again in 3 - 5 years at a profit (or at least a reasonable chance of not loosing money)?

Criteria would have to be as follows ;
Age: 1980 or pre 1980 as I could import to Ireland for zero tax and thus re-sell back into the UK (as this would be the most likely market to purchase from and sell to) when the time came.
Budget: Max STG 25,000
Car: Possibly 308, or any other suggestion, preferably Ferrari.
Logic: Head should rule heart on this one, but at the same time it's a car that I would drive (occassionally) and would have to "like".

Any thoughts, or am I barking to even think such an "investment" could exist at 20 - 25K?

Ferrari's: 360 Modena, 550 Maranello
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post #2 of 53 Old 10-22-2009, 07:29 AM
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Originally Posted by Barry O'Brien View Post
Gents,
An unusual battle perhaps but a thought has just occured to me... At this time of year I usually top up the pension fund, which of late has performed particularly badly.

Here's the thought; instead of putting it all into a pension fund, is there a possible argument for buying a classic Ferrari with a view to selling it again in 3 - 5 years at a profit (or at least a reasonable chance of not loosing money)?

Criteria would have to be as follows ;
Age: 1980 or pre 1980 as I could import to Ireland for zero tax and thus re-sell back into the UK (as this would be the most likely market to purchase from and sell to) when the time came.
Budget: Max STG 25,000
Car: Possibly 308, or any other suggestion, preferably Ferrari.
Logic: Head should rule heart on this one, but at the same time it's a car that I would drive (occassionally) and would have to "like".

Any thoughts, or am I barking to even think such an "investment" could exist at 20 - 25K?
Interesting thought. However, though I didn't do the math and market research properly, I'ld hazard a guess that this would likely not be your best possible investment (notwithstanding the fact that I grant you that the stock market has seen better days as well):

a. The underlying asset is likely to 'erode' physically: you'll drive the car, so there is an inherent risk of damaging it, upping the mileage, increasing the wear, etc. Then again, storing it instead is not a great option either: a Ferrari needs to be driven to keep in shape;

b. Appreciation is far from guaranteed: esp. for affordable classics like 308/328/etc. There were quite a few made; already nowadays they attract a fairly limited group of buyers (quite a few people do like Ferrari, but prefer newer/faster); it might just be that the group with the strongest buying motives (guys like me, born between roughly 1960 and 1975, who grew up thinking '80s Ferraris were 'da bomb') will fade out even more as time proceeds;

c. You should factor in additional cost on top of your investment to begin with: think about repairs, maintenance, insurance, etc. Actually, the cheaper you buy - and GBP 20-25k isn't the world in Ferrariland - the larger the chance some serious stuff will pop up that you'll have to either take care of (at cost) or take a hit for (in proceeds at sale);

Don't want to trash a perfectly elegant alternative to putting your money in a pension fund though. Hell, I for one would argue that 20-30k spent on a nice '80s F is a great way of enjoying it while you still can. However, I wouldn't make an investment case in terms of defensible cash returns based on it. That's my €0.02 (in your pension fund? )

A horse is a horse, of course, of course, and no one can talk to a horse of course. That is, of course, unless the horse is the famous Mister F.

Last edited by IPF; 10-22-2009 at 08:51 AM.
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post #3 of 53 Old 10-22-2009, 07:54 AM Thread Starter
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IPF,
You make some excellent and valid points. Thanks. I often run the risk of convincing myself of the "genuine" merits of such ideas, when I really know it's just a convenient way for me to fool myself that I'm doing it for reasons other than the usual - "but I just want it"!
The jury is still out, but your argument cannot be ignored!!

Ferrari's: 360 Modena, 550 Maranello
Ex's: Dino 308 GT4, 612 Scaglietti
The Rest: Rolls Royce Silver Shadow, Porsche 911 2.7s, Porsche 911 3.2 Carerra, Ducati 916... and the Land Rovers
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post #4 of 53 Old 10-22-2009, 08:49 AM
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Originally Posted by Barry O'Brien View Post
it's just a convenient way for me to fool myself that I'm doing it for reasons other than the usual - "but I just want it"!
But that 's an excellent reason for doing things Barry! I'm man enough to admit this to be my prime motivator just as well.

Hence I own an oldie (and aspire to buy one or two more as soon as my wife has forgiven me for the first one, which may take awhile), knowing full well that investment-wise I should've probably just given it to the proverbial dart-flicking chimp and gotten it over with.

So please don't get me wrong: if you want fun before you're 65, go for an '80s Ferrari now. If you want a safe return .... eh well, eh ... uhm... anyone?!?!?

A horse is a horse, of course, of course, and no one can talk to a horse of course. That is, of course, unless the horse is the famous Mister F.
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post #5 of 53 Old 10-22-2009, 12:43 PM
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If you are really looking for a pre 1980 investment grade Ferrari, you should look for models in the GBP 200+k range with values that have not been driven up by a huge amount in the last 3 years. I would stick to 2 seaters, low production numbers, and probably pre '69.
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post #6 of 53 Old 10-22-2009, 12:48 PM
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Quote:
Originally Posted by Boxer View Post
If you are really looking for a pre 1980 investment grade Ferrari, you should look for models in the GBP 200+k range with values that have not been driven up by a huge amount in the last 3 years. I would stick to 2 seaters, low production numbers, and probably pre '69.
agree: however, you have not listed your retirement parameters detailed enough. Biggest key is what you would like WHEN.

Sometimes I like not the simpler assets, but ones that generate income and can suffice for a lot more: Like owning a Ranch[as we call it here in CA]/Farm. Can do much with property, LOTS More, like writeoff, fun of just being there, diversity/shifts towards economy of the times [from Olives--I know longer term, to grapes--always, to Organic--eaties--animals and veggies, which is big right now]. Shoot, put in a fly casting lake. Raise Phesants as we did in the 20-30's to local rest. etc. etc. Put in a pool...then sell it.

IF that is too difficult, then need to understand what nest egg value you want but more importantly WHEN. Time = risk.

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post #7 of 53 Old 10-22-2009, 01:21 PM Thread Starter
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Originally Posted by Boxer View Post
If you are really looking for a pre 1980 investment grade Ferrari, you should look for models in the GBP 200+k range
Only problem with that plan Boxer is that I'd need to find the 200K first... fell at the first hurdle!

Ferrari's: 360 Modena, 550 Maranello
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post #8 of 53 Old 10-22-2009, 01:24 PM Thread Starter
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agree: however, you have not listed your retirement parameters detailed enough. Biggest key is what you would like WHEN.
Well retirement is 25+ yrs away for me. Last few yrs being putting it into simple pension funds. Thought a Ferrari might be a more interesting way of spending it - but as correctly pointed out by IPF & Boxer it's not really as simple as that - still worth considering!

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post #9 of 53 Old 10-22-2009, 05:59 PM
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Simple answer: the value of anything is determined by its scarcity (ceteris paribus). And, there will always be wealthy folks who want a scarce Ferrari. So, if you can afford a nice, relatively scarce Ferrari: do it.

There was a 12-cylinder, Enzo-era Ferrari 'on offer' posted to this board a few weeks back - about US$100k. A blue-chip investment, in my humble opinion. It has intrinsic value - what else can I say? Same was true for a 308 a little while back - about US$40k. Of course, the 12-cylinder car is the better choice...

(please, someone tell me I'm wrong or I'll have to ask my wife to do so...)


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post #10 of 53 Old 10-22-2009, 09:55 PM
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Quote:
Originally Posted by colonel1961 View Post
Simple answer: the value of anything is determined by its scarcity (ceteris paribus). And, there will always be wealthy folks who want a scarce Ferrari. So, if you can afford a nice, relatively scarce Ferrari: do it.

There was a 12-cylinder, Enzo-era Ferrari 'on offer' posted to this board a few weeks back - about US$100k. A blue-chip investment, in my humble opinion. It has intrinsic value - what else can I say? Same was true for a 308 a little while back - about US$40k. Of course, the 12-cylinder car is the better choice...

(please, someone tell me I'm wrong or I'll have to ask my wife to do so...)

Rough guideline IMHO for an "investment grade" Ferrari - under 1000 produced (waiver for F40 and Daytona), helpful if it had great press at launch (look at the difference in Daytona vs 365 BB values) and 2 seats. Also must currently be worth more than the cost of a restoration.
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post #11 of 53 Old 10-23-2009, 05:26 AM
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Originally Posted by Boxer View Post
Rough guideline IMHO for an "investment grade" Ferrari - under 1000 produced (waiver for F40 and Daytona), helpful if it had great press at launch (look at the difference in Daytona vs 365 BB values) and 2 seats. Also must currently be worth more than the cost of a restoration.
I guess I botched my own scarcity theory with the 308 example, didn't I?


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post #12 of 53 Old 10-23-2009, 06:56 AM
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I guess I botched my own scarcity theory with the 308 example, didn't I?

Unless of course you were thinking of the 308 GTB vetroresina: about 712 built...
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post #13 of 53 Old 10-23-2009, 07:19 AM
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Unless of course you were thinking of the 308 GTB vetroresina: about 712 built...
But, of course! Thank you!

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post #14 of 53 Old 10-23-2009, 11:49 AM
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But, of course! Thank you!
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Originally Posted by Vitalone View Post
Unless of course you were thinking of the 308 GTB vetroresina: about 712 built...
Which is why the one 308 qualifies as having investment potential.

Last edited by Boxer; 10-24-2009 at 02:08 AM.
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post #15 of 53 Old 10-23-2009, 12:58 PM
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Which is the one 308 which qualifies as having investment potential.
Probably,

At least, the law of scarcity could in principle imply so. Yet scarcity itself doesn't suffice: sometimes things are scarce simply because no one likes them to begin with, which is the flipside of Boxer's criterium of a well received model in its day and age. Come to think of which, reportedly there were mixed feelings about a 'plastic' Ferrari back when the Vetroresina was introduced.

But I guess it's safe to assume the underlying appeal of the landmark Pininfarina design (the 'extinction' of the Magnum PI generation notwithstanding), the relatively powerful motorisation (for a 308), plus the nowadays unusual material are strong enough assets to sort of protect value.

Yet if one may take a cue from the FML-quoted price evolution for the Vetroresina over the last 2 years, it may prove to take a while for serious value growth to materialise:
  • Jul.2007 - $ 49.312
  • Jul.2008 - $ 42.877
  • Jan.2009 - $ 44.410
  • Jul.2009 - $ 31.750

Mind you, I'm not sure how much of an indicator the above really is, since I don't know [a.] how many actual transactions this could possibly be based on (hence how reliable the average values are); [b] what the impact of the recent economic downturn on these numbers has been (likely to have driven part of the decline, yet unlikely to go on forever); [c.] whether there are any foreign exchange rate effects running through these market values (and which way they would influence them).

My tentative conclusion then: a pretty sexy limited investment candidate, but still a tad speculative. Is this the time to buy cheap and will it go up again on Barry's 2-3 year horizon? Or will it quietly age with no spectacular moves either way?

Hard to tell, but hey, no risk = no gain!
.

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Last edited by IPF; 10-23-2009 at 01:22 PM.
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post #16 of 53 Old 10-24-2009, 02:12 AM
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Probably,

At least, the law of scarcity could in principle imply so. Yet scarcity itself doesn't suffice: sometimes things are scarce simply because no one likes them to begin with, which is the flipside of Boxer's criterium of a well received model in its day and age. Come to think of which, reportedly there were mixed feelings about a 'plastic' Ferrari back when the Vetroresina was introduced.

.
Two quick comments, potential and then a positive return are very much interconnected with the greater market. The issue on "plastic" was really a US thing, not seen as a negative in Europe.
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post #17 of 53 Old 10-24-2009, 03:18 AM
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Although the Vetro has its followers, including myself, and it is recognised in Europe as a desirable 308, it is nonetheless still a 308. The same with the 365BB - I am convinced the values of that are kept down by the 9 years of production of 512BB's and BBi's. A lot of people don't see 365BB's as rare because they don't see the difference with the other Boxers. I think the other 308's will always drag the Vetro down to some extent. After all, 10,000 made...

Coming back to the original question: I think it's a pretty good idea to have some cash in cars and part of the reason I've got 3 Ferraris is that I like to hedge my wealth. But to invest in cars PRINCIPALLY to make money is IMHO a very bad idea. Something can break on these cars and it becomes very expensive very quickly. Even if it doesn't, then I am not expecting to make huge amounts of money. I believe the 330GTC will make me some money if we're talking 10 years or more of ownership, but it's not going to fund my retirement. We have to remember that we've already had the bull market for classic cars. If you'd bought in the '70ies, or early '90ies after the crash, then you would have made some very nice money. But those days are gone. I was hoping this financial crisis would bring the prices down drastically, but it hasn't, at least not for the vintage Ferrari market. It seems people still think a classic car is a reasonably solid investment.


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post #18 of 53 Old 10-26-2009, 07:01 AM
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Although the Vetro has its followers, including myself, and it is recognised in Europe as a desirable 308, it is nonetheless still a 308. The same with the 365BB - I am convinced the values of that are kept down by the 9 years of production of 512BB's and BBi's. A lot of people don't see 365BB's as rare because they don't see the difference with the other Boxers. I think the other 308's will always drag the Vetro down to some extent. After all, 10,000 made...
Onno
Excellent point Onno: the 308 GTB vetroresina ticks the right investment boxes as well put by Boxer: 2 seater, good press when new (certainly in Europe) and rare. However it is a 308 and so forms part of a larger population of 12,000 cars. Still, there cannot be many 308 GTB Euro vetroresina's left and so I think it will gain value slowly in the long term.

Still the main reason to own is to drive and enjoy with a bonus of market value increase.
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post #19 of 53 Old 10-26-2009, 10:10 AM
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Couldn't agree more David.

If you want to increase the value of your vetro, BTW, that would be very easy: get rid of those horrible aftermarket changes and ditch the gold wheels! Go on - there is a person with taste inside you just dying to come out!




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post #20 of 53 Old 10-26-2009, 11:33 AM
 
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Was reading an article today about used Ferraris and according to Tony Glynn at Foskers in the U.K, in regards to a 308, he recons for 15K you can probably find privately a Bertone-bodied 308 GT4 and in a couple of years it could be worth 18K to 20K. They're just about the only 308 that is going up in value as they are becoming quite fashionable apparently.

But he recommends for 28K, go for a 328 instead. You can buy a 20-year-old 328 tomorrow, keep it for 3 years, put 15K miles on it and lose nothing at all and that's because tidy 328's are appreciating at about 2000 a year at the moment and only have a 550 annual service fee (with Foskers).

Normal 308's are too numerous to ever appreciate.

Tony recommends for 2nd hand Ferraris :

For about 25K - A 328.
For about 35K - A nice 355 (coupe version) as they are beginning to appreciate. The only downside is the service cost.
For about 45K - You would be made not to have a 550 Maranello for that.
For about 65K - A 612, it's a lovely car and we (Foskers) hardly have to fix them.
For about 75K - Definitely a 360 Challenge Stradale. You may take a little bit of a hit for the next 3 years but it will be worth it for all the fun you will have with it.
For about 200K - The F40. Mind blowing to drive but you need deep pockets and plenty of guts. History is critical ie: never been in a crash. It's one for the well heeled collector.

For interest sake : Tony would stay away from the 599 as he recons there is still 60K to lose on one over the next 3 years. Also doesn't suggest a F430. They are great cars but it's still too early to buy one. You could pick one up for roughly 15K less in the next year or so once the 458 comes out.


[Source: Autocar Magazine September 2009]
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