Forget Gold - Buy 356's

[jaudette3]

Good Morning...

As many of you know, at one time my early Porsche involvement was mostly with 356's. I still love 'em, but my attention (and resources) are focused on early 911's at the moment. However, I still follow the 356 market closely as I'm sure I will own a few more of those before I'm done. (Plus my great friend and Porsche mentor has 6 356's and he's very hard to ignore ).

As the economy continues to head off a cliff (I'm in the L-shape with stag-deflation school vs. the U-shape boys), it makes following the market in early Porsches kind of a morbid activity. But I'm been doing it for many years and can't shake the habit. We all have our opinions, observations, and opinions about our observations, but there's little doubt that the market value for cars that are less than great has decreased by a significant percentage - at least in the early 911 world.

The thing that puzzles me is that I haven't seen any signs of market weakness in the 356 world, even in #3 and #4 cars. In fact, good examples of the most sought after cars (just about any open car, A's) have continued to go *up* in value. This confounds me. Do you think 356's are similar to gold, with agreed on intrinsic value, that makes them a counter-cyclical hedge? Are 356 all owners frugal old guys with pensions and no mortgage or other debt? (nicest group of car owners on the planet, btw.)

Wouldn't that be great? Gold is pretty boring to own, but imagine a hedge that you can work on and drive.!

Cheers,
JohnA

[swb911s]

I think it is a numbers game...with 78k cars produced from 48 to 65 and with the toll taken by the list of usual suspects, mabe these iron oxide heaps are gold in the core-- I have owned two 356's. A 56 speedster with non-original 1500 plain bearing 4 cam engine [sold way to early in the game] and my present keeper a 65 sc coupe.
These cars have their foibles but in the whole are great to drive and always draw interest. Thought about sellng the 65 not long ago but am going to see what happens in the near future as I don't have any bullion put away.

[super9064]

John, I'm with you the 356 is a great car. As I watch these auctions, where very ordinary Detroit iron, built in the millions, sells for 50k up. I can't help but think that these hand built cars, that cost half the price of a house back in their day, don't cost double or triple.

They are a hell of a, fun ride. They are fast, handle well, and have great braking. I can cruise 75-80 all day long. If anyone tells you different, then they have not driven a well sorted out car. If they weren't such a fantastic car, there would not be a 997 today.

[Vintage Racer]

The Sports Car Market database and 2009 Price Guide show large increases in value, smaller increases, and in a few instances, a "no change" in value for 2008 on all 356 models as well as all early 911s. I think that is remarkable in this economic climate.

Now the 996 is a different story. I looked at one yesterday for $20K. I've heard of wholesale prices in the mid-teens for a fair-condition 996.

The 993 is showing real weakness in this market.

Nonetheless, I have never considered a car an investment. It requires fixed costs (storage, taxes, insurance, maintenance). I'd rather own gold, bonds, and stocks in my investment portfolio and drive my cars hard with no regard of ownership ("Drive it like you stole it"). JMHO.

[sithot]

CPI says different. Prices haven't moved on some cars since 2006 and if they did it was down. (eg 1960 B Coupe).
356's have done pretty well but they are not immune to the downturn.

To be fair I researched a 1957 Speedster price as I consider it to be one of the best of the bunch. The big price jumps happened in '05 and '06.
They were flat from 11/06 to 05/07.
Then there is a slight bump and then flat again from 09/07 to 03/08.
Two rises; one in May '08 (market shake up) and one in November '08 coinciding with the real Wall St. blow out. The car went negative this January 2009 to the tune of 5%.

This IS different than 1987; banks don't have money to lend and asset values are going down so what do you collateralize? Cash is king and you should be holding on tight.

It's going to get a lot worse before it gets even a little better.

The Industrial and Retail real estate vacancy numbers for places like Memphis, TN are staggering. Even SoCal (the Inland Empire) is hurting if you didn't already know. -17% on Retail, -6+% on Multifamily and nearly -20% on Office. Those are not good numbers and they will get worse.

Today I learned of a condo for sale that originally cost $500,000 in a ritzy area near Naples FL. It is on the market for 1/3 of it's original price. I believe I can get it could be had for 1/5th.

Brokers and sellers want you to believe that prices have continued to rise and they are wrong.

I read SCM for the pretty pictures and discount all sales of the fees involved. A car isn't worth it's base sale price plus the total of the fees. That's a way to inflate values and it's not real imho (although it did get paid). To make a fair comparison let's use a real estate commission. You don't get to count that when the sale is recorded do you? For taxes, yes; but for final price; no. SCM inflates the prices to the hammer price plus fees.

Never go to any auction looking for a deal. You'll always pay too much.
Go to watch people make fools of themselves like the Ferrari hat wearing dude who paid $3,000,000 for that horrific concept car at B-J a few years ago. I'll bet he's on a short leash this year and pissed too that G.M. in all of its infinite wisdom tries to dump "their" collection.
BTW; the collection sale is for the press and "Joe Blow" because the proceeds won't make a pimple on a Gorrillas butt in the grand scheme of things. It's a thinly veiled gesture for the "leaders" in Congress. Sheesh....

Later.

Tom

[jaudette3]

My post was tongue in cheek: "Wouldn't that be great?". Just stirring the pot a little bit.

As for me, I'm following Pogo's advice (that's how old I am): "The sky is falling. Short sky".

Cheers,
JohnA

[John912]

Did anyone see the green 356 B that sold at the Barrett-Jackson auction yesterday (Tuesday, 1-13) for $15,500. It's a one-owner car, which looked to be decent from the TV view anyway

[NiceT]

And then there is this one. Scooped up from a Craigs List ad when it was offered at $5k.
It's not even a Super 90 motor........who would chase this money pit?

http://cgi.ebay.com/ebaymotors/ws/eB...3AIT&viewitem=

[Vintage Racer]

Cash is king and you should be holding on tight.

It depends on the individual. A guy with a mortgage and a kid in college should be more careful than a guy with no future financial obligations and a few million in cash.

The latest iMoneyNet report cited a record amount of cash in money-market funds ($43.38 billion, not everyone is broke). That cash will soon be earning a zero return as the older short-term Treasuries mature and newer short Treasuries are purchased which yield almost nothing.

I see nothing wrong with a guy buying a nice 356 if he has the financial liquidity.

A car isn't worth it's base sale price plus the total of the fees.

They clearly disclose this. They do so because it shows exactly what the buyer paid for the car before he left the premises. Of course, the seller netted 10%-15% less than this number. I'd call that a large frictional cost.

Never go to any auction looking for a deal. You'll always pay too much.

I would never buy a car through an auction process. The fees are much too high, and my ability to completely inspect the car is not available. I wouldn't even buy off eBay (unless it's an item under $10).

The SCM guide is a guide. I use it as such. I consider their prices as the "high" side of the #2 market. I also get the CTM price guide.

I enjoy the magazine for the wisdom of Jim Schrager, Michael Sheehan, and the rest of the staff. The auction coverage will not hesitate to say so when someone overpays for a car. Keith Martin was actually thrown out of the B-J auction 2 years ago for stating the obvious (that the muscle car was a bubble getting ready to bust, he was correct). B-J also had SpeedTV kick him out of the TV commentary booth for stating his honest opinion.

[larwik]

"I would never buy a car through an auction process"...especially when the auction-clown is hiding behind sun glasses....what's up with that?...If that's not a "poster-boy" for a "used car salesman" what is?...and "Speed TV"...what a miserable television channel that has become....just like "CNBC"...it's best on mute...What are they thinking?...

Sorry...couldn't resist...