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Tuesday, February 12, 2013

Ferrari Fever, Wall Street Journal and Inson Wood on investing in Collectibles.




Taste maker, Inson Dubois Wood,  advises clients on all kinds of purchases: realestate, art, furniture, wines, and yes even cars.  Inson Wood says - "Bar none, Ferrari is the only way to go if you want style and a true investment. Its the equivalent of an Andy Warhol or a Koons." - Inson Wood


Inson Wood says Ferrari's are by far the most collectible and have the highest appreciation rate - however the entry level investment for anything truly valuable is a cool million. Other than art and property - vintage cars are my favorite collectible. noting that some Ferrari's have sold for over 30 million.

The Ferrari 250 GTO is chassis number 3505 and was purchased by American billionaire Craig McCaw for $35 million, beating the previous purchase price record by $1 million. The former record was held by Peter Mullin, who owns the Automotive Museum in Los Angeles. Mullin reportedly paid between $30 and $34 million for 1936 Type 57SC Bugatti Atlantic in 2010.

 

According to Inson Wood - Go for timelessness - Porsche.

Larger vehicles are still valuable but tend to be seen more at weddings.

Inson Wood rare pick of the day - "Miniatures can be cool."

Inson Wood tells us: "Ferrari GTO's are top rated above almost anything other than maybe a Bugatti. 

The little know Siata's are popular amongst European collectors according to Inson Wood.

Aston Martin's have great appeal as everyone knows who has watched a good Bond film. 

More as a novelty, but still collectible are older models - here a classic Saab. 

Although not as valuable, Alpha Romeo's still have great curbside appeal. 


Alfa Romeo - Italian flair - affordable entry level. 
Inson Wood tells us Ferrari's although appreciating at 28% yearly - in some cases have been doubling in price at auctions astounding sellers and bidders alike.  "This doubling in value is seen no where else save the modern and contemporary art world." A Ferrai recently sold for 30 million and a Bugatti for 42.7 million.


European racing cars still lead the pack for both vintage and new in most sought after collectibles. - Inson Wood

"Vintage Lamborghini's are extremely chic - yet be prepared to have a full time mechanic on your staff."  - Inson Wood


For the older gentleman or woman looking for a new car, Inson Wood recommends a Bentley.  "What affordable European car can hit 205 mph and still look like you are driving a complete mid-life crisis."  

Bentley - one of the only new cars that can look sophisticated in red.   According to Inson Wood, "Many clients are looking for a status symbol without being considered tacky.  Understated is the goal, while still having top performance on the road.  Clean lines, not too aggressive of a stance, and an eye on quality yet a European flair. 

After a decade of up-and-down stock-market returns and widespread fears that the bull market in bonds could turn into a bubble, money managers are pitching new asset classes—from wine to musical instruments—that investors can use to diversify their holdings.
Ferrari (Gooding & Company); Taxi Medallion (Mark Tyner/The Wall Street Journal); Wine, cap, guitar (Getty Images)
A few firms are even putting together private funds that let investors pool their money to buy portfolios of these assets, often charging hedge-fund-like fees of 2% of assets and 20% of gains.
Skepticism is essential, but some of the sales pitches are compelling. Since 1980, for example, classic cars have appreciated by 13% per year, according to the Historic Automobile Group International, an investment-research firm in London—while large-company stocks have returned about 11% annually, including dividends, according to investment-research firm Morningstar.
Be warned: Many of the alternative investments, sometimes called "treasure assets," are inherently speculative. For example, while collectors might think classic cars, such as the Mercedes-Benz SL300 Gullwing, are rolling works of art, they have no intrinsic value other than what the next buyer is willing to pay. The same goes for luxury asset classes like fine wine, stringed instruments and diamonds.
Many of the items are also relatively "illiquid," or hard to sell quickly. Unloading, say, a vintage Gibson Les Paul electric guitar can take months, and commissions and fees will eat into your profit. Some of the new private investment funds lock up investors' money for at least five years before letting them cash out. That makes these assets poor choices for short-term investors.
The caveats make many such assets suitable for only a tiny portion of an investor's portfolio—less than, say, 3%—and only if investors genuinely enjoy owning them, experts say.
Still, it's "perfectly reasonable to have treasure assets as part of your wealth," says Greg Davies, head of behavioral finance at Barclays wealth and investment management division. "You should do it because you enjoy it, apart from the financial gains you may make."
Expertise helps. "People who invest in alternative alternatives have to be interested and engaged in what they're acquiring, which raises the probability they'll reap both aesthetic and financial returns," says Scott Clemons, chief investment strategist at Brown Brothers Harriman Wealth Management.
With that in mind, here are some alternative asset classes that can be fun to own and buttress your portfolio.
Classic Cars
Most autos lose value the moment you drive them off the lot. But classic models—which include the 1965 Aston Martin DB5 Coupe and the 2004 Porsche Carrera GT—have gained value even as the economy has stayed weak, according to the Historic Automobile Group International, or HAGI.
Since the end of 2008, the HAGI Top Index of classic-car prices has risen nearly 64%, not far off the 73% total return for the Standard & Poor's 500-stock index and much better than the 26% return for the Barclays U.S. Aggregate Bond index. The HAGI index tracks prices of 50 rare models with a minimum price of 100,000 British pounds and a maximum 1,000 cars in existence.
The hottest models right now? Vintage Ferraris, which have risen 28% in price so far this year, according to HAGI. Porsches have risen 15% this year.

image

A 1965 Aston Martin DB5 coupe
The performance of car investments is based solely on supply and demand. "These are basically collectibles with some asset-class qualities to them," says Dietrich Hatlapa, HAGI's founder.
Picking the right vehicle—at the right price—is best left to serious aficionados. With certain exceptions, prices of sports cars—and especially open cars like roadsters and convertibles—perform better than those of other cars or coupes, says Mr. Hatlapa.
Some asset managers are creating funds that kick the tires for you. The Family Classic Cars Fund I, based in San Juan Capistrano, Calif., is trying to raise $120 million to invest in classic automobiles, says Paul Charles, the fund manager.
The private fund, which started raising money this month, has a minimum investment of $10,000, charges an annual management fee of 2%, and takes 20% of profits. Investors need to be "accredited"—generally, those who earned $200,000 or more each of the last two years, or have a net worth of more than $1 million, not including a primary residence.