Replies to post #8927 on Your Economy (No Politics) (YE1)

[SSKILLZ1]

Financial Advisor, Hard Assets & commodities are definetly a way to go, and I backed up the truck on EZM on the most recent selloff. I will also be trying to buy some NTO if it weakens here. Yet, I hold a significant portion of my assets currently in cash, and although I'm well aware of the risks I really don't see much better alternatives at this point, because I wouldn't put anywhere more then 10-15% of my money in metal plays, due to my diversification rules. What can I say I'm a big believer in diversifcation, and if it comes back and haunts me then what can I really do, at the end of the day I have to go with what I believe. Good luck to you.

[Bullwinkle]

Other types of hard assets...

Joy Rides
By ROBERT CAMPBELL ROWE
MONDAY, FEBRUARY 20, 2006


THESE DAYS, DETROIT IS HAVING TROUBLE selling new cars. But in the collectibles market, some old Motown metal is pure gold.

That was evident last month at the mid-winter Arizona auctions that are benchmarks for the collectible-vehicle market. Although the three January Phoenix-area events, at which about 1,500 vehicles changed hands, represent only a sliver of total annual sales in the U.S., their results are watched worldwide. Based on what transpired, the market looks strong, and the segment of it devoted to muscle cars looks very, very strong. Prices of big-engine Plymouth Hemis, Boss Mustangs and Chevrolet Chevelles, to name a few, from the 1960s and early 1970s easily outpaced those of traditional sports cars, classics, hot rods and customs.

The three major auctioneers are Barrett-Jackson (which sold 1,084 cars for $100 million), Russo and Steele (306 cars, $21 million), and RM Auctions (108 cars, $31 million). Each recorded substantial gains over their 2005 totals; Barrett-Jackson, for example, went from $62 million in 2005. "Our growth was bigger than total sales two years ago," said an ebullient Craig Jackson, president of the auction that his father and a friend, Tom Barrett, started in 1971, when 50-plus cars fetched $650,000. The company's opening event -- Family Day ($10 for adults, kids free) -- attracted 25,000 visitors eager for a preview of the cars for sale. Six days of auctions followed, each drawing on average another 35,000, attracted to the Vegas-style circus with plenty of sideshows.

Back in 1971, the stars of collectible-car sales were pre-war classics like Rolls-Royces and Duesenbergs, plus Ford Model Ts and sports cars. This year, the auctions included one Model T, three post-war Rollses and no Duesys. They did have about 600 Fords and Chevrolets (including 100 Corvettes) and many muscle marques.



The craziest moment occurred when a 1950 GM transporter/tour bus came on the block. Looking like a huge spaceship, it sold for $4.3 million, the highest amount for a single lot in Barrett-Jackson's history. The audience went berserk. When the auctioneer brought down his gavel, it was like watching a basketball game end with a buzzer-beating three-pointer.

That same Saturday night, a 1954 Pontiac Bonneville concept car, designed by famed GM stylist Harley Earl for exhibition only, sold for $3,024,000. Thirty minutes later, a 1970 Plymouth Hemi 'Cuda convertible fetched $2,160,000. It was the highest price paid at the auction for a car that actually had been used, and was more than twice the pre-sale consensus estimate.

"Auctions test the higher end of the market," said California collector Bruce Meyer, shortly before his 1956 Mercedes-Benz 300SL Gullwing Coupe was hammered down for $575,000 -- well above the $350,000-to-$450,000 this iconic German sports car usually commands. With the 8% buyer's commission (the same amount sellers pay), the final tab was $621,000. Less than an hour earlier, a '57 Gullwing had drawn a mere $372,600 (including commissions). The difference? Condition. Meyer's car was beautifully restored and maintained. The other one looked good, but had minor flaws.

"It probably would have cost close to $200,000 to get the other car up to Meyer's standard," says master restorer Bruce Canepa, of Scotts Valley, Calif. Restorers charge $60-to-$100 an hour, with most major jobs requiring at least 2,000 hours. Top show cars like the ones seen at the annual Pebble Beach Concours d'Elegance can have as much as 10,000 hours of work.

For collectors of more modest means, there were lots of cars selling below $100,000 or even under $50,000.

A 1969 Ford Mustang Boss 302 Custom Convertible garnered $43,200; a 1967 Chevrolet Impala SS convertible, $25,920. In most cases, "ragtops" are much more valuable than sedans or coupes. Craig Jackson sees a surge in interest for 1950s convertibles. "They're fun to take to events and pretty reliable," he said.

"Reliable" has become a key word. Modern collectors' desire for driving their cars, rather than just admiring them, has had a huge impact on the marketplace. Twenty years ago, there were few events for old-car aficionados. Now, every weekend brings rallies, shows, scenic tours and competitions, to which collectors want to drive their cars. That's helped boost prices of cars new enough to be relatively dependable. It's also cut demand for pre-World-War-II autos, with the exception of the finest classics.

The desire for drivability has a lot to do with the soaring popularity of muscle cars, the collectibles of choice for many baby-boomer males in their 50s and 60s. Most boomers hit age 18 at the height of muscle-car mania. Do the math, and you'll see that the boomers' impact -- and demand for muscle cars -- could remain robust for at least 20 years.

In the past five years, prices for many of these cars have tripled or even quadrupled. The 1969 Camaro Z Coupes that sold for $29,000-$35,000 at Barrett-Jackson in 2001 brought $68,000-$108,000 this year. (An unrestored example with only 11,000 miles sold for an extraordinary $221,400). A 1970 Dodge Super Bee Hardtop went for $19,000 in 2001; a similar car sold this year for $72,000.

One model worth tracking is the Shelby Mustang, created by racing legend Carroll Shelby, who enjoyed success on the international circuit before turning his attention to muscle cars in the 1960s. These very souped-up cars (not to be confused with the Shelby Cobras) are widely admired by both muscle car and sports-car fans. Ten years ago, Shelby 1967 GT500 Fastbacks brought $25,000- to-$35,000. At Barrett-Jackson, one sold for $222,480; another, for $270,000. (The latter had been owned by musician Sammy Hagar, best-known for his work with the band Van Halen. The car came with one of Hagar's guitars and a case of Cabo Wabo Tequila; the box bore the rocker's autograph.)



At auction, a vehicle's technical innovation and performance, compared with those of its contemporaries, are very important considerations. So are aesthetic appeal, history and provenance. And the history that matters most is racing history.

A 1970 Chevrolet Chevelle LS6 convertible that had been driven by Ray Allen won every major drag race in its category that year. This year it sold for $1,242,000 at Barrett-Jackson. A very similar 1970 LS6, fully restored, sold an hour later for $513,000. The Ray Allen racer is a special car that will have meaning to collectors for a long time.

On the other hand, if a car's history is celebrity-connected, that celebrity's fame had better have staying power. The person who overpaid for a 1956 Pontiac Chieftain station wagon driven by 1950s sitcom stars Ozzie and Harriet Nelson may have trouble in the next decade finding buyers who even recognize the onetime TV stars' names.

When the celebrity does have megawattage, the car benefits greatly. A duplicate version of the 1965 Aston Martin DB5 Coupe used by James Bond in Goldfinger sold for $2,090,000 at RM Auctions. The vehicle was "accessorized" by the factory and used to promote the debut of Thunderball in the U.S. and Europe. It's in great shape and has all those neat little extras -- revolving license plates, retractable bulletproof screen, fender-hidden machine-gun mounts. Want just a great DB5? You can find one for $80,000 to $100,000.

But beware. Warns Rob Myers, founder of RM Auctions, headquartered in Ontario. "Some of those 'muscles' have gone so high, they may level off now." Or even drop, at least in the short term.

The atmosphere at the RM auction is a 180-degree turn from the Barrett-Jackson "lifestyle" event. Plummy-toned Brits run the one-day sale that plays to fewer than 1,000 bidders and spectators. RM's niche includes American classics, as well as sports cars. A 1934 Packard Twelve Runabout Speedster -- one of four known to exist -- sold for $3,190,000, one of the highest prices ever paid for a classic. A 1938 Bugatti T57C Aravis Drophead Coupe fetched $1,045,000; a 1930 Duesenberg Model J Dual Cowl Phaeton, $1,001,000.

The Bugatti and Duesenberg look like bargains, considering that their combined price was less than the $2,160,000 paid for the 1970 Plymouth 'Cuda convertible.

The classics were built for aristocratic tastes and without concern for cost; the 'Cuda was a modestly priced street car with a big engine aimed at young people out for a night of drag racing and drive-in hopping. In the long run, classics usually win, be it in furniture, painting, decorative art, or cars.

Russo and Steele operates a three-night auction in a tent just down the road from Barrett-Jackson's Scottsdale location. A former employee of Barrett-Jackson, Drew Alcazar, president of Russo and Steele, eschews "lifestyle" events and focuses just on the cars. Only bidders are allowed at the three sessions. Though the majority of his Arizona sales (there is also an August auction in Monterey) are of muscle cars, Alcazar believes that many young buyers will gravitate to sports cars, "maybe within five years."

In the view of Alcazar, a 42-year-old Southwesterner who grew up loving muscle cars, pre-1970 models -- particularly any V12 Ferraris -- generally are the best bargains among sports cars.

While most Ferraris of that period sell for hundreds of thousands of dollars, or even millions, there are exceptions. At RM, a top-condition 1964 330 GT 2+2 Coupe sold for $77,000. This isn't a flashy, open car but one with clean lines and even a back seat (for small adults, pets or children). Most likely, this model will never soar in value, but it should steadily appreciate. More important to many drivers, it's the real deal. You get to join the club and wear the cap.

For those who prefer the muscle-car category, Alcazar and others recommend seeking models that aren't the rage right now, like cars made by AMC. A mint-condition 1968 Ambassador SST two-door fastback currently commands $18,000 to $20,000. Even the rare 1970 Javelin fastback with the "Big Bad Package" (vintage Detroit hype) has a current market value of only $25,000-$28,000.

Other neglected survivors include certain Buick and Oldsmobile models, especially convertibles. A fully restored, 1966 Pontiac GTO 2-door hardtop sold at Barrett-Jackson for $46,980; a 1967 GTO convertible sold for $51,840; it had undergone "frame-off restoration" (meaning that, during the course of the work, the body had been removed from the frame and then reattached). Considering the cost of restoration, these are good prices.

Many fully restored automobiles, unfortunately, will never be show cars or classics. Paying too much to restore such a car is like putting $2 million into a $2 million house and then selling it for $3 million.

There is a hot new category of restoration that crosses over into customizing; Barrett-Jackson calls it "Resto-Mod." It involves retrofitting a nearly stock-appearing old vehicle with a late-model chassis, drivetrain and conveniences. While purists cringe, such vehicles are favored by some well-heeled buyers, who want to turn heads, not wrenches. They couldn't care less about such concepts as "all original."

Consider the 1969 Chevrolet Camaro SS Coupe that sold at Barrett-Jackson for $486,000. Its exterior looks original, but everything inside is new, however, and incredibly beefed-up, tricked-out, gorgeous and powerful. The Camaro features a state-of-the-art sound system, high-resolution cameras for rear-view safety and a 540-cubic-inch, fuel-injected engine. That should keep the street competition at bay, while the car's killer good looks guarantee that valets at the Beverly Hills Hotel or The Breakers will put it in a primo parking slot.

Three Good Bets

Anyone seeking a long-term profit, as well as lots of fun, should consider these:



Under $25,000
1984-89 Porsche 911s, especially Carreras. These drivable dreams are powerful and beautiful, with relatively uncomplicated flat-6 rear engines. The tiny rear seats are good only for small children, pets or luggage. Clean, good-running examples sell for $15,000-$25,000. They've bottomed out in price in recent years and should move up modestly if well-maintained. These kind of cars are sometimes called "equity protectors."

$50,000-Plus
1955-1957 Ford Thunderbirds. These two-seat "Baby Birds" are American sweethearts. They got the name after Ford upsized the car in 1958. They come in a huge range of prices and conditions. Three 1956 models, all "frame-off" restorations, sold at Barrett-Jackson for $54,000, $57,240 and $70,200, respectively. Find a good one, save it for fair-weather Sunday driving and watch its value appreciate.

$75,000-Plus
Early-1960s Corvettes. America's first and greatest sports car. These are great vehicles, with which amateurs had racing success all across America. In the $75,000-to-$100,000 price range, there are many to pick from. To find a good one, look at the ads in Hemmings Motor News or contact a nearby Corvette owners club. Especially prized: 1961 or 1962 two-top fuel-injected models. Always go for the biggest engines with max power. Knock-off wheels and air conditioning add value.

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