Monday Musings

I had a dream that I was watching a pro football game on TV, but all the director and cameraman wanted to show were two players’ wives. Obviously, I don’t really know what they looked like–I don’t think one can visualize a person they’ve never seen–but I did have the impression that they were, indeed, beautiful. However, I became angry that the game wasn’t actually being shown, nor was any of the commentary about anything except these two women. Once again, it is hell to live inside my brain. Oh, if I had a dollar for every time I’ve typed “agaib” when trying to type “again” I could probably afford to buy almost any car.

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Nikola founder Trevor Milton was convicted by a federal jury on one count of securities fraud and two counts of wire fraud. Nikola was the name of an electric truck and, obviously, was named after Nikola Tesla.

People like Milton, Elizabeth Holmes and Bernie Madoff do give capitalism and the stock market a black eye. However, while I won’t say that people want to be deceived, many are guilty of willful blindness when it comes to investing their money. I am not talking about the ludicrous trend of ESG currently running amok, I am simply talking about people who want an outsized return on their investment and who don’t dig too deeply when they think they have a chance to do so.

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This Hagerty piece is about 5 “classics” that are “finally cooling off.” One of these is a car very near and dear to me.

 

 

This is a 1966 Pontiac GTO convertible. Of course, my first car was a ’67 Goat, although not a ragtop.

 

More from the piece:

 

“The cooling off is the muscle car market, which reached all-time highs this year. Now, several of these 1960s and ’70s classics have posted declines.

…There’s no doubt the broader economy is having an impact. Inflation is hitting us all in the wallet while uncertainty in the stock market is hitting us all in the 401(k). Although classic cars, like many tangible assets, can be a hedge against such bad news, they are also, like other discretionary purchases, subject to pressures on consumers. That’s particularly true for relatively attainable vehicles like muscle cars, which by and large are bought and sold by people of ordinary means.”

 

Over the last six months, our family portfolio has seen a decline in value of more than 10 percent, which equates to a six-figure loss. Of course, this loss is really only on paper, but the wealth effect is very real.

The first-gen GTO (1964-67) was shown having a recent 7 percent decline in value. The ultra-wealthy (sometimes called, with contempt, the “Fuck You Rich”) are also losing money, on paper, but if you start with $700 million, even if you lose 20 percent you still have $560 million. These people are probably not buying 1967 GTOs, but 1967 Ferraris.

I am always skeptical when people tout some “investment” as being recession-proof. That applies to automobiles as well. As I have written many times, I don’t really believe in buying cars as a financial investment, but as an investment in the enjoyment of life, if one is so inclined.

 

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8 thoughts on “Monday Musings

  1. Anyone who buys cars strictly for investment value is certainly not buying most GTOs or most Mustangs. Until you get into buying and selling vehicles that are 6 figures at minimum, you’re not a player. There are countless folks who have learned the hard way that this is a tough way to make ANY money trying to play in those markets.

    Like you, my net worth has gone down, on paper, much more that I would like. It certainly isn’t going to put me in the soup line, but it has paused a major purchase I was going to make. And depending on who you listen to, it’s going to keep losing value for several more months or more. For me, the downturn actually started in 2020 with all the Kung Flu panic. Our work cut back by about 75% between March and the end of that year. It’s been returning, slowly, and is now at about 80% of what it was pre-pandemic. Unfortunately the cost of our projects has gone up due to rising costs for EVERYTHING. These costs, and delays getting anything from repair parts to new equipment, has any number of companies re-thinking investing in new equipment. We just had another project pushed out several weeks due to the equipment not being finished and ready to ship. It makes our life tougher, because now we have to find some small projects to put our employees on, but still be able to put a crew together to travel when the equipment DOES ship.

    “I picked the wrong week(year) to quit sniffing glue.”

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    1. Many thanks for sharing, DDM. As a business owner you are on the front lines of the conflict. I used to own my own business, but it was just me doing analytics for baseball teams. It was nowhere near as complicated as your situation. Still, if I hadn’t had a great accountant, I might not have been able to navigate the obstacles governments set up to stop small businesses.

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      1. Our accountant makes a decent lower middle class salary just from us. 😦

        The second edge of the sword is trying to keep up with the latest dictates from various government agencies. As we have done, and still do, work in all 48 contiguous states, we have to take the time to see if there are any “local” rules we have to follow.

        As an example: In Arizona to anchor machinery to a concrete floor, it has to be approved to be rated for earthquakes (I was unaware Arizona was a hotbed of earthquake activity). We found this out at the last minute, and only by a tip from another contractor working on the site. It took 2 1/2 weeks IIRC to get approval for the anchors we need to use. This left us hanging as we can only do so much without the equipment anchored. I put the time to good use by chasing around to a couple or 3 car museums, hitting the Barrett Jackson auction, you know, job related stuff. 🙂

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  2. I too owned my own business being a consulting engineer, so I know the issues of which you speak. Not having to depend upon the delivery of equipment to complete a project was not one of my problems. Having to specify equipment that was a quality product and available for the construction contractor was my problem. Most politicians do not understand what issues small business owners have to deal with.

    I shall not get into the discussion about the value of investments. I know better and we too are suffering the same losses as mentioned above.

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    1. “Most politicians do not understand what issues small business owners have to deal with.”

      That comment is so true. George McGovern, one-time darling of America’s far left, realized that while running a business after he left public office. More of his thoughts:

      “I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

      Today we are much closer to a general acknowledgment that government must encourage business to expand and grow…We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.”

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  3. ” Too often, however, public policy does not consider whether we are choking off those opportunities.”

    Just my opinion, but it seems over the last few years policy has been to discourage certain opportunities while encouraging others. In fact demonizing some industries by words and deeds. In many cases these are industries that are NEEDED by many, both to make a good living and to maintain a viable community. No I’m not in favor of a totally unregulated business environment as there are more than a few that will abuse that, but there has to be a limit on how onerous the regulations are. IF I was looking to start our business today knowing what I know, I wouldn’t. It’s hard enough MAINTAINING our business even knowing what I know. And as we don’t maintain a physical manufacturing facility, we are not subject to many of the laws and regulations that those companies are. In the current time, if an inspector has a bone to pick with a certain company, they can go in and I guaranty that they WILL find something to fine that business over, no matter how diligent that company is. I have seen it happen and if we know about the inspection in advance while we are on site, we will discontinue certain activities that would draw the inspectors interest.

    “You’ll have to let me know the next time you’re in Arizona for “work.”

    Over the next year or so, I intend on lowering my “on site” presence. I’ll still keep my finger in the planning pot, but it’s time to slow up. I’m on my 66th trip around the sun and the constant travel isn’t as much fun as it used to be and in all reality, I don’t NEED to travel. I, and my partner, mainly do it now for certain long time customers. We have competent people in place, luckily, that can handle the on site stuff. We have been teaching a couple of our better employees to become more of a project manager and less a working foreman (I’m bringing one with me tomorrow to Baltimore to look at this upcoming project) . I will still work with some customers on the specifications of machinery, and the recommendation of OEM’s, based on their needs and budget, which I can do without a ton of travel. There will always be some travel, but I’m looking forward to NOT spending 1/2 to 2/3 of a year away from home.

    After all, I have hot rods that need to be finished. 🙂

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    1. “IF I was looking to start our business today knowing what I know, I wouldn’t.”

      This is a sad statement, DDM. However, it is one echoed by many American ex-pats who have moved abroad to places like Portugal specifically because it is so much easier to start and to operate a business there. EVERYTHING comes with a cost, INCLUDING regulation. Too many idiots politicians just don’t get it.

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