Classic cars - economic hedge, if you can afford it

In recent months I have discussed the economy, stocks, energy, and alternative sources of retaining wealth in an economic slowdown. I have found claims and suggestions that collectibles and antiques are excellent hedges against a credit crunch or mortgage bailout. But as nice as it may be to have an original edition copy of Green Eggs and Ham, it won’t get you down the road a mile.

For that you need a car. And if you have a mind to preserve your capital there is nothing better than a classic car. If you can afford it.

A recent car auction, which was focused on classic cars was held in London. Thousands crowded the scene, and many in that group were there to buy. Up for grabs were Rolls Royces, Bugattis, Aston Martins from the 50s, Ferraris from the 60s, and Jaguar E-Types just to name a few popular names. And many of the 99 cars were sold at or above the estimated price.

2 Ferraris were able to fetch over $1 million each. And an all-time high price was set for the McLaren F1, at $1.2 million



But for all the huge prices - and a few bargain deals like the 1935 Lancia that sold for $4500 and the 1954 Fiat that went for just over $1000 – 30% of the cars did not hit their estimated price. Still that’s not too bad for an auction.

So you might take this from the London auction. A classic Bugatti or Aston Martin, A Jaguar or McLaren is definitely not a stock. You can ride it down the road, really fast in some cases. You can look like a million bucks in it. You can be terrorized by birds overhead and potholes in the road. But the value of this slice of automotive heaven will likely not get altered much by lost profits, or bad loans.

Of course you have to have the money to buy the car in the first place. And then a home to garage it afterwards. And an alarm system, a really good one.

So perhaps classic cars are a hedge against economic woes. But it would seem to me that if you can afford a Rolls Royce your economics are pretty secure anyway. But if you have the mind and the money, well there is an option.