Classic cars and stocks are in a bull market, with the latter Dow Jones Industrial Average hitting an all-time high.
With half of the households struggling to put food on the table and shelter over their heads today, this must be a sick joke, you are probably thinking.
This is the reality today with classic cars and stocks in a bull market
Moreover, with food being more expensive in decades, retail food stores are reporting record revenue in 2023. But as Darren Winters points out, there is a shoplifting epidemic where even toothpaste and cheese are locked up.
Shoplifting flash smash-and-grab mods have entered the lexicon as retail theft balloons to $100 billion.
A broken fiat system where waves of desperate people steal for the necessities, and classic cars and stocks are in a bull market.
It is no soft landing, but a systemic crisis as currency debasement causes hyperinflation and a melt-up in tangible assets from classic cars, works of art stocks, to cryptos
In 2017 Venezuelan stock market was up 1,100 %, but inflation was up 720% as the economy contracted by double digits over those years.
Heavy money printing and deficit spending triggered a collapse in the exchange value of the Peso and hyperinflation.
At the time, there was tweeter footage of hungry people hunting down cows on farms for meat, their version of smash and grab.
The melt-up in tangible assets, from precious metals to classic cars, could continue as confidence in central banking melts down
Here are a few sound bites from the Fed over the last six weeks
The Fed Since November 1st:
1. Nov. 1: Getting inflation to 2% “has a long way to go”
2. Nov. 21: “No indication of rate cuts at last meeting”
3. Dec. 1: Talks about rate cuts are “premature”
4. Dec. 1: “We are prepared to tighten policy further” if needed
5. Dec. 13: Rates have peaked, 3 rate cuts coming in 2024
6. Dec. 15: Fed “isn’t talking about rate cuts”
Analyzing the Fed doublespeak to try and get a heads-up could be like trying to find a meaningful relationship in a cat house.
Reading between the BS, here is the real deal
A fed fund rate of 5.5% in a hyper-indebted economy with a record high 34 trillion dollars public deficit burst the treasury bond market, triggering the worst bank liquidity crisis, collapsing five banks in 2023.
Record demand for Repo funding, an emergency funding facility used by banks to fund their daily operations, revealed a stark reality behind the facade of stability, collapsing market liquidity.
Facing a second bond market meltdown and believing that temporary emergency measures to keep the banks afloat would not cut it this time, the Fed decided to pivot.
A highly leveraged global economy cannot afford higher interest rates without causing a currency crisis.
Someone’s debts are another person’s assets.
If the value of those debts is destroyed due to higher interest rates, potentially causing a tsunami of loan defaults, then the exchange value of the currency weakens with inflation knocking at the door.
Higher interest rates create an illiquid market for long-maturity treasury bonds, and if the Fed resorts to creating dollars to buy those bonds, that debases the currency.
The takeaway, the Fed has opted for higher inflation, irrespective of what they say.
The inflation hedge investments; are tangible assets, alternative investments, and classic cars
If we are heading into a monetary crisis and high inflation scenario, then tangible assets would be the optimal place to shelter wealth.
In this scenario, cash would be trash.
Everyone thinks of precious metals as an inflation hedge, but alternative investments, which include, black-label whisky, fine wines, fine arts and classic cars, have done well.
A well-restored classic car ages well and appreciates with time offering investors a good store of wealth
Inputs that go into restoring classic cars include commodities, craftsmanship, and hours of skilled labour. So classic cars potentially offer a good store of value with all input costs coming together in a high-value finished timeless product.
- Data shows that 2000s classics such as the Vauxhall Corsa and the Renault Megane have increased in value by more than 80% since September 2019
- The rate of value increase is higher than both the average UK property price and the FTSE 100 during the same period
- 00s revival challenges the common misconception that a car can only ever lose value once it’s driven off the lot – and shows why it’s always worth getting your vehicle valued.
Demand for classic auto trucks, and SUVs is also going through the roof
These are the autos with no computers or primitive computers with few or no sensors.
As prepping goes mainstream, the demand for classic cars that will survive an EMP attack is high. These are older model diesel vehicles with minimal electronics.
The Classic Car Index, K 500 Index, underscores this asset class as a haven asset in times of massive central bank easing.
The K 500 Index tracks the movement of the classic cars market through tens of thousands of verified and quantified auction results.
The other benefit of alternative asset classes, like classic cars, and whisky, fine wines, is that even if the asset doesn’t appreciate as intended, there is always the fun factor.
If your stock, bond, or precious metals portfolio depreciates, there is nothing to enjoy.
Darren Winters points out, the size of the classic car market between 2020 and 2024 is projected to grow steadily from roughly 30.9 billion US dollars in 2020 to some 43.4 billion US dollars in 2024.