Investing: Stock Market vs. Classic Car vs. Modern Car

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Hi Neal,
No harm, no foul.  I definitely agree the analysis is extremely simplistic, but, you have to start somewhere, and where better to get good feedback on the subject than here?  So I thought I'd try it out here and see what happens.  I appreciate all input.

For what it's worth, though, I looked up the CAGR calculation, and it looks like the only thing it takes into account is the beginning and ending values of a time-series, and then smooths it.  If that's so, that has to be a much worse way to look at it, because it ignores a lot of information, almost every point in the series.  I'm unfamiliar with CAGR, but I am familiar with statistical methods of forecasting, and somewhat as they apply to the market.  A popular method (among trillions, I know) is to convert the series to percentage differences (of course, I'd prefer daily rather than yearly, but that's another matter), and forecast forward based on shocks to the series, then integrate back to the series.  I don't know how into that sort of thing you are, so I hope it's not just babbling.  But like you say, things would be better if it had the 2000-2008 data.

There was a point where I noted and included upgrades (it's pretty long, so it's easy to overlook), etc., but didn't focus that much on it, because then we'd be talking about restoration or resto-mod, and investment, rather than merely investment, and potentially driving.

Other than that, I'm right there with you.

Does anybody know if there's any credible source out there for data where someone has studied the rise and fall of classic car prices?  I'm sure we'd all find that very, very interesting.

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I did not have time to read the whole article but did find it interesting that you did not include the cost of storing a classic car.  Whether the car is stored in your own garage or in a rented garage, there are fairly high costs involved.  Also, you stated that "unlike the stock market, you will not have to pay capital gains tax on your profits, which saves you $41,788."  That, to the best of my knowledge, is just not true.  Both of these would dramatically skew the cost/investment comparison.  Check out my gas/garage hog at www.marlia.com. Kim

If you have a classic car that's used as a daily driver the storage is not an issue because the car gets stored anyway, new or not. Same with insurance. Since any car has to be insured that shouldn't count against you regarding the investment potential. Whether using a classic as a daily driver is a good overall investment, I don't know, but you can bet it's a better investment than a new car when it comes to basic transportation. I'd say probably 95% or more of the new cars purchased are going to depreciate whereas a classic will most likely appreciate or remain static.

Also, a driver would be exempt from any hobby tax.

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Same with insurance. Since any car has to be insured that shouldn't count against you regarding the investment potential.

It's hardly substantial, but someone could say that their insurance premium goes down every year on a new car, and that long term, they're saving money in that respect compared to a car that holds its value.  Of course, you'll never hear me argue in that direction.

Also, a driver would be exempt from any hobby tax.

Now THAT is an interesting notion.  That would create a loophole for the owner.  If they've had the car fully insured a long time (not collector car insurance), then they might save money at the time of sale by claiming they drove it all over hell and back, rather than pay 25 or 28% tax on capital gains, even if claiming you drive it lowers the value a little.  25% is a lot.  That's a really interesting idea there Bull.