Professor Elam

Tuesday Sept 9, 2014

The prices of collectible cars continue to set new records, along with the stock market. This is explained  by the predictive social science of socionomics. Social mood drives behavior. And at the moment that behavior is optimistic towards higher prices for art, autos,a and stocks. 

European car makers have traditionally anmed their cars in a way that identifies something mechanical about them. To this day, BMWs sport a name like 328 which means it is a three series with a 2.8 liter engine. 

Ferrari names it cars using the cubic centimeter displacement of one cylinder. Italy taxed cars based on total displacement so the older Ferraris had twelve cyinder engines with small displacements. The pistons were about the size of a six ounce orange juice can.  So this 275 GTB has 275 cc per cylinder of 

2758 x 12 = 3.3 Liter Displacement

At the recent Pebble Beach Auction, this collectible brought $26.4 Million. Our points here are

there are multiple methods of tracking social mood including prices for art, stocks, and all manner of collectibles

social mood is currently expansive in markets like this but dangerously exclusive in the Middle East, Scotland, and the Far East where China threatens its neighbors. 

Ferrari collectibles first crossed the $10 M mark in 2008 when a 1961 model once owned by actor James Coburn sold for$10,894,000.

Note the $10 M figure occurred at the top of the markets in 2008. Now that markets are once again making new highs, so are collectible Ferrari prices, believe me all this is inter connected. 

One hundred dollar oil in the Middle East is driving such prices much higher. As a result Ferrari has now scaled current production back to a mere 7,000 units a year from about 7,400. Model runs are snapped up as soon as they are announced. Ferrari understnad the lure of exclusivity for its brand. 

As future accounting professionals I suggest you make a habit of following interesting markets and becoming expert on them. After all, there is nothing more deadly than sounding like an accountant. 

By the way, you do know where Pebble Beach is, right?  Dan Neil who writes teh auto column for the weekend WSJ was a judge at this year's Pebble Beach Concours. 

one