In the June issue of Sports Car Market, Michael Sheehan takes a look at the Ferrari price index to determine if we are currently in a boom or bubble business.
It came to me immediately, and why this didn’t come to him or the editors at the bible for pricing, that he uses pricing of a Daytona starting with near new in prices 1973 but never accounts for inflation or adjusted CPI.
So below is a recap of his pricing and my conclusions using the GDP Deflator and CPI Consumer Price Index.
FYI – The GDP deflator is an index number that represents the “average price” of all the goods and services produced in the economy. It a weighted number that is based on what is paid for the entirety of GDP, that is, for everything from a gallon of milk to a new Army helicopter. Changes in the deflator are a broad measure of inflation. The GDP deflator is calculated by dividing Nominal GDP by Real GDP. I thought it would be good hear because Michael does quote inflation a lot in the article and uses international reference such as Japan and the Nikkei index.
Daytona Prices then: Today using GDP Deflator and CPI
1973 $15,000: $60,500 to $75,900
1975 $75,000: $253,000 to $313,000
1979 $75,000: $194,000 to $232,000
1989 $500,000: $815,000 to $907,000
1994 $125,000: $177,000 to $190,000
2007 $300,000: $320,000 to $325,000
2008 $200,000: $209,000 to $209,000
2012 $350,000: $400,000 to ???
When we analyze his data from the article but adjust it for cost of living, we notice the following.
1. His swings would make you believe Daytonas have quadrupled their values from 1975 to today, when actually they’ve remained flat.
2. In fact, you probably lost relative money in any year unless you sold it in 1989.
3. If you bought it during the lows of 1994 or in 2008 you probably doing ok. But putting money in the stock market would have done you far better in 1994.
Does this mean the Ferrari market hasn’t returned some staggering prices? No. Does it mean that the market isn’t going up? Nope. Does it mean Michael Sheehan needs to have someone scrutinized his articles a little more before going to print. Yup.
Historical Stock Market Returns
| Historical S&P 500 Index Stock Market Returns | ||
| Year | Return | |
| 1973 | -14.7% | |
| 1974 | -26.5% | |
| 1975 | 37.2% | |
| 1976 | 23.8% | |
| 1977 | -7.2% | |
| 1978 | 6.6% | |
| 1979 | 18.4% | |
| 1980 | 32.4% | |
| 1981 | -4.9% | |
| 1982 | 21.4% | |
| 1983 | 22.5 | |
| 1984 | 6.3% | |
| 1985 | 32.2% | |
| 1986 | 18.5% | |
| 1987 | 5.2% | |
| 1988 | 16.8% | |
| 1989 | 31.5% | |
| 1990 | -3.2% | |
| 1991 | 30.5% | |
| 1992 | 7.7% | |
| 1993 | 10.0% | |
| 1994 | 1.3% | |
| 1995 | 37.4% | |
| 1996 | 23.1% | |
| 1997 | 33.4% | |
| 1998 | 28.6% | |
| 1999 | 21.0% | |
| 2000 | -9.1% | |
| 2001 | -11.90% | |
| 2002 | -22.1% | |
| 2003 | 28.7% | |
| 2004 | 10.9% | |
| 2005 | 4.9% | |
| 2006 | 15.9% | |
| 2007 | 5.5% | |
| 2008 | -37.0% | |
| 2009 | 26.5% | |
| 2010 | 15.1% | |
* Calculations from MeasuringWorth.com
Leave a Reply