Hagerty. “Economic Factors … On Car Collectors. ” John Wiley. June 2022.

Bank of America said real assets far outperformed popular financial instruments like blue chips, government bonds, and cash. But don’t assume that tangible assets like art and cars are just an inflation hedge. These collectibles can act more like equities in periods with healthy inflation. That doesn’t mean any classic car (or artwork) will hold its value during a period of inflation or act like equities in a low inflation periods. 1,11,12

Overall, though, demand for collectibles, especially cars, is expected to outstrip supply for years to come, thanks to the number of collectors emerging from the millennial crowd and the expansion of online selling platforms. If inflation takes hold, car enthusiasts might be joined by investors looking for real assets. And cue my old "diminishing supply, expanding demand" rant.

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BUT, WHAT IF...

Let's not pretend that collector cars are entirely immune from the potential imp-

APPRECIATION RATES 1793-1981

1,12

KEEPING UP WITH INFLATION OUTPACED INFLATION

2 21 1 . .9 9 2 24 4 . .0 0

A P P R E C I A T I O N Y E A R C A L E N D A R A V E R A G E

APPRECIATION RATES 2010-2020

KEEPING UP WITH INFLATION OUTPACED INFLATION

10.5

4.7

1.7 1.7 1.7 1.7 INFLATION S&P 500 GOLD ALL ART

acts of rising interest rates and inflation. If the efforts to curb inflation go overboard and set off a recession, enthusiasts might be less keen to splurge on the car they've always wanted, and appreciation could slow (not decline but slow). Yet, what data can tells us is that collector cars are well prepared to weather any economic storm that comes. 13,14

First, let’s start by exploring the last crash in the collector car market in the 1990’s. Leading up to the ‘90s car market crash, there was a run-up in demand for highend luxury vehicles a la Wolf of Wall Street. Speculators entered the market wanting cars that went up in value without understanding the underlying fundamentals that drive car value in the long run.

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9.39.3 2.4 9 9. . 3 3 9 9. . 3 3 INFLATION S&P 500 GOLD ALL ART

If this sounds familiar it's because we've seen this happen very recently in the commuter car market. Speculators entered a red-hot market without understanding that the pricing influences