For land prices. As asset bubbles are being spotted like financial Yeti all around the globe, people are trying to see some sense behind the prices. In this analysis about the boom in classic car prices see if the reasoning resonates with our favorite asset.
From our vantage point — and it certainly is a lay vantage point when it comes to classic cars — there seem to be three core attributes associated with vintage automobiles.The first is uniqueness.Value related to uniqueness is understandable since it relates to how easily an object or item can be sourced, replicated or mass produced. For now, there is little chance that a classic Bentley will be perfectly replicated. Value applied on these grounds seems rational enough.
The second is utility.Though, while this may be a bonus, we’d argue that in classic cars this is not necessarily a core value since most classic cars are notoriously unreliable and hard to maintain.In fact, a lack of utility can even be part of the appeal for classic car enthusiasts, since the joy of ownership is often linked to the challenge of maintaining the cars in working order, or getting them up to scratch.The third attribute, arguably the most important, is historical importance to car enthusiasts and sector specialists. [More]
The third point may be a bigger contributor to land prices than we think: land has continues to stand unchallenged as an historic form of wealth, and because it is intrinsically tied to location it also is a repository of history. To know an ancestor or beloved grandparent walked/bought/farmed an acre is to add the same type of value as knowing your childhood movie idol owned an item. Think of Spock's napkin or Jon Voight's car. Funny doesn't work without a wide acceptance of the underlying truth we feel.
When it come to land next to me, it is truly a scarcity market. And given my conviction that extremely large amounts of liquid assets are looking for a long-term home, farmland could be a semi-scarce asset that can at times possess some attributes of fine art or a Duisenberg.
This means that using tools that select the best stock for your 401K may not help when making land decisions, especially if you farm.