8 November 2016

Will the election results sink your classic’s value?

The old saying goes: “Markets like good news. Markets dislike bad news, but markets hate uncertainty.” The 2016 presidential election has been described as a choice between the lesser of two evils, but it’s also a choice between degrees of uncertainty.

Growth in the classic car market has slowed measurably over the last 18 months. Uncertainty around the presidential election, the Chinese economy, Brexit and the increasingly unstable geopolitical situation has undoubtedly caused a number of potential buyers to sit on their hands, preferring to wait to see how things shake out.

Should Republican candidate Donald Trump win the election, it seems logical that this trend will accelerate and the classic car market will at least in the short term, quiet even more. The markets while essentially apolitical, loathe change and Trump, love him or hate him, personifies it.

The equities markets could react negatively to a Trump victory. According to a CNBC article by Evelyn Chang, published yesterday, the consensus among Wall Street insiders is that the S&P will likely sell off on a Trump win and at least maintain their position with a Clinton win. With last Friday’s close, the S&P experienced its first nine-day losing streak since the 1980s. This coincided with Trump’s resurgence in the polls.

A win for Democrat Hillary Clinton, represents, to the markets, a lesser degree of uncertainty – a continuation of current policies that have brought growth (albeit of the unspectacular variety) in the U.S. economy and unemployment near or below five percent.

But a Clinton win does little to address uncertainty and instability of the geopolitical kind. It is well known that she and Vladimir Putin, the Russian Federation’s president, despise each other. And we still have no idea whether China’s economic slowdown will be a hard or soft landing, nor do we know what effect Brexit will have on the UK and European Union economies.

Regardless of this election’s victor, its conclusion only removes some of the uncertainty. In the longer-term, continued uncertainty might actually inspire a rush to tangible investments that could eventually favor the classic car market, but it’s difficult to imagine a return to the growth seen in classic cars values between 2011 and ‘14 any time soon. There are just too many unknowns on all fronts.

While great cars that are fresh to market and represent unrepeatable opportunities will continue selling, and probably quite well, the rest of the market is going to be tough to call. We’re likely in for a fair amount of volatility in the classic car market over the next several years regardless of which candidate wins tonight.

(Editor's note: Now that Donald Trump has won the election, there is a bit more clarity; however, overnight equities fluctuations saw Dow Jones futures drop by over 700 points, before rallying to a 200-point gain by 2:00 P.M., eastern time on Wednesday, Nov. 9. While we can relax for the moment, there is still a while before Trump’s inauguration and his tone will set the markets’ mood moving forward. As always when buying, make sure you research as much as possible and try not to rush in.)

14 Reader Comments

  • 1
    Jeff Beyer Livingston TX November 9, 2016 at 14:49
    Stick to making sure you process claims properly and other insurance duties, and leave the politics out of it. As a longtime policy holder I do not appreciate the insinuations that somehow Donald Trump is something negative for this country.
  • 2
    Jim Florida November 9, 2016 at 14:49
    The undiscussed wildcard could easily have been each candidate's position on "Global Warming" and "Climate Change"-my gut is a Hillary election,with Al Gore's undoubted help as a cabinet member or advisor,could have been a disaster as far as Federal regulations concerning our collector cars.
  • 3
    S.H. Cullman East Tennessee. November 9, 2016 at 14:54
    Seeing as how the S&P had already predicted a Trump victory based on historical data I see their response as a CYA. http://www.zerohedge.com/news/2016-11-04/market-indicator-gives-trump-86-chance-winning-election Look for opportunities, be it an up or down market irregardless of the commodity. The car market is no different, except we get to drive our investments.
  • 4
    Mike Marsh Stand by, strong message to follow. November 9, 2016 at 15:32
    As I type this, the market is up $312.52. Apparently the Country, even the Fat Cats on the street, have come to the conclusion that Trump is real and won't play around. Most of them are probably busy scrubbing their emails, as in CYA!
  • 5
    James Louisiana November 9, 2016 at 15:34
    I would rather risk the market variation of my classic Porsche that risk the erosion of my country. So, now that President elect Trump has emerged victorious, my car may be worth less? It would appear that the "market crash" predicted by Hillary and Co. in light of a Trump victory was a misnomer.
  • 6
    Lou AZ November 9, 2016 at 16:09
    2 things: the DOW came back immediately and never quote anyone from CNBC.
  • 7
    Adam Nebraska November 9, 2016 at 17:17
    Every presidential election has come down to the lesser of two evils for as far back as I can remember. That's how American politics work.
  • 8
    Duane Hayes Peyton Colorado November 9, 2016 at 17:55
    President Trump is likely to dial back the EPA and it's disastrous regulations. 10% ethanol has destroyed older vehicles fuel systems, cause major drive ability problems, and for some, reduced pleasure with the old car hobby. If we can eliminate the ethanol and return to enjoying our older vehicles, it surely will increase values as well. Who knows, maybe a unleashed EPA such as under a President Clinton would outlaw the internal combustion engine, such talk has been discussed in European countries, such as Sweden.
  • 9
    Benjamin E Cavileer Virginia November 9, 2016 at 18:31
    Once again, are You in it for the joy of owning, restoring or driving vintage automobiles or is it just another investment vehicle. The latter is and will always be pure speculation and truly ruins the hobby and comraderie true enthusiasts enjoy.
  • 10
    Michbc3 Port St. Lucie, FL November 9, 2016 at 18:34
    Basically for quite a while now corporations in bed with the government that have been getting massive taxpayer subsidies based on the global warming hoax (solar, wind, Tesla) are going to be in trouble when Trump gets on the job. Legitimately run companies not on the dole will do well as Trump rolls back over-aggressive EPA regulations and taxes. At the local level, have you bought tires lately? Have you bought R-12 lately? Even 134a is expensive. Much of the high cost of that stuff can be blamed on government regulation.
  • 11
    AJ orlando November 9, 2016 at 19:58
    This article is all BS!
  • 12
    Gregory Bergamaschi New York November 10, 2016 at 16:11
    You've got to be kidding me. Did this message come directly from the Democratic National Committee. I am an independent. And I did vote for Trump. What is it with you guys. Are you located in California and Have been infected by the left coast. I As an insurance agent look a person who is a businessman maybe he can straighten out this mess. And then as a classic Car owner,I ask myself if I had to leave my keys with somebody Would I leave them with Hillary Clinton or Would I leave them with Donald Trump. I believe I'd leave them with Donald. You can see how quickly the stock market recovered. That should give you a hint. God bless. Gregory Bergamaschi
  • 13
    ferd the cloud December 28, 2016 at 10:07
    LOL!! I agree with some of the comments that Hagerty should avoid printing articles that have any hint of politics - but not because of this article (which I found reasonable and balanced) but because your audience is too overprotective and oversensitive to the collector car niche. Classic cars may be a high priority to the audience of this web site, but classic cars are just a insignificant blip in the world of surface transportation. They do not have enough impact in pollution or the economy to get much political notice in Washington. If any of the EPA hand-wringing feared by some of the comments had any basis, surely classic cars would have already been legislated out of existence by the previous administration. Ethanol mixed fuels are not a conspiracy against classic cars, it is an attempt to lower pollution created by the car and truck fleet (most of which can tolerate these fuels) with a side benefit of pleasing the agricultural concerns (which is much bigger economically than classic cars). I'm a classic car lover too, but I realize that it is not nearly as important to the U.S. government as it is to us. As far as economic responses to whomever wins the Presidency, and his future policies, that is all guessing. All we see is market over-reactions and manipulations based upon emotional responses and profit engineering. President Trump may be anti-climate change and anti-EPA but I doubt you'll see any policy from him that will have any significant impact upon the classic car hobby. Auction prices of collectable cars will continue to go up and down in response to the profitability of competing investments. Take a look at the history of several past decades of Presidential policy vs. the collector / classic car industry and you'll see little overall impact. Now that might make an interesting article - although no matter what results were reported you'd still get criticized by comments from people who didn't hear what they wanted to hear.
  • 14
    Chris Los Angeles January 10, 2017 at 17:36
    Care to write a follow up story on this article????

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