'Crypto bros are hurting': Bruised young investors are now dumping their Mercedes G-Wagons, other luxury cars amid the FTX collapse - but these 3 real assets are still scarce and coveted




  • In Business
  • 2022-12-01 23:44:00Z
  • By MoneyWise
'Crypto bros are hurting': Bruised young investors are now dumping their Mercedes G-Wagons, other luxury cars amid the FTX collapse — but these 3 real assets are still scarce and coveted  

The downturn in the cryptocurrency world has sent ripples across the economy, including the market for high-end automobiles.

"Exotic car market is getting decimated right now," twitter user CarDealershipGuy - an anonymous luxury car CEO with nearly 120K followers - says in a tweet.

"2021 Mercedes G-Wagon with 3,378 miles just sold for $187K at auction. [T]hat's nearly an $80K (or 30%) drop in under 12 months."

The tweet has now received over 5,000 likes.

To be sure, the entire car market has cooled from its peak. But the G-Wagon, a status symbol for crypto millionaires, has been hit particularly hard. Other "new money" badges of the crypto rich, like Lamborghini Urus and McLaren Spiders, have also been pummeled.

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Bitcoin - the largest cryptocurrency in the world - is down 64% in 2022. And the bankruptcy of cryptocurrency exchange FTX has sent investors running for the exits.

CarDealershipGuy points out that wholesale used cars are "only down 13.7%" year over year.

"[S]o yes, crypto bros are hurting," he says.

With most assets deep in the doldrums and a possible recession looming in the distance, it's hard to say when sentiment will change in the luxury car market. But if you are looking for tangible assets, a few are still worth considering - even in today's market environment.

Fine art

It's easy to see why art pieces often fetch new highs at auctions: The supply of the best works of art is limited, and many paintings have already been bought by museums and collectors.

Contemporary artwork has [outperformed the S&P 500] by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

Artwork is becoming a popular way to diversify because it's a "real" physical asset with little correlation to the stock market.

According to Deloitte's latest Art & Finance Report, 85% of wealth managers in 2021 believed art should be included as part of a wealth management service.

It's true that investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich. But with a new investing platform, you can invest in iconic artworks too, just like Jeff Bezos and Peggy Guggenheim.

Real estate

Real estate has been a popular asset class as of late - perhaps because it's a well-known hedge against inflation.

As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.

Of course, when the Fed raises its benchmark interest rates to tame inflation, mortgage rates tend to go up as well.

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However, while it's true that mortgage payments have been on the rise, real estate has actually demonstrated its resilience in times of rising interest rates according to investment management company Invesco.

"Between 1978 and 2021 there were 10 distinct years where the Federal Funds rate increased," Invesco says. "Within these 10 identified years, US private real estate outperformed equities and bonds seven times and US public real estate outperformed six times."

Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.

The best part? You don't need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that can get you started on becoming a real estate mogul.

Wine

People have been consuming wine for thousands of years. While most collect wine for enjoyment rather than investment, bottles of fine wine become rarer and potentially more valuable as time goes by.

Since 2005, Sotheby's Fine Wine Index has gone up 316%.

As a real asset, fine wine can also provide the diversification you need to protect your portfolio against the volatile effects of inflation and recession.

You can invest in wine by purchasing individual bottles - but you'll need a place to store them properly. Residential wine cellars often cost tens of thousands of dollars. If not stored at the right temperature or humidity, the bottle could be compromised.

That's one of the reasons why investing in fine wine used to be an option only for the ultra-rich. But with a new investing platform, you can invest in investment-grade wine too, just like Bill Koch and LeBron James.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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