The upper end of the car enthusiast world is filled with people trading unfathomable sums of money for cars that they sometimes cannot even drive. Some cars sell for sums that are greater than the lifetime earning potentials of some folks.
David Tracy wrote about how someone purchased a Ferrari 458 Italia-based LaFerrari prototype for $1.2 million. This is a car that technically isn’t even road legal. Yet, it’s an important part of Ferrari history, and someone thought the price was worth it. Anyway, sometimes it’s hard to visualize money, so let Widgetsltd do it for you:
Say for instance your net worth is $1 billion. For that person, $1.2 million is only 0.0012% of their net worth. This purchase would be comparable to a person with a $1 million net worth spending $1,200 on a car. What do we learn from this? There are unfathomably rich folks out there.
Ash78 elaborates:
I agree, but having worked in banking for long enough to see behind the scenes of Certified Rich People, one thing we always looked at for loan approvals is “Outside Net Worth” or “Outside liquidity” — both refer to the idea of stripping away all their valuations (public or private) for closely held companies or even big ones, like Musk with Tesla or Bezos with Amazon. Or even more conservatively, how much actual net short-term cash do they possess after current debts are removed? It was amazing how often that number was small or even negative, even for people “worth” a billion or more.
You’d be shocked how much lower the number is than their stupid “Net Worth” number. We essentially considered Net Worth meaningless, especially if it could only be liquidated by selling a $20MM home (at a loss…) or liquidating company stock which, like the Heisenberg Principle, actually changes the value of that stock while the transaction is underway.
What a world we’ve created…
Roofless:
Two other ways to think about a billion dollars:
The difference between a million dollars and a billion dollars is roughly a billion dollars.
A million seconds is about 11.6 days, a billion seconds is a bit over 31.6 years.
Thanks, I’ll never look at money the same way again!
David Tracy also wrote about how fancy car shows will have Land Rovers, Toyota Land Cruisers, Ford Broncos, and other vintage SUVs, but leave out the one that started it all, the Jeep. The comments were great. ShinyMetalAsp:
“I tell people I’m a CJ-7. My wife tells everyone I’m a CJ four-and-a-half. No respect.”
“I go to my mechanic the other day, Vinnie Boombatz. I tell him I get a nasty death wobble over fifty, what should I do? He said ‘Spend more time on the interstate.’”
I believe these are references to Rodney Dangerfield:
Anyway, Beto O’Kitty has a hot take:
LeBron is the G.O.A.T.
Goes Over All Teams.
Jordan fans will argue to the grave that Michael was better. Of course, they can never admit that he saw The Rockets coming and he was smart enough to go try baseball for awhile.. He knew The Bulls had no answer for Hakeem and their scheme.
Have a great evening, everyone!
Topshot: Griffin Riley
The banking comment is interesting. I think the most interesting part is that billionaires actually apply for regular bank loans. A lot of rich people borrow against their investment portfolio, which is ultra-low interest and basically never needs to be paid off until your heirs inherit the portfolio and can then pay the loan off with the much higher-value portfolio at no capital gains. It’s called “borrow, buy, die” and it’s one of the prime examples as to how “American capitalism” is a scam.
This is going on my resume
The real millionaires? The old folks with good paying jobs in the trades or health care who worked hard all their lives and never wasted a cent! Like my friend in Florida who retired from four decades in the trades, bought his home in the 80s and paid off the loan, and fixed darn near everything in his well equipped shop. After turning 70 he finally treated himself to his first new car- A Tacoma pickup!
Small math correction: it’s 0.12 percent.
$1.2M is 0.0012 of $1,000,000,000, but one percent of 1B = 10,000,000 – one one-hundredth of one billion. It’s a small mistake but when you drop the word “percent” in there, that has a specific meaning that must be taken into account.
So we’re still talking about a fraction of a percent – just under an eighth – but more than the two zeros after the decimal.
To most people I would appear to be poor. But my single wide is paid for, as is the land it sits on. I have no wants or needs now, late in life. In fact, I have more money than I know what to do with. But I see people buying expensive houses and cars and just wonder why. Is it just for bragging rights?
Business people consider anything un-leveraged to be a wasted opportunity.
Which is true until the creditors show up with a box of chains and locks.
I was vacationing on Kiawah Island once. I’m not a golfer, but the resort was nice. Problem is, it was also filled with trust fund baby finance bros. I always remember the one guy confidently belting in that “alpha male” voice I know you all are hearing right now, “liquidity is for losers.”
Those of us who don’t have Musk levels of daddy-money might disagree.
It’s a lot easier to take risks when you’ll only fall into daddy’s golden safety net.
A lot of people buy into the White Picket Fence dream they were sold young.
I’d love to have my bungalow paid off. Hell, I’d love to downsize my bungalow and put that square footage into a my shop. Then I wanna use that space to wrench on shitbox cars.
Or, the same square footage I have now, but a climate that makes heated workspace less of a requirement. But living in Canada, the only place I’ll get that is B.C.
I know, I dream of extravagance. But we’re all chasing something.
When my kids all are grown up, I’m buying a couple acres on a mountain and building a 4 car garage with a 1 bedroom apartment upstairs. I’m divorced and don’t plan on ever having another woman in my life, so I can get away with it.
Spoil yourself with a second bedroom, in case you decide to paint your walls someday.
I was fortunate with the purchase of my current home, but home values in the town have risen drastically since then and the taxes on this place are going to be a problem later in life if I stay here.
Maybe I’ll just give up dogs and cars for wife swapping and golf carts. Then I can move to The Villages.
We bought in 2018. My house has nearly doubled in value. I literally wouldn’t be able to afford my own house if I was still in the market. This shit is unsustainable.
It’s obviously manipulated. The economy took like a 30% hit in early Covid and home prices went up.
The public story was that people were fleeing the cities, driving up suburban and rural values, but the prices did not drop in the cities (the other necessary half for that scenario to be true).
The market has been propped up for way too long, and the next adjustment is going to make 2009 feel like 2005.
I should have paid off my single bedroom flat by the time I’m 70. I don’t own the land under it. I have never even considered buying a brand new car.
It’s just The System at work. Even though I consider myself a capitalist (because I see what it CAN do sometimes, not necessarily what it DOES often do), I’ve been increasingly disenchanted with the idea of people and companies demanding nonstop “progress” in order to keep the machine running.
Eventually, once the majority of society’s needs are met — which includes almost every traditionally developed nation — it seems like there’s a choice to ease off the throttle and start working to ensure common welfare. That would typically be accomplished through some level of increased taxes, social safety nets, etc. You can argue all day that safety nets reduce productivity, but I’d also argue (again, primarily as a capitalist) that having things like healthcare and pensions tied to an employer is actually anti-capitalist. It creates fear, some version of “loyalty,” and discourages innovation or even dissent in the workplace.
Anyway, to the point of my piece of the COTD above, there are tons of people who will leverage and spend as much as their bank (or investors, or venture funds, or private equity) will allow them to, and they have no guardrails because a lot of them know that creating 27 LLCs and filing Chapter 11 is the safety net. It’s a weird safety net, but it apparently works. And it can get you elected President, even.
I’m planning to leave my job at a small (micro, <10 employees) business because they aren’t large enough to provide a healthcare plan for the employees, despite wanting to. Even if I make slightly less salary at a new job, if it includes health and dental, I’ll surely be ahead. This ABSOLUTELY can and does kill small businesses.
And the dirty secret about where I work (220k+ people…and shrinking) is that the large private health plans are often only a tiny bit better than self-insuring through ACA. Sure, the tax accounting is a lot easier through paycheck withholdings, but that’s about it.
The second-largest firm I ever worked for only had 1,500 people and a very reasonable series of health plans. Anecdotally, it definitely feels like a U-shaped curve with the smallest and largest both being bad, but in different ways.
That’s what National Healthcare was supposed to provide. I wonder whatever happened to that? /s
I am leaving a job I’ve been at for years because of benefits. I genuinely like the place and the people. I haven’t told them yet.
If I didn’t have excellent health coverage through my wife’s employer I would have had to leave years ago.
You’re not wrong. Pure capitalism requires things that quickly get dispensed with once someone out-competes everyone else to start calling the shots in their favor.
If you really want capitalism to work, you have to ruthlessly encourage competition. We used to do a lot better at that – some of us are old enough to remember when Bell Telephone was broken up because it was too monopolistic. Suddenly, you didn’t have to rent your telephone, and long distance calls didn’t require taking out a mortgage. And even then, we didn’t do it well enough.
That kind of thing almost never happens anymore, unfortunately, and it’s to our detriment. Once you let a company or individual amass too much wealth, they can start spending it to get laws changed to favor them and screw the rest of us, which is exactly what’s been happening.
Trickle-down economics was specifically designed to create billionaires who could then reform the government to serve them, and only them. And it was the most effective economic/political program in human history, which we’re all going to suffer for.
And that suffering includes the billionaires, because people like that don’t know how to stop before everyone else crosses over from being pissed off to being literally murderous. I fully expect to see rich-people hunting become a regular event in my lifetime, and frankly it doesn’t upset me at all.
“Expensive” is highly relative, but there are absolutely plenty of people who want to “keep up with the Jones'” as far as expensive houses and cars go. When my wife and I were house shopping in 2011 after the market crash, we toured countless homes that all had the same story of a family borrowing heavily in 2008 just to make a downpayment for a ritzy house only to immediately fall behind on payments, the value of their house fall through the floor so they were way underwater, and now the house was foreclosed. We wanted a modest and secure family home we could grow our family in, but we’ve both always had the view of “the bigger the house, the more there is to clean, fix, and air condition”, and that’s always been a good reality check.
As far as cars go, bragging rights can absolutely play into it, as well as the “well I work hard, so I deserve this” capitalist mentality. You should absolutely be rewarded for hard work, but it’s a slippery slope to go overboard. I’m somewhat guilty of this myself, though never to the extent where our long-term financial security suffers, or a mistake couldn’t be undone (like I might pay cash for weekend toy car, and if needed, I could turn around and sell it without any external encumbrances).
My remark wasn’t aimed at people with large families or who liked to buy pretty things. It was mostly about those who buy McMansions for 2 people or go into hock buying the most expensive suv’s like Bentleys. (I saw one recently, I thought it was a Hyundai until I saw the logo). I have bought crap to reward myself for having to work forced overtime. Maybe the comment was rhetorical, as in my older years realizing how much the aim of our society is to buy “stuff ” versus spending that money on making the world a better place. We aspire to be rich by any means and are envious of those that have become so. I’m not religious, but have always wondered if a certain person reappeared would he even be recognized because he wouldn’t be rich. That’s all.