The boat market seems to be improving

[krush]

Agreed, Krush has time on his side. In fact, we all have time on our side. If you see a boat you like, make an offer. That said, there will be other boats you will like in 2010 or 11.

That was my point. Besides, I can't really afford one right now (aka can't pay cash). I'm also in a different boat than most of ya'll (pun intended) since I'm just a young punk HAHA.

I agree about buy and enjoy though. But delaying satisfaction is another admirable trait that my contemporaries seem to be lacking.

 

[ThirdHatt]

So we HAVE to buy our boat NOW or all the good boats will be gone?
There will be ZERO nice boats for sale next year?

Why does that sound like a familar pitch?

Nobody said there will be ZERO nice boats for sale next year. Next year is in less than three months! Two years from now the deals will probably not be as good as the deals THIS year, happening right now. There will always be nice boats on the market, but it is rare to have a marketplace where so many boats can be bought for reasonable prices. Current sellers have been beat up by many different factors that are not often present in the marketplace and there is no denying that no matter how hard you try. The economy and boat market in general will be better in two years by at least a small but possibly a larger margin, certainly not worse than it is now. What should that suggest to a real buyer?

I am not a boat salesman, just a boating consumer. I was echoing what Eric (a professional Yacht Broker) has said.

Jim, how long have you been looking now? I've been without my boat for only two months and I can't wait to get the next one locked down. Luckily I still have a 31' center console to log hours on, but I really do miss a big boat. How are you surviving?

Life is short, the market is ripe, GO BOATING NOW!

 

[Genesis]

.....Two years from now the deals will probably not be as good as the deals THIS year, happening right now.
.....
The economy and boat market in general will be better in two years by at least a small but possibly a larger margin, certainly not worse than it is now. What should that suggest to a real buyer?

I wholeheartedly disagree.

This is the sort of "knife-catching" that sadly often turns into chainsaw catching - and the chainsaws have a stuck trigger - on.

IF (and only if) you look at the purchase price of a boat as 100% sunk cost, and are willing to see it go literally (or close) to zero in terms of retained value, then have at it. My small boat was purchased with exactly that in mind. But my 45C was not, and when I detected this potential in the market, I sold her.

Anyone who thinks this is impossible is either young or a liar. I was a waterman during the energy mess back in my youth and there were a lot of boats in the 40ish foot range on the Great Lakes that in fact had negative value. That is, their owners could not get rid of them - at any price. Believing that this can "never happen again" is simply naive. It both can and might, and it bankrupted quite a few people I knew on the Great Lakes who were stuck with the costs on an "asset" that had a literal zero resale value. If you can "hang in there" through that trough you might see a big rebound, but it's all relative.

If your $300,000 boat falls in market value to $30,000 that's a 90% loss. If it then doubles, that is, a 100% gain, people will cheer the "huge" improvement in the market - but you're still down 80% if you bought at $300,000.

Oops.

Now you may not care, in which case, buy and go boating. Like I said, if you treat the entire purchase price as sunk cost and worth it for lifestyle reasons, then have at it. We all make money to enjoy it. Just be certain that if your $300,000 purchase is worth $30,000 on the market in three or five years that you will see the transaction as a net gain all-in (including your time on the water); if not, well.....

If what I believe is coming shows up I'll be buying at a dime on the dollar or less in a few years.

If I'm wrong about that you'll have the opportunity to get your boat before the turn is apparent. If the facts change so will my opinion, but thus far, I see no evidence that we're going to see anything approaching an actual economic recovery in the next couple of years.

 

[ThirdHatt]

I wholeheartedly disagree.
.......

If I'm wrong about that you'll have the opportunity to get your boat before the turn is apparent. If the facts change so will my opinion, but thus far, I see no evidence that we're going to see anything approaching an actual economic recovery in the next couple of years.

So you think that our economy and the boat market will not be any better in 2011 than in 2009. Fair enough, you are much more in touch with that possibility than I am. I sure hope things are better but I have no way of knowing for sure. While they may not be much better I doubt that things will be too much worse, so why wait if the "right" boat deal comes along now?

My point is simply this: boats are MUCH cheaper than they have been in a long time. With that in mind if you're looking to go boating, why sit around and wait in an attempt to do what most experts say NOT to do which is try to time a definitive bottom?

Okay, let's assume for a moment that the market continues down and boats are indeed cheaper in a couple years. Does it really matter because those who are sitting around trying to time the bottom have lost out on two full years (or more?) of fun and priceless memories that boating gives us. Those boat funds that were invested will have probably decreased in value as well, due to the economy just as the boat would have. Which would have been more fun, boating while the market gets worse or not boating and simply standing by watching your declining portfolio? Life is short and you may not be here in two years!

To me boats are not an investment, they are a liability and whether the market goes up or down after I buy a boat I don't worry too much because of the priceless fun that I am extracting out of the boat each and every day. Of course I'd like to buy a boat that has depreciated 90% then eventually sell it for 1,000% profit. Who wouldn't? To me that sounds more like an approach to buy and sell stocks rather than boats.

I just don't see for example 1998 Hatteras 74's that are selling for $1M now ($1.5-1.8M in 2007) selling for only $100k in 2011. If so, more power to those who waited. If that IS the case, I'd just sell mine for $100k having lost $900k and then buy another boat for $1M which will be a $10M boat in 2009 market, but I will only have $1.9M in it. Works for me, but I'm not going to hold my breath!

If your main purspose in buying a boat is for pure financial gain, by all means sit around and wait until you see a definitive bottom. I honestly wish those who do the very best of luck. I, on the other hand, will try my best to make my best deal in a down (by today's standards) market and if and when I get that done I will not look back except on the fond memories and great times that the boat has given me.

I think it is much more fun to be out boating rather than watching the boat market, but to each his own.

 

[Genesis]

So you think that our economy and the boat market will not be any better in 2011 than in 2009. Fair enough, you are much more in touch with that possibility than I am. I sure hope things are better but I have no way of knowing for sure. While they may not be much better I doubt that things will be too much worse, so why wait if the "right" boat deal comes along now?

I believe that the economic picture has a high probability of being MUCH worse in two years than it is now.

Why? Because instead of dealing with the bad debt we layered even more fraud upon it. That CANNOT (mathematically) work over long periods of time.

Those who believe it will are free to execute whatever plan they believe is appropriate on their beliefs. As I said, if you're prepared to have your boat be a 100% loss, with all of its price being realized as satisfaction and personal enjoyment, then have at it - it makes sense.

If, however, you are NOT prepared to do so, then I'd do some more thinking.

 

[ThirdHatt]

I believe that the economic picture has a high probability of being MUCH worse in two years than it is now.

Why? Because instead of dealing with the bad debt we layered even more fraud upon it. That CANNOT (mathematically) work over long periods of time.

Those who believe it will are free to execute whatever plan they believe is appropriate on their beliefs. As I said, if you're prepared to have your boat be a 100% loss, with all of its price being realized as satisfaction and personal enjoyment, then have at it - it makes sense.

If, however, you are NOT prepared to do so, then I'd do some more thinking.

WOW! I had no idea you really think things will be that much worse in two years than it has been this year. That is quite disheartening.

I sure hope you are wrong about the economy but even if what you say comes true things such as late-model nicely equipped and well maintained boats will still have a value, however "low" that value may be considered at the time.

Hell, if this economy actually gets that bad I'll just head to the islands on my boat and not care what it's current value is!

 

[Genesis]

I believe there is a 33% chance we see the S&P 500 trade under 300, half of the companies in the index file Chapter 11, U-6 unemployment north of 25% with U-3 (official) unemployment over 15%, GDP contracting by 30% from the peak in 2007 and credit effectively unavailable at any price.

Yeah, that's bad (1930s style or worse), and in that environment a "midsize" yacht (which all the Hatts are) is going to be worth effectively zero in the market.

90% of the market for boats of this size are people who have most of their wealth in a business (which will be closed), real estate (which will be worth less than half of what it is now) or stocks (which will fall by 80% or more).

What are they going to buy a boat with?

One chance in three is where I put this outcome at the present time, with a one-in-ten risk (beyond that) of something even worse - you'll think you want gold only to discover that what you really want is copper, brass and lead.

You asked.....

 

[nyrussell]

Ok, need to keep enough funds to get to Japan. Karl, Now you scared me!!!!! to think we allowed this to happen... Well, at least we have a home on the water. LOL we are allowed the home right?

 

[SKYCHENEY]

Boats are toys and if you can't afford to lose that money, you have no business owning one. They are not and never have been an investment.

People spend money on all kinds of toys other than boats. Most of them are just like boats, however. RV's, snowmobiles, dirt bikes, dune buggy's, ATV's and the like are not investments either.

An investment is a purchase with a positive expected return. A boat is just the opposite. And buying this depreciating asset that produces no income and buying it on credit is just plain stupid in any market.

I agree with Karl that it only makes sense to buy if you can pay cash and you are prepared to see the value drop.

My boat is worth far less than what I paid for it in 2004, but I don't care. It is worth more to me than what I could get for it and it's not for sale. The memories that have been made with family and friends are priceless, not to mention the psychological benefits to the captain and crew.

 

[nyrussell]

There is not one item bought that is an asset until it is sold and shows an actual profit. Not a house, building, anything....

If you were told your house is an asset, you were lied to, it is a liability, more so if you have a mortgage, less so if not. But until you sell it and actaully make the profit it is a sunk cost!!!!

Same with stocks (until sold you neither gain or lose) etc...

For us, our house is a Hatteras. We made the choice and will be here for a bit more. The difference in thinking was: Darling, the market is going to crash, care to enjoy...

Noel

 

[SKYCHENEY]

An asset is anything that has economic value. You purchased it with something, so it had value at that point. If someone else is willing to buy it from you, then it still has economic value. It only becomes a liability when the price becomes negative (it costs more to dispose of it than someone is willing to pay for it).

 

[saltshaker]

Boats are toys and if you can't afford to lose that money, you have no business owning one. They are not and never have been an investment.

People spend money on all kinds of toys other than boats. Most of them are just like boats, however. RV's, snowmobiles, dirt bikes, dune buggy's, ATV's and the like are not investments either.

An investment is a purchase with a positive expected return. A boat is just the opposite. And buying this depreciating asset that produces no income and buying it on credit is just plain stupid in any market.

I agree with Karl that it only makes sense to buy if you can pay cash and you are prepared to see the value drop.

My boat is worth far less than what I paid for it in 2004, but I don't care. It is worth more to me than what I could get for it and it's not for sale. The memories that have been made with family and friends are priceless, not to mention the psychological benefits to the captain and crew.

I couldn't agree more. Sure I'd like to see the value of my boat increase, but if I'm not looking to sell then I really don't care. If I take a huge loss when I decide to sell then I would look at it as a net gain as I most likely will be paying far less for the boat I am trading up to. If I have to give it up for financial reasons then I'll be sad but still have no regrets for the time I enjoyed my Hatt. Boats are toys and should be treated as such. I've never been a fan of financing one or owning one that is a financial burden to run and maintain.

 

[OBXTucker]

I believe there is a 33% chance we see the S&P 500 trade under 300, half of the companies in the index file Chapter 11, U-6 unemployment north of 25% with U-3 (official) unemployment over 15%, GDP contracting by 30% from the peak in 2007 and credit effectively unavailable at any price.

That's an interesting opinion, especially since most economists see a reasonable recovery in the next couple of years and now some speculating at oil up to the $150 range again. I agree that unemployment, commercial RE and consumer debt will take more time to come around.

1/2 of the S&P 500's filing for C-11.....not going to happen (and I'll take odds).

In the meantime, I'm glad I just bought a 2,400 mile LRC that sips fuel - and got a pretty good deal!

 

[krush]

One of the best ways to make money, is to pay less for purchases....paying 25% less for something is like a return of 25%...try getting that in the market LOL penny saved is a penny earned

 

[spindrift]

I agree with Krush. I think we both must have read the autobiograpphy of Benjamin Franklin in our youth.

I made a cash offer on a good sized Hatt on Monday evening. The price point got down to where it became very attractive. Only problem was that I had a hard time getting the broker out of my house. Three vodkas latter I kicked him out at 10:30. Let's hope these brokers can sell more boats and buy their own booz!

Spin

 

[nyrussell]

An asset is anything that has economic value. You purchased it with something, so it had value at that point. If someone else is willing to buy it from you, then it still has economic value. It only becomes a liability when the price becomes negative (it costs more to dispose of it than someone is willing to pay for it).

Sky,

an asset is something one has no payments on... agreed. Most houses are a liability to the owners unless the money is put away somewhere that can be tapped easily to pay it off. Otherwise it is a liability that one has to deal with.

As for the market... Who is going to be buying when they are worried about their jobs. We have a plan if we get "right-sized" (not sure what the new term is yet). Move to florida and work for Universal or Disney

 

[Red Hatt]

Do you guys sleep a night????

 

[nyrussell]

sleep? what's that?

 

[Genesis]

I believe there is a 33% chance we see the S&P 500 trade under 300, half of the companies in the index file Chapter 11, U-6 unemployment north of 25% with U-3 (official) unemployment over 15%, GDP contracting by 30% from the peak in 2007 and credit effectively unavailable at any price.

That's an interesting opinion, especially since most economists see a reasonable recovery in the next couple of years and now some speculating at oil up to the $150 range again. I agree that unemployment, commercial RE and consumer debt will take more time to come around.

1/2 of the S&P 500's filing for C-11.....not going to happen (and I'll take odds).

You better start reading some balance sheets on the S&P 500 with a particular look at where their legacy pension liabilities are and what they've got those funds in. Hint: Massive overexposure to corporate stock - their own - and the only way out of the box is to dump it on the PBGC, which comes with a Chapter 11 filing.

"Reasonable recovery" eh? This is like Alcoa last night? Nice report, yes? Look at the last line of their posted results - tonnage shipped was down about 6% although they claimed sequentially-improving demand.

I'll take math over words, and the math says that the entirety of their "better results" was due to higher prices for aluminum.

But economic activity is measured in units moved, not prices paid and received. Higher prices paid and received on lower unit volume constitutes economic strangulation, not improvement.

So sorry to interrupt the puffery with mathematics; reading beyond the headlines in a sound-bite world is required if you wish to understand what is really going on.

PS: $150/bbl oil means $5/gal gasoline - or higher - which in turn destroys the economy as that is an effective tax of close to $1 trillion a year on both business and consumers. These folks and their projections would be humorous if they weren't so full of contradictions as to make absolutely no sense.

 

[OBXTucker]

Do you guys sleep a night????

Nope. There'll be plenty of time for that when I'm gone.....