Your car may be worth more than what’s in your portfolio.
According to market researcher Jim Bianco, used car prices are growing faster than bitcoin and other assets.
“If you want to know the best investment you can have in 2021, it’s the car that’s lying in your driveway or in that garage,” Bianco Research President told CNBC.Trading country“on Thursday.” It is growing faster than the stock market, and more recently, faster than some cryptocurrencies. “
He’s building his analysis on the Manheim index of used car prices, which is designed to track pricing trends in the market.
“Over the last four months, they’ve increased in price by more than 20%. Not only are they higher than the S&P, but over the last four months they’ve been higher than bitcoin,” he said. “As of December 15th, the latest dataset we have, they’re just accelerating higher and higher right now. At least no peaks for now.”
Bitcoin up about 5% over the past four months based on Thursday’s stock market close. The S&P 500 has grown 26% so far this year.
Bianco cites two bullish drivers in the used car market. The first is that new cars are inflated due to a shortage of semiconductors.
Kelley Blue Book reports auto prices are at record highs. In November, the average price for a new car was $46,320 and used cars were $27,569, up 27% from the same time last year.
Second: Speculators want to flip the car.
“What we’re seeing with used cars is people rushing to buy them and speculating on them,” he noted. “Buy it now because it will only get more expensive.”
‘The telltale sign of the bubble’
It’s clearly not your parents’ car market.
“It has all the telltale signs of a bubble,” he said. “Used car prices are considered a depreciating asset. They are not expected to appreciate. However, this year they have increased by 49%, or 50%.”
Bianco’s proposed shock car sticker prices reflect a larger problem.
“This is exactly what they [Federal Reserve] don’t want to see that happen because this is a self-reinforcing idea of inflation,” he noted.
Last December on “Trading Nation .”“Bianco warns 2021 could mark the first return to inflation in a generation.
He believes inflation will fall in 2022, but its rate of decline will be much slower than most people think. As for the car price peak, Bianco thinks that’s anyone’s guess.
“This could happen in a year,” Bianco said. It could continue for another two weeks. “The activity you’re seeing is probably very interesting.”
