(Interviewed by Louis James, Editor, International Speculator)
This interview was first published on August 12, 2009
Editor’s Note: At a yearly production of just 7,000, the Italian Ferrari is one of the highest-end sports cars in the world. It’s also a favorite of Casey Research founder Doug Casey, as you’ll read below…
You may be wondering…why are we talking Ferraris?
Well, Doug Casey recently tried to buy a $400,000 Ferrari…but the dealership refused to sell him a Ferrari under any circumstances. Doug tells his readers the whole story in the newest issue of The Casey Report, Casey Research’s flagship investment research service.
Here’s Doug on cars…
L: Doug, last week we talked about energy, including your thoughts on what’s in store for the oil markets. That naturally leads me to ask about something that I know has been near and dear to your heart: the automobile. Especially high-performance cars – which were the basis of your first capitalist venture.
Doug: It’s appropriate that we talk about cars now, with the recent bankruptcy of General Motors. I’ve always been interested in cars. The first car I had was a 1964 Pontiac GTO, with the tri-power and all the extras. Throughout my life, I’ve always had high-performance cars. I had a couple 289 Cobras. I had a 427 Cobra.
And yes, the first business I got into was importing Ferraris to the United States. This was in 1967. In those days, there was a relatively small middle class in Europe. So you could either afford a new Ferrari, or a new Fiat, but there was no market for used Ferraris, because of the maintenance costs and social strictures that came with owning one. On the other hand, in the United States, there was even more of a middle class to society than there is today, and everybody wanted a used Ferrari.
I was in college at the time, but I saw the opportunity and decided to act on it. I bought a 1962 250 GTE 2+2, in Milano.
L: Was that the four-seater?
Doug: Yes, although the backseats were pretty cramped. It was the car that Ford copied for their 1964 Mustang 2+2, and it was a lot of fun; it had a 3.0-liter V-12 with three two-barrel Weber carbs. I drove it through a lot of Europe and went to a couple of driving schools, one at Montlhéry, the autodrome of Paris, the other at Monza in Italy. I then sold it, sight unseen, to a guy in Ohio. The price was so good, he couldn’t resist it.
I went back to Milano to pick out a second Ferrari, a 330 GT 2+2. I had the bit in my teeth – I had plans to refine the business. Who knows, if I had done that, my entire life would have been different. But… Stroke of fate. There was a truck passing a tractor on a blind curve in between the towns of Fribourg and Bern in Switzerland, and I had a catastrophic accident. It put me in the hospital for six weeks.
That put paid to my first business venture of importing used exotic cars to the United States, but I’ve stayed interested in cars since then.
L: What’s your favorite car today?
Doug: Well, I’ve got to say that dollar for dollar, pound for pound, you can’t beat a Corvette. It’s too bad it’s a General Motors product – it’s one of the very few that General Motors makes that’s a decent car. More than decent; the Corvette is a fantastic car. It’s a high-performance, lightweight, fine-handling economy car.
I have a Corvette I bought in 2004, and the car averages about 23 mpg in the city, and about 26 or 27 mpg on the highway. In fact, I’ve noticed that while cruising in it over 100 miles per hour, even then, it averaged 26 mpg, according to the instant readout.
L: I always thought you were joking about Corvettes being economy cars, but it’s true. My 2008 gets 30 mpg at 70 on a level highway – at that speed, it’s barely ticking over at about 1,500 rpm. My average fuel economy, for the entire time I’ve had the car, including city driving and some racing, is 23.4 mpg. I bought the car at your suggestion, because most of the time I drive, I’m driving by myself to an airport or to business meetings. It was silly to be driving my nine-passenger SUV like that – it gets literally half the mileage, and it’s hard to park the beast in Vancouver to boot. For folks who drive a lot by themselves, or with just one passenger, the Corvette actually is an economy car.
Doug: Yes, they’re fantastic cars. They don’t need maintenance. They use very little fuel. They don’t rust. If anyone’s looking for a high-performance car, I’d suggest the Corvette be the first on their list.
In New Zealand, where I live three months of the year, I’ve got a Toyota Supra Twin Turbo, which is almost as fast as the Corvette but isn’t nearly as much fun. I’ve also got a Mazda RX-7, fantastic car, but I’m just too big to drive it comfortably. I let my normal-size friends who come to visit use it.
In Aspen, I’ve got a Porsche, the last of the air-cooled twin turbos with four-wheel drive, and it’s a lot of fun to drive. But when I’m driving into town and I have to decide whether to take the Porsche or the Corvette, I usually take the Vette. The Porsche is actually faster, handles better, and in a road race, it’d probably win, but the Corvette is just more fun to drive.
L: So, what’s the ratio, dollar for dollar, as you say? The Porsche is a little faster, handles a little better, but it costs – what – three times more? Four?
Doug: In 1996, the year I bought my Porsche, it cost $105,000. That’s about $144,000 in current dollars. In 2004, when I bought my Vette, I paid about $40,000 for it, which is about $46,000 today. So in real terms, the Porsche is more than three times more expensive – but it’s not three times as much fun. And the Porsche doesn’t even give you a cup holder. [Laughs] And I promise you, when you change the oil or have anything done on the Porsche, it’s going to cost you two or three times what it costs on the Vette as well.
The only car I’m looking at that I’d kinda like to get right now is a Ford GT. Perhaps that’s because I have a soft spot in my heart for the Cobras from the ‘60s. I’ve driven one of the GTs – which they no longer make – and they’re actually fantastic cars. The problem, however, is that the roads in the U.S. are full of police, and they’re full of other cars. These days, if the police pull you over for driving a car like the GT at the speeds that would be the whole point of owning the car, they’ll take your license and they might even take your car.
I mean, in the ‘60s, when I was a bit wild and crazy, I was in a few road races with the police. And what would happen? They might throw you in jail for a night, give you a series of $50 tickets, and it was no big deal. I speak from personal experience.
But now it’s serious business, and not just in the United States. In many countries in the world, if you’re caught exceeding the speed limit by too much, you’re in for some very serious consequences. That’s one of the pluses about Argentina. Wide-open roads, few police, and they have a very Italian attitude towards speeding. Actually, I’m thinking of putting in a quarter-mile dirt track near Estancia de Cafayate as an additional amenity…dirt-tracking some cars with roll cages with a few friends is my idea of a good time.
Doug Casey is a multi-millionaire speculator and the founder of Casey Research. He literally wrote the book on profiting during economic turmoil. Doug’s book, Crisis Investing, spent multiple weeks as number one on the New York Times bestseller list and was the best-selling financial book of 1980. Doug has been a regular guest on national television, including spots on CNN, Merv Griffin, Charlie Rose, Regis Philbin, Phil Donahue, and NBC News.
Doug and his team of analysts write The Casey Report, one of the world’s most respected investment research services. Each month, The Casey Report provides specific, actionable ideas to help subscribers make money in stocks, bonds, currencies, real estate, and commodities. You can try out The Casey Report risk-free by clicking here.