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Recent price increases for military bikes seem to have surprised most of us but perhaps all is not what it seems.
I bought my first military M20 27 years ago...a clean, tidy and complete example that was on the road and ready to use.
I paid £500 for it then and currently the same bike in a similar condition would probably achieve £5000.
That represents an increase of £4500 over 27 years..or £166.66 per year.
Expressed as a percentage that's just 3.7% a year when averaged out over that time...hardly a massive increase in value.
Of course the increase in value has not been linear as the market tends to go through a cyclic motion with quiet periods followed by periods of activity.
It would seem therefore that the recent price increases are as much an adjustment towards a figure that reflects the true current cost (as opposed to value) of these machines rather than an 'out of control' boom....Ian
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I predict further massive increases, what with ralph lauren kitting out his exhibitions with brough superiors and vintage bike chic looming on the horizon.
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Relatively speaking, the increase in girder forked singles, especially side valves has been quite high. Thirty years ago, they had to be OHV to be attractive to most buyers.
Coincidentally, I bought a Commando at that time for £1000 - the most that I could afford and not too tatty but not the best available - they were £1300 or £1400.
My Commando has had a fortune spent on it since and is a multiple concours winner (well, at club level anyway) but I doubt if it's worth much more than the M20's £5000 today so that's only half the rate of appreciation.
The Commando situation has perhaps been complicated by the huge numbers brought back from the US which means supply can exceed demand and many now are looking for smaller bikes for Sunday runs, even side valvers !
As we've said in the past, I don't have a problem with £5000 for a well put together authentic machine. What I can't fathom are the £3500 - £4000 dog-rough, absolutely hanging, cats-arse basket cases !
Hummmh. Well, a problem I am having is with my insurance company. They insist on having a replacement value listed on the policy. Well, what is the replacement value? Things are all over the board. The basic idea is what would it cost to replace the thing with one of equal quality, shipped to my door here in the US. Difficult to say as most of what is offered for sale are bikes in need of restoration and not restored examples. This price thing is a headache, I'll just tell them 15 000.00 USD, and if they bite, I'll have my wife drive over it with the truck!
Sorry, Ian, it does not represent an increase at all. Keeping in mind that 3.7% per year is less than the average inflation rate for this time period (remember, there were years in which the prime rate was over 10% and the consumer price index increase was well over that rate, at least on a quarterly basis) I would say that real (i.e. inflation-adjusted) prices for M20s, as you describe them, have actually dropped, if adjusted for inflation. You would have made more if you simply kept your money in a deposit account. As another comparison, the Dow Jones Industrial Average 27 years ago, in 1983, stood at about 1,200. Your £500 back then, if put in an index fund, would be about £5,000 today. Of course, you can't ride an index fund so it's apples and oranges. What is the value of 27 years of riding?
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Don't tempt fate Sam. Your wife does ok without it Ron
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Good point about inflation John...I didn't mention that as I have no idea of the average figure over that time frame. If you are correct it rather proves the suggestion of my original posting...there hasn't been a disproportionate meteoric rise in prices, only an adjustment to bring prices back into line with reality, particularly in the area of restoration costs...Ian
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Well actually Ron, that wasn't her fault you see, just ask her, she'll tell you!
something just flew over my head Whoosh! 3.7% what
There are plenty of types of bike that you could have bought 26 years ago for around a £1000 that are worth next to nothing now. They are the usual unremarkable fodder that never gained any "desirable/interesting status". They have had a steady depreciation over those 26 years.
Compared to them over that time, bikes like exWD bikes and Commandos have held about the same relative value.
If you factor in the riding fun over that time its good value--26 years riding and ownership--- free.
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Its like this with most things. I collect alot of old things and i often hear people speak of how much they made selling their old stuff. They say how they never thought that old thing would ever be worth so much. But when you account for inflation the item may only be worth 5 dollars more than it did in 1950. The same goes here in the states with real estate. SOMETIMES, thanks to speculation you can make money, but for the most part that house that you payed 50 thousand for in 1975 hasnt gained any value in 2010. Its only inflation.... Thats what happens when you back your money with thin air. When we all left the gold standard the government had the ability to print and borrow all they wanted at the expense of everyone else. It what I call the "secret tax". You can have 50 million in cash under your bed and it still isnt safe. All that is needed is some big budget government project. They government borrows the money from the reserve. Then it gets added to the supply and now your savings are worth less. Since we left the gold standard in the USA, 97 percent of the value of a single dollar has been inflated away. Thanks Uncle Sam!
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a friend said what will happen when the resesion is over