Was This Finally “Peak Insanity” in Used Vehicle Prices? And all other crystal ball questions

I think you can compare it to stock options or short selling….

Nothing fancy, just now it became relevant on car leases :crazy_face:

Seriously, how is transacting on a commodity or tangible good - where it actually changes hands - at all like a contract for a share of a publicly traded company? There is oodles of moral hazard in play, but beyond that :thinking:

That’s like calling an electronic store of value - based only on what someone else will pay for it - a currency.

@jeisensc - you are not selling someone’s property.

You have a contract with the leasing company to buy out your car at a predetermined price.

That is an option you own by contract.

You are selling that option to buy the car to someone else.

Plain and simple.

You always could have done that.
The thing is that that option was usually worthless, until now…

Yes

Nope :x::x::x:

Solid effort though

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Can you subtanuate your statement?
Perhaps I’m missing something

How is this different from buying out your lease and then immediately turning around and selling it to somebody else?

If I have to explain the difference between any financial instrument (designed to have as many counterparties as a Times Square toilet), and a property contract, we aren’t having the same conversation.

It wasn’t designed that way, but certainly has the same mechanics.

An option is an option. A financial instrument option on stock and commodities just have better liquidity.

Btw, stock and stock options also considered property you own…

our views are clearly different, but I would not vilify the other side that doesn’t share your view

Do stock options explicitly say that you can’t sell them to anyone else?

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Nothing personal or to vilify, I really am open to a range of opinons (counscious incompetence is a hell of a drug), but I’m done with straw-person/lemonade stand reductuons that fall apart on closer examination:

That we can debate, but you can’t compare how they work when they exist in two completely different legal spaces: the Securities Act of 1934 has nothing to say about the state law that governs selling a car. The rules they must play by derrive from that first, and where they operate second. Even this is a lemonade stand reduction that can be expanded, but take whatever mixed metaphor of your choosing.

More evidence we aren’t having the same discussion :man_facepalming:t2:

lol wtf are u guys talking about

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This is what happens when everyone gets to “WFH”…All of you get vaccinated and back in your cubicles. Your ruining it for those of us who have responsibly worked from home…and didn’t argue on forums all day.

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This will happen when we Volcker our way out of this inflation.

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Get ready for a gigantic drop in used car prices. No way can this trajectory continue the way it has… Hopefully the dealers will start to sell cars once again below MSRP and offer incentives but usually after something like this unfolds it will probably take some time before dealerships start to drop prices of new cars below msrp. They will be extremely slow to bring new car prices back down below msrp. It’s like my local pizzeria shop. Years ago I remembered when oil skyrocketed above 100 a barrel, they had increased their prices of pizza and other eats and said due to high oil prices we now have to pass that cost onto the consumer. We’ll they certainly did, raising prices as oil kept moving higher and higher and higher. Then one day oil collapsed, guess what, my pizza place never reduced t prices even though oil had plummeted over the next few months. It’s just the way the cycle works. Maybe this chip shortage, even when it does situate itself out, will now keep dealerships in a zone for selling most inventory at MSRP.

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This is not going to be a sustainable. It is a bubble. I think once you ask “is this the peak,” then the peak has past. Some people got in and out at the right time. Some people are getting greedy and don’t realize that their actions might have real world financial consequences. Look at the people paying MSRP or MSRP + for cars that normally sell for thousands below invoice and have godawful resale values. Some people are “upset” that their lease doesn’t have the equity that they thought it should. Sounds very familiar to people in the late 90s saying their Yahoo or AOL stock is only up X% this quarter, WTF?

When chip production and vehicle production catches up, new cars will be able to be hacked & used car prices will drop very quickly. There will be a lot of “is this a good deal” questions asked here about a year & a half from now from people who are willing to bury themselves in negative equity trying to get out of their lease.

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FWIW, 75% of mannheim cars last week did not sell. call it what you will…

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Is this due to high reserves?

It would seem to me that we have two separate bell curves, one for wholesale buyers and one for retail buyers, and there exists an inflection point where the two curves intersect. As wholesalers begin balking at prices and the average price begins to wane, it still takes a while before that translates to the retail market, who are quite removed from the realities of the wholesale, and await word-of-mouth confirmation that the prices are ‘safe’ once again. I guess what I’m saying is there are two ‘peaks of insanity’.

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Im Out Shark Tank GIF by ABC Network

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Is summer typically a high car buying season?

With so many people trying to get out of the house because they have been stuck there for so long, we might be seeing a temporary pause.

That option is for the lessee and the lessee only.

The lessee has no rights to sell, trade or assign that option to anyone else.

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