Sailing in recession ?

[chakil]

Hi guys,

You all remember the recession in 2008 when the eurusd dropped to 1,10 from 1,60 just in 3-4 months.
Consider that you bought your cat for 300.000€ before the recession and sailed for 5 years , the boat depreciated almost %30 and another -45.000 usd because of the eurusd. Now you have 150.000€ , half of your money is gone. We may have the same situation for the boat buyers who have their boats since 2010.Europe has many problems now;france,germany,italy ,you name it. If the euro goes down to 0,80 in the coming 4-5 years ,what will you do ?
Would you go and invest your money in a potential depreciating currency now?

I want to hear your thoughts about the topic and ideas to hedge our position.

Thanks,

[daletournier]

No one can pick timing, I believe we are in the middle of a crazy monetary experiment that may stop tommorow or go on for several more years, I don't know. Debt and lose monetary policies will have a consequence at some stage, asset prices inflated by historically low interest rates are an issue IMHO.

But yes I think buying a depreciating asset is a concern and could definitely take a big hit over the near future.

I'm actually considering advertising my boat this year, the Aud isn't getting stronger therefore the Usd to aud will work for me, I'll be carribean way in a couple mths time. If I don't sell it I'm fine as I've positioned myself for what I believe is coming.

Then again a boat is never a asset financially, it's always a liability, if you can afford a paper hit then it doesn't matter.

[bobnlesley]

Originally Posted by chakil

...I want to hear your thoughts about the topic and ideas to hedge our position...

No ideas or opinions to offer whatsoever. A major reason for our buying a boat and sailing away was to stop having to spend my days thinking or caring about stuff like that and I'm prepared to bet that I'm not the only one. Oh and it worked

[Stu Jackson]

You get smart and play with different currencies. The reason it's an issue for you is that you have a base line, i.e., YOUR OWN denomination. Didn't Gordon Gekko teach us anything? :>)>

[Paul L]

I'm missing the currency analysis you are presenting. What difference does it what the euro to usd rate is if you bought your boat in euros and sell it latter in euros? You aren't playing some currency hedge here.

[chakil]

Originally Posted by Paul L

I'm missing the currency analysis you are presenting. What difference does it what the euro to usd rate is if you bought your boat in euros and sell it latter in euros? You aren't playing some currency hedge here.

First of all the question is will there be a euro currency in 5 years? Who knows what is going to happen after Brexit? Maybe France is next or Italy?
And most of the equipments you buy is in USD, all manufactured in China. And the cost of fiberglass is also in USD.
You can buy 1 kg tomatoes for 1 euro today but if euro depreciates you will pay 1,30 euro for the same amount. All the costs are in usd, crude oil is in USD. Energy costs are in USD. You will have the euro with less buying power.
I dont think its sustainable if you don’t have a basket as %30 euro (cost of boat)%40usd and %20 gold and %20stocks. Orherwise soon or later if you ever want to move to a house or sell your, you may be broke.
And the majority of the cats are not in Europe so Us is the market maker.
Would you go and buy a ferrari now rather than a future car like Tesla or similar?
Nowadays they upgrade the cats each 2 years , I dont say that lets give up liveaboard but is it more safe to go with the custom boats or the production boats?
In these days I think, if you have 500K Usd its wise to invest %30 of that nothing more.
Thank you all for your thoughts and replies.

[chakil]

And if things go wrong in Europe as it is now, euro will depreciate, same for china even its the case for US. Usd is the king unless they go for QE which is not forseen for near future. In the scenario would you go and buy a boat at 1,13eurusd?
If you will you better wait for Macron gap which is at 1,07 and brexit no deal 1,05 and a frexit for 1,03 and another qe from ECB for 0,95 and end of Eu for 0,88.
If I am going to buy a boat I wont make a deal before 1,05.
Just my two cents.

[Fence Man]

I prefer boating in down economy. Fewer ass hats on the water. ;-)

[chakil]

Originally Posted by Fence Man

I prefer boating in down economy. Fewer ass hats on the water. ;-)

Ass hats are everywhere

[Paul L]

Originally Posted by chakil

First of all the question is will there be a euro currency in 5 years? Who knows what is going to happen after Brexit? Maybe France is next or Italy?
And most of the equipments you buy is in USD, all manufactured in China. And the cost of fiberglass is also in USD.
You can buy 1 kg tomatoes for 1 euro today but if euro depreciates you will pay 1,30 euro for the same amount. All the costs are in usd, crude oil is in USD. Energy costs are in USD. You will have the euro with less buying power.
I dont think its sustainable if you don’t have a basket as %30 euro (cost of boat)%40usd and %20 gold and %20stocks. Orherwise soon or later if you ever want to move to a house or sell your, you may be broke.
And the majority of the cats are not in Europe so Us is the market maker.
Would you go and buy a ferrari now rather than a future car like Tesla or similar?
Nowadays they upgrade the cats each 2 years , I dont say that lets give up liveaboard but is it more safe to go with the custom boats or the production boats?
In these days I think, if you have 500K Usd its wise to invest %30 of that nothing more.
Thank you all for your thoughts and replies.

If you live in a euro country then your big expenses, such as housing, health care are in euros and your income is in euros.

Thinking of a boat as a currency hedge is dreaming. Buy it in euros or usd or in kopecs it is going to loose value over 5 years once you include the costs of keeping it up to original standards. If you want a currency hedge then buy futures or put your money into your preferred basket of foreign currencies. Investing in a boat isn't investing.

[john61ct]

My preferred assumption is I am paying for the time enjoyed on the boat.

Zero expectation to get any cash back out when I sell.

Yes maybe I'll get some, but that is not assumed in financial calculations.

And things like politics, state of the economy and currency fluctuations are 100% irrelevant, no one can predict the future, but yes pretty safe to assume disasters will get worse and their frequency accelerate.

[boatman61]

Recession.. Boom.. makes no difference with boats one should only spend what one can afford to lose without pain and tears.

[Hesti]

Recession and exchange rates are not firmly linked, it depends where the recession hits. You seem to assume the EU is heading for a recession and the US are not - may be, may not be, who knows. Then, exchange rates is not the only thing that will change in a recession - where a recession hits, boat prices will fall - which is good for a buyer. But there are few buyers around when a recession hits ... . These price changes can far outlever any currency effects. Which brings us to "buy when the market is down and sell when the market is up". Already the normal annual cycle from spring to autumn can be around 20 % in boat price. In the housing credit crisis, as far as I know there were cases where people just walked away from their boats as they cold not afford upkeep any more. Which brings us to the cost of sustainable upkeep which is required so the boat maintains its value. Say 10% of what a comparable boat would cost new today. You can do some of the work yourself, but only some. Doesn't sound like an investment, does it? More like a hobby, defined as producing average results with high efforts.

In the end - if you want to be clever and wait, do so. I want to go sailing. But don't tell me in 20 years, that you waited to long and missed the opportunity to go sailing ...


And yes, what the post above says makes a lot of sense - do not invest more in a boat than you can afford to loose. A pretty conservative approach ...

[Sailmonkey]

If you’re using money that you cannot afford to loose to buy a vessel for pleasure (as opposed to an asset for commerce) you’re going to give yourself a stress induced heart attack.

[Island Time O25]

If one is so concerned with the residual value of the boat 5 years down the line, or currency fluctuations affecting resale one clearly is above one's head owning it.

Unless one is a hardcore 24/7 liveaboard/cruiser a boat is a hobby. Not an investment nor a business, just a hobby.