Osblog 46 – Inflation

Osblog 46 – Inflation

16th Dec 2013

A car dealer told me a story once of how he had sold a Toyota Corolla to a farmer early in his career. Some twenty years later the same client arrived in the shiny new show room and enquired about the price of a new Corolla. The dealer slightly smugly said “they are a fair bit dearer than when you bought that jalopy”. Like how much asked the farmer calmly. When told the new price the farmer said “the old one cost me a trailer load of cattle and the new one will cost me a trailer of cattle, where do I sign”.

James Hanly, the silver miner from Nenagh, maintains that horses are cheaper now than ever, especially when compared to a “painting of a Coke bottle” referring to Warhol’s collectibility. It is an interesting point. In the days before the big book of mares, when supply was truly limited, the elite colts of a generation commanded prices which we have yet to emulate. Meanwhile the price of everything else seems to have multiplied, not just advanced. The Warhol might last for ever, but the legacy of an elite filly can continue to reward for decades, and we have seen how a filly can beget a multitude of producers, Meon Valley being the example most often cited.

The early Juddmonte purchases continue to reward on the track and in the sales ring and somebody is buying fillies nowadays which will be commented upon in decades from now. If the price is a measure of their “utility”, then some of the so-called expensive mares will be discovered as being extremely good value. The resilience of elite brood mare valuations during the worst of the crash demonstrated how these stock assets now rank with high-end art as commodities of monetary value beyond the comprehension of horse-dealers like me, purely because their collectibility now ranks up there with Warhol, Beatles memorabilia, stamps.

Making sense of it is more difficult, as many are tempted to cry how can 500kgs of horseflesh be worth so much money? When a 1963 Ferrari can make 28,000,000, and taxis cost €10 per mile. When a Francis Bacon can make €80,000,000 and wallpaper is €15 per roll, when a stamp can cost thousands and email is free.

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