Monthly Archives: August 2014

The Bugatti Veyron Is Twice the Car

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The Bugatti Veyron 16.4 is a car unlike any that has come before. Sure there have always been fast, luxurious cars. But the Veyron takes it to another level not just in terms of speed but in terms of, well, just about everything.

It was named after a relatively unknown Bugatti test driver named Pierre Veyron who teamed with Jean-Pierre Wimille to win the 1939 24 Hours of Le Mans driving a Bugatti Type 57C. While the Veyron bears the name of the company founded by Ettore Bugatti and is produced at the site of the company’s original works in Molsheim, France, the driving force behind its creation was Volkswagen Group and its chairman, the indomitable Dr. Ferdinand Piëch.

Dr. Piëch, grandson of Porsche founder Dr. Ferdinand Porsche, played a key role in a number of automotive developments including the Porsche 917 race car and the Audi Quattro all-wheel drive groundbreaking drivetrain. He was also voted “Car Executive of the Century” in 1999.

His goal with the acquisition of Bugatti was nothing short of the creation of the ultimate car. Following a series of concepts sporting a whole lot of cylinders and four digit power figures, the Veyron concept was initially shown at the 2003 Pebble Beach Concours d’Elegance.

The production Veyron arrived in 2006 with a price tag of about $1.2m, depending on exchange rates. Since then prices have edged as far as the $2m-$3m range. Yes, in the world of super cars inflation is real, and the sales tax alone can amount to the price of a very nice car.

Engine

At the heart of the Veyron is, of course, its engine. This engine is very different from any other. For one its displacement is 8.0 liters. Okay, so an SRT Viper has a larger engine. But the Veyron has four turbochargers. Okay, so the Bugatti EB110 had four turbos. But the Veyron has sixteen (!) cylinders. Okay, so the 1932 Cadillac Phaeton had sixteen cylinders.

But no other car has combined all of those attributes into one engine: Giant displacement, lots of turbos and lots of cylinders. Oh, and the cylinders are arranged in a W-pattern rather than a typical V-pattern. It’s a quad-turbocharged 8.0 liter W-16 engine that just happens to produce over 1,000 metric horsepower (987 SAE hp) and 950 lb-ft of torque. Those are the official ratings, which are rumored to be quite conservative.

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Do Shantytowns Have Condo Fees?

Shantytown

Of shantytowns and homeowners associations.

There’s usually a sizable difference in the purchase price of single family homes and condominiums of similar grade. Adjusting for differences in square footage and certain amenities, the required condo fees are usually higher than single family homeowner association (HOA) fees.

Could that difference in fees make up for the difference in purchase prices? How much more property could you buy if, instead of acquiring a property with a condo fee, you bought one without? Here’s one way to look at it.

I have a condo where the fee is over $300 per month. That includes trash service, water and electricity, as well as maintenance of common areas and all that good stuff. But let’s suppose I had instead bought a home nearby that didn’t have a homeowner association. How much more home would that $300 condo fee buy?

First, realistically it would be more like a $200 difference since I would have to pay for utilities and such any way. Assuming a 30 year mortgage and 5% annual interest, that extra $200 per month works out to a little more than $37,000 – an amount that will, unlike fee increases, appreciate in the owner’s favor.

In other words, if I had put that extra $200 per month toward buying a bigger property, I could have bought a home that cost about $37,000 more. Would that have been likely in that area? No. But that doesn’t mean that’s always the case.
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Ford GT – Forty Year Follow Up

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Enzo Ferrari was partly responsible for a lot more sports cars than he’s given credit for. The Old Man apparently had a way of, shall we say, inspiring others to go off in a huff to build their own cars in order to spite him. He reportedly insulted a customer who complained of clutch problems. That customer turned out to be Ferruccio Lamborghini who then started the firm that bears his name.

The Ford GT40 is another car that came to be in part because of Ferrari. Its development was commissioned by Henry Ford II after he was rebuffed in his attempt to purchase the fabled Italian company. The GT40’s mission was to race and beat Ferrari at the 24 Hours of Le Mans. It didso four consecutive times from 1966 to 1969 – including a 1-2-3 sweep in 1966.

The GT40 ended Ferrari’s streak of six straight Le Mans victories from 1960 to 1965. (Ferrari hasn’t won Le Mans since, concentrating on Formula One instead.) After that things quieted down as Ford became preoccupied with other things as the malaise of the 1970s set in.

It wasn’t until 2005 that the spiritual successor to the GT40, the Ford GT, was introduced to once again battle Ferrari. But this time the battle was not on the track so much as in the sports car marketplace.

While it certainly bears a strong resemblance to its predecessor the GT is a much larger car, its 106.7 inch wheelbase about a foot longer, and its 44.3 inch height about four more than that of the GT40.

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Keeping Up With Your Cash Calendar

One thing I do is keep a simple calendar that shows me at a glance my anticipated cash flows, when to expect upcoming dividend and rent payments, as well as key expenses. You may want to do so as well.

Stock Dividends

When earnings announcements occur, companies usually also announce the ex-dividend date (the date before which one must own shares in order to receive the next dividend payment), the payment date and the date of the next earnings call.

For stocks I already own, using a calendar lets me plan when I’ll need to take action with these payments, whether to reinvest them and, if so to start thinking about where to place them.

If I’m considering buying stock then I want to know the ex-dividend date. I’ll mark it on the calendar with an “x” followed by the day of the month (“x14” for the ex-dividend date falling on the 14th day of the month).

These dates are also useful to know when unloading shares. Sell on the ex-dividend date or after and you’ll have received the dividend payout, locking in the dividend as cash. However, when trading opens on the ex-dividend date, the share price will already have been adjusted down by the amount of the cash payout. So in theory your sales proceeds will be a wash – though share prices constantly fluctuate.

It’s also good to know when to expect the annual report, and keep an eye on analysts’ earnings “guidance”.

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The Shortlived Saturn Sky

2007-2009 Saturn Sky sports car

Saturn Sky roadster

Once in a while events unfold that seem, however briefly, as if the stars are in alignment. It makes one think all is right with the world and that things are the way they should be. That’s just plain nonsense. The universe doesn’t care – it’s entirely impartial. But regardless the Saturn Sky might have been one of those that was destined for greatness in the car universe.

Based on GM’s Kappa platform the Sky arrived in mid-2006 as an early 2007 model, positioned as the more upscale cousin of the Pontiac Solstice, with a unique exterior and interior. Base price started around $23,000.

The Kappa platform also served as the basis for the Opel GT and Daewoo GX2 roadsters for international markets. All were manufactured at the GM plant in Wilimington, Delaware, which has since closed.

The Sky was like a junior Corvette with a front engine, manual folding top and rear wheel drive layout – roughly half the cost for half the cylinders.

Engine & Drivetrain

The base model came standard with an all aluminum 177 hp Ecotec four cylinder engine displacing 2.4 liters. While the all-aluminum design was not known for its smoothness, it did feature variable valve timing and considerably more power than its chief competitor, the Mazda MX-5 Miata.

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Crossing That Fine Line

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Remember that fine line I wrote about a few months ago? It’s been crossed in my latest kart race. Here are all the gory details and lessons learned.

The day had started off like most racing Sundays. Get up early after staying up a little too late, get in the car and drive two hours to the track. Hustle to get everything together and onto the grid for practice.

Finishing the last race on tire cord really wasn’t fun so this time I had a new set of Bridgestones on and went out to break them in. In the process my GoPro camera flew off my helmet, fortunately without damage.

The second practice session went without incident but I was still breaking the tires in and not pushing it. So the stage was all set for the heat and feature race.

Starting from seventh on the grid was kind of fun because racing traffic is the only kind of traffic I like. But perhaps if I had remembered that discretion is the better part of valor, I wouldn’t have made the move I did at the start. Fortunately, there was enough room at that mystical location known as Turn One, a place where many a race has been lost, as we’ll see.

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After the Great Credit Hangover, the Party Is Slowly Starting Anew

More lending documentation requested

“What do you mean I have to fill out another form???”

A pair of articles in the Wall Street Journal this week signaled that credit scoring models and strict lending standards and are beginning to loosen. Signs of the Great Credit Hangover seem to be fading as the pendulum swings back the other way ever so slightly.

Credit Score Revamp

This year’s introduction of FICO 9, the latest iteration of the widely used credit scoring model from Fair Isaac Corp., is expected to help widen credit access. The goal of this latest version, of course, is to increase lending without increasing risk. Lenders want to expand the pool of eligible borrowers while avoiding likely deadbeats. The eternally open ended question, of course, is how?

The new model will not penalize those who do not have an outstanding balance, omit bills that have been settled with collections, and give less weight to unpaid medical debt.

That first point especially makes a lot of sense. Absent the influence of government handouts that distort the free market regulations, I would say borrowers without debt are more likely to pay back loans than those who have already demonstrated an inability to do so.

The WSJ cites Federal Reserve findings that “More than half of all debt-collections activity on consumers’ credit reports comes from medical bills…”. This encompasses an astounding 41 percent of the U.S. adult population. That’s apparently 75 million people.
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Audi R8 – Ingolstadt Ingenuity

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Note: While the R8 is still in production, this post covers 2007 through 2012 models. Additional variants will be covered at a later date.

Audi created the R8 to celebrate its success at the 24 Hours of Le Mans (13 wins since 2000) and introduce a competitor to the Porsche 911.

It is a very different sports car. Not because of its longitudinal, mid-engine layout. Not because of its V8 engine. But because it contains so many unique technologies, synthesizing the great strides that Audi made in the years since the fallout from the unfounded accusations leveled at its cars by a 60 Minutes report on unintended acceleration. I wouldn’t be surprised if a fistful of patents were granted for the design of this car.

To get an idea of the magnitude, think of the Audi’s aluminum spaceframe structure, all wheel drive, optional carbon ceramic brakes, direct injection engine, semi-automatic gearbox and magnetorheological suspension. Then blend those elements in a package capable of nearly 190 mph that has, by all accounts, the usability and comfort of a daily driver.

Surprisingly, despite the company’s long history in motorsport dating back to its pre-war (WWII that is) Auto Union days, Audi had never produced a sports car in the modern era. Sure, there was the Audi Quattro with its remarkable performance, but it was more of a rally car than a sports car. The R8 was  Audi’s foray into such territory.

Chassis

One of its differentiating elements is the extensive use of aluminum. Like Honda with its Acura NSX, Audi chose to employ aluminum throughout its flagship sports car, continuing the work it began with the 1997 Audi A8 sedan.

The production version was unveiled at the 2006 Paris Motor Show, a potent mix of German technology and Italian flair. VW Group, Audi’s parent company, acquired Lamborghini in 1998. As a result, the R8 and Lamborghini Gallardo share structural aluminum technology and a number of components, notably the all-wheel drive (AWD) system, transmission and, in certain models, the same V10 engine.
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