[MyNameIs]

Reprint from BARRON'S...

Used Car Prices up 35%!

Updated April 08, 2023, 10:16 am EDT / Original April 07, 2023, 3:55 pm EDT

My car seems to be beating the stock market. It’s nothing special—a midsize, mass-market sport-utility vehicle leased in September 2020. On the pandemic supply-chain timeline, that’s after the toilet paper panic and just before the everything-else shortage. And yes: leased. I get a new car every three years to avoid the hassle of repairs and periodically clear my seat rails of Happy Meal fries.

The lease is based on a $40,000 purchase price and a $26,000 “residual” value at turn-in, which I can pay for the car if I want. I’m running so far over my mileage allotment that I’m starting to suspect myself of sleep-Uber-driving. That should subtract from the car’s actual value at turn-in, yet I see identical, high-mileage cars selling now for $33,500. If those prices hold for a few more months, I’ll be “up” on my buy option by 29%. That’s two points more than the S&P 500 index has returned over the same stretch.

[el ess A]

While getting back more of a share than you normally would have is a great thing, volume wasn't taken into consideration, and neither were dividends. The S&P 500 return rate doesn't account for dividends. So the comparison, in reality, is apples and oranges.

Comparing the used car return value to stock market is like owning 1 stock out of the stock market. The S&P rate on average over the three year span of the lease may have been less, but I doubt if you could live off the dividends.

And there will be a time when another car leased will be a HORRIBLE idea again. That's why the title of the article is BS clickbait.

It's like those idiots a while back who were claiming Warren Buffet paid less taxes than his secretary and how he needed to pay his fair share. In reality, he legally paid less of an effective tax rate, but the actual total amount of his taxes paid were more than his secretary even made.