Warren Buffett made billions of dollars buying on sale.
“Whether we’re talking about socks or stocks,” the Oracle of Omaha has said, “I like buying quality merchandise when it is marked down.” The time to get interested, he says, is when no one else is.
I like to think that I practice a similar philosophy when buying consumer goods, albeit on a much smaller scale than Buffett. It had me looking recently at electric cars, snowblowers and other goods that have fallen out of favor or out of season.
I’ve been doing this for years. My second car was a 1987 Chevy Nova, which had a Toyota Corolla engine. I purchased it for a lot less than the comparable Toyota Corolla because the Chevy nameplate wasn’t as desirable as Toyota’s. I held on to it long enough that the resale values were almost equivalent when I sold it.
The plunge in gas prices now presents contrarian consumers with another car-buying consideration: to get a used electric car such as a Nissan Leaf or Chevy Volt. According to recent reports by the National Automobile Dealers Association, the depreciation rate for plug-in electric cars has been twice that of a gasoline engine car.
More than a dozen Leafs and Volts were for sale earlier this week on the local Craigslist site, including a 2013 Volt with 20,000 miles for $15,000. That’s more than a 50 percent depreciation for a car that, excluding the $7,500 tax credit, sold for about $39,000 new. Even a 2013 Chevy Malibu, hardly known for high resale value, has depreciated at a lower rate, based on Craigslist recent prices.
Some could surely argue that gas prices are low now and may even stay low for the rest of the year, thus negating some of the savings with an electric car (the Leaf) or gas/electric car (the Volt). I would argue that gas prices will surely go up, but even if they don’t, I would rest easy in leaving a slightly lighter environmental footprint with an electric car.
It’s fair to note that a source as reputable as Consumer Reports doesn’t necessarily agree with me. Eric Evarts, senior associate autos editor at Consumer Reports, said that the electric car technology is so new that it’s impossible to predict its depreciation value in five to 10 years.
That’s a good point for anyone who trades vehicles frequently. But if I didn’t want to keep my 100,000 mile vehicle for another 50,000 miles, I’d be negotiating on a Volt. “Can you do better on your price?” I might ask a seller. “Seems as if you’re not factoring in the $7,500 tax credit.”
My contrarian mind also had me visiting Menards earlier this week on a 65-degree day, looking for snowblower deals. The hardware store giant didn’t disappoint. Nearly all models were on sale — an event that I doubt is happening in Boston stores.
With Minnesota’s cold but dry winter, nearly all hardware stores are now overstocked on snow removal merchandise. But not all stores put them on sale or still have them in stock. Local Home Depots haven’t discounted their remaining stock, for example. Menards won’t confirm how long they will keep throwers on the selling floor or if the discount will remain. Discounts of $50 to $100 were common on the low-profit-margin item a few days ago.
Whenever Minnesota has a dry winter like this one, consumers should start checking prices on snowmobiles and ski equipment in February. By the same token, when it’s been a warm winter, look for deals on coats, hats, and gloves. Unfortunately, our cold winter means fewer deals and less overstock on those items this year.
Being a contrarian consumer doesn’t always work out. Champagne drinkers, for example, get a lower price before New Year’s Eve than after. Newly released CDs and DVDs often are cheaper the week they are released than it is several weeks later.
A year ago, my swimming-against-the-tide advice held true for plasma TVs. But no more. All the experts said that plasma televisions had a better picture than LCD panels, but after the consumer votes were tallied, LCD won. That meant retailers were overstocked until manufacturers quit making plasmas.
Now the tide has shifted. The remaining plasma TVs are selling for a premium instead of a discount, said Louis Ramirez, an electronics expert at Dealnews.com. “A 51-inch Samsung plasma was $998 recently, but you could get a 55-inch LCD for $500,” he said. Plasma aficionados are snapping them up to a point where a shortage exists.
Being a contrarian consumer sometimes requires a blind eye. More than a decade ago, I purchased a new $350 KitchenAid mixer for $50. I asked why it was marked down so drastically and was told that the color, black, was out of favor. Now it’s back in and still sitting on my kitchen countertop. I may not have Buffett’s billions, but he’d agree with me that even contrarian consumers should buy only things they really need. No matter how cheap those fading skinny jeans are, don’t be a slave to fashion or contrarianism.