Articles Tagged fine wine investing

No No No No No No NO (Wine Is Still Not A Good Investment)

Vinted on November 17, 2015 binned in commentary, wine news

Recently, the Drinks Business reported that, according to Vin-X’s head of procurement Martin Pruszynski, “fine wine investment has been the best overall performer when total growth across major asset classes since 1988.”

No no no no no no NO.

Not again.

It seems that almost every year I write this retort. My view on this has not changed one iota in the last twelve months, despite Martin Pruszynski’s assessment that fine wine prices have outpaced the Dow Jones and S&P 500. The Vin-X findings are, in my opinion, closer to smoke-and-mirrors than to anything substantial.

Bear in mind that I am NOT an investment expert, and therefore I am NOT offering any true investment advice here. But I did semi-retire (in terms of being able to switch career gears) at the age of 40, so make your own assessment of how well I manage money, and the value of my opining on the subject. And my opining in a nutshell is that “investing” in fine wine (in terms of hoping it will accrue in value, and that you will actually be able to realize that gain) is basically a a really, really poor way to utilize your money…

Read the rest of this stuff »

8

 

 

Investing In Fine Wine Is For Fools

Vinted on March 12, 2013 binned in commentary, wine news

“Investing” in fine wine is a fool’s errand.

As in, “greater fools” – for it is certainly a fool who hopes to sell his/her speculation to greater fools for a profit.

The term greater fool is actually a pseudo-technical financial one, probably best explained in William J. Bernstein’s amazing book The Four Pillars of Investing (emphasis mine):

“The acquisition of a rare coin or fine painting for purely financial purposes is clearly a speculation: these assets produce no income, and your return is dependent on someone else paying yet a higher price for them later. (This is known as the “greater fool” theory of investing; when you purchase a rapidly appreciating asset with little intrinsic value and no capability to create income on its own, you are dependent on convincing someone else to take it off your hands later at a higher price.) There’s nothing wrong with purchasing any of these things for the future pleasure they may provide, of course, but
this is not the same thing as a financial investment.”

Substitute “coin” with “red Burgundy” and “painting” with “First Growth Bordeaux” and the quote would remain apt, cogent and frighteningly applicable. The bottom line is that holding onto fine wine for any reason other than to eventually drink it (or pass it on to someone else who might) is stupid.

This is because wine does not conform in any way to the modern paradigm of investing, which is built upon lower-risk (and thus lower-returning) loans or higher risk (and thus higher-returning) valuation of something’s (usually a company’s) ability to make profit. At best, it’s a hedge that someone (the greater fool) will want the object badly enough to take it off your hands at a price higher than what you paid for it…

Read the rest of this stuff »

14

 

 

The Fine Print

This site is licensed under Creative Commons. Content may be used for non-commercial use only; no modifications allowed; attribution required in the form of a statement "originally published by 1WineDude" with a link back to the original posting.

Play nice! Code of Ethics and Privacy.

Contact: joe (at) 1winedude (dot) com

Google+

Labels

Vintage

Find

Sign up, lushes!

Enter your email address to subscribe and get all the good stuff via email.

Join 40,254 other subscribers

Gravityscan Badge