Every year or so, I receive an unsolicited email blast from wine auction services that makes me want to Hulk rage. The 2019 incarnation of this comes my way from online auction house WineBid, is titled “16 Years of Burgundy vs. The Stock Market – and WineBid Auction Results,” and which I will only link to with the anchor text Probably Total Horseshit so as not to give them quite exactly the kind of organic social mention that they had in mind when they sent it.
In that WineBid article, which you probably shouldn’t bother reading, they make the claim that a report published by The Economist (using WineBid data) shows that “fine red Burgundy wine is a better investment by far than the stock market.”
Sorry, but that’s a steaming pile of horse crap of the tallest order.
Yes, they include cool-looking, impressive charts and lots of flowery language insinuating that if you love fine red wine then you’re an idiot for not considering it the world’s most impressive investment vehicle, so there’s that. But the problem is, well, that there are lots of problems with comparing the apples of proper investing to the oranges of owning fine wine, not to mention the issues with the report itself…
Here are a few of the concerns that you should have regarding this specious conclusion that Burgundy will be besting stock returns now or, like, ever:
- Even if Burgundy outperformed the market (which it won’t, more on that in a second), you cannot possibly purchase similar amounts of investments in fine wine as you could in mutual funds, so the comparison is misleading at its face.
- WineBid and The Economist, in this report, are engaging in the same time-honored trope that has been used for decades to convince people not to calculate how much of their money is actually going to smooth-talking financial “advisors” – namely, cherry-picking their data timeline to show the most favorable returns.
- There’s probably survivorship bias in their results (we’re likely not seeing inclusion of the performance of Burgundy wines that didn’t track well against the stock market).
- Past performance never, ever equals future performance.
- Wine investing is biased towards the “greater fool” requirement, which isn’t a winning investment strategy.
- When you invest in mutual funds the right way, you carry risk but almost no real cost of maintenance; in wine investing, almost all of the maintenance cost is on you, which, oops, WineBid doesn’t really mention.
- There are undoubtedly more issues to point out but f*ck this, I have better things to do, such as go clip my toenails.
Pretty much each time that I address this topic, I end it with the same cautionary tidbit, so I am just going to quote myself on one of the last ones I offered:
” If you’re contemplating any substantial move into the fine wine investment market, I’ve got three words for you: Don’t do it. And here, for good measure, are four more; remember that the four most dangerous words in any investment sphere are ‘this time it’s different…’ “