Investing in Wine: Returning 522%, Some Wines Are Outpacing Stocks
By Dr. Steve Sjuggerud, President, Investment U
Thursday, February 12, 2004: Issue #312
“Let’s face it, in a worst-case scenario, you can literally drink your investment into oblivion” – Eric Roseman
If you’ve never given thought to investing in wine, just look at a recent issue of Global Mutual Fund Investor. My friend Eric Roseman points out that First Growth Bordeaux wine (1990 vintage) has risen by 522% over the last 10 years, beating out stocks. Up 522% in the last 10 years!
Roseman says, “Some of the world’s finer vintages have severely outpaced the S&P 500 Index – especially from 2000 to 2002 when the American broader market crashed 40%. Wine truly has no correlation whatsoever to the S&P 500 Index and offers key asset allocation diversification as an investment“
According to Forbes.com: “The world’s most expensive bottle of wine that could actually be drunk today is also the most expensive wine ever sold in America, a Montrachet 1978 from Domaine de la Romanée-Conti that was hammered down at Sotheby’s in New York in 2001. The lot of seven bottles fetched $167,500, or $23,929 per bottle.”
The NYSE of the Wine Investing World
The wine investing market is actually developing into a “pseudo stock exchange” for finer vintages, Roseman says. For example, “The WorldWineXchange.com offers secure trading in fine wine to international buyers and sellers on a real-time, first-come, first-served basis.”
Whether it’s a joke or it’s serious, there’s actually a wine price “ticker” running across the bottom of the web page.
The wine investors themselves don’t see wine investing as a joke at all They see a supply of fine wines from good years constantly shrinking pushing prices ever higher. It’s Economics 101, they say – supply is falling while demand is increasing.
If you’re into wines, you may get a kick out of a few web sites that are out there:
- The site www.decanter.com offers its Fine Wine Tracker, which allows you to chart wine prices just like stock prices, going back to 1978.
- The site www.InvestDrinks.org points out some of the big risks and pitfalls.
- www.brentwoodwine.com/wineinvesting.html offers the positive case.
- And there’s even an offshore fund: www.vintagewinefund.com
Although I’m no wine expert, I found these sites interesting.
Robert Parker’s newsletter is popular, as well, as a high rating from him will almost guarantee high demand for a wine. But I’m getting out of my area of expertise here.
Honestly, I know nothing about wine – I’m not joking. But I got a kick out of my friend’s article about wine as an investing strategy. In particular, I liked Eric’s view about the upside of the downside
“Let’s face it, in a worst-case scenario, you can literally drink your investment into oblivion!”
Good investing (or, if it doesn’t work out, drowning your sorrows),
Steve
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