And that, sir, partly drives my thought-process! Some of those wines you note offer such incredible returns, and for what they deliver are fairly priced. It never ceases to amaze me how often I am disappointed by wines I bought (and paid dearly for) with very high expectations, when the lesser priced wines I pop with just reasonable expectations flourish. Sorry for another drift . . . . (PS. Cannot wait to TOFT on my 2010 Levet than came in on Friday!)
I always laugh at how we rationalize opening a costly bottle based on “I only
paid …” And i do it, too! Would one sell their house for what they paid if it were worth ten times that amount? Or the Apple stock bought at $10 but worth $700–would they sell it for $10?
Yes, we call those people “people who flunked Econ 101.”
Of course, Econ 101 is based entirely on the principle that people make rational decisions 100% of the time. Human beings don’t work that way & there is an entire field of economics based on the study of irrational behavior as it relates to economic decision-making.
And I think you are ignoring opportunity cost and the friction in the market, which would probably not fail you provided you did well enough in the other parts of Econ 101. You would likely get a solid D, however.
As if “rational people” aren’t people, too…
Harry Markowitz on how he invested: “My intention was to minimize my future regret, so I split my contributions 50/50 between bonds and equities.”
Making irrational decisions is fine, we all do it (and economists certainly aren’t ignorant of that fact), but what some of you guys are trying to do here is rationalize the irrational!
You all are right as you are smarter than I, but…
I will always sell or trade a wine when it gets above $600 and I have owned it for a while, why? To me I can trade that and end up with anywhere between 6b and a case of things that will continue to age. That and I can never justifying drinking a $600.
Now if I happen to stumble on a wine for $60 and it’s worth $2k, I would drink it. Why? Because sometimes you get lucky and when that happens it’s life telling you to enjoy.
I guess it’s like Vegas…
Rationally I would never spend $1k on a meal and another $1k on a fancy hotel room, even if I made that money on original Apple stock, it seems like too much of a life invested.
But if I win $2k at a blackjack table I would be more than happy to blow that in a heartbeat on a room and food.
I have been asked to post a picture which I will provide this evening when I return home.
Interesting direction this thread has taken. No surprise given the direction of the last thread that treated this wine.
I find one of the posts to be more accurate than the rest. Eric’s post “Veinard!” (lucky). Yes, I am lucky. I am lucky to be part of a “community” that is pretty damned generous.
Most economic theory is trash. Especially the crap they teach in Econ 101. That said Keith’s post is technically correct. I did forego the opportunity to trade the bottle for $2,000 therefore my opportunity cost of drinking the bottle was $2,000 (less cost of the bottle, cost of selling, time, etc etc). I am fortunate to be gainfully employed and able afford to drink a $2,000 bottle of wine. And if I find another bottle of the same for $60 I will buy it and drink it again. Next time I will call Eric before and suggest we meet in Lyon. This bottle would go well in a bouchon lyonnaise.
I have been purchasing wine from this caviste for 4 years. I’m not his biggest client in terms of revenue but I would wager I am one of the most passionate. Once every few months I spend a few hours, as I did on Saturday, tasting and talking wine. Appelations, parcels, cépages, vignerons, history, future, critics, etc. Previously he contacted Barthod & Lignier on my behalf to arrange tastings at their respective domaines. The last time I went he offered me a bottle of 1996 Les Fuées from Barthod. He is passionate about well aged wine and he recognizes that my collection is far to young to offer up many examples of mature wine. He addresses this issue by either offering me the odd bottle or selling me bottles from his collection at very reasonable (or irrational?) prices.
Questions for all of the “berserkers” following this thread:
A friend comes to your home for dinner. He surprises you with a bottle of Rousseau CdB. What is your reaction? Do you surprise him with a bottle of Yellowtail at dinner? Do you tell him, “thanks for the opportunity to flip this and score a couple hundred bucks”. After all, you replaced one bottle of pinot noir with another. What’s the difference? Are you a berserker or a wine hedge fund?
Have any of you purchased wine from your child’s birthyear? Do you hope that they refuse the opportunity to share that/those bottle(s) with you when they are 20, 30, 40? Do you wish they will have been perfect Econ 101 students and they insist on selling the old bottle? “Come on dad (mom), sell that bottle of 2010 Chave for $2,000 and lets buy a bottle of 2030 generic Syrah for $20”. Is that your intention when you purchase a case of wine from their birthyear? If so, why are you buying them wine? This stuff is awfully difficult to store, move, etc. Just buy them a few shares of the next Apple. Picking the next bottle that will go from $50 to $2,000 is about as easy as picking the next Apple. Ask the guys in wine hedge funds that purchased a boat load of 2010 Lafite.
Personally, it is the people that keep me interested in wine. I enjoy the people who truly enjoy wine. Vignerons, cavistes, somm’s, berserkers. The list could go on. I consider myself part of this community and I believe we are a hospitable (and typically joyous) bunch of people. M Kelly posts “I need to try some Gonon” and Todd Waldmann immediately responds, “I promise to share (a bottle of '90) with you”. That’s awesome. I see that all the time on this board.
But according to some of the logic above, M Kelly is supposed to respond, “thanks for the offer but can you wire me $50 instead?”. That is the rational response, the econ 101 response. M Kelly can take the $50, pick up a bottle of $10 syrah and pocket the $40 left over. I am lucky to be part of a community where the first response to “I haven’t had one of those” is “come to my house”.
Todd French has never, to my knowledge, provided a definition of a “berserker”. I expect that any definition which might come will not include “rational”. Thank goodness. It is the irrational benevolence of wineberserkers that I enjoy so much about this hobby.
I will step down off the soapbox. FWIW the wine + meal was the Christmas dinner for my wife, daughter and I. We are headed to Texas in 5 days to stay with my folks for Christmas. The meal was flawless. The pigeon was cooked to perfection. The truffle was a sublime touch. The spinach was the ideal companion to the meat. And the wine was sublime. We were both delighted and we both laughed when I wine-searched the bottle the next morning. It is a memory we will certainly keep…if pressed to put a price on that memory I guess I would reckon it falls somewhere in the neighbourhood of $2k.
- Econ 101 is not ‘crap’. It’s the base for which all other Econ knowledge flows. You can’t build a house without a foundation, and all foundations are essentially the same. Big cinderblocks surrounded by dirt. Not pretty, no one would want to live in a foundation, but w/o one you can’t get to the good stuff.
- I postulated an example with no frictions (and, of course, on purpose. To eliminate that from the problem). Here it is again;
A) I give you a bottle of 1990 Gentaz-Dervieux. Then I offer you the opportunity to sell it for $2,000.
B) I give you $2,000. Then I offer you the opportunity to buy a bottle of 1990 Gentaz-Dervieux for that same $2,000.
In both cases all options are identical, you can either have $2,000 or a bottle of 1990 Gentaz-Dervieux. But people view these differently based on the Sunk Cost fallacy.
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People (like paul clark) are welcome to add into the calculation the value of the experience (I often do this. Why take a trip to ski during holiday period with my 4 kids when I can take a trip by myself after holiday period with just my wife for 1/4 the cost. Why? Because I highly value the experience with my kids), but we’re not welcome to say that the base calculation makes no sense. I need to know the base calculation before I can think about the value of the experience. Is the experience worth $1mm to me? then let’s go on the trip (or drink the bottle), If it’s worth $1 to me, the let’s skip the trip (or sell the bottle).
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in the ‘real world’, frictions are a big deal. it’s a pain to sell stuff, even in small quantities. I sold some wine this year, mostly to friends, and it reminded me why I don’t sell much wine; as a ‘financial asset’ it’s damn heavy!!!
Thanks for that post, Paul. I think this snippet changes everything for me, as the bottle really was in the nature of a gift. I’m certain that nice gentleman will ask you next time you are in the store, “how was it?” I doubt any of us would sell it under those circumstances.
And yes, you are very lucky, including for living in Switzerland! Cheers, and thanks for the cool post.
He won’t have to wait for my next visit. I sent him an email yesterday. I was too excited about the results to wait to tell him.
As for Switzerland it is a delightful place to call home. The cavistes are just one of many reasons to enjoy living here.
I typed up a long reply to the Econ 101 discussion and, eventually abandoned it. It was destined to be an ultimate thread drift…on my own thread!
This wine demonstrated just how marvellous Côte Rôtie can be in the right hands. I don’t want to argue if Côte Rôtie is better / worse than Hermitage. Focusing on the specific appelation of Côte Rôtie…
There are people, like Keith and Peter, who have a heck of a lot more years of tasting. I would enjoy to hear what your thoughts are on modern Côte Rôtie. I know it has been discussed in other threads but, perhaps differently from previous threads, do you think the region will shift back to the classics? Burgundy had the Accad phase and today the approach is much more “hand’s off” (or at least a lot of vigneron proport to be hands off). Piemonte seems to be moving in the same direction (maybe less swiftly).
Will Côte Rôtie shift in the direction of the trend of Burgundy, or the trend even closer to home in many of the Côtes du Rhône domaines who are producing great / classic wines. There are big names like Allemand and obscure domaines like the one Guillaume described in the “So what great old wines are there still to be discovered” thread producing knock out wines. I believe Eric’s wines (and their success) should be noted as well…sadly I haven’t tasted one as they aren’t sold here in Switzerland!
Cornas seems to be much more receptive of (or at least quicker to pick up) the hands off approach with other young guns like Gilles and Paris. Will new oak be replaced by old oak? Will big extracted fruit forward wines slowly be replaced by wines made with stems and less ambitious pigeage? If no, why not?
Or do these guys have it all wrong? Are Guigal’s wines of today going to be better in 30 years than Eric’s wines?
The sunk cost fallacy only exists for people with enough money that they get to lecture others on the sunk cost fallacy.
The rest of us just like ot drink the wine, not ruminate on what else could have been bought if we sold the bottle.
Hey Paul,
Just to be clear I wasn’t suggesting you ought to have sold the bottle, just responding to the poster who said opening one bought at below market value is different from paying the real tab. Glad you had the opportunity to try something you may never get the chance to see again.
I didn’t come to wine early enough to buy Gentaz on the cheap like Peter did (or at least I was still stuck on Bordeaux when I could have done so). The question you raise about a potential style shift in the region is an interesting one. Burgundy doesn’t have a mega-domaine like Guigal that’s seen as almost synonymous with the appellation and gets showered with the highest scores by the most influential critics, not just Parker but the WS too. So that’s a big obstacle to overcome. We’re starting to hear a lot more buzz on the boards about producers who are more like Gentaz than Guigal, but I don’t know if this increased attention to them has translated to any increased number of them. It sure would be nice to see that happen.
No, obviously the opposite is true. Opportunity cost can only be ignored by people with enough money to ignore opportunity cost.
In the context of a wine board I respectfully disagree.
We’re not talking about folks trying to make their rent here.
I would happily pay CHF60/$60, too!
As it happens, I came on a bottle for $5.99 in 2003 at Crossroads here in NYC. The bottle was missing its main label but had a 1990 neck label that seemed very familiar to me. Bing! A light went on and I realized it had G-V and matched an empty 1983 I had in my kitchen. Naturally, I grabbed the bottle.
I drank it in 2005. It was lovely and typical of old Cote Rotie, though a bit tired. Crossroads was known for having terrible storage conditions, so it was a bit of a miracle that it was drinkable.
We agree!
And, lest you think I am a total buffoon, if there were no inefficiencies in this market and I could find a frictionless transaction, I would sell all my wine. Though writing this now, makes me believe the sunk cost fallacy would apply to me here, as I would be reluctant to sell wines for a loss and would prefer to drink them!
Funny, I did the exact same thing there around the exact same time but it was a J-L Chave neck label. It had several inches of sludge and was totally maderized.