“Speculators are ruining it for everybody”

WINE TALK
#21

But Mark, don’t you run a wine investment service yourself?

#22

I’m probably going to horrify many here, but I don’t really find wine speculation any worse than any other type of speculation. Of course wine is for drinking, but homes are for living in, which has never stopped any of us from selling our homes for a profit. Nobody seems to complain about that. I used to be a typical WB, refusing the call of the siren and stubbornly holding onto all my bottles. Then one of life’s little hiccups forced me to do otherwise and I belatedly cottoned onto the value of what I had collected over the years. Just as well - it came in very handy. So yes, now I mostly buy for drinking, but not only. The stuff I buy for selling is more often than not wine I wouldn’t be seen dead drinking, but enough idiots seem to like it, so…in any case, the scale of my investments is hardly going to affect the market!

As for producers who take advantage to raise their prices, who can blame them? It always makes me think of poor Anthony Barton, whose 2000 doubled on the grey market days after its release EP. I too missed the days when fine Bordeaux was cheap, but then I discovered the Loire.

#23

Used to do a wine fund for one specific client; didn’t really count as he ended up drinking everything apart from the Chateauneufs. But it is interesting dynamic, buying wines with the sole intention of making money.

#24

A speculator is anybody who likes what I like, but will pay more money for it. Demonization is the solution to envy----at least, until the shoe goes on the other foot.

#25

These recent threads remind me of cranky older surfers. (I should know, I am one.) We bemoan the fact that the good old days are gone, when there weren’t hordes of newbies crowding our favorite surf breaks.

Waves are like quality wine – it’s a bit like terroir. They require a unique set of conditions to create them – wind, swell, tide, bathymetry, etc. No two breaks are alike, and certain spots are like certain vineyards that produce best-in-class experiences. There are a small handful in the world. Malibu on a good day is the La Tache of surfing. So it makes middle-aged farts like me nuts when to see recent converts – Google workers transplanted from the Midwest, indulged Trustafarians, loudmouth talent agents – paddling out and “taking” what used to be “ours” (read: in-the-know cognoscenti who have paid the dues and know the rules of the road.) After all the work we’ve put in, it’s simply too easy for these Philistines to come in and snatch waves from the truly deserving.

My analogy starts to fall apart here: You don’t need to be on an allocation list to get a juicy peeling set wave in Malibu. It doesn’t matter whether you are hedge-fund manager or a working stiff in the lineup. You can’t buy perfection – you just need to paddle out and fight the crowds to snag one. You can’t overpay for waves at auction. They also don’t keep. You can’t store one in a locker and hope to sell it later at a profit. But the basic premise holds – too many people jockeying for a premium product, thus leaving the old-timers who know better really steamed.

But here’s the thing: Complaining about it doesn’t change a thing. You can’t do anything about it. I spent too much time agitated in the lineup, resentful of the Johnny-come-latelys surrounding me literally, cutting me off from what I thought rightfully belonged to me because of some exalted early-adopter status. I had to learn to let it go. Now, I’m like the middle-aged jackal after a big kill on the Serengeti. I let the big cats fight it out in the water and take whatever scraps are left to me. I don’t like it, but I’ve gotten used to it – and I still have a lot of fun. Some of my best sessions come from zagging when others are zigging … heading the opposite direction when Malibu is firing and finding two-foot waves at a deserted beach-break.

Same thing with wine. I may no longer be able to find and drink Rousseau Beze affordably as I once did. But there’s literally nothing I can do about that. I still have many memories and a few bottles still left to drink. So I zig when others zag, as many other posters have noted. The craziness in Burg pricing has forced me to explore other less buzzy regions, which has been good for my palate and my bank account. Who knew that Chenin Blanc from the funny little Breze hill could be so good?! And while many might choke on paying $55 a bottle for one, it feels like an absolute steal after chasing white Burgs.

Anyway, thanks for indulging my nostalgic surf tales. Keep your eyes on the horizon. There’s always another wave coming … [cheers.gif]

#26

Hardly close to the same thing. One, because the vast majority of people, wine lovers and non-drinkers alike, actually live in their homes, even if sold for a profit. The proper analogy would be if people were buying up lots of homes for the sole purpose of investment/renting, especially in high end urban markets. Second, that actually is the subject of much criticism and complaint, with far greater social ramifications than wine speculation. Exhibit A: Vancouver.

#27

Yes, an ex-merchant friend of mine said he’d lost count of the number of people thinking they could make a fortune buying port and simply waiting for the price escalation. It never happened. Why? Others may have better insight, but IMO on the whole it is drunk rather infrequently, plus its wonderful longevity, might just count against it, as storage costs can span multiple decades.

#28

[cheers.gif]

#29

That was a fun read, and counter-point.

While I was privately telling another person that I certainly am disappointed to have gotten allocations on special wines that I adore, cut, my getting into that market years ago, and perhaps even touting some of the wines here, perhaps caused someone that got in before me to get their allocations cut. My salvation, ironically, is my age. At 53, there is only so much more chasing I will do of wine that needs 15+ years to really shine and express their true value proposition. And that I have a nice junk if it sitting in lockers, and around my feet right now in my office. :wink:

I have also been doing a little horse-trading of a few things for some things that I do not have. Selling wine is just not my thing.

#30

I feel like the entry of funds into the space creates some nasty ponzi-scheme type dynamics that are quite different than the old complaints about flippers and casual speculators. You’re talking well organized financial players pulling pension money and even institutional money into the space, so the total amount of money increases a lot, and then the underlying wine auction market is highly manipulable for less traded wines. So funds can manipulate their stated returns by boosting prices. Then, so long as the wine fund space is growing (based in part on these reported returns) it may be decades until the amount of redemptions really puts pressure on the system. It’s just very different than some individual selling off part of their allocation or something.

#31

It goes both ways. You have a speculator and you also need someone buying it.

#32

That someone is often just another speculator.

#33

I think it’s time to differentiate the types of speculation.

  1. First and probably the most controversial are the large scale investors, funds etc bidding up the top wines. Although I like wines to reach best potential, I can really understand why this particular activity is so annoying.

  2. Those who sell their allocations.

  3. Those who see a wine for sale at auction or retail below current market and flip it.

  4. Those who value their wines at current levels, and don’t want to drink $1000+ bottles even if if they paid only $100 for it. The acid test for this one is would they pay $1000 for the wine, and if not, sell it. I have friends who value their wine at cost, and some at market.

  5. I am sure there are combinations of the above, and a couple I may have missed.

#34

Would you object if somebody spent his or her money elsewhere?

#35

I agree with Jeremy.
I some how cannot come to grips with speculation in wine. Especially big wine funds or private individuals with deep pockets buying wine with no intention of liking it or remotely drinking it. Its like scalping concert tickets.

#36

Sorry Victor i don’t understand the question. I approve of people being able to spend money on anything they want.

#37

Gregg Jefferies rookie card! I used to go crazy for those when I was in middle school.

#38

I, too, agree with Jeremy, and feel that many here have way too anodyne a view of what is taking place. It’s not cyclical; the globe is smaller and more awash in capital seeking yield than it ever has been. The changes this occasions in anything it touches–from home buying to wine–are far greater than previously. In the little world of wine, there may be little that can be done, and, though I never bought DRC and now buyer fewer of Jeremy’s wines than I once did (though felt lucky to get a not bad deal on his 2016 Clos St. Denis), there is to be sure more good burg and good wine elsewhere to be found. Whether any of us will get to enjoy them while the backbone of our polity and so many others is breaking down is another question.

#39

Do folks think there is institutional/broad base speculation in the lower bracket price points? E.G., $75-$250 bottle tiers? Just curious, because these prices are up substantially as well, and I assumed this was secular demand growth versus cyclical demand or speculation.

I do admit, I struggle to pay $150-250 for Burgs, when at that price/or lower I can buy really nice aged Bordeaux or Barolo or higher “point scored” Bordeaux/Barolo off a recent vintage.

#40

Sure. Juge was $50-$60 for those with allocations. Gonon is less.