I remember a small article in the Wine Spectator back in the day- a woman decided instead of investing in the stock market for her kids’ college tuition, to invest the money in wine and wine futures. I’m fuzzy on the exact details and couldn’t find the article but seem to remember a Bordeaux and Bordeaux futures focus and an early 2000’s time-frame.
Or the other way around – you end up sneaking bottle after bottle until, whoops, it’s off to Juco for the kids.
1 Like
HenryB
June 18, 2021, 9:59pm
22
Sure we have lower storage costs in the UK, but there isn’t a 10% commission on Vanguard funds…
And as you say, it’s only possibly a good investment if it’s diversified.
So even backing out the “American-centric” view you seem to acknowledge that wine is still not a great investment except for a select few, under specific circumstances. Even in the Europe and UK.
10% commission on sale is just cost of business, you have to factor it in. No different to a high % stamp duty.
Wine is a good investment if you can get reliable access to investment tier wines. Like I said, from a risk-balanced perspective, I wouldnt feel anywhere near as confident about anything in my portfolio returning the same leve of RoI you can get off, say, a lafleur/carmes haut brion first tranche allocation. Downside is generally much less as well - Netflix can do an Enron over night and my shares become worthless, you’ll see much less comparative volatility in wine.
I remember a small article in the Wine Spectator back in the day- a woman decided instead of investing in the stock market for her kids’ college tuition, to invest the money in wine and wine futures. I’m fuzzy on the exact details and couldn’t find the article but seem to remember a Bordeaux and Bordeaux futures focus and an early 2000’s time-frame.
Just looked up some very basic information about this, and it looks like the S&P 500 return from June 2000 to March 2020 (due to the valuation info from an article referenced below) with dividends reinvested was ~164% (could be way off as I used a canned S&P 500 historical gains calculator). According to this Decanter article, every first growth has beaten that mark, but it should be noted that June 2000 was the “dot com bubble” bursting and March 2020 was the pandemic drop-off in the market. If you started investing in 2005, you would be looking at a ~198% S&P 500 gain vs. the highest appreciating first growth at 83%. 2009, 2010, and 2016 are red across the board from a first growth value standpoint, and all of those periods were significant growth for the S&P.
IMO, you are most likely to get crushed by the market unless you pick the very specific best wines that get hyped, which is almost as challenging as picking individual stocks that will do the best. The major upside to investing in wine is if a pandemic or otherwise inspired free-fall happens, you might not hit as low of a bottom. That said, you only really look good if you need to cash in when the market is trash, which is a crazy bet to take 18 years before college.
There’s a difference between beating the mark on paper and realizing those gains in the real world, net of transaction costs, as well as expenses (storage, insurance). Risk adjusted, wine is a terrible investment for most anyone other than people who don’t ever need to worry about relying on that money someday.
Though I know there exceptions - sophisticated folks who know what they are doing. But that is rare, and so is making enough money on investing in wine such that it’s more attractive than many safer alternatives.
I agree. I doubt too many industry funded comparisons account for storage costs for wine and the fact that most wine is bought at retail and sold for wholesale prices. Want inflation protection, buy TIPs. Want something to drink, buy wine.
Sure we have lower storage costs in the UK, but there isn’t a 10% commission on Vanguard funds…
And as you say, it’s only possibly a good investment if it’s diversified.
So even backing out the “American-centric” view you seem to acknowledge that wine is still not a great investment except for a select few, under specific circumstances. Even in the Europe and UK.
10% commission on sale is just cost of business, you have to factor it in. No different to a high % stamp duty.
Wine is a good investment if you can get reliable access to investment tier wines. Like I said, from a risk-balanced perspective, I wouldnt feel anywhere near as confident about anything in my portfolio returning the same leve of RoI you can get off, say, a lafleur/carmes haut brion first tranche allocation. Downside is generally much less as well - Netflix can do an Enron over night and my shares become worthless, you’ll see much less comparative volatility in wine.
Sure. I think everyone on this board does understands that. But your average person who, to Howard’s point, sees an article on investing in wine and suddenly thinks it’s a great idea- they likely don’t.
Which gets back to some people make money in wine- people who understand the risks and true costs, and have good sources. Most don’t have those things.
HenryB
June 19, 2021, 8:18am
25
Sure. I think everyone on this board does understands that. But your average person who, to Howard’s point, sees an article on investing in wine and suddenly thinks it’s a great idea- they likely don’t.
Which gets back to some people make money in wine- people who understand the risks and true costs, and have good sources. Most don’t have those things.
Yeah. I suppose I dont class myself as a particularly sophisticated person so I dont think you have to be a sophisticated investor to get into wine
That being said, I agree, platforms like Vinovest make it too easy for people to invest badly in wine. Some of the suggestions and directions they drive people are just baffling. Well, not so baffling considering their 2.35% (?) AMC
Sure we have lower storage costs in the UK, but there isn’t a 10% commission on Vanguard funds…
And as you say, it’s only possibly a good investment if it’s diversified.
So even backing out the “American-centric” view you seem to acknowledge that wine is still not a great investment except for a select few, under specific circumstances. Even in the Europe and UK.
10% commission on sale is just cost of business, you have to factor it in. No different to a high % stamp duty.
Wine is a good investment if you can get reliable access to investment tier wines. Like I said, from a risk-balanced perspective, I wouldnt feel anywhere near as confident about anything in my portfolio returning the same leve of RoI you can get off, say, a lafleur/carmes haut brion first tranche allocation. Downside is generally much less as well - Netflix can do an Enron over night and my shares become worthless, you’ll see much less comparative volatility in wine.
Sure. I think everyone on this board does understands that. But your average person who, to Howard’s point, sees an article on investing in wine and suddenly thinks it’s a great idea- they likely don’t.
Which gets back to some people make money in wine- people who understand the risks and true costs, and have good sources. Most don’t have those things.
And, who know which wines to purchase. I doubt someone’s favorite $50 Merlot that tastes great young but does not age well will appreciate in value while wines like Monte Bello likely will appreciate a good bit.
Agreed. But, when the articles discuss appreciation rates vs. returns on stocks do they take this cost and others into account?
1 Like
HenryB
June 19, 2021, 1:54pm
28
probably none, but to be fair, if you’re investing based on reading a summary article without down your own research and critical thinking of it, you (arguably) deserve to lose your shirt IMHO.
