Wednesday, April 20, 2005
A 'Liquid' Alternative Investment
Increasing interest in Chinese and Indian art as investments has got many business magazines to write about such alternative investments. The focus on art from these regions is driven by simple supply and demand trends. Investors in Chinese and Indian art are betting on the scenario that as people in these regions get richer they will purchase art, driving up the prices.
There is however another alternative investment that is receiving significant attention - Wine. As Indians get richer and acquire wine drinking habits (already happening - see this), the demand for fine wines (mostly from France) is bound to increase but the supply is, for geographical reasons, limited.
A PBS interview on investing in wine claims impressive returns and the benefits of knowing exactly where to invest (Wines from Bordeaux, vintage ports and fine champagnes are said to be investment drinks).
COLVIN: Okay, so you don't have to be the kind of person who can identify 1982 Chateau Margaux blindfolded.
RYNECKI: No, you don't have to be that person at all. Because what's simple about it, and this is what makes wine investing beautiful compared to stock investing, in stock investing you have 7,000, 8,000 public companies and just as many mutual funds. It's impossible to actually figure out what will do well. In wine investing, you're really talking about 20 to 25 blue chip wines, and they primarily come from the Bordeaux region of France.
COLVIN: Well, some of them have done fabulously. I mean if we look at some of the returns, just over almost 5 years, a little less than 5 years, Chateau Lafite-Rothschild, up 875 percent; Le Pin, up 700 percent; Chateau Petrus, 531 percent. Those are fabulous returns for 5 years.
That the profits are not taxable is also often touted as an advantage. but here is a great site to infuse some realism (storage costs, insurance, scams) into wine investing. As the website clarifies...
You should not use drink as your primary investment vehicle. Only invest what you can afford to lose. You have to buy the right wines at the right price and the right time.
Well, the upside with investing in wine is that even in the worst case scenario you'll be sitting with some old empty bottles of wine and some drunk friends!
In any case, I rather start distributing in India some wines from smaller vineyards in Europe and from the 'New World'. Is anyone reading already doing this?
UPDATE: Another alternative is to simply invest in a fund that invests in wine. One such recent hedge fund doing this is OWC asset management. Their site has wine prices and the fund performance since it started.
There is however another alternative investment that is receiving significant attention - Wine. As Indians get richer and acquire wine drinking habits (already happening - see this), the demand for fine wines (mostly from France) is bound to increase but the supply is, for geographical reasons, limited.
A PBS interview on investing in wine claims impressive returns and the benefits of knowing exactly where to invest (Wines from Bordeaux, vintage ports and fine champagnes are said to be investment drinks).
COLVIN: Okay, so you don't have to be the kind of person who can identify 1982 Chateau Margaux blindfolded.
RYNECKI: No, you don't have to be that person at all. Because what's simple about it, and this is what makes wine investing beautiful compared to stock investing, in stock investing you have 7,000, 8,000 public companies and just as many mutual funds. It's impossible to actually figure out what will do well. In wine investing, you're really talking about 20 to 25 blue chip wines, and they primarily come from the Bordeaux region of France.
COLVIN: Well, some of them have done fabulously. I mean if we look at some of the returns, just over almost 5 years, a little less than 5 years, Chateau Lafite-Rothschild, up 875 percent; Le Pin, up 700 percent; Chateau Petrus, 531 percent. Those are fabulous returns for 5 years.
That the profits are not taxable is also often touted as an advantage. but here is a great site to infuse some realism (storage costs, insurance, scams) into wine investing. As the website clarifies...
You should not use drink as your primary investment vehicle. Only invest what you can afford to lose. You have to buy the right wines at the right price and the right time.
Well, the upside with investing in wine is that even in the worst case scenario you'll be sitting with some old empty bottles of wine and some drunk friends!
In any case, I rather start distributing in India some wines from smaller vineyards in Europe and from the 'New World'. Is anyone reading already doing this?
UPDATE: Another alternative is to simply invest in a fund that invests in wine. One such recent hedge fund doing this is OWC asset management. Their site has wine prices and the fund performance since it started.
