Investing in Wine: Caveat Emptor!



By John ~ July 8th, 2009.

Wine AuctionOver the last few months I’ve read a number of articles encouraging wine lovers to “invest” in good wine, with each typically citing a favorable comparison between wine and the stock market over the last year or two. As an investment management professional for over forty years, my response to these recommendations would be caveat emptor, which is Latin for “let the buyer beware.” (Photo by Frieder Blickle)

  1. First of all, comparing for a year or two means nothing in investing. How about twenty or thirty years?
  2. Second, wine is a perishable asset, not even just a depreciating asset.
  3. With wine, you also have ongoing storage costs and the question of whether the previous owner took proper care of the wine.

I think it’s great to buy a great “collectible” bottle of wine occasionally when you can afford it. But don’t buy it believing that it is your retirement plan. Collecting purely for investment purposes usually proves to be foolish. The chances of losing money when the collectability factor is priced into an item are enormous. Collecting trends are usually fads. And fads usually fade.

I think the best attitude you can have towards your wine cellar was expressed by Jancis Robinson in her book, Tasting Pleasure: Confessions of a Wine Lover:

“I don’t want to manage my cellar. I want to drink it.”

Just like Jancis, my goal is to live long enough to enjoy every bottle that I have.

In sum, know your collectible wines, take good care of them and, most of all, enjoy them. But do not expect them to make you rich.

Cheers!


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