September Wine Valuations Showed An Increase
Half of the wines valued showed no movement, both winners and losers were evenly matched. As a result, activity was also slower than normal.
Several vintages of Rhone Valley wines had a very good month, with Ermitage La Pavillon 2010 gaining 14% in 30 days
What is really going on with the wine market?
Like almost every other industry across the world, the wine and spirits market was affected since the pandemic began.
First we had a 300% increase in online buying of alcohol during lockdown.
Then F&B businesses fell into financial difficulty (Which still continues as they slowly open back up and people gently ease back into dining out).
We have seen unprecedented increases in the stock market which means investors have been driving gains in stocks like Tesla and Amazon rather than alternative investments such as fine and rare wine.
Fast forward to September 2020 and whats happening right now?
F&B businesses are still struggling which will continue until people are comfortable socialising.
The Fed continues to print money and adopt a ‘no company can fail’ policy. Resulting in an inflation in assets (As opposed to their goal of inflation in the economy).
This is why the stock market continues to rise while the economy continues to suffer. Because the money flow is in the stock market instead of the economy. This is called an inverse correlation.
History has proven that during every downturn the wealthier population become wealthier as the extra money pumped into an economy eventually ends up in the hands of the elite.
And it is the elite who drink and consume the wines that we invest in.
The thirst for fine and rare wines and spirits will always remain popular.
As investors, we try to look into the future….
There will be a vaccine at some point.
F&B businesses will re open again (When?). Which means consumption of fine and rare wine will increase.
Wine Investing presents a great opportunity right now for an investor because:
Wine prices are very negotiable.
There is a flood of cash in assets which will be spent on luxury items like fine and rare wine and spirits.
Its time to be ahead of the curve and buy some rare wine for your portfolio.
If you are selling wine, buyers are in the market and ready for a deal. Be prepared to lower your price, if you are a seller right now.
If you are a buyer, Opportunity is knocking. Buy low and sell high, the “latest offers” weekly email will give you tips on which cases of wine are below market value that you can invest in today.
Look out for that email which is sent every Monday and Thursday and WineTrade@InvestIntoWine.com
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Performance for 2020 ‘Year To Date’
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Important Update When Checking Your Wine Portfolio
This month’s valuations showed the Bordeaux market has increased by 0.225% for the month. Champagne and Rhone Valley wines also showed an increase of 1.334%.
– 27% of the wines valued showed a positive return, while 23% showed a negative return and 50% remained the same.
– 84.1% of our portfolio is Bordeaux while 15.9% is Champagne and Rhone Valley.
– The overall change for ALL the wines valued this month was +0.322%
Below are the five, top and bottom movers compared to the previous month. Over 100 wines are valued each month. The wines valued are ALL OUR recommendations from the last fifteen years.
The new prices, are reflected in your online portfolio every month.
Please log on to our website investintowine.com to view your wine portfolio and email us back if you wish to ask anything about which wines that can help build your wine portfolio.
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Markets and The Economy
In 2008 the market reached its peak and fell by 50%, then in 2009 it fell another 20% before climbing 40% for the year.
Comparing this to the Nasdaq year to date in 2020 which fell 20% in March and has increased 27% for the year.There’s a possibility of a second drop as the first correction in March was not sufficient to reset the markets.However the second drop is likely to be a longer and more solid recovery than the first.Knowing when the second drop will come is the tricky part, that could be anywhere between now and the next 2 years.
If you are going to call the direction of the stock market and get it right, you might be heralded as the next messiah given the tumultuous year 2020 has been.
With President Trump on a mission to print the most money in history and the Fed vowed to support the economy at all costs, including the debt of larger corporations.
One can’t help but wonder did they plan for all this money to be awash in the stock market? Or was it a misjudged proposal?
The money was supposed to go into the hands of the mass population, so the people would be out spending to kick start the economy.
But that has not happened…
Instead, the money was heavily invested into the stock market and its likely the economy will not recover as quickly as the proposed measures intended.
Resulting in either massive inflation or a spiral into deflation.
Either one is bad news for the economy…
The U.S Dollar has, In the last 15 days started to weaken.
(See USD/UK Pound chart below).
Signifying a lack of confidence in the U.S Dollar. A weaker U.S Dollar will mean the cost of importing goods will become more expensive. Resulting in inflation.
Last year exports were 2.34 trillion while there were 2.88 trillion in imports.
Expect price of goods to increase.
A good friend (the nephew of the President of Guinea in Africa) told me he was speaking with their finance minister during lockdown and they were planning to raise money from the IMF.
Yet they decided to follow the U.S.A and just print money because borrowing from the IMF would have the same implications as printing more money. They would still end up in debt either way…
The good news
When a vaccine is out, the world will start opening up again and a lot of money that is in the stock market, will probably get spent on luxury goods like fine and rare wine.
Since most of the time, the money in the stock market eventually ends up in the hands of the top 10% because retail investors have an uncanny habit of losing more than gaining in the stock market.
Be prepared for a rally in wine.. Coming soon to a portfolio near you.