Time to look at the real economy for the road ahead

by Jul 29, 2020Thinking outside the bottle0 comments

Consumer goods: a way forward? (Alexas_Photos on Pixabay)

Consumer goods: a way forward? (Alexas_Photos on Pixabay)

Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

For this latest text, I would like to get back to you on how experience shapes our attitudes and provides wisdom – if you make the best out of it. That is why I want to show why stumbling upon so many obstacles and errors led me, after decades as an investor, to finally see with a wider lens some economic and financial dynamics I was not able to see before.

I like to look back at the almost 30 years I have spent carving a living in the markets, because it reminds me of how stupid and ignorant I have been at times. As it happened, I have devoted all my years learning from mistakes.

Thirty years ago, people talked about something other than the stock market – all they could associate was the crash of 1987. That generation was in love with banks. Having bank accounts, knowing bank managers, asking for credit, living beyond its means thanks to banks.

These 30 years saw an investment explosion due to an explosion of money. First with millionaires, then with billionaires and now with trillion dollar companies in anticipation of the first trillionaire. All this is thanks to banks and Central Banks creating funny money (out of nothing).

As a result I have been making the argument that people should prepare for inflation. This is where these 30 years come handy, because all pre-conditions for inflation are in place even if there is no sign of it.

In the graph below we can see what is happening in Lebanon now. Inflation is at 89.7%, but in 2019 there was also no sign of inflation.

 

lebanon cpi.png

 

For the people in Lebanon it is too late now for warnings. When people lose faith in the currency it is impossible to get them to trust it again. Here in Europe and in most of the West we see no inflation, and have a younger generation that has not seen interest rates above 2% in the last 10 years – so it is difficult for them to imagine that interest rates can go to 6%, much less 8 or 10%.

Just the other day, also, I read that Banque de France will build a central bank digital currency in partnership with Soc Gen, HSBC and six other partners. Aren’t government currencies already digital? Isn’t the purpose to control the currency in case they lose the hang of it, and eliminate personal freedoms on money matters?

What to look for in investments, then

I believe the aging population representing my generation is looking for something safer than stocks while offering more reward than the 0,2% from a bank.

Obviously there are bonds, but they bring no return with zero interest rates. And the biggest problem is that most people know less about bonds than they do about stocks.

That is why I believe that more people understand that inflation is a threat, and that the financial economy is “fake” and the “real economy”, with consumer goods, offers real opportunity.

Fine wine, particularly rare wine, represents peace of mind and a good insurance against inflation. In a portfolio, fine and rare wine is an alternative investment that represents diversification, and, for many investors and collectors, a strategy to hedge against political risk and currency depreciation.

Fine wine is very easy to understand if you stick with a few hard and fast rules:

  • Quality, quality, quality

  • Do not be greedy

  • Do not buy a wine you cannot guarantee provenance

  • Ladder your portfolio

  • Stay diversified

 


Five useful apps for wine lovers anywhere in the world

 


Investing in fine wine remotely in times of Covid, tariffs and stuck cargo ships

 


Alti Wine Exchange Indexes in 2020: despite it all, safe and strong returns for fine wine

 


Read and watch our fine wine investment tips and analyses

 


Introducing our internal index for fine wine investors

 


Outside the bottle | Prosperity is not automatic: a lesson from top wine producers

 


Fine wine withstood a tough year. What's ahead for 2021?

 


Why not give your loved ones a rare wine Christmas gift card?

 


What makes Seña a masterpiece of New World winemaking

 


Why people are turning their passion for wine into investment

 

Wine tokens at Alti Wine Exchange are not securities, or derivatives, or another financial contract. It is a physical real asset stored in Bordeaux City Bond.

These tokens are a convenient and cost-efficient way to buy, hold and trade fine and rare wines via a secure electronic platform. Physical bottles are held in a world class storage facilities.

People who save and invest, grow and prosper, but it is getting more and more difficult with wealth taxes, capital controls – and even worse: being caught in volatility, a depression or inflation before you can react.

When Central banks start issuing trillions, you know something is very wrong.

Start to build your wine portfolio, one bottle at the time.


More articles by Paulo Pinto

News


Summer is coming – and things really do not look promising

Building a sound strategy for your resources in the face of inflation and worsening living standards has become more crucial than ever


Outside the bottle | Building wealth wisely, change is both need and opportunity

Away from falsely reassuring economic news, seeking alternative financial strategies is inevitable in the face of low interest rates and looming inflation


Outside the bottle | A scale for reasoning and a crisis warning

It takes personal trust to let the next generation run its own course in a world where everything and everyone are being homogenized


Outside the bottle | Luxury is far simpler than what we once thought it was

The pandemic shows that small things that were once taken for granted can simply vanish, in both our economic and social lives


Outside the bottle | On miscommunication and generational mismatches

Although frequently overlooked, communicating is an art that needs to be practiced and mastered at all levels.


Outside the bottle | A digital euro is coming. We should be worried

Beyond inflation on the horizon, the ECB plan paves a troubling control of our economic lives. We have to think through.


Outside the bottle | Prosperity is not automatic: a lesson from top wine producers

 


Outside the bottle | A Great Reset to save democracy: rebooting the financial system

 


Outside the bottle | Reseting the monetary regime to achieve true freedom

 


Outside the bottle | Why we need a Great Reset of the financial system

 


Outside the bottle | In the face of Covid-19, public enemy number one

 


Outside the bottle | A new Bretton Woods moment? It is time for a new paradigm

 


Outside the bottle | How to restart the economy without falling under piling debt?

 


Outside the bottle | Could 2021 be the year of hard assets?

 


In the ‘everything bubble’ era, we plan ahead with alternative investments

 

Explore More from Our Blog

Would you bring your child to a winery?

DEAR READER, What a pleasure to be back! I admit it: these mailbags are now my favorite point of the week. Even during the contentious back-and-forth, I always enjoy opening my inbox to see words from you all. “Kind” ones, sometimes—but as you know from last week—I...

Our Sommeliers suggested wine

DEAR READER, I must be honest—I expected many more well wishes after posting that old journal entry. Everyone is modest when they say they don’t want well wishes, and so I expected there would be a few of you who saw through my “plea for privacy”. But, I forgive and I...

Because Life Needs Good and Evil

Black and white. Chaos and order. Sinner. Sinless. Life is a constant search for the happy medium, the yin and the yang. It’s as renowned psychologist Jordan B. Peterson explains, “Order is not enough. You can’t just be stable, and secure, and unchanging, because...

Thank you, Lehman Brothers?

On this day, 13 years ago, the world broke out in a panic when Lehman Brothers filed for Ch. 11 bankruptcy. Still the largest bankruptcy filing in US history, it was the climax of the Great Recession of 2007-2009. Subprime mortgages were to blame, lending money to...

Beer vs Wine, a timeless debate…

DEAR READER, Blah blah blah let’s get right to it! Dear Sommelier Ferdinand, You’ve dropped some hints that you look down on beer. Why is this, Sommelier Ferdinand? You have a growing fanbase—surely, you’re aware the effect that your insults have? And before you...

What would you do if you found an expensive wine in a cellar?

DEAR READER, Never in my life have I been happier to pontificate about wine than at my computer desk. In person is stimulating, sure, but they always talk back at some point. My lovely readers, however, only speak when I like! This internet thing has utility!...

The Beginning and The End.

Alas, the sun has crossed the celestial equator from north to south. Summer is now quite uneasy, shifting into fall in the north, while life is springing into action down south. What a beautiful time of the year! When grapes are cut from the vine to create new wine,...

Ever heard of a wine cocktail?

DEAR READER, I hope some of you learned from the reader letter last week [hyperlink to Week Ten post] and checked your attics! You never know how much wine sits above you, waiting to be uncorked and decanted—on someone else’s dime! Dear Sommelier Ferdinand, I have a...

The Future of Wine

We humans are bold if nothing else. Unlike any other species (that we know of), only we have chosen time and again to go boldly where no other has gone before. This holds especially true to the modern European, the first to really “discover” ignorance. Though they...

Could Mozart Make Your Wine More Complex?

We usually do three things when drinking wine: look at it, smell it and taste it. We activate three of our five senses to understand what’s going on in the glass. I propose we go further by incorporating sound and touch. Surely what we’re listening to while...

What on earth is a ‘Wine Decanter’?

DEAR READER, It’s come to my attention that many of you are ill-informed, misinformed, and frankly, uninformed about how wine is to be consumed. Were I only a wine enthusiast, it would be wholly dispiriting. But—wine is my profession, and I’m obligated to recognize...

“What’s My Next Question?” – Benjamin Kaplan

What’s My Next Question? On a random day like today 11 years ago, a legendary Harvard Law professor and lawyer, Benjamin Kaplan, died at 99 years of age. A rich, marked life that left an impact long after his last breathe. Apart from influencing the likes of Ruth...