Investor, this is why you should seek taking refuge in fine wine

by May 18, 2020News, Wine Trading Academy0 comments

finw wine investment bottles alti exchange

Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

It is a thrill to be back writing to you about economy and investments.

You and I are wine lovers, but our main goal here is to help you to invest in fine wine, showing also how profitable this safe long-term investment asset is.

***

Fine wine as an alternative investment asset

Anyone who knows me can confirm that I have stopped giving financial advice for the past 3 years and will not start soon because my motto is to sit on the sidelines with fine wine.

Also, investors and general readers who have been following my recent posts know by now that the reason for creating Alti Wine Exchange is to allow people, who think like me, and who also sit on the sidelines of the market to look into fine and rare wine.

As you can see from the chart below, this is how Bank of America’s wealth management clients have their asset allocation during pandemic times. It is intriguing to see that fine wine is not listed on the chart.

Truth be told, I do not know if my bearish views on stock market valuations are correct.

After all, if things keep going as they have been, stocks may continue higher, but common sense tells me that the smart money will start panicking sometime in the (not too distant) future. All it needs is for the smart money to pause to think.

Markets go from oversold to overvalued, while people rotate their asset allocations.

Where do you think we are? The total debt in the last five years in the US is up 7 trillion dollars and debt to GDP ratio is at 117%.

Obviously, the optimistic view is to mention that debt to GDP in Japan is at 250% and therefore still a long way, but numbers are just numbers until people stop understanding them.

Why take refuge in fine wine

For people with money, gold and silver are playing a bigger role, but for people with not so much money, fine and rare wine is where you should be considering taking refuge.

Paul Tudor Jones, the hedge fund manager, says “we are witnessing the Great Monetary Inflation, an unprecedented expansion of every money”.

To this, I will say that at the basis of any economy is the allocation of scarce resources. That is the way any economy grows. Money is not a scarce resource now – savings are.

In times of economic uncertainty, many investors go for physical and tangible assets: some buy real estate, gold, or art. These are famously referred scarce resources when we talk investment — alternative, real assets.

A fine wine vintage is also a scarce resource and becomes scarcer as it is consumed.

Age-worthy investment-grade wines make a profitable investment because they are not correlated to financial markets, and therefore won’t directly suffer losses during economic downturns.

And although they pay no interest, fine wines become better (due to their quality) and ever rarer. This means an excellent appreciation in the long term.

Some people have their eyes on money. But we do not understand what money is anymore. That’s why we have our eyes on fine and rare wine.

 

 

Articles by Paulo Pinto

Alti Wine Exchange founding member

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


Read More →


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


Read More →


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


Read More →


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

 


Outside the bottle | On miscommunication and generational mismatches

 


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

 


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

 

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...