Is wine next target of price suppression by central banks?


And could vineyards be any more oblivious than gold mining companies?

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The Best Investment of the 20th Century? Red Wine

From News Services
The Telegraph, London
Tuesday, May 20, 2014

Forget government bonds, fine art and even stamps: Red wine outperformed them all over the 20th century.

At least that is what research by a team of academics from the University of Cambridge, HEC Paris and Vanderbilt University, Nashville, Tennessee, shows.

The Warren Buffetts of the fine wine world could have earned annualised real returns of 4.1 percent from 1900 to 2012, beating government bonds, fine art, and stamps, though British equities would have given annualized returns of 5.2 percent.

... Dispatch continues below ...


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"You would have done nowhere like as well as equities but the returns are surprisingly high compared with the returns on cash or bonds," Elroy Dimson, visiting professor at the Cambridge Judge Business School, said.

"Life is a little unfair and wealthy people who buy these assets -- in this case wine -- if they keep half to drink and sell half, maybe the half they sell could pay for the half they drink," he said.

The research crunched the data from 36,271 transactions for five red Bordeaux wines -- Haut-Brion, Lafite-Rothschild, Latour, Margaux, and Mouton-Rothschild -- from the sales rooms of Christie's auctioneers and wine merchant Berry Bros & Rudd.

Annualized real returns over the same period on British government bonds were 1.5 percent, 2.4 percent on art, and 2.8 percent on stamps, according to data quoted in the research.

So did the academics get to try the Premiers Crus Bordeaux, which can fetch L8,000 ($13,500) a bottle, as part of their research?

"No. Come on. They are L8,000 a bottle. ... They are for Chinese millionaires not for humble academics," said Mr Dimson.

Mr Dimson used the example of port, which underperformed fine red wine over the century, to caution that drinking fashions can change dramatically over time.

But he did have one bit of advice for tippler-investors planning for the next century. "Fine whisky may be the coming thing," he said.

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