Ethical Investments

One of the few things that I know rather a lot about is wine investing.  It’s been a key part of my job for ten years, and I think I know what I’m on about, which is a rare thing.  Get to the mechanics of this: i.e. do it, speak to someone about doing it, and you will find no shortage of cowboys, crooks, uninformed but incentivised salesmen and, on the other hand, equally uninformed cynics and know it alls who know little or nothing.

Wine is an interesting commodity.  There are few other “stocks” that can provoke passion.  Certainly there are none that can get you drunk.  You can maybe compare fine wine with vintage cars but I think that’s about it.  People like to compare wine with art but the problem with art is that it’s so difficult to qualify: you need some bloke in a museum or a gallery to confirm that your painting is actually any good and, even if it is, what is the difference between the real thing and a copy?  Fake wine, loved by the press, is (a) pretty thin on the ground and (b) vastly different from that which it tries to replicate.

It’s not just an interesting commodity, it’s also a relatively easy and interesting one to research.  You need a subscription to Robert Parker’s Wine Advocate and a subscription to wine-searcher.  The advanced may also look at Liv-Ex.  What soon will become clear is that the overwhelming trend of the prices of the top ten or so chateaux of Bordeaux is up.  That’s what wine prices do over the long term.

As mentioned previously, wine investment isn’t really investment: it’s speculation, it’s hoarding.  What you’re essentially doing is financing stock: looking after it until it’s ready.  Is this ethical?

I used to wonder about this but a recent answer to that question has set me straight.  I quote: “you don’t need to worry about the ethics of fine wine investment, as this is the realm of the super-rich.  You could claim that it was immoral to speculate on the price of wheat as it is an essential foodstuff, but first growth clarets are only affordable to a global elite, and the release prices of the chateaux themselves have made them so (look at 2005 release prices).  Speculators are merely reacting to what the producers themselves have been encouraging”.

This partly explains the shadenfreude of the “traditional wine enthusiast” when prices drop (rare, but they do once a decade or so) and the speculators lose out.  It’s a class, or a wealth thing.  A chippy thing.  A bit like gloating at the chap whose Ferrari has conked out as you roll by in the Clio that you hate.

Jesus said: “the poor are ever with us”.  He was right, but we can work on it.  The rich are ever with us too.  And their demand for the best pays my wages and that of many others that I know.  Is it their fault that I can’t afford Lafite?  Nope.  It’s the way of the world.  Get over it.

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