I always wondered if there are any economic research regarding wine investing. (among other interesting things like marriage, which i think is akin to "investing" in people) As it turns out, there had been several economic studies on wine investing in the past.
This blog post is dedicated to listing these research.
WHAT THE EXPERTS SAY
Below are links to journals containing the research done on wine investing. Access to most of them are restricted from non-subscribers but an excerpt of the findings can be read for free. I have written a few lines summarising the findings for each of them but readers are strongly encouraged to read the excerpt for themselves.
Excerpt from: The Rate of Return to Storing Wines (1979)
In the journal "The Rate of Return to Storing Wines", the author conducted empirical studies which suggests that the rate of return for investing in wine is no larger than investing in riskless assets. (Government bonds etc)
Excerpt from: Wine as a medium term investment vehicle (1978)
The journal "Wine as a medium term investment vehicle" look into the prospects of investing in wine. After tabulating the yield of wines sold in auctions, they concluded that investors are better off drinking the wine than investing in them.
The Rate of Return on Investment in Wine (2001)
This "recent" research concluded that wine does not yield greater returns than financial assets like stocks and bonds. This finding was further accentuated when volatility of return and transaction costs are accounted for. The methods used here appears to be pretty sophisticated!
THE USEFULNESS OF VINTAGE CHARTS
An interesting piece of research showed up during my search.
Dr Roman L. Weil, a professor of the world renown Chicago Business School and also Co-Chairman of the Oenonomy Society of the US, discovered in his experiment that wine tasters cannot differentiate the quality of wines as shown by the vintage charts. Those who could do so produced judgment that differ from those expressed by the charts.
The Death of the Vintage Chart (2001)
The link above links to a PDF file containing the research journal. It is free to download and read for all.
CONCLUSION
So are wines good investment?
There fact that there exist economic studies that find wine to be poor investments raises some interesting questions. The apparent ineffectiveness of the vintage charts further raised more alarms.
Wine investing is certainly not a simple and straight forward affair.
Saturday, September 15, 2007
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4 comments:
Personally, I think that investments that cannot generate a yield (as opposed to capital gain) cannot be considered as an investment of an asset class.
Stocks give dividends, bonds have interest income, Real Estate generate rental income. Investors can calculate the intrinsic value of the investment when an income stream exists.
As for wines (like commodities and among other so-called investible asset classes), there is no such income stream. Then how can one calculate the intrinsic value of a bottle of wine?
My 2 cents worth.
8percentpa
Hi economist,
I stumbled upon your blog while reading 8percentpa's blog.
I think your blog is really interesting, offering a new insight and dimensions to the topic of investing. Will certainly drop by often!
Took the liberty to create a link to your blog, hope you don't mind!
fishman
8percentpa: A seasoned investor's input is always welcomed. Thanks! :)
fishman: Thank you for the kind words. I am glad you find my casual ramblings entertaining! No problems about the link. Thanks for dropping by! :)
Thanks Economist,
I like your blog too. Will put up a link in time.
I am definitely not a seasoned investor. Not when my track record still far less than 10 yrs. Even if it's 10 yrs, it is still not long enough to be statistically significant.
Nobody has a monopoly on knowledge. Let's learn from one another.
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