Wine investment is a safe bet if you like wine!
There is certainly a case for investing in wine, according to new research by economists at the University of Wyoming. The paper investigated the returns that wine investors get. They collected hammer-price data for auctions of red Bordeaux vintages ranging from 1883 to 1998. The auctions that they studied took place from 1996 to 2003 and they estimated risk-adjusted returns for individual wines. The results were amazing, considering that what investors really want is an asset that delivers healthy annual returns but without much associated risk. Wine did just that. The economists found that wine investments have almost no correlation with the market as a whole, yet have high returns. The average annual return for those who invested in Bordeaux was between 7.5 and 9.5 per cent higher than would have been predicted by factors that account for risk. And, as the paper concludes, if by some chance one of your wine assets declines substantially in economic value, you can always exercise the implicit option to consume, and drink your Bordeaux!