Introduction If you have never traded wine before, the idea of wine as an investment might seem mystifying or impractical, given the physical heft of a dozen wine bottles cordoned off in a wooden case. Despite perceptions that wine is simply a beverage, or at best a collectible, the fact is that a particular category of Investment-Grade Wines (IGWs) has emerged in recent years as its own alternative investment class, with characteristics similar to high-yield bonds, gold, and fine art.
These assets are largely uncorrelated with stocks, so they provide a greater level of portfolio diversification and risk reduction. You may be surprised to know that returns on IGW have dependably outperformed blue-chip stocks over the past fifty years. Fine wines have become very easy to trade online and you don't even need your own cellar to store them. Despite rising prices, IGWs are still among the least expensive, easily tradable, and most profitable investment opportunities around. Blame it on the exploding popularity of fine wine as a consumable. Though long associated with highbrow affairs like a gala, a black-tie event at a local museum, or maybe a dinner among investment bankers celebrating the closing of a billion-dollar deal on Wall Street, wine is increasingly finding a fan base in more mainstream markets. It's now found for sale at Nascar races, and some tracks even offer wine-tasting programs for race patrons. One of Nascar's most famous sons, Jeff Gordon, makes wine under his own label and owns a collection of rare wines that has been featured in the pages ofWine Spectatormagazine. But it's outside America where the economic trends are really driving the growth in the finest wines. The rise of global wealth, particularly in Asia, Russia, and other emerging parts of the world, combined with increasing awareness about wine, has spawned an unprecedented demand for what I call investment-grade wines. Not among investors, mind you, but among consumers who suddenly have the discretionary dollars to splurge on some of the best wines money can buy. Due to the unique properties of these investment-worthy wines, the world has entered an era where continually decreasing supply meets continually increasing demand for the relatively limited supply of the world's greatest wines. Where this sort of supply-demand dynamic emerges, you suddenly have...an investment opportunity. Little wonder, then, that Wall Street has latched onto the idea that fine wine now has investment-grade characteristics. Fine-wine investment funds have launched in the United Kingdom, the United States, and Australia in the last few years, and all are solely in the business of profiting off the price appreciation that is basically unavoidable in certain wines. Why is this price appreciation unavoidable? In a word,consumption. Unlike other assets, wine is drunk by buyers. Over time, fewer and fewer bottles exist of the comparatively small lot of the world's best wines that, themselves, are improving with age. The result: Every time someone pulls the cork on a bottle of 1982 Chateau Petrus -- one of the truly great wines -- the remaining supply of that vintage rises in value. No one will ever own the last tradable share of IBM. But one day, someone will own the last known bottle of '82 Petrus, and that bottle might just be worth enough to buy a winery. Like stocks and bonds, fine wine even has its own index of prices now. The London International Vintners Exchange (Liv-ex) is an electronic exchange of about 150 merchants and professional traders in the global fine-wine market. Liv-ex produces the Liv-ex 100 Index, which is to wine what the Dow Jones Industrial Average is to U.S. stocks -- the leading blue-chip index. In Liv-ex's case, the blue chips are 100 of some of the most widely traded fine wines from the French regions of Bordeaux, Burgundy, Champagne, and the Rhone, as wellNow more than ever, the value of Investment-Grade Wines (IGWs) and opportunities to invest in wine as an asset class are soaring. With a little research and a little risk, wine enthusiasts on every level will find it possible to gain big rewards in wine investment -- and there's never been a better time to try. IGWs have dependably outperformed blue chip stocks over the past 150 years, and the upscale wine market is still an area in which independent investors can profit handsomely. A third-generation wine merchant, and CEO of one of the largest rare-wine companies in the world, David Sokolin knows how to turn fine wine into cold cash. And he knows how you can, too. In simple, practical terms,Investing in Liquid Assetsprovides all the information you need to understand the economic principles that govern the world of fine wine and take advantage of the resources currently available. Using his insider's expertise, Sokolin defines Investment-Grade Wine and identifies the most financially important wine regions and styles. Defining the key players in the field, Sokolin shows you how to navigate the world of wine critics and understand the impact of their scores, and he explains why it's perfectly fine that your own personal tastes really don't matter. He offers tips on where to find reputable sources for fine wine, how to manage storage and resale, as well as all-important buying and selling strategies. In the second half of the book, he gives overviews of the world's greatest wine regions and offers his predictions about which regions and which wines are likely to represent the greatest investment opportunities in the near future. Providing information and tactics previously known only to successful professionals,Investing in Liquid Assetsturns your passion for fine wine into a valuable resource that will pay for itself.From David Sokolin, one of the nation's top wine brokers, comes a practical and comprehensive guide to making money by investing in wine. Investing in Liquid Assets features insider information about: The economic principles that govern the world of wine, The greatest wine regions around the world, Wine critics' scores and their all-important effect on the wine market, How to get started and structure your research, Dealing with wine merchants, online auctions, and other possible vendors, Essential buying and selling strategies, Safeguarding your investment, Where you'll find the next great wine investment opportunities. The most comprehensive book of its kind, Investing in Liquid Assets provides all the information you need to turn your passion into cash.Dave Sokolin provides highly readable insight into the fascinating world of fine and rare wine investing -- packed with investment ideas and entertaining anecdotes." -- Hamilton "Tony" James, President and Chief Operating Officer, The Blackstone Group"I find Dave Sokolin's judgment about wine -- the taste of it, how it will develop, and where its price is headed -- to be of incredible value. Personally, I follow his suggestions not to make money on wine but to enjoy drinking the wines when the price gets to a level I wouldn't want to buy them at." -- Sandy Weill, Chairman Emeritus, Citigroup Inc.From one of the nation's top wine dealers comes this practical and easy-to-understand guide to making money by investing in wine. Graphs and tables throughout.
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