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Wine Investment for Portfolio Diversification : How Collecting Fine Wines Can Yield Greater Returns Than Stocks and Bonds

Kumar, Mahesh; Broadbent, Michael
ISBN-10: 1891267841
ISBN-13: 9781891267840

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Description

Table of Contents

Author Bios

Mr. Kumar begins his study by weighing the existing academic arguments for and against alternative investments (paintings, antiques, wine, etc.), the source material for most of the mixed messages that appear in financial circles and the media regarding the investment potential of wine. Deciding that academic studies have not taken the question of fine wine (specifically) to its exhaustive conclusion, he uses modern portfolio theory, as well as his special insight, to create a Fine Wine 50 Index that beats both the US and UK financial indices, and fills the gap in the financial literature by showing empirically that fine wine has higher expected returns related to its over all contribution to portfolio risk than do stocks and bonds, proving that: wine is good for an investor's blood pressure in more ways than one.

"Is wine a wise investment or bold speculation? No need to rely on luck. Mahesh Kumar's structural analysis could be of considerable help."--Michael Broadbent, M.W. author of Vintage Wine.

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Notations	p. ix
Foreword	p. xiii
Author's Preface	p. xvii
Publisher's Preface	p. xxv
Acknowledgements	p. xxvii
Introduction to Fine Wine Investment	p. 1
Fine Wine Investment	p. 1
A Brief History of the Bordeaux Wine Market	p. 4
Marketing and Distribution in the Bordeaux Wine Market	p. 6
Fine Wine Investment Today	p. 8
The Primary Market: En Primeur	p. 10
The Secondary Market: Auctions and Alternatives	p. 11
Trading Strategies: Blue Chip Fine Wine versus Blue Chip Stocks	p. 14
Critical Analysis of the Performance of Fine Wine	p. 17
The Alternative Investments Market	p. 17
The Relationship between Price and Quality	p. 18
The Case Against Alternative Investments	p. 20
The Case Supporting Alternative Investments	p. 22
The Performance and Investment Potential of Fine Wine	p. 23
The Effect on the Rate of Return of Incidental Costs and Benefits	p. 27
Review of Portfolio Theory and Diversification	p. 33
Critical Review of Modern Portfolio Theory	p. 33
Critical Review of Portfolio Diversification	p. 9
Critical Review of Literature on Portfolio Diversification	p. 42
Critical Review of Optimal Asset Weights and the CAPM	p. 44
Methodology and Data Analysis	p. 49
Introduction to the Data	p. 49
Calculating the Returns on Alternative Investments	p. 50
Compilation of the Fine Wine 50 Index	p. 51
Optimal Portfolio and Asset Allocation Methodology	p. 54
Critical Evaluation and Interpretation of Results	p. 59
Expected Return, Standard Deviation and Compound Growth Results	p. 59
Correlation Coefficient Results	p. 62
Optimal Risk-Return Efficient Portfolio Results	p. 66
Sharpe Ratio Results	p. 73
Beta Value and Capital Asset Pricing Model Results	p. 76
Underlying Logic to Portfolio Diversification	p. 79
Risk Assessment of Fine Wine Investment	p. 85
"Return Is Only Half the Equation" and RiskGrades	p. 85
Calculating RiskGrades	p. 87
RiskGrades & Application to Fine Wine Investment	p. 88
Risks Associated with Fine Wine Investment	p. 96
Conclusion, Recommendation, Further Issues	p. 99
Characteristics of a Good Investment Portfolio	p. 99
Additional Alternative Investment Issues	p. 102
Appendixes	p. 105
Price Variation of the 1982 First Growths Since Release	p. 106
Compilation of the Fine Wine 50 Index	p. 107
Expected Return Results for UK Data	p. 109
Standard Deviation Results for UK Data	p. 111
Compound Growth Rate Results for UK Data	p. 113
Correlation Coefficient Results for UK Data	p. 115
Optimal Risk-Return Efficient Portfolio Results for UK Data	p. 117
LIBOR versus Optimal Portfolio Results for UK Data	p. 119
Maximum-Return Portfolio Results for UK Data	p. 121
Minimum-Risk Portfolio Results for UK Data	p. 123
Optimal Risk-Return Efficient Portfolio Results for UK Data	p. 125
Maximum-Return Portfolio Results for UK Data	p. 127
Minimum-Risk Portfolio Results for UK Data	p. 129
Sharpe Ratio Results for UK Data	p. 131
Beta Results for UK Data	p. 133
CAPM Results for UK Data	p. 135
CAPM Analysis for UK Data	p. 137
Expected Return Results for UK and US Data	p. 139
Standard Deviation Results for UK and US Data	p. 140
Compound Growth Rate Results for UK and US Data	p. 141
Correlation Coefficient Results for UK and US Data	p. 142
Optimal Risk-Return Efficient Portfolio Results for UK and US Data	p. 142
Risk-Free Investment versus Optimal Portfolio Results for UK and US Data	p. 144
Maximum-Return Portfolio Results for UK and US Data	p. 146
Minimum-Risk Portfolio Results for UK and US Data	p. 147
Sharpe Ratio Results for UK and US Data	p. 148
Beta Results for UK and US Data	p. 149
CAPM Results for UK and US Data	p. 150
CAPM Analysis for UK and US Data	p. 151
RiskGradeTM Results (I) for UK and US Data	p. 152
RiskGradeTM Results (II) for UK and US Data	p. 153
RiskGradeTM Results (III) for UK and US Data	p. 154
References
Books	p. 156
Academic Papers	p. 157
Non-Academic Articles	p. 161
Bibliography
Books	p. 164
Academic Papers	p. 165
Non-Academic Articles	p. 169
Internet Sites	p. 172
Resources For Fine Wine Investors	p. 174
Index	p. 175
Table of Contents provided by Ingram. All Rights Reserved.

List price:	$45.00
Edition:	2005
Publisher:	Wine Appreciation Guild, Limited
Binding:	Trade Cloth
Pages:	179
Size:	7.00" wide x 10.00" long x 0.50" tall
Weight:	1.41 lbs.
Language:	English

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