BECOME A MEMBER

Thousands of wines at your fingertips

Search database of wine reviews
Read about wines BEFORE they hit the stores
Match wines with foods

FREE MEMBERSHIP



GET TONY'S NEW EBOOK


TONY'S NOVELS
A gift for the literate wine-lover in your life – who may be you. Tony's murder mystery novels, set in the world of wine, are now available at a discount – autographed.

Find out more...

TUNE IN TO TONY
Listen to Tony

Listen to Tony talk about wine on 680 NEWS radio on Fridays at 10:48 am, on Saturdays at 2:48 am and 9:48 am, and on Sundays at 12:48 am and 1:48 pm.
Tony Aspler
Wine Reviews
Food & Wine Match
Personal Wine Cellar
Pocket Wine Cellar
Articles
Gourmet Recipes
Cocktails
Wine Primer
Links
More Tony Aspler
Tony's Books Tony's Books
Ontario Wine Awards
About Us About Us
Contact
Advertise

MEMBER LOGIN
E-mail Address or
Username
Password
 
Forget Password?
 

FREE MEMBERSHIP

POPULAR ARTICLES
All about sparkling wine Port wine 101 Pairing food and wine Pairing wine and cheese What wine to serve with chocolate Why we like to visit wine country A wine tour of Italy Germany and German wines Wine touring France: Cognac and Bordeaux Wine touring France: Burgundy A tour of California wine country

 

 

 

 

 

 

 

 

 

 TONY'S BLOG

More Tony's Blog  

Wine Investment for Portfolio Diversification: How collecting fine wines can yield greater returns than stocks and bonds (July 13, 2006)

book review
by Dean Tudor

Wine Investment for Portfolio Diversification: How collecting fine wines can yield greater returns than stocks and bonds (Wine Appreciation Guild, 2005, 179 pages, ISBN 1-891267-84-1, $58 hard covers) is by Mahesh Kumar, MBA, currently teaching finance at Mount Royal College in Calgary. This is the Canadian connection. He is also working on a second book, Collecting Wine for Pleasure and Investment.

The major problem with this current book being reviewed is that everybody knows wine increases in value and that greater yields are possible. That has been anecdotally known for some time: that fine wine has a higher expected return relative to its overall contribution of risk. Wine investments are not as volatile. Kumar proves it using Markowitz Theory, but so what?

The resulting technical book has a U.S. and U.K. investor focus. Kumar points out, quite rightly, that the stock market dive of 2000/2002 reminded all of us of the importance of portfolio diversification. Don't put your money into only one thing, and that includes wine. Don't churn, because you will want to avoid sales premiums at auctions. Invest for the long term, as people did with gold in the 1970s and real estate in the 1980s.

He has developed a "Fine Wine 50 Index" of 10 red Bordeaux from different vintages. There are 101 pages of text, followed by appendices of thirty tables of returns and ratios. Many people (including wine writers) react negatively to the thought of wine investments, claiming wine is hedonistic pleasure and not crass commercial marketplace material. Personally, I have used the Broadbent approach (see below) but I won't be selling my wines; I am now enjoying my investments, such as a Cote Rotie 1985 with my dinner tonight.

The book concludes with end notes, bibliographies, and internet sites.

Bottom line: Holding fine wine as part of a diversified portfolio of traditional financial assets (equities and bonds) enhances expected returns.

Audience and level of use: It should appeal more to investors and speculators, rather than to curious fine wine lovers.

Some interesting or unusual facts: From Michael Broadbent – "My advice is to buy the wines you particularly like, of good vintages only – and with your own money – and look forward to enjoying them when mature. With luck and good management you might have the additional benefit of reselling the stock surplus of your drinking requirements at a price that reflects its enhanced quality and diminished availability."

What I don't like about this book: It has limited value to Canadians unless they go for off-shore storage and sales. There is no guarantee that the LCBO will continue to have sales auctions twenty years from now, and you'll have to pay transportation and "administrative" taxes to government.

What I do like about this book: Useful for estate planning and valuation. He has a good discussion on "alternative investments" (fine wine, fine art, antiques). Broadbent's introduction furnishes an engaging history of Christie's Fine Wine Auctions.

Quality/Price Ratio: To convince non-wine lovers, 89.

 

 

 

More Tony's Blog  
 
ALL MATERIAL © TONY ASPLER   WEBSITE BY MEDIRESOURCE INC.
PRIVACY POLICY