A major contributor to this article appears to have a close connection with its subject.(September 2012) |
Investment wine, like gold bullion, rare coins, fine art, and tulip bulbs, is seen by some as an alternative investment other than the more traditional investment holdings of stocks, bonds, cash, or real estate. [1] While most wine is purchased with the intent of consuming it, some wines are purchased with the intention to resell them at a higher price in the future. [2] A wine's value often goes up as time passes and consumption increases as the market becomes tighter and access to good wine is more elusive. [3]
Wine investment is usually conducted through one of two main methods. The first involves purchasing and reselling individual bottles or cases of particular wines (wine for investment tends to be sold in sets of 3, 6, 9, 12, or 13). [4] The other option is purchasing shares in an investment wine fund that pools the investors' capital. In the former instance (directly buying specific cases of wine), it is recommended that inexperienced investors work with a broker, merchant, or a consultant, to minimize risk. [5] Many authorities also publish independent guides for the investor to help navigate this investment class. [6] Indeed, complex models and formulae have been applied to tracking investment wine's historical returns. [7] [8]
While there may be tens of thousands of wine producers across the globe, it is estimated that perhaps only 250 produce the sort of premier wines that are worth considering as a financial investment. [9] It is also estimated that about 90 percent of the world's investment grade wine is produced in the Bordeaux region of France, which explains why the region is the main target for investment wine fraudsters. [9] Vintage ports historically have made up much of the rest of the market inventory, but now more and more varied and global selections of wines are finding their way into the investor market. [10]
Outstanding vintages from the best vineyards may sell for thousands of dollars per bottle, though the broader term "fine wine" covers bottles typically retailing at over about US$30–50. [11] Investment wines are considered by some to be Veblen goods ; that is, demand for them increases instead of decreases as the price rises. The most common wines purchased for investment include those from Bordeaux, Burgundy, cult wines from Europe and elsewhere, and Vintage port.
While premium wines have been around for centuries, [12] the formal and organized sale and resale of the best wines for profit became a more established phenomenon in the late 1970s and early 1980s. Indeed, at least in the United States in the 1960s and early 1970s, newspaper articles about investing in wine were more likely to warn that it is illegal for individuals to sell wine, and that the "investment" would be drunk by the investor. [13] [14] However, by the mid-1980s, in the state of Illinois, and in special cases in California, it was legal to sell wine without a retail license, [15] and more investors were learning how to transact their trades through legal brokers with the necessary licenses. In Europe, laws are much less restrictive regarding wine selling and reselling.
Wine as an investment does have some concerns, including the fact that (unlike dividend-paying stocks and bonds) stored wine produces no return for the investor until it is sold, and insurance and storage costs will mean the investor is losing money while waiting for the wine's value to appreciate. There is low liquidity in US wine inventory, as most US states will only allow private wine sales through auctions, which themselves may take a commission of 15% to 25%. [16] Investment in fine wine has attracted fraudsters both in the UK [17] and US, [18] who prey on their victims' ignorance of this sector of the wine market. [19] Losses by investors to rogue wine investment firms can be significant, made more acute by the fraudsters willing to re-offend. Wine fraud often works by charging excessively high prices for off-vintage or lower-status wines from famous wine regions, while claiming that it is a sound investment unaffected by economic cycles. Efforts made by regulators to stem losses to rogue investment firms include the closing down of companies in the public interest, and cease and desist orders. [20]
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as stock that is only traded privately, such as shares of private companies that are sold to investors through equity crowdfunding platforms. Investments are usually made with an investment strategy in mind.
Investment is traditionally defined as the "commitment of resources to achieve later benefits". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow, while money received in a series of several time periods is termed cash flow stream.
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common long position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller.
Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements (pump), in order to sell the cheaply purchased stock at a higher price (dump). Once the operators of the scheme "dump" (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small-cap cryptocurrencies and very small corporations/companies, i.e. "microcaps".
Philatelic investment is investment in collectible postage stamps for the purpose of realizing a profit. Philatelic investment was popular during the 1970s but then fell out of favour following a speculative bubble and prices of rare stamps took many years to recover.
Château Mouton Rothschild is a wine estate located in the village of Pauillac in the Médoc region, 50 km (30 mi) north-west of the city of Bordeaux, France. Originally known as Château Brane-Mouton, its red wine was renamed by Nathaniel de Rothschild in 1853 to Château Mouton Rothschild. In the 1920s it began the practice of bottling the harvest at the estate itself, rather than shipping the wine to merchants for bottling elsewhere.
Penny stocks are common shares of small public companies that trade for less than five dollars per share. The U.S. Securities and Exchange Commission (SEC) uses the term "Penny stock" to refer to a security, a financial instrument which represents a given financial value, issued by small public companies that trade at less than $5 per share. Penny stocks are priced over-the-counter, rather than on the trading floor. The term "penny stock" refers to shares that, prior to the SEC's classification, traded for "pennies on the dollar". In 1934, when the United States government passed the Securities Exchange Act to regulate any and all transactions of securities between parties which are "not the original issuer", the SEC at the time disclosed that equity securities which trade for less than $5 per share could not be listed on any national stock exchange or index.
Château Lafite Rothschild is a French wine estate of Bordeaux wine, located in Pauillac in France, owned by members of the Rothschild family since the 19th century, and rated as a First Growth under the 1855 Bordeaux Classification.
Contrarian investing is an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment of the time.
Château Langoa-Barton is a winery in the Saint-Julien appellation of the Bordeaux region of France. Château Langoa-Barton is also the name of the red wine produced by this property. The wine produced here was classified as one of fourteen Troisièmes Crus in the historic Bordeaux Wine Official Classification of 1855.
A stock trader or equity trader or share trader, also called a stock investor, is a person or company involved in trading equity securities and attempting to profit from the purchase and sale of those securities. Stock traders may be an investor, agent, hedger, arbitrageur, speculator, or stockbroker. Such equity trading in large publicly traded companies may be through a stock exchange. Stock shares in smaller public companies may be bought and sold in over-the-counter (OTC) markets or in some instances in equity crowdfunding platforms.
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information. The setups are generally made to result in monetary gain for the deceivers, and generally result in unfair monetary losses for the investors. They are generally violating securities laws.
Wine fraud relates to the commercial aspects of wine. The most prevalent type of fraud is one where wines are adulterated, usually with the addition of cheaper products and sometimes with harmful chemicals and sweeteners.
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances with respect to the price of, or market for, a product, security or commodity.
Microcap stock fraud is a form of securities fraud involving stocks of "microcap" companies, generally defined in the United States as those with a market capitalization of under $250 million. Its prevalence has been estimated to run into the billions of dollars a year. Many microcap stocks are penny stocks, which the SEC defines as a security that trades at less than $5 per share, is not listed on a national exchange, and fails to meet other specific criteria.
En primeur or "wine futures", is a method of purchasing wines early while the wine is still in the barrel. This offers the customer the opportunity to invest before the wine is bottled. Payment is made at an early stage, a year or 18 months prior to the official release of a vintage. A possible advantage of buying wines en primeur is that the wines may be considerably cheaper during the en primeur period than they will be once bottled and released to the market. However, that is not guaranteed and some wines may lose value over time. Wine experts, like Tom Stevenson, recommend buying en primeur for wines with very limited quantities and will most likely not be available when they are released. The wines most commonly offered en primeur are from Bordeaux, Burgundy, the Rhône Valley and Port, although other regions are adopting the practice.
Stocks consist of all the shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the number of like shares each stockholder owns. Not all stock is necessarily equal, as certain classes of stock may be issued, for example, without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.
Liv-ex is a global marketplace for wine trading. It has over 620 members from start-ups to established merchants. Liv-ex supplies them with data, trading, and logistics services.
Rudy Kurniawan is an Indonesian convicted criminal and perpetrator of wine fraud.
In finance, the notion of traditional investments refers to putting money into well-known assets with the expectation of capital appreciation, dividends, and interest earnings. Traditional investments are to be contrasted with alternative investments.
{{cite web}}
: Missing or empty |url=
(help)