Can Anyone Say Bubble or Here We Go Again
It seems that we will never learn. Whenever too much money starts chasing anything, be it real estate, equities, bonds or even tulip bulbs albeit a good while back a bubble will always appear. That seems to be the case with wine investing being spurred on from the far east. Dr. Vino gives us a quick and to the point summary of what is going on and hints at what we may expect is coming soon as prices have already started to soften.
“What has hints of red fruits, leather, tobacco, and tulips? Why, the wine investment market!
Elin McCoy reports from Hong Kong that a fund there will lend up to $641,000 (USD) for investing in wine–providing the investments are in the bank’s select list of 50 top names. She also reports that a new fund at Pacific Asset Management seeks to invest over $150 million in wine (it’s raising $30 million initially). There’s talk there of other funds diversifying into wine; some European wine investment funds have opened offices.
More money, chasing wines and returns while dodging counterfeits, smacks of tulip mania and the greater fool theory. When will some financial wizard develop a way to short wine? One aspect of the wine market that defies tulip mania is the fact that even as more money appears to be rolling in, top Bordeaux prices are falling…”
Someone once said that we humans are doomed to repeating history. That certainly seems to be the case here. Prices are already softening and the lenders are stepping up to lend more. For those of us here in the U.S. this has a familiar ring to it. One other thought to keep in mind looking forward though is that many have been shut out over the last several years by rising prices and if this ends up going the way I think that it surely will (and so does history) then there are going to be some real good buys when “investors” start getting liquidated.
Photo credit DR Vino
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