post•09 May 2020•Market News
Recession Vs Wine
Here is some data from 2005 up to 2017 which compares the London Exchange top 100 fine wines and the top 1000 fine wines. Plotted against the FTSE, S&P, DAX and Hang Seng stock markets. What I can tell you from my 20 years of experience is that before 2005 the wine market was [...]
Here is some data from 2005 up to 2017 which compares the London Exchange top 100 fine wines and the top 1000 fine wines. Plotted against the FTSE, S&P, DAX and Hang Seng stock markets.
What I can tell you from my 20 years of experience is that before 2005 the wine market was booming right up to 2008. China was heavily investing around 2005 and we saw exponential growth in wine. Returns in excess of 350%.
If you pay close attention to the Fine Wine 100 (RED line), notice it drops in 2008, but only slightly, compared to the rest of the stock markets.
If you pay close attention to the Fine Wine 100 (RED line), notice it drops in 2008, but only slightly, compared to the rest of the stock markets.
The fine wine 1000 is less affected which is a broader base of the wine market. Proving diversity in many wines is key.
However, notice that from its peak of 2008, by the middle of 2009 its not only recovered but the whole market went up more than 20%. We saw this rally in wine continue until 2011, it was phenomenal growth.
Notice from 2008 to 2011, the stock markets in comparison are slow to recover and if you remember this was when we had a global recession following the 2008 crash.
Again in 2016 we saw another rally on wine, yet this time the stock markets were also rallying. When a lot of money is accumulated in stocks it usually flows out to hard assets like wine to diversify and offset some of the risk held in stocks.
When there is a crash in stocks, money flow will usually pause for about 30 days and then start to flow into hard assets like fine wine.
Gold has already made a bull run recently with the collapse of the DOW Jones.
However, notice that from its peak of 2008, by the middle of 2009 its not only recovered but the whole market went up more than 20%. We saw this rally in wine continue until 2011, it was phenomenal growth.
Notice from 2008 to 2011, the stock markets in comparison are slow to recover and if you remember this was when we had a global recession following the 2008 crash.
Again in 2016 we saw another rally on wine, yet this time the stock markets were also rallying. When a lot of money is accumulated in stocks it usually flows out to hard assets like wine to diversify and offset some of the risk held in stocks.
When there is a crash in stocks, money flow will usually pause for about 30 days and then start to flow into hard assets like fine wine.
Gold has already made a bull run recently with the collapse of the DOW Jones.
Do you have liquid funds available at present for me to select a few wines for your portfolio?
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