Could wine be a safer option in a turbulent stock market?

Justin Knock, Master of Wine at Oenofuture, explains how investing in wine can provide a safe and profitable alternative to the overheated US stock market

IInvestors have enjoyed remarkable 12-month success from the depths of the pandemic bear market, and are now wondering where the markets can go from here. Rising yields on US Treasuries, thanks to improving consumer and business confidence, pushed inflation expectations higher, casting a shadow on growth stocks and highlighting highly valued valuations. high in US equities overall.

Yet, with unprecedented amounts of monetary expansion and huge US fiscal spending plans, there are extremely strong arguments for the bullish and bearish scenarios ahead. The fine wine market is a much-watched safe haven, a highly sought-after alternative asset that offers stable annual returns of 10-15% and very low correlation to the stock market. This can be an excellent area in which to invest the profits of stocks that may have been fully valued.

The performance of fine wines relative to stocks is certainly convincing. If you had invested $ 100 in the fine wine market in 1952, your investment would now be worth $ 420,000. On the other hand, $ 100 invested in the stock market would now be worth a modest $ 100,000. Typical catches in the fine wine market tend to be long term, usually between five and ten years, but even over a shorter period healthy yields can be achieved. For example, the wines of Domaine de la Romanée-Conti, arguably the most prestigious cellar in the world, regularly show increases in valuation of 150 to 200% over a period of five years.

Unlike almost any other type of investment, good wine also has the unique advantage of being a tangible asset that is made to be drunk and enjoyed. Most of the world’s largest producers create tiny amounts of their finest wines each year, and over time the number of bottles of a given vintage decreases as they are consumed. This means that pricing is primarily determined by a very simple business model: supply and demand. And after a year of tumultuous pandemic, the demand for fine and luxury wines has never been higher in established markets such as the United States and Europe, and in younger wine consuming markets such as the China and Brazil.

The traditional investment in wine, almost exclusively with producers in France, has been a bit like the infamous Hotel California: checking in when you want, but leaving can be difficult. It can be difficult to find reliable and timely exit strategies. OenoFuture is unique among wine investment companies in that it is able to offer both multiple and diverse exit strategies, as well as timing advice.

In addition to selling your wines to other collectors and drinkers, we supply wines to many starred hotels, bars and restaurants in Europe through our OenoTrade branch. Later this year, we are opening our first luxury wine bar, OenoHouse, in the City of London, which offers another exit strategy for our investors. In both cases, end customers appreciate having access to ripe wines ready to be tasted, but without having to pay the aging costs.

Investing in wine can seem daunting at first, which is why it’s a good idea to seek expert advice. At OenoFuture, we offer a free, no-obligation consultation call to all potential investors, where we discuss your financial goals and help you select the right wines for your desired investment risk profile, time frame and budget. .

For some investors, this may be a portfolio of top-notch wines from iconic Bordeaux estates such as Château Margaux, Château Latour or Château Mouton Rothschild, or the best Napa estates such as Screaming Eagle and Opus One. These tend to be longer term takes, appreciating over a five to ten year window, making them ideal for building up a nest egg for your retirement or for sending your children or grandchildren to school. ‘university.

Other investors may prefer to opt for more user-friendly wines which can be sold through our hotel partners, generating a guaranteed return in the shorter term, typically 12 to 18 months. This process can then be repeated, providing a constant stream of very low risk returns that can be reinvested as many times as you like, much like an attractive dividend reinvestment model for income-oriented investors.

So what’s the catch? Very little. Because it is asset-backed and demand driven, good wine is a very safe and secure investment. Once you invest in the market, your wines are kept in optimal conditions in a secure bonded warehouse in your name. They are fully insured, and we have a dedicated anti-fraud service within OenoFuture which guarantees the authenticity of your bottles. In almost all cases, we buy direct from the producer to ensure flawless provenance.

Unlike other wine investment services, OenoFuture also does not charge a management fee. We always put our investors first, and that extends to our profit sharing model. We take a small commission on the profits you make when your wines run out. This ensures that we only make money when you do, and we are constantly striving to provide the best possible service to each of our investors. That’s why we’re seeing record numbers of new and seasoned investors turning to us to protect their assets.

To find out how you could profit from an investment in wine and to request your free, no-obligation consultation call, visit oenogroup.com.

This article was originally produced and published by Business Reporter. See the original article on business-reporter.co.uk

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