S&P500 dropped 17% from year highest of 1363.61 (April-2011) to
lowest at 1131.42(September-2011). While Liv-ex 100 was down from all time high
of 364.69 (June-2011) and reached 297.96 ended Nov 2011, with a loss of 18.3%.
Liv-ex 50 showed similar tend to that of Liv-ex 100, down 22.2% ended 13th
December 2011.
While some of the economists or politicians trying to reference wine
index as a forecast to the world economy in general, obviously they did not do their
homework. When both major drops in Liv-ex lags the major stock market by approximately
two months, it is rather amusing listening to those hypocrites and pretentious trying
to justified their actions by their ignorance.
In addition, the recent drop of Liv-ex occurs not only due to the
instability of world economy and market speculations. I believe the newly added
2008 vintage contributed greatly to the recent fluctuation. The brave ones who
bought the 08 during the financial crisis at the lowest prices were the smart
bunch. Hence, they would be more than happy to sell their
Lafite at €1,000 (or less), while the Chateau price is now over €1,600. As long
as these €1,000 are still floating around the market (this applies to other
grand cru as well), it would be difficult for the index trying to gain back
their position in short run.
While the wine index continues to slash, the stock market seems to
leveled out a little. If history has the tendency to repeat itself, then data
suggests that stock market has room to go down again. On the other hand, it
would not be surprised to see the stock dips given the vulnerable European market
and their mountain high debts; in combination to political instability with next
year’s US president election and Chinese power shift.
I am not going to say “I told you so” because that’s useless, lame and
rather showing off. I think the important thing is that fine wine investment
should be viewed as one of the many investment options; also, it should be
regarded as a type of very long term investment. And the good thing is, when
bonds and stock became just a piece of paper, a bottle of wine can be consumed
with pleasure.
(Original data from Liv-ex and yahoo finance, for personal use only)
