As a wine fan & a part owner of vineyard out in New Hampshire, I'm all down for Wine Investment. I've tested and sold plenty of wines from Riesling, Syrah, Sauvignon Blanc, Zinfandel, Tempranillo, Rosé, Grenache, Cabernet Franc to Viognier & Muscat. It's a great rival to the S&P 500 & if you study families who run the Wealth paradigm like the Rothschild's you can tell Wine Investment is an inside investment strategy. An investor myself, I take the diversified route of spreading my capital across individual company shares, real estate funds, commodities etc. Now, I also include wine; an asset class that has a track record of outpacing the S&P 500.
There are some important things to understand about the wine market that differ greatly from the stock market. Being a stock market guy myself, it was a bit of a learning curve getting involved in a very different type of asset class. The easiest way to understand the difference between stocks and wine, is how the value is created. For stocks, we’re looking at quarterly or (if you’re smart) annual earnings reports. We’re looking for increased sales and net income that translate to value per share of stock.
For wine, imagine that every single vintage starts out with 100,000 shares. Through time, people drink those shares. As the number of shares decreases, the value of the remaining ones increase. That’s how you make your money in the wine business. You’re trying to hold onto your shares (bottles in this case) longer than everyone else does.
I talk about this analogy a lot. It might sound simple, but at the end of the day investing consists of fundamental concepts. Buffett doesn’t overcomplicate it. Neither should we.
The stock market consists of billions if not trillions of shares outstanding. There are tons of trading firms, individual investors, broker dealers, etc. There are huge exchanges with massive trading volume. There are also multiple market makers, ensuring the liquidity of assets in short time frames.
The wine market is expanding, and liquidity is growing thanks to online markets, exchanges, and investment platforms like Vinovest. Still, it’s a different dynamic. You cannot expect to invest in wine, and sell a month later for 20% gains. This Is Not Day Trading. You will likely be putting your money in a long term asset more akin to real estate. The majority of time, it will take years for the prices and liquidity to stabilize into a reliable place to profit from.
Why? It comes back to what we said before. Stocks are driven by earnings. If you invest in Ford (NYSE:F) right before it reports a 98% earnings beat to the upside, you’re going to see trading volumes and prices rise pretty fast.
Wine is driven by scarcity and consumer demand. Consumer demand rises as a wine reaches its ideal drinkability window. It used to be that you’d need to have a whole wine collection in your personal cellar at home. With Vinovest, it's been made easier; handling the storage of your wine in state of the art warehousing.
When you first get into the wine game, it can get incredibly tempting to try to be overly involved. This impulse couldn’t be further from what’s needed. It cannot be stated enough that wine is a long term game.
The benefit of this longevity and simplicity of strategy? It’s incredibly hands off. Once you’ve made your picks, you just sit back and wait. There’s no constant monitoring of quarterly earnings reports, or management shake ups. A good vintage doesn’t change. If anything, it simply gets better with age. Imagine buying a stock that you knew would only have a better balance sheet with time.
From Shabazz Farrakhan, DeVonte Muhammad, Jason Black, Mohamed Shashoug, Kevin Diop, Rakim Hawthorne, Bianca Smith, Raven Stephens & Richard Curry, we say thank you for reading this blog from the Shabazz Farrakhan University powered by OnyxMedia ™️ & Google Blogspot. Goodbye & come back soon!
SFU forever, go 'Jackets!
Produced by: Shabazz Farrakhan
Advised by: Shabazz Farrakhan
Edited by: Kevin Diop
Written by: Shabazz Farrakhan & Richard Curry
