Paulo Pinto
Alti Wine Exchange founding member
Dear reader,
It is a thrill to be back writing to you about economy and investments.
You and I are wine lovers, but our main goal here is to help you to invest in fine wine, showing also how profitable this safe long-term investment asset is.
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Fine wine as an alternative investment asset
Anyone who knows me can confirm that I have stopped giving financial advice for the past 3 years and will not start soon because my motto is to sit on the sidelines with fine wine.
Also, investors and general readers who have been following my recent posts know by now that the reason for creating Alti Wine Exchange is to allow people, who think like me, and who also sit on the sidelines of the market to look into fine and rare wine.
As you can see from the chart below, this is how Bank of America’s wealth management clients have their asset allocation during pandemic times. It is intriguing to see that fine wine is not listed on the chart.
Truth be told, I do not know if my bearish views on stock market valuations are correct.
After all, if things keep going as they have been, stocks may continue higher, but common sense tells me that the smart money will start panicking sometime in the (not too distant) future. All it needs is for the smart money to pause to think.
Markets go from oversold to overvalued, while people rotate their asset allocations.
Where do you think we are? The total debt in the last five years in the US is up 7 trillion dollars and debt to GDP ratio is at 117%.
Obviously, the optimistic view is to mention that debt to GDP in Japan is at 250% and therefore still a long way, but numbers are just numbers until people stop understanding them.
Why take refuge in fine wine
For people with money, gold and silver are playing a bigger role, but for people with not so much money, fine and rare wine is where you should be considering taking refuge.
Paul Tudor Jones, the hedge fund manager, says “we are witnessing the Great Monetary Inflation, an unprecedented expansion of every money”.
To this, I will say that at the basis of any economy is the allocation of scarce resources. That is the way any economy grows. Money is not a scarce resource now – savings are.
In times of economic uncertainty, many investors go for physical and tangible assets: some buy real estate, gold, or art. These are famously referred scarce resources when we talk investment — alternative, real assets.
A fine wine vintage is also a scarce resource and becomes scarcer as it is consumed.
Age-worthy investment-grade wines make a profitable investment because they are not correlated to financial markets, and therefore won’t directly suffer losses during economic downturns.
And although they pay no interest, fine wines become better (due to their quality) and ever rarer. This means an excellent appreciation in the long term.
Some people have their eyes on money. But we do not understand what money is anymore. That’s why we have our eyes on fine and rare wine.
Articles by Paulo Pinto
Alti Wine Exchange founding member
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