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Wine as Investment Beats Russell Stocks

Study Shows Adding Fine Wines to Portfolio as Liquid Assets Yields Higher Returns

April 19, 2010

According to a study, fine wines are a better investment than stocks; We'll toast to that!
Fine wines perform better than Russell stocks as liquid assets, even during a period of economic downturn, according to a study by two Switzerland-based economists. University of Fribourg PhD candidates Philippe Masset and Jean-Philippe Weisskopf arrived at their conclusion by comparing auction results of the most-traded wines with the Russell 3000 Index of the largest U.S. companies between January 1996 and January 2009. That 13-year period included two bull markets and two bear markets for stocks. They found that including investment-grade wine in a portfolio increases the portfolio's returns and lessens risk, especially during an economic crisis.

One of the examples cited in the study (which was first published in 2009 and recently updated to reflect the current recession) is the auction price of a 1982 Barbaresco Riserva Santo Stefano, which has risen from an average of $135 in 2002 to $613 in 2009. The study shows that the largest growths in top vintages since 2005 alone have returned 500 percent, compared to the Russell's 50 percent.

So which wines make for the best investments? The study shows that along with price, a wine's appellation influenced its value appreciation: U.S. wines yielded a positive return of only 63 percent, while Italian wines gained 125 percent. Wines from France fared even better, with Bordeaux and Burgundy yielding returns of nearly 200 percent, and Rhône Valley at almost 300 percent.

In the study, the economists state that positive press commentaries on the favorable risk-return profile of wine as an asset has played a part in convincing investors of the advantages of adding wine to their financial portfolio. As a result, many investors are viewing wine as not just a consumer good but also as an interesting investment opportunity.

Check out our Top 10 Value Wines for smart wine choices to enjoy now!
The slow economy got you down? Find affordable ways to enjoy dining, travel and more with our Gayot Economic Stimulus Plan

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