The price of aged Bordeaux has gone insane. But why?

[JimHow]

Checking out some of the vintages from the 1980s, everything is up in like the $400-500 range now. What is going on? I'm still not understanding the economics of what has been happening here. Why have my two houses doubled in value? Why is there such a shortage of labor? Why are luxury items and art and fine wine skyrocketing astronomically in value? It seems counter-intuitive to me. Democracy is under attack and failing around the globe. Autocracy is on the rise. War is raging in Europe, nuclear danger no longer just lurking on the back burner. The planet is roasting. Energy costs rising at exponential rates. Catastrophic global pandemic. Supply chains clogged for basic supplies, computer chips... food next? It seems like times are uncertain, troubled, the ground shifting beneath our feet. Why would 1989 Baron go from $195 a bottle to $495 a bottle like over night? And on and on? I'm not understanding the economics here.

[JoelD]

Too be fair it’s more like 395 now but I agree that’s a perfect example. To me it’s simply inflation and overvaluation of scarce assets right now. Combined with others recognizing that we probably won’t see classic wines like 80s Bordeaux again. The rich have gotten a lot richer during the pandemic. If cash is trash like you believe then the obvious answer is to put it into scarce assets like real estate, wine, (and bitcoin). However, I believe that you’re right and we may see a correction on thus. Just like we do on anything that skyrockets in price. I’m still making sure not to buy high on almost anything like that right now. Only deal hunting. I might sell my last bottle of this at that price. I enjoyed the bottle I brought to the Saturday dinner but not enough for that.

[marcs]

Look at a chart of the money supply from early 2020 on and you will have your answer. The Fed juiced asset markets massively then and has never withdrawn the stimulus, indeed has increased it

I greatly regret not having bought a house in 2020 or 2021, I’m priced out of my neighborhood now (although could still go to the suburbs)

[SF Ed]

Look at a chart of the money supply from early 2020 on and you will have your answer.

This. I don't think these prices will keep going up at this rate, but I don't think they are going to drop much either. Too much money chasing limited assets.

As money is now increasingly worth less (inflation), people want their wealth in different assets. It doesn't take a lot to move a small market like wine.

SF Ed

[jal]

Didn't you say yourself that Cash is Trash?

[Claudius2]

Guys
It isn’t just Bordeaux the fine wine industry is on a bull run and the situation is worse for Burgundy. Auction prices are going crazy for mature wines and I’m constantly shaking my head at realisation prices.

The volume of wine per se is variable but of famous wines, it is constant and with increasing demand, prices rise exponentially. Maybe I’m just getting old as I recall buying Henschke Hill of Grace for $20 and it is now nearly $1000, and Bordeaux 1ers Crus for $50 and now they are well over AUD1,000.

The sad part is that famous wines are the playthings of the new rich throughout Asia and they still add Coke or water to Mouton. I kid you not.

Cheers
Mark

[AKR]

Just think what will happen to Bourbon prices once the Asian nouveau riche discover they can add Coke to that too!

[Musigny 151]

I bid yesterday on a bottle of 1964 Cheval for a vertical. I stopped early but the wine went got $1300 plus vig and taxes, which will bring it to around $1850. Crazy, man, crazy.

[robert goulet]

I just got a bottle of '93 lafleur at auction for $360...i figured that was a steal going by today's inflated market...but yes wine prices have jumped alot...and when mediocre vintage '99 1st growths at auction are going for 700plus then the 2nd 3rd 4ths and 5ths will follow suit...As of late I have found myself bidding less often

[stefan]

Auctions have become so unexciting for me that I must find a new way to waste time while pretending to work.

[Jay Winton]

A Van Halen song seems appropriate: Everybody wants some.

[AKR]

Auctions have become so unexciting for me that I must find a new way to waste time while pretending to work.

Have you tried WebEx, Zoom, or MS Teams?

[Musigny 151]

Auctions have become so unexciting for me that I must find a new way to waste time while pretending to work.

Ain’t that the truth

[marcs]

On the other hand skyrocketing prices give auctions a certain new interest. The 1995 La Fleur Petrus that I got for the not-low price of $199 each just three months ago are now, per the computer, supposed to be worth…$381 each? Prices doubling every couple of months can’t continue, doubt these prices are real.

[DavidG]

Supply and demand.
More dollars chasing fewer bottles.
A worldwide recession would probably bring prices down.

[Claudius2]

Arv
Yeah i get the point though the Chinese drink bai jiu (white spirit) by the truckload. My few attempts to drink it suggested that methanol and battery acid would taste much better but who is to argue with a market of nearly 1.5B people.

I think the English are correct that money buys lots of things other than taste and class. Oh well.

Cheers
Mark

[Musigny 151]

Something like this I suspect. Bear in mind a bottle sold for over a million dollars

I went to China to do a wine judging. I had once tasted Moutai at a Manhattan restaurant and thought it the most disgusting thing I had ever tasted. That is not hyperbole.

So you can imagine my joy when I was told the first twenty “”wines” would be Moutai. Let me say I was close to throwing up after a couple, and managed to make my way through the remaining ones. The guest judges from Europe and America also had gray/white faces and one actually refused to continue and just marked his sheet with zeroes. I managed to find one that was halfway palatable; it came from a can and some of the tinny odors disguised the worst of the Moutai. I would give this to my worst enemies, the other nineteen not.

The following morning they had flown in the most venerable maker from pre Mao days. Armed with four teeth, a querulous voice and a beautiful ceremonial costume, he was there to tell us about the glorious history and greatness of Moutai. Unfortunately we did not get to hear much. The translator managed to round off each fifteen minute exposition into two sentences. At the end of two hours, I could swear some of the judges were close to sleep. I wanted it to go on forever, as I knew there would be more Moutai afterwards.

Alas it was time, but mercifully this time only fourteen. Things had not got any better. The fourteen were followed by several flights of Chinese grape wines. These are for the most part wines that struggled to get 80 points. That day they did a lot better. The secret for a bad or even a flawed wine to get a high score is to serve a flight of Moutais before it.

[AKR]

I think the English are correct that money buys lots of things other than taste and class. Oh well.

Cheers
Mark

Money doesn't buy security either...

https://heisenbergreport.com/2022/04/02 ... airy-tale/

read the first part in the grey sidebar

Interesting report that is getting a lot of buzz from the market community.

Finally hearing people talk about defense spending as an investment