My friend wants to buy wine as an investment and something of a climate change bet
06-30-2019
, 07:25 PM
Any investment made on the basis of climate change, unless it involves the company getting government handouts, is a very stupid one.
Local variability is WAY larger than the effects of rising temperatures. As example, the temperature in France two days ago hit 45 (113 Farenheit). But that was caused by a weather pattern where air is pumped straight up from the Sahara; it is a natural infrequent weather occurrence and without "climate change" - even taking the worst assumptions - it would have been 44 (111 Farenheit).
Year to year there is very large variability and this dwarfs any extra system forcing in terms of how many good years you will have for wine. For example, here is the max yearly temperature for Iowa by year (couldn't find data for Bordeaux):
You can see 10+ degree swings in yearly variability...an extra 2 degrees of forcing in here might give you a slightly higher peak, but ultimately it will mean very little and most seasons will fall within the range they always have.
That doesn't create good clickbait though or get useless people research dollars from taxpayers, so what you hear is CLIMATE CATASTROPHE and WINE REGIONS WILL BE DESTROYED and oceans of other bull****. The fake news media has done a nice little number on a lot of people hence nonsense like your friend's idea.
Local variability is WAY larger than the effects of rising temperatures. As example, the temperature in France two days ago hit 45 (113 Farenheit). But that was caused by a weather pattern where air is pumped straight up from the Sahara; it is a natural infrequent weather occurrence and without "climate change" - even taking the worst assumptions - it would have been 44 (111 Farenheit).
Year to year there is very large variability and this dwarfs any extra system forcing in terms of how many good years you will have for wine. For example, here is the max yearly temperature for Iowa by year (couldn't find data for Bordeaux):
You can see 10+ degree swings in yearly variability...an extra 2 degrees of forcing in here might give you a slightly higher peak, but ultimately it will mean very little and most seasons will fall within the range they always have.
That doesn't create good clickbait though or get useless people research dollars from taxpayers, so what you hear is CLIMATE CATASTROPHE and WINE REGIONS WILL BE DESTROYED and oceans of other bull****. The fake news media has done a nice little number on a lot of people hence nonsense like your friend's idea.
07-01-2019
, 02:46 PM
Investment in alcohol is an actual thing.
But like all niche investments, you need to be knowledgeable about what is going to make it worth more than a normal investment. You can invest in the stock market with a dart board and do very well. Investing in alcohol will require significantly more knowledge and time than the general public has at large to just break even.
Your friend also needs to consider how she will realize that investment. IE she buys a bottle of wine for $100 and 8 years from now it's worth $250. Ok, who buys it? How does she sell it? Will the buyer actually pay $250 or is he going to buy the same bottle from someone else who just wants to move their inventory at $150? How much will shipping and insurance cost? It's like owning a baseball card. Sure, the book says it's worth $50, but let's see if you can find someone to give you that $50 for it first.
Your friend doesn't have the vaguest understanding of wine production, wine value, nor climate change. So many dominos need to fall perfectly for this to pan out and they are all nothing more than hunches. That's a hard no. As anyone who's studied geology can tell you, earth time scales are in the hundreds of thousands and millions of years. Often times, a lot of the things you see or read isn't remotely in the short term but more "if this continues for another half million years" sort of stuff. You can find underwater fossils on both the peaks of the rockies and himalayas. Change happens, it's inevitable, but it's on such a slow time scale that the human lifespan won't even notice it.
This isn't a treatise of climate change denial, I very much believe in climate change. I very much believe we should do everything in our power to combat. I'm about as eco friendly and green as can possibly be. I wouldn't ever make a wine investment based upon this.
There is however, ample room for her to just learn just about investing in alcohol. Certain items, specifically limited edition pride products can increase their value over time with proper care and storage. It is however a very long wait where the money is going to be tied up for some time and as a physical good, there is always the chance of spoilage, breakage, or your cousin visiting for a weekend and not realizing she's opening bottles from the investment shelf.
For example there's a lot of alcohol that has a surprisingly strong aftermarket. I don't know if they still do it, but Samuel Adams used to create a special batch of beer that was then refined much like brandy is made from wine. They distributed this in small quantities to their suppliers to offer their special customers. Many people scoffed at paying $50 or so for a beer based hard liquor made by a brewery as a one off, but many loved it but then because supplies were so limited, they had to buy it online. It soon created an after market where people would drive to liquor stores across the country and requesting it just to then resell it on ebay for several hundred dollars. But once people started showing up at liquor stores to buy them, the stores themselves figured it out and then began directly selling it online themselves. So it was a fantastic opportunity to make thousands with very little work, but it only lasted a fleeting moment and you had to be in on it early.
Your friend will likely never be one of the first in on that stuff either. She'll need to spend years learning about it or hiring expensive consultants.
TL
R - convince her to buy in on a fund instead
But like all niche investments, you need to be knowledgeable about what is going to make it worth more than a normal investment. You can invest in the stock market with a dart board and do very well. Investing in alcohol will require significantly more knowledge and time than the general public has at large to just break even.
Your friend also needs to consider how she will realize that investment. IE she buys a bottle of wine for $100 and 8 years from now it's worth $250. Ok, who buys it? How does she sell it? Will the buyer actually pay $250 or is he going to buy the same bottle from someone else who just wants to move their inventory at $150? How much will shipping and insurance cost? It's like owning a baseball card. Sure, the book says it's worth $50, but let's see if you can find someone to give you that $50 for it first.
Your friend doesn't have the vaguest understanding of wine production, wine value, nor climate change. So many dominos need to fall perfectly for this to pan out and they are all nothing more than hunches. That's a hard no. As anyone who's studied geology can tell you, earth time scales are in the hundreds of thousands and millions of years. Often times, a lot of the things you see or read isn't remotely in the short term but more "if this continues for another half million years" sort of stuff. You can find underwater fossils on both the peaks of the rockies and himalayas. Change happens, it's inevitable, but it's on such a slow time scale that the human lifespan won't even notice it.
This isn't a treatise of climate change denial, I very much believe in climate change. I very much believe we should do everything in our power to combat. I'm about as eco friendly and green as can possibly be. I wouldn't ever make a wine investment based upon this.
There is however, ample room for her to just learn just about investing in alcohol. Certain items, specifically limited edition pride products can increase their value over time with proper care and storage. It is however a very long wait where the money is going to be tied up for some time and as a physical good, there is always the chance of spoilage, breakage, or your cousin visiting for a weekend and not realizing she's opening bottles from the investment shelf.
For example there's a lot of alcohol that has a surprisingly strong aftermarket. I don't know if they still do it, but Samuel Adams used to create a special batch of beer that was then refined much like brandy is made from wine. They distributed this in small quantities to their suppliers to offer their special customers. Many people scoffed at paying $50 or so for a beer based hard liquor made by a brewery as a one off, but many loved it but then because supplies were so limited, they had to buy it online. It soon created an after market where people would drive to liquor stores across the country and requesting it just to then resell it on ebay for several hundred dollars. But once people started showing up at liquor stores to buy them, the stores themselves figured it out and then began directly selling it online themselves. So it was a fantastic opportunity to make thousands with very little work, but it only lasted a fleeting moment and you had to be in on it early.
Your friend will likely never be one of the first in on that stuff either. She'll need to spend years learning about it or hiring expensive consultants.
TL
R - convince her to buy in on a fund instead
07-01-2019
, 05:01 PM
