December 2017 Wine Investment Report

December 2017 Wine Investment Report!

The figures for November

This months valuations showed a positive gain for the Champagne and Rhone Valley wines UP 0.91% and the Bordeaux market which was marginally down -0.03%

• 27% of the wines valued showed a positive return, while 27% showed a negative and 46% remained the same. 82% are made up of Bordeaux while 18% are made up of Champagne and Rhone Valley.
• The overall gain for ALL the wines valued this month was an increase of +0.05%

See below the winners and losers for November versus October.

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Investors Summary by James E.P Pala

We saw the Rhone Valley and Champagne market take over the Bordeaux Market for the first time in many months.

Nice to see some good growth in the Rhone Valley and Champagne market. These investments took a bit longer but now starting to reap rewards. It was not a big surprise since the Bordeaux growth has been higher almost every month this year.

In late November, a number of the major Chateaux began releasing large quantities of Bordeaux into the market, which slowed down price increases on our valuations. I did some investigation into why the prices were not moving in November. Following discussions with merchants and negociants, It became clearer that due to lack of sales during their en primeur campaigns back in 2011 to 2014 they were holding on to too much wine which was affecting their financial reporting. Since many of the big Chateaux report to holding companies.  The game is always to release stock as late as possible to maximise on profits.

Nevertheless, being forced to push stock into the market is a good thing. This will curb their ability to manipulate the market and presents some nice opportunities for investors to buy in better quantities of first growth wines at a lowered price.

As this market is currently on an upward trend, you can expect to see good growth, should you choose to invest into first growths. There is also evidence the market remains buoyant and strong, reflecting in the results from the London Vintners Exchange Index 1000 and 100.

The index 1000 is their broadest measure of the market and reported a gain of a whopping 2.8% in November. Reports indicate Burgundy wines were the most aggressive this month. The livex 100 which is made up of predominantly Bordeaux wines also increased 1.3% according to livex.

Email me if you wish to participate in the excess stock offerings by the big Chateaux. Its a great opportunity for you.

With global stock markets at all time highs, there is plenty of liquidity in the market which will allow the excess stock coming onto the market to disappear very quickly.

Global Market

Year to date:

U.S Markets

There are talks that the FED will raise interest rates next week, though it seems rather an unusual time to increase interest rates so close to the end of year. It looks more likely that we won’t get the interest rate hike before the end of this year, since Janet Yellen is exiting her post, she may want to leave without a market correction on her resume. Probably the first fed chair to do so. Being a Democrat, she should be happy to give the reigns to a Republican to take the correction off her hands. 

In terms of any market correction, it is unlikely to see before the end of the year.  Rather it makes more sense for the big money to wait until the tax reform plan is in place before exiting the market because there is a lot of money at stake.  If you were sitting on several billion dollars like Warren Buffet, why wouldn’t you wait for the tax reform to save 10%? It only makes sense to hold off and liquidate when the tax cuts kick in. We are talking about millions of tax saved dollars for some investors. The U.S markets are clearly waiting for the tax reform plan before making a move. However the Asian markets have already started to tumble just last week.

GBP & The Euro

Year to Date: EURO/USD: 12.7%            GBP/USD: 9.1%