Liquid assets outperform Russell 3000 Index
By Leslie Gevirtz
NEW YORK (Reuters Life!) - Investing in wine, not just top Bordeaux but even cheap varieties, can be good for your total portfolio and is especially useful during a financial crisis, according to two Swiss economists.
"Wine in a portfolio has produced higher returns and lower risks than the Russell 3000 equity index ... Especially in times of economic downturns" they said in a report in the American Association of Wine Economists.
The study comes as leading auction houses reported sales of fine wines totaling more than $12 million in the last two weeks.
Economists Philippe Masset, of Lausanne Hotel School, and Jean-Philippe Weisskopf, of the University of Fribourg, both in Switzerland, looked at auction prices from The Chicago Wine Company from January 1996 through January 2009.
"In a nutshell, our findings show that the inclusion of wine in a portfolio and, especially more prestigious wines, increases the portfolio's returns while reducing its risk, particularly during the financial crisis," they explained.
"This is true for all model-portfolios both during bull and bear periods."
Masset and Weisskopf accumulated data from 144 auctions with a turnover exceeding $237 million and covered a period that included two significant economic booms and downturns.
They also constructed several indices using the repeat-sale regression method, an approach used by the economists who created the S&P/Case-Shiller Home Price Indices that are used to track and forecast home prices in the United States. Continued...