Coronavirus Infected Financial Markets
4 Reasons Why A Coronavirus Infected Financial Market Is the Best Time To Invest In Fine Wine and Vineyards
Global markets are teetering on recession and even worse the possibility of a depression, due to the COVID-19 outbreak. The coronavirus is now being called a “pandemic” by the World Health Organization (WHO), with cases in more than 100 countries worldwide. President Trump has restricted travel between the U.S. and Europe. Italy is in a total lockdown, with its government urging citizens to stay home with the hashtag #iorestoacasa. Even globally beloved Tom Hanks confirmed that he has tested positive for this wide-sweeping virus.
Yes, these are strange and frightening times for all of the world.
But the silver lining is what this could all mean for your wallet. In fact, NOW is the time to invest in alternative hedge funds like fine wine.
1. The Perfect Hedge Against Recession and Inflation
Fine wine investments are a good idea in down times like these because they “hedge” against drastic market changes like a recession or inflation.
This is because wine is a tangible asset, meaning that it has an inherent natural value. During market down-turns, these tangible assets tend to retain their value and even show counter-cyclical correlation with the market, meaning they do better when traditional stocks and bonds are down.
To show you why you should invest in tangible assets to hedge against a recession, let’s take the example of gold. In the 100 years since the Federal Reserve was created in 1913, the dollar lost nearly 97% of its purchasing power. In this same time, gold, a tangible asset, increased its worth by nearly 300% even after adjusting for inflation.
2. Diverse Your Investment Portfolio
Because our fine wine portfolios are considered alternative hedge funds, they can also help to diversify your assets. Many independent researchers have also confirmed that a well-diversified investment portfolio would benefit from a small allocation to alternative assets.
The Chart above shows the performance of fine wine in the crash of 2008 and 2017 improving economy, Fine wine protect investors from suffering greater loss during financial crisis period.
Diversification is good for two reasons.
First, it adds variety to your portfolio, and higher variety can lead to higher returns.
Second, it protects against risk. If one asset performs poorly, the other funds can recuperate some of that loss.
So, in a market that seems to be turning downward, now may be the time to diversify your investment portfolio by adding alternative assets like fine wines. At Vinito Capital Management, our funds, collectively worth over 35 million euros, are backed by wines and vineyards that we personally select. These wines include Bordeaux’s most prestigious Premier Grand Cru Classe wines, like Château Latour, Château Margaux, and Château Lafite Rothschild. These names have been around for hundreds of years, and they are synonymous with consistent quality. It’s no surprise that they have survived through their fair share of economic scares, pandemics, wars and now coronavirus.
3. Wealth Preservation
20 years ago, investing in fine wines would often have generated greater capital growth than equities. For an investor today, who may not have such a long investment horizon – can the same performance be achieved in the future? How has the wine market performed in recent times?
The answer is yes especialy with the award winning wine and vineyard funds offered by VCM. These wine and vineyard assets are also backed by the new VINX Coin, a security token offering that has just launched. VCM wine funds experienced an average of 45% returns from its funds last year and VINX is offering a guaranteed buyback of its coin spring 2021.
4. Wine and Vineyard Investments Get Better With Time
And the last reason you should invest in wine now? Because our wines will only get better with age. When the threat of Coronavirus looms over your investments, consider diversifying with an asset that will not only make it through this bear market, but come out better on the other side.
Reason for continued Optimism
VINX & VCM research clearly indicates that fine wine and fractional vineyard ownership continues to provide a viable opportunity for investors looking too diversify and expand their portfolios in to alternative assets.
From VCM fund performance and past wine investment performance, we can see how Fine Wine can act as a defensive asset class in times of economic crisis but at the same time will benefit from the economic upside due to the creation of wealth, fueling spending on luxury assets.
Furthermore, demand for fine wine does not tend to fluctuate too much during periods of economic deterioration – wine consumers will always consume wine. The niche characteristics and relative size of the fine wine market insulates the market from wider macro-economic factors and it can therefore protect investors from greater loss. The case for investing in wine as a strategic alternative asset class has strong merits and the outlook for the market remains promising with broadening interest from emerging markets such SEA, China, Mexico, Russia and parts of Africa.
Now with the newly launched VINX Coin, Security token offering launched in partnership with VCM there is now another way for investors to leverage the power of wine and in vineyard investments. Gone are the days of you must be a wealth French Rivera jetsetter to be able to to take advantage of wine and vineyards investments thanks to VINX and VCM.
Interested in learning more? Send us a message and we’d be happy to answer your questions.
SPY: SPDR S&P 500 Trust ETF Compared to VCM Wine Fund Performance
If your not familiar with “SPY” fund then here is a short definition.
The SPY ETF is one of the most popular funds that aims to track the Standard & Poor’s 500 Index, which comprises 500 large- and mid-cap U.S. stocks. These stocks are selected by a committee based on the market size, liquidity, and industry. The S&P 500 serves as one of the main benchmarks of the U.S. equity market and indicates the financial health and stability of the economy.