Originally posted by bman:
I don't know about stocks, but universally acknowledged quality, or things that are scarce and disappearing, will always command a high price, so top-end wines that all see as reliably good, and scare and disappearing eventually (i.e. top bordeaux, CA cult cabs) will not really come down in price ever, IMHO.
Ditto for property in Kowloon near the water, downtown Mumbai and Vancouver, Manhattan, etc., for the same reasons.
Which is why I continued to buy vintage ports on release, or as futures when I could, until I got too old to expect to live long enough to enjoy them at their peak (2003 was the last vintage I bought - I'm not THAT old!
IMO those who say the price of top wines [particularly those that are made in large quantities like 1st Growth Bordeaux and top flight champagne] are likely to fall if a major economic downturn occurs and those that say they won't, may simply be referring to different time frames.
Some may even be arguing on the basis that they do not believe a major economic downturn is possible in today’s world – the consequences would be so catastrophic Government ‘won’t allow it to happen’!
In the past it is a fact that mature vintages of top wines have been heavily discounted following major and enduring global downturns such as occurred in the early to mid 70s. I know this because I watched it happen and wished years later I had done something about it at the time but like so many one was caught up in the mood of the time.
Have those top wines from vintages like 45 and 61 recovered and gone on to many multiples of those discounted prices? Of course they have, just as inflation and increasing prosperity has affected most everything in the same way.
But they did go down in real terms for a while and could do so again for reasons already given.
In addition prime property locations and individual pieces of great art by dead artists cannot be created annually in the way that wine is at every great vintage. Nor can they ever be extended e.g. like the acreage of a 1st Growth Chateau. So there really is a difference of kind there as well as degree.
Even with these property icons, natural or man-made disasters [like rising sea levels, war, terrorism, disease, pollution] could destroy or devalue, possibly permanently, 'prime properties' just as fashion can affect great art. ‘Never’ is a100% exclusion.
IMO this thread has not been about the ‘super rare’ but the hugely inflated prices of a large number of high volume [hardly scarce and disappearing] wines currently held in stock - like relatively recent vintages of e.g. Lafite and Latour et al that have been increasingly bought, often like stocks and shares with borrowed money, for profit not consumption. As James Suckling suggested with his opening post ‘I think that there may be some sort of price correction, particularly with young wines’.
More and more of these are held by individuals [and investment funds] that are certainly vulnerable to a global downturn accompanied by a major credit squeeze.
If the dominoes start to fall so too will these inflated prices as profits are taken and sales are made in growing quantities when demand has been weakened and the mood changed. If the smoke and mirrors continue to work then prices of the best will probably stay high although the 1997 syndrome will not require such an extreme push and may yet manifest itself with the 2006 Bordeaux vintage.