Are rare wines still a good investment—even in the economic downturn?
A. Fine and rare wines are often seen as a great hedge against market volatility, and this is truer today than ever before. (Technically, fine wine is high-quality wine that appreciates in value over time as it improves in flavor, and rare wine is fine wine that is more than fifty years old.) Q. Why do fine wines hold their value? A. The two reasons that fine and rare wines are appealing investments are that the average rate of return has been very consistent over time and that it has outperformed most major market indices. In addition, volatility in the market for fine wine does not have a strong correlation with other markets, so it works well for portfolio diversification. Some investors would add a third reason—one can always reap the benefits by drinking them. This is only partly tongue-in-cheek, since many investors operate on the principle of “buy three cases, drink one free,” selling some wine to finance what one has consumed. Q. Do you foresee rare wines holding, increasing, o