Whisky as an investment: are we in a bubble?December 14th, 2011
The cover story for the new issue of Whisky Advocate (pictured below) is on whisky auctions and whisky collecting. We like to show both sides of a story. Ian Buxton has a feature in this issue that takes a more contrarian approach to auctions and collecting, discussing a whisky’s “soul.” Below, in this guest blog post, he goes into even more detail.
Read what he has to say below. Do you agree with him? Disagree with him? And why?
By Ian Buxton
Can one invest in whisky? And, if yes, should you?
There’s certainly a lot of excited chatter about this right now, perhaps a measure of the troubled economic times in which we live. The idea seems to be creeping into the popular imagination that picking the right bottle is a worthwhile, not to say near essential part of your financial planning.
We can argue about the figures. Elsewhere I’ve taken exception to sloppy journalism and the casual quotation of potential investment gains that ignore transaction costs – and can thus never be achieved in real life. Call me old-fashioned but I believe readers should be able to trust what they read and citing illusory and unattainable rates of return is misleading at best.
What’s more, simple common sense suggests that returns of over 100% in just two or three years are never going to be sustained in anything but a feverish bubble. When you appreciate that those figures are being most enthusiastically trumpeted by people with a vested interest, such as distillers with a brand to promote, retailers with stock to move or auction houses keen to drum up business you might just want to look twice before committing your 401(k) pot.
But there’s a more fundamental philosophical point that the money men, with their hard, cold souls don’t seem to get: if the whisky you buy is just for investment, then – since it’s never going to be opened – the bottle may as well contain cold tea. Today whisky; tomorrow pork belly futures.
Whisky is a drink, but it is more than that. It is a metaphor for the spirit and soul of the people and place that produced it. The distillers of Scotland express part of the austere, Calvinist personality of their land; in Kentucky (as for Rabbie Burns) “freedom and whisky gang the’gither” and for the brave new distillers in Brittany, France it encapsulates their Breton identity and culture, even their language.
Buying and hoarding bottles like some latter-day Ebenezer Scrooge while poring over spreadsheets to measure RoI and capital growth tears out whisky’s heart and spirit; confounds its generosity and desecrates the memory, skill and craftsmanship of the people who made it. And, call me a romantic, but that’s just wrong.
If you love whisky, set it free. Mark my words: this ‘investment’ bubble will end badly and people – and whisky – are going to get hurt.