Yesterday I blogged about whiskey as an investment, and today I discovered World Whiskey Index, a stock market for all your whiskey-trading needs.
World Whiskey Index (better known by the unfortunate acronym WWI) was founded on simple supply and demand. New markets, especially China, have developed a taste for single-malt scotches. But there's a limited amount of fine scotch. Most medium-grade and all high-grade single-malt scotches were casked as many as 50 years ago in small batches. Back then, there was no way distillers could anticipate the rise in demand.
It's not distillers who are getting richer but international brokers like WWI. Founded in 2007 when stock markets were peaking, WWI promises a Madoff-esque 12 percent annual return. Founder Michel Kappen told Reuters, "If you invest in stocks, there is always the risk the value will go down. With whiskey, we do not see that."
Kappen has a point. But if I were a whiskey investor, I wouldn't worry about declining value but plateau value.
Kappen mentions a bottle of Black Bowmore scotch malt whiskey priced at
a little over $200 in 1995; today it's worth $3,000. If the value of
the bottle continued to increase at the same rate, in 15 years it would
cost $16,000. But there's a limit to what people will pay for booze,
especially if it's not the rarest or most valuable booze in the world.
There may be some rich morons willing to pay $3,000 for one bottle of
scotch but there are a lot fewer rich morons willing to pay $16,000. Besides, scotch can't pay a dividend. And you have to pay for proper
storage.
There are people getting rich off of WWI and with
enough research you could probably be one of them. But if this latest
market trouble has taught the world anything, it's to beware of the
person promising guaranteed returns.
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