Wednesday, October 29, 2008

My Hedge Fund

Back in the 1980’s and 90’s I invested in a personal hedge fund. At the time there wasn’t any overriding strategy other than perhaps a hedonistic one. I started out with little investments here and there, and one thing led to another. A little trading, some long-term holdings, some quick-turn-around buys. All this over a period of the past 20 years.

In these days the market is in the tank, up and down like a yo-yo, heavily driven by an emotionalism I find too volatile to deal with. But along the way I have been lucky enough to dodge the important bullets and my hedge fund has grown. Now, what should I do about it?

Several cases of La Chapelle Hermitage from Paul Jaboulet, from 1985 and 1989. These have been the house wine for the past 15 or so Christmas dinners. Initial cost was about $20 a bottle. Current appx. street value $150-300 a bottle. But if I sold the remaining cases, how could I tell how an Hermitage will taste at 50 years of age? After all that was the reason, to buy a wine that everyone told me would age for 50 years. I have 30 years to go, which is just about how long I expect to last as well. Position:Hold and Drink

A magnum of the 1960 Vega Sicilia Unico Artist Series, bought a very long time ago for about $100. About now this bottle is going for appx. $1600-2500. I’ll probably keep it and open it when it is 50 years old, which is in two years. It’d also be great for anyone who was born or married in that year. Maybe there is a hedge fund manager who is swimming in dough and was born in 1960? I’m not married to the Vega Sicilia, but seeing as it represents an amount that I would never spend on a bottle of wine, maybe I’ll just open the damn thing for the hell of it. Position:Hold or Sell.

Chateau Mouton-Rothschild. I bought many different years of this wine because I liked to collect the labels, from 1982 to 1990. Now these wines represent a lot of capital, but none of which I really tied up. I think the most I paid for a bottle ( the 1990) was $50. And while I cannot sell them all and buy a Porsche Speedster, it really wouldn’t matter. I don’t want a Porsche Speedster again. I do like the Francis Bacon label, though. It reminds me of the time I did a tasting in Bordeaux at a famous negociant. They showed us a wall of first growths and told us how many millions of dollars it was worth. They neglected to say the triptych of Bacon’s that they had in the hallway leading to the wine vaults was worth about $50 million. Position:Hold for Now.

I’ve had my flirtations with Super Tuscans over the years. There still is a good stash of Sassicaia from 1979 to 1990 in my portfolio. The most I ever paid for a bottle was about $70.00. I remember actually selling the 1968 for about $28 to my clients. I had found a cache of the first bottling in a cellar in Florence in the early 1980’s. It wasn’t an easy sell. So I tended to keep the early wines, drinking a few here and there. I’m not as interested in Sassicaia these days (when they go for about $200), but the older ones still have a sense of place and lack of manipulation. Position:Hold or Drink.

I also dabbled with a little Solaia, the 1997. I am not sure if Doc Micro-Ox or if Miss Perverse Osmosis infected this wine. I traded it for 3 bottles of Montepulciano d’Abruzzo Riserva. Now it has a street value of about $400.Position: Sell.

A few years ago I traded a bottle of Mouton, a bottle of Sassicaia and a bottle of Tignanello for a Hasty-Bake wood barbeque grill. Now that was one of my better trades.

Back in the early 1990’s I walked into a river-bottom liquor store and they had 1988 Bruno Giacosa Barbaresco for $14.99. I bought all they had (and got a 10% discount). Today that wine is easily worth $150. So delicious and now just about ready. Position: Drink what is left. With pleasure.

Lastly, I bought a bunch of Port, thinking 1990-1994 would be good wines to drink when they are 20 years old. The oldest of that bunch are starting to get close. I am particularly fond of Quinta Vesuvio for several reasons. It was one of the quintas farthest up the Douro. I had probably the best bacala I have ever had, there. And during crush one year we pressed the grapes, by our feet, in the ancient lagars. Truly a transcendental experience. We're talking Old-World, Old-School stuff here. Not some snotty California wine-camp-crush stuff. The real deal. So I love my Port and my hedge fund portfolio is weighted well in these long term holdings. Position: Hold.

There’s a lot of weeping and gnashing of teeth in these days. It seems a lot of people are poorer on paper than they were a month ago. But really how poor are you, if your closet if filled with all these long-term high-return wines? I have been visiting my wine closet a bit more lately, if for no reason other than to reassure myself that even though I will need to work quite a few years more, there will be a continuous supply of great wine, bought at low prices, available for those lean years ahead.

"Dale a tu cuerpo alegría, Ma'dalena, que tu cuerpo e' pa' darle alegría y cosa' buena'"


Marco said...

I wouldn't mind having a recession-proof hedge fund like that. It just so happens that I was born AND married in 1960. What a coinkydink. Though I do have a bottle of the 1996 Vega Sicilia Valbuena in da' cellar.

BK said...

You had me going there for a second, AC. When you said " could I tell how an Hermitage will taste at 50 years of age?" I was going to say "easy... just think back a few years." Then I realized you were talking about the wine!

So enjoy. But, don't leave town... we know where you live... ;-)

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