Where do you put your money in a bear market? Sample Wine, Art, and Baseball Cards – CNN | Candle Made Easy

Stocks have entered bear market territory as recession fears gathered momentum. Inflation rates remain at 40-year highs, interest rates are rising, geopolitical chaos and supply chain kinks still loom, and big CEOs are warning of an economic “hurricane.”

But not all economic downturns are created equal, and luxury markets are somehow staying afloat. Smart investors are now looking to alternative assets like wine and art to keep their money invested in asset appreciation during tough times.

Fine wine has grown at a compound annual rate of 10% over the past 30 years, according to the Liv-Ex Investment Index, which tracks current rates for fine wines. It also has a relatively low correlation to the stock market, making it a valuable hedge against fluctuations in stock prices. Physical assets also tend to withstand inflation fairly well.

The Liv-Ex Index shows that between January and June, fine wines increased in value by around 10.3%. During the same period, the S&P 500 fell more than 13%. In 2008, the S&P 500 fell about 39% during the financial crisis, while wine prices fell less than 1%. Also, you can’t drink Apple stock.

Traditionally, alternative investments should make up between 5% and 10% of an investor’s portfolio, said Atul Tiwari, CEO of wine investment firm Cult Wines Americas, “but the traditional 60/40 portfolio isn’t doing well right now, and we’re seeing clients who are… Increase the amount they invest in alternative investments because they tend to be great diversifiers.”

Cult Wines advises, buys, stores and sells fine wines on behalf of investors wishing to participate with a minimum investment of $10,000.

“There is a finite amount of investment-grade wine produced each year, and consumption is reducing that amount over time,” Tiwari said. “In the case of good wine, demand continues to grow as more countries become wine-drinking cultures and wealth is created around the world.”

Supply chain issues only increase that demand, Tiwari said. The value of champagne rose 41% in 2021, partly because people were so concerned it wouldn’t be delivered to wine store shelves, he said.

art

The world may be focused on NFTs, but physical art collection is still a popular bet for wealthy investors. However, the entry point for fine arts is much steeper than for wine and other alternative assets.

Historical analysis has shown that the art market has some correlation to the stock market but tends to lag six to 18 months. For example, the 2007-2008 recession didn’t hurt the art market until 2009, said Masha Golovina, head of market analysis at Masterworks, a marketplace for premium art investments. “This drop happened just as stock prices were beginning to recover.”

Art prices also tend to fall less than stocks. According to data from MeiMoses, art auction prices fell about 27.2% between 2007 and 2009, while the S&P 500 fell 57% from its peak.

Citi has calculated a correlation coefficient of 0.12 between art and the S&P 500 index, which is relatively low, and Masterworks estimates that between 1995 and 2021 there has been a 13.8% annualized appreciation for fine arts.

watches

Another item that tends to retain its value during economic downtime is a quality watch. At the height of the Great Recession in 2008, watch auctions for the year totaled $83 million, up from $55 million in 2007. Watch prices continued to rise in the months after September 11, 2001, according to Sotheby’s analysis and the ensuing economic downturn.

Demand and prices for both Rolex and Patek-Philippe watches have increased significantly since inflation hit a 40-year high, according to the watchmakers.

collectibles

It’s important to be cautious when investing in new assets surrounded by hype. Beanie Babies were once considered a surefire way to make millions.
But the sports card trade has been on the rise in recent years. More than $871 million worth of sports cards were traded on eBay in the first quarter of 2021 alone, according to the online retail platform. Overall, eBay reported a 142% increase in trading card sales in 2020 compared to 2019.

Trading card games like Pokémon also saw a more than 500% increase in sales over the same period.

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